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NATIONAL ACADEMY OF ARBITRATORS
P0LICY STATEMENT ON EMPLOYMENT ARBITRATION
May 20, 2009
It is the position of the National Academy of Arbitrators that voluntary arbitration is always preferable, and that it is desirable for employees to be allowed to opt freely, post-dispute, for either the courts and administrative tribunals or arbitration. We recognize, however, that the United States Supreme Court has extended the Federal Arbitration Act to most contracts of employment. As a result, employers may require their employees to arbitrate some or all future disputes, including statutory claims.
The abiding concern of the Academy is that all arbitration, including employment arbitration, be conducted in a manner that respects the rules of fundamental fairness essential to the integrity and credibility of the arbitration process. When serving in cases in which, as a condition of employment, an employee has signed an agreement that imposes arbitration as a substitute for direct access to either a judicial or administrative forum for the pursuit of statutory rights and judicially recognized claims for relief, arbitrators should be especially careful to ensure the fairness of any employment arbitration procedures in light of the Academy’s Guidelines for Employment Arbitration.
INTRODUCTION
NAA members are now being called upon to arbitrate employment claims in the non-collective bargaining sector. Cases arising under an employer promulgated arbitration plan require particular vigilance on the part of arbitrators to ensure procedural fairness and to protect the integrity and reputation of workplace arbitration. These Guidelines, together with the Due Process Protocol endorsed by the Academy, the American Bar Association, the American Arbitration Association and other interested agencies, are intended to assist arbitrators in deciding whether to accept a case and to provide guidance as to how such a case might be fairly conducted and concluded. They supplement the Code of Professional Responsibility for Arbitrators of Labor-Management Disputes. Members should also be alert to other applicable codes of ethics (e.g. code of Ethics for Arbitrators in Commercial Disputes) federal and state statutes or regulations, or any other ethical code or rules adopted by the parties.
Employment arbitrations can result from post-dispute arrangements made by the agreement of the parties. Often, however, they arise as a condition of employment or "pre-dispute agreement" with terms that are established by the employer. Either may involve statutory claims, common law claims or contractual claims. Academy members who undertake such cases should do so with full assurances that their powers and the procedures to be followed are consistent with minimum standards of due process and fairness. In matters involving statutory claims, the arbitrator's jurisdiction and remedial authority should permit a hearing, rulings and decision fully consistent with the provisions of the statute itself, no less than would be the case before a court.
Members should recognize that in adjudicating statutory, common law or contractual claims they are acting as substitutes for a court. If the arbitration plan under which a member is appointed lacks fundamental due process, the arbitrator should insist upon an agreed correction as a condition of service and, failing agreement, should decline the appointment or withdraw from any further participation. The power to withdraw from a case in the face of policies, rules or procedures that are manifestly unfair or contrary to fundamental due process can carry considerable moral suasion. However, in assessing the fairness of a given system, the arbitrator should be mindful that the parties to a post-dispute agreement have much more latitude to vary from the procedural and substantive requirements of statutory systems than do parties to a pre-dispute agreement.
I. SHOULD YOU TAKE THE CASE?
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Do you have past or present connections, interests or relationships that should be disclosed?
Academy members are used to situations where disclosures are often unnecessary because the parties know them well and the labor-management universe is relatively small. In contrast, in the employment field the parties may not be familiar with one another or conversant with the arbitration process. Caution suggests detailed disclosure regarding any past or present involvement with or relationship with the parties, counsel or potential witnesses, and any similar considerations. It is important to proceed carefully and to err on the side of disclosure so there can be no question of impropriety or of your impartiality. State statutes, regulations, or rules of court on disclosure may be applicable, particularly where federal law is not controlling, and these should be fully complied with.
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Do the parties have adequate rights of representation?
At times, the parties in these cases, especially claimants, may not have experienced, professional representation. Arbitrators should exercise special care when accepting appointments or hearing cases where one party is not represented. Some members elect not to accept a case when the claimant is unrepresented.
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Were you selected in a fair manner?
When notified of selection, if you are not familiar with the parties' procedure, you should inquire as to how you were chosen. Did both parties have a meaningful selection opportunity? A negative answer to this question should cause you to decline the case, absent clear evidence that the selection process was fundamentally fair.
