Employment Disputes: Litigation, Arbitration and Mediation
An employment lawsuit can be a major expense. Legal fees add up quickly, and you and your staff may spend a significant amount of time collecting documents, responding to discovery requests and attending depositions. It can be a couple of years before the case is ready for trial.
But a lawsuit isn’t the only way to resolve a dispute. Many employment disputes can be handled more efficiently through mediation or arbitration.
How Litigation Works
Litigation begins when your employee or former employee files a lawsuit. As the defendant, you must answer the lawsuit and raise any affirmative defenses you intend to use. Before answering, you may file preliminary motions such as a motion to dismiss or a motion to send the case to arbitration.
After you have filed your answer, the parties begin discovery. Discovery is a formal process in which each party requests and receives information about the claims made in the lawsuit. Discovery might include written requests for documents, written questions that must be answered (interrogatories), oral testimony under oath (depositions), and written requests to admit that certain statements are true. Not surprisingly, the parties often object to one another’s discovery requests, and there may be lengthy negotiations or motions relating to discovery.
The parties may file additional motions, including motions for summary judgment that ask the court to decide the case based on written evidence without a trial, and pretrial motions to exclude certain evidence. Either party can request a jury trial, or a judge can decide the case. If the losing party does not like the result, that party has a right to appeal the decision to a higher court.
Discovery, pretrial motions, trial preparation and trial can be time consuming and expensive. It can take months, or even years, to resolve a matter in litigation. Although many lawsuits settle, settlement often does not occur until after the parties have spent a substantial amount of time and money building a case.
In arbitration, the parties agree to have their disputes decided by a neutral arbitrator instead of by a judge or jury in a courtroom. Arbitration can only happen if the parties have agreed to it. Employees might agree to arbitrate any future disputes when they sign employment documents, or you might mutually agree to arbitration after a dispute has arisen.
Your arbitration agreement will probably specify that your arbitration will be conducted according to a specific set of arbitration rules, such as the American Arbitration Association rules. Arbitration rules typically allow for only limited discovery and motions.
The arbitrator will listen to witness testimony and consider other evidence, just as a judge would. But arbitration is less formal than a court trial: many arbitrations take place at conference tables, and the rules of evidence may be relaxed. The arbitration may be conducted by a single arbitrator or by a panel of arbitrators. Most arbitrations are binding, meaning that the arbitrator’s decision is final and the parties cannot then litigate the matter in court.
Arbitration has advantages and disadvantages, depending on your situation. Commonly cited drawbacks to arbitration include:
- You give up your right to a trial by jury.
- You typically have more limited discovery rights.
- You cannot appeal the arbitrator’s decision if you are unhappy with it.
- Some people view arbitrators as more likely to make a decision that is somewhat fair to both parties rather than handing one side a big victory.
However, arbitration can also have numerous advantages:
- Because of its limitations on discovery and pretrial motions, arbitration is usually cheaper than litigation.
- Rather than being randomly assigned a judge, you can choose your arbitrator. Your arbitration agreement or arbitration rules will specify a procedure in which the parties jointly choose an arbitrator or arbitrators. You may be able to select an arbitrator who has knowledge of and experience with the employment laws involved in your lawsuit.
- Arbitration may allow you to resolve the matter more quickly than litigation.
- Arbitrations are private, so there is no public court record of the dispute.
While litigation and arbitration involve a judge or arbitrator who will decide the case for you, mediation helps the parties resolve the case among themselves. In mediation, the parties meet with a neutral mediator - either with or without their attorneys - and attempt to reach a settlement. The mediator may meet with the parties individually or together. A mediator will evaluate each party’s position and suggest ways they might compromise. Mediators may be chosen by the parties or appointed by the court.
Local court rules may require the parties to mediate before a lawsuit goes to trial. Your employment agreements or policies may require mediation before a lawsuit or arbitration is filed. And the parties may agree to mediate at any point in the dispute, regardless of whether a lawsuit is pending.
You aren’t required to reach a settlement when you mediate. If you are unable to reach an agreement, you can schedule an additional mediation session, or you can proceed with litigation or arbitration. If you do reach agreement, that agreement will typically be memorialized in a written settlement agreement.
Mediation can be a good choice if your goal is to settle the case. It can allow you to resolve the dispute more quickly and efficiently than either litigation or arbitration. Even an unsuccessful mediation can give you valuable insights into your employee’s case if the matter proceeds to litigation or arbitration.