- Are you satisfied that you can serve in light of the documents creating and defining the scope of the arbitrator's jurisdiction, including, where applicable, the following?
a. Arbitration agreemen
b. Employment contract
c. Designating agency rules
d. Court order
e. Employer ADR plan or other policies
f. Any restrictions on class or group actions to the extent these might hinder particular grievants in pursuing their claims, especially where the monetary amount of each individual claim is relatively small, or hinder the vindication of the public purpose served by the particular claim.
Before agreeing to serve you should receive all of the documents defining your authority and scope of jurisdiction. If there are restrictions, particularly with respect to your remedial authority and your ability to control the proceeding, such as unfair limitations on discovery or on the production of documents or witnesses, you should make sure that you have the authority to make such directions as may be necessary to ensure procedural fairness. If the restrictions have previously been found unconscionable by a court, but the employer offers to waive those restrictions in this particular case, you should consider whether accepting the case is appropriate.
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Where a claim involves statutory or common law rights, are you authorized to provide adequate discovery and remedies fully consistent with any applicable statute or the common law?
In an employment relationship where arbitration is a condition of employment it is essential to ensure that your remedial authority is equal to that of a judge or jury under any statute or the common law applicable to the matter before you. Different considerations may apply if the arbitration agreement is truly negotiated at arm's length or is a post-dispute agreement made between sophisticated parties. Similarly, if there are no provisions for discovery, you should make a determination about your authority. Unlike the collective bargaining setting, there is no administrative agency available to require discovery in the absence of agreement. If you believe that your remedial authority is unfairly restricted, you should consider carefully whether it is appropriate to serve.
6. Are there unfair restrictions on the date, time and location of the hearing?
Academy members should ensure that all aspects of the scheduling of the hearing are fair. The location should not be so distant that it causes cost problems for a party of limited means or be inconvenient to reach for a person with physical disabilities. The arbitrator should also consider the reasonableness of a party’s request for a “neutral” site. The dates of hearings should not be so soon as to prevent adequate preparation or so delayed as to prevent a timely remedy.
7. Are you satisfied that the arbitrator compensation arrangement is consistent with fairness and impartiality?
Compensation arrangements can take a number of forms, including employer pays in full or in substantial part, the parties share equally, or loser pays. You must decide whether the basic arbitrator compensation arrangement is consistent with fairness and applicable law. If there is a mandatory arbitration agreement executed as a condition of employment, and the claim is based on a statute or the common law, an arbitrator should consider whether fairness demands that the employee’s share of the arbitrator’s fees and expenses be no greater than the filing fees for such a claim in the appropriate court.
II. PRE-HEARING CONSIDERATIONS
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Employment cases require active management to ensure due process, fairness, and efficiency. At the outset of the case, the arbitrator should make clear the rules governing the proceeding and the full range of pre-hearing and remedial authority the arbitrator intends to exercise. Depending on the agreement and relevant statutory and case law, that authority may include sanctions, compensatory and punitive damages, interest, attorneys’ fees, and equitable relief.
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If the agreement to arbitrate or the parties’ agreed-upon rules do not set forth the evidentiary standards to be followed at the hearing, the arbitrator should make clear the standards he or she intends to apply.
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Pre-hearing discovery is essential for adequate case preparation. In addressing discovery issues, the arbitrator must balance the parties’ need for sufficient information to ensure full and fair exploration of the issues and the expedited nature of arbitration. Fairness, efficiency, and due process should guide the arbitrator in managing discovery. Where the agreement is silent, the arbitrator should establish discovery rules in conjunction with the parties
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In establishing discovery rules the parties may choose state or federal rules because of familiarity with them. Arbitrators should have some familiarity with both sets of rules and tell the parties whether they will be applied literally.
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The arbitrator and the parties must establish time limits for pre-hearing activities, which the arbitrator is authorized to enforce. The arbitrator should determine whether dispositive motions shall be permitted, with or without further leave of the arbitrator.
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When both parties are represented by counsel, arbitrators should encourage voluntary resolution of discovery issues. When claimants appear pro se, arbitrators should ensure that they understand the issues being discussed and the discovery obligations they must meet. Arbitrators should be careful, however, to avoid acting as advocates for pro se claimants, and should scrupulously maintain both the reality and the appearance of impartiality.
III. THE HEARING
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Certain issues that often arise at the hearing in a labor arbitration will have already been discussed and ruled upon by the arbitrator in the pre-hearing process.
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At the hearing, the arbitrator should seek a comfortable balance between the traditional informality and efficiency of arbitration and court-like diligence in respecting and safeguarding the substantive statutory, common law, and contractual rights of the parties.
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While parties of equivalent capacity often object to what they consider excessive arbitrator intervention in their case presentations, arbitrators must exercise special care to ensure fundamental fairness when there is a pro se claimant. A frank statement to this effect at the beginning of a hearing may be helpful. Although an arbitrator should not take over the pro se claimant’s case as would an advocate, the arbitrator may appropriately point out the basic procedures to be followed and the elements that must be proven to establish the claim. The arbitrator may also raise questions to clarify confusing testimony or argument.
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If not following the formal rules of evidence, arbitrators should be mindful of issues of privilege and confidentiality, and instances where the application of an informal evidentiary approach might prejudice an underlying substantive right under a statute, the common law, or a contract.
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Arbitrators should familiarize themselves with any legally established burdens of going forward and any legally established burdens of proof, including any shifting burdens of proof, that are applicable to the claim.
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During the hearing the arbitrator should remain alert to any ongoing disclosure obligations not anticipated and dealt with at the pre-hearing consultation.
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If the parties do not agree on having a transcript, the arbitrator may have to rule on what, if any, record of the proceedings will be required other than the arbitrator’s own opinion and award. In statutory cases, an appropriate record is necessary for a court to accord the arbitrator’s award full weight. But unless a case is unusually complicated or the evidence is highly controverted, a professional transcript could be unduly expensive and time-consuming. An audio recording or similar device controlled by the arbitrator may suffice.
IV. OPINION AND AWARD
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The arbitrator should provide a written opinion and award.
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The opinion should record the parties, the type of dispute, the issues to be decided, and the relief requested.
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The opinion should recite the facts and the reasoning for any conclusions contained in the opinion and award. The arbitrator should identify and deal with all statutory, common law, or contractual issues raised, being mindful of the standards of judicial review which may apply. It is appropriate for the arbitrator to cite and rely on material supplied at the hearing, as well as on information in the public domain, including the jurisprudence of agencies and courts. In resolving public law claims the arbitrator is obligated to apply applicable statutory and case law.
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Remedies should be consistent with the statutory, common law, or contractual rights being applied and with remedies a party would have received had the case been tried in court. These remedies may well exceed the traditional labor arbitration remedies of reinstatement and back pay and may include injunctive relief, compensatory and punitive damages, interest, and assignment of attorney's fees and costs.
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The award should be signed by the arbitrator or by a majority of a panel of arbitrators. It should specifically cite the disposition of each claim and the damages and relief provided, if any.
The following protocol is offered by the undersigned individuals, members of the Task Force on Alternative Dispute Resolution in Employment, as a means of providing due process in the resolution by mediation and binding arbitration of employment disputes involving statutory rights. The signatories were designated by their respective organizations, but the protocol reflects their personal views and should not be construed as representing the policy of the designating organizations.
Genesis
This Task Force was created by individuals from diverse organizations involved in labor and employment law to examine questions of due process arising out of the use of mediation and arbitration for resolving employment disputes. In this protocol we confine ourselves to statutory disputes.
The members of the Task Force felt that mediation and arbitration of statutory disputes conducted under proper due process safeguards should be encouraged in order to provide expeditious, accessible, inexpensive and fair private enforcement of statutory employment disputes for the 100,000,000 members of the workforce who might not otherwise have ready, effective access to administrative or judicial relief. They also hope that such a system will serve to reduce the delays which now arise out of the huge backlog of cases pending before administrative agencies and courts and that it will help forestall an even greater number of such cases.
A. Pre or Post Dispute Arbitration
The Task Force recognizes the dilemma inherent in the timing of an agreement to mediate and/or arbitrate statutory disputes. It did not achieve consensus on this difficult issue. The views in this spectrum are set forth randomly, as follows:
Employers should be able to create mediation and/or arbitration systems to resolve statutory claims, but any agreement to mediate and/or arbitrate disputes should be informed, voluntary, and not a condition of initial or continued employment.
Employers should have the right to insist on an agreement to mediate and/or arbitrate statutory disputes as a condition of initial or continued employment. Postponing such an agreement until a dispute actually arises, when there will likely exist a stronger re-disposition to litigate, will result in very few agreements to mediate and/or arbitrate, thus negating the likelihood of effectively utilizing alternative dispute resolution and overcoming the problems of administrative and judicial delays which now plague the system.
Employees should not be permitted to waive their right to judicial relief of statutory claims arising out of the employment relationship for any reason.
Employers should be able to create mediation and/or arbitration systems to resolve statutory claims, but the decision to mediate and/or arbitrate individual cases should not be made until after the dispute arises.
The Task Force takes no position on the timing of agreements to mediate and/or arbitrate statutory employment disputes, though it agrees that such agreements be knowingly made. The focus of this protocol is on standards of exemplary due process.
B. Right of Representation
1. Choice of Representative
Employees considering the use of or, in fact, utilizing mediation and/or arbitration procedures should have the right to be represented by a spokesperson of their own choosing. The mediation and arbitration procedure should so specify and should include reference to institutions which might offer assistance, such as bar associations, legal service associations, civil rights organizations, trade unions, etc.
2. Fees for Representation
The amount and method of payment for representation should be determined between the claimant and the representative. We recommend, however, a number of existing systems which provide employer reimbursement of at least a portion of the employee's attorney fees, especially for lower paid employees. The arbitrator should have the authority to provide for fee reimbursement, in whole or in part, as part of the remedy in accordance with applicable law or in the interests of justice.
3. Access to Information
One of the advantages of arbitration is that there is usually less time and money spent in pre-trial discovery. Adequate but limited pre-trial discovery is to be encouraged and employees should have access to all information reasonably relevant to mediation and/or arbitration of their claims. The employees' representative should also have reasonable pre-hearing and hearing access to all such information and documentation.
Necessary pre-hearing depositions consistent with the expedited nature of arbitration should be available. We also recommend that prior to selection of an arbitrator, each side should be provided with the names, addresses and phone numbers of the representatives of the parties in that arbitrator's six most recent cases to aid them in selection.
C. Mediator and Arbitrator Qualification
1. Roster Membership
Mediators and arbitrators selected for such cases should have skill in the conduct of hearings, knowledge of the statutory issues at stake in the dispute, and familiarity with the workplace and employment environment. The roster of available mediators and arbitrators should be established on a non-discriminatory basis, diverse by gender, ethnicity, background, experience, etc. to satisfy the parties that their interest and objectives will be respected and fully considered.
Our recommendation is for selection of impartial arbitrators and mediators. We recognize the right of employers and employees to jointly select as mediator and/or arbitrator one in whom both parties have requisite trust, even though not possessing the qualifications here recommended, as most promising to bring finality and to withstand judicial scrutiny. The existing cadre of labor and employment mediators and arbitrators, some lawyers, some not, although skilled in conducting hearings and familiar with the employment milieu is unlikely, without special training, to consistently possess knowledge of the statutory environment in which these disputes arise and of the characteristics of the non-union workplace.
There is a manifest need for mediators and arbitrators with expertise in statutory requirements in the employment field who may, without special training, lack experience in the employment area and in the conduct of arbitration hearings and mediation sessions. Reexamination of rostering eligibility by designating agencies, such as the American Arbitration Association, may permit the expedited inclusion in the pool of this most valuable source of expertise.
The roster of arbitrators and mediators should contain representatives with all such skills in order to meet the diverse needs of this caseload.
Regardless of their prior experience, mediators and arbitrators on the roster must be independent of bias toward either party. They should reject cases if they believe the procedure lacks requisite due process.
2. Training
The creation of a roster containing the foregoing qualifications dictates the development of a training program to educate existing and potential labor and employment mediators and arbitrators as to the statutes, including substantive, procedural and remedial issues to be confronted and to train experts in the statutes as to employer procedures governing the employment relationship as well as due process and fairness in the conduct and control of arbitration hearings and mediation sessions.
Training in the statutory issues should be provided by the government agencies, bar associations, academic institutions, etc., administered perhaps by the designating agency, such as the AAA, at various locations throughout the country. Such training should be updated periodically and be required of all mediators and arbitrators. Training in the conduct of mediation and arbitration could be provided by a mentoring program with experienced panelists.
Successful completion of such training would be reflected in the resume or panel cards of the arbitrators supplied to the parties for their selection process.
3. Panel Selection
Upon request of the parties, the designating agency should utilize a list procedure such as that of the AAA or select a panel composed of an odd number of mediators and arbitrators from its roster or pool. The panel cards for such individuals should be submitted to the parties for their perusal prior to alternate striking of the names on the list, resulting in the designation of the remaining mediator and/or arbitrator.
The selection process could empower the designating agency to appoint a mediator and/or arbitrator if the striking procedure is unacceptable or unsuccessful. As noted above, subject to the consent of the parties, the designating agency should provide the names of the parties and their representatives in recent cases decided by the listed arbitrators.
4. Conflicts of Interest
The mediator and arbitrator for a case has a duty to disclose any relationship which might reasonably constitute or be perceived as a conflict of interest. The designated mediator and/or arbitrator should be required to sign an oath provided by the designating agency, if any, affirming the absence of such present or preexisting ties.
5. Authority of the Arbitrator
The arbitrator should be bound by applicable agreements, statutes, regulations and rules of procedure of the designating agency, including the authority to determine the time and place of the hearing, permit reasonable discovery, issue subpoenas, decide arbitrability issues, preserve order and privacy in the hearings, rule on evidentiary matters, determine the close of the hearing and procedures for post-hearing submissions, and issue an award resolving the submitted dispute.
The arbitrator should be empowered to award whatever relief would be available in court under the law. The arbitrator should issue an opinion and award setting forth a summary of the issues, including the type(s) of dispute(s), the damages and/or other relief requested and awarded, a statement of any other issues resolved, and a statement regarding the disposition of any statutory claim(s).
6. Compensation of the Mediator and Arbitrator
Impartiality is best assured by the parties sharing the fees and expenses of the mediator and arbitrator. In cases where the economic condition of a party does not permit equal sharing, the parties should make mutually acceptable arrangements to achieve that goal if at all possible. In the absence of such agreement, the arbitrator should determine allocation of fees. The designating agency, by negotiating the parties share of costs and collecting such fees, might be able to reduce the bias potential of disparate contributions by forwarding payment to the mediator and/or arbitrator without disclosing the parties share therein.
D. Scope of Review
The arbitrator's award should be final and binding and the scope of review should be limited.
Dated: May 9, 1995
Christopher A. Barreca, Co-Chair
Partner
Paul, Hastings, Janofsky & Walker
Rep., Council of Labor & Employment Section, American Bar Association
Max Zimny, Co-Chair
General Counsel, International Ladies' Garment Workers' Union Association
Rep., Council of Labor & Employment Section, American Bar Association
Arnold Zack, Co-Chair
President , National Academy of Arbitrators
Carl E. VerBeek
Management Co-Chair Union Co-Chair
Partner, Varnum Riddering Schmidt & Howlett
Arbitration Committee of Labor & Employment Section, ABA
Robert D. Manning
Angoff, Goldman, Manning, Pyle, Wanger & Hiatt, P.C.
Union Co-Chair
Arbitration Committee of Labor & Employment Section, ABA
Charles F. Ipavec, Arbitrator
Neutral Co-Chair
Arbitration Committee of Labor & Employment Section, ABA
George H. Friedman
Senior Vice President
American Arbitration Association
Michael F. Hoellering
General Counsel
American Arbitration Association
W. Bruce Newman
Representative, Society of Professionals in Dispute Resolution
Wilma Liebman
Special Assistant to the Director
Federal Mediation & Conciliation Service
Joseph Garrison, President
National Employment Lawyers Association
Lewis Maltby
Director - Workplace Rights Projectl
American Civil Liberties Union |
