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By: Patrick J. Lamparello and Noa M. Baddish Proskauer Rose LLP
This article explains the process of mediating employment disputes, describes the contexts in which it may arise, and articulates the advantages and disadvantages of this process. Mediation is a non-binding, informal, and confidential negotiation in which a neutral third party actively promotes a mutually acceptable settlement.
PARTIES OFTEN ATTEMPT TO RESOLVE EMPLOYMENT LAW disputes through mediation to reduce the uncertainty and expense inherent in litigation. The mediator facilitates negotiations between the two parties, while the parties retain complete control over the dispute and resolution. This article advises how best to prepare for a mediation and offers best practices on how to achieve a favorable settlement.
Mediations can be mandatory (or strongly encouraged) by a tribunal or arise at the parties’ own initiative. They also can occur at various junctures in the timeline of a claim.
Often, a court mandates or strongly encourages the parties to mediate their dispute. For example, in the U.S. District Court for the Southern District of New York, the Court’s rules mandate that all employment discrimination claims be automatically referred to mediation upon the filing of the answer.1 In addition, Fair Labor Standards Act (FLSA) cases assigned to certain judges in the Southern District of New York are automatically referred to mediation.2 Moreover, some employers may require mandatory mediation in their employment agreements with employees that require the parties to attempt to resolve the dispute before proceeding to arbitration.
Government agencies also may initiate mediation. The Equal Employment Opportunity Commission (EEOC) has a mediation process, known as conciliation, which occurs after it issues a probable cause finding on a charge. Conciliation with the EEOC is an informal, confidential, and voluntary process. Employers may consider settling with the EEOC early in the process instead of after the EEOC has filed a lawsuit. Also note that although the process of mediation with the EEOC is confidential, the ultimate settlement and/or its terms may not be.
In addition, in the wake of the #MeToo movement, many state and local governments have enacted legislation that either discourages or prohibits confidentiality of sexual harassment claims and/ or settlements unless certain conditions are met (e.g., it is the employee’s preference to maintain confidentiality). For example, New York law states that an agreement to resolve a claim of sexual harassment may not include a section mandating the confidentiality or nondisclosure of the underlying circumstances of the claim, unless the employee prefers confidentiality.3
Parties increasingly turn to mediation voluntarily to resolve employment disputes. Such voluntary mediations achieve their best results when the parties are reasonable and willing to cooperate and compromise. On many occasions, it may be helpful for the parties to exchange some limited discovery for purposes of the mediation. This can help manage each party’s expectations and set a realistic tone for the mediation. It also may be important, particularly in employment discrimination cases, that each party feel like they received the opportunity to tell their story and be heard. With respect to timing, perhaps the best opportunity for a successful mediation occurs early in a matter before the parties have developed an acrimonious relationship and incurred substantial expenses. Thus, employers should consider mediation upon receipt of a demand letter or complaint. That said, parties also frequently attempt mediation much later in a matter’s timeline or try mediation several times over the course of a matter. For example, a defendant-employer may be more open to mediation after losing summary judgment. A plaintiff-employee may want to discuss settlement after receiving notice for his or her deposition or after being deposed.
This section will help you make an informed decision about whether to embark on mediation of an employment dispute. In particular, it addresses the advantages and disadvantages of using mediation as a settlement tool.
Agreeing on Fee Payment
Parties should work out with each other whether one party will cover the cost of the mediation or whether and how the parties will share such costs. Both the American Arbitration Association and Judicial Arbitration & Mediation Services (JAMS) charge administrative fees, and the mediators associated with those organizations charge for their time. In some cases, the parties share the cost of mediation fees equally. However, many employers offer to pay most (or all) of the administrative fee and the mediator’s first day of fees as an incentive to the employee to participate in the mediation process. The parties should confirm their fee agreement in writing.
Selecting a Mediator
Generally, mediations have one mediator. The mediator must be impartial, devoid of decision-making power, and acceptable to both parties. In employment disputes, parties should select a mediator who has expertise on the relevant employment laws and judicial standards and a reputation as a fair and neutral professional who will work hard to find common ground between or among the parties.
A number of agencies offer mediation administration services and a source of trained mediators. For example, JAMS offers retired judges as mediators as well as lawyers who are trained in mediation. JAMS and other similar alternative dispute resolution firms offer a panel of mediators from which the parties may choose. The parties also may request a specific mediator with whom they are familiar from prior experience or reputation. There are also mediators who are not affiliated with agencies. The nature and quality of their services vary.
If you are unfamiliar with a suggested mediator, research the mediator’s background and experience with similar cases and issues by soliciting the views of knowledgeable attorneys.
Scheduling the Mediation
Mediations often take longer than anticipated. Thus, when scheduling a mediation, overestimate the amount of time you feel may be necessary to reach a resolution.
When selecting a mediation date, ensure that a company representative is available to attend the mediation. Either this individual should have settlement authority or a person with settlement authority should be readily available by phone. The presence (or lack thereof) of the company representative may send a message about the employer’s position or take on the plaintiff’s case. Employers should therefore consider the effect of the company representative’s attendance.
The mediator may request that the parties submit mediation statements or other written materials before the conference. Depending on the parties’ and the mediator’s preferences, the parties may either provide the mediation statements to the mediator only or may share them with the mediator and the other parties participating in the mediation. If mediation statements are shared with other parties, a party often may choose to submit additional information for the mediator’s eyes only. If you do not want the mediator to share your mediation statement with the opposing party, you should clearly label it “for the mediator’s eyes only.” You should also emphasize in your covering correspondence to the mediator that the mediator should not disclose it or its contents.
Mediation statements typically contain the material facts, a discussion of liability issues, damages calculations, the history of the dispute, any settlement negotiations, and a statement of expectations. You should draft the mediation statement with an eye toward educating the mediator about the procedural posture of the case and the strengths of your client’s case. If the mediation statement is not only for the mediator, you should of course also be judicious about not including information that you do not want your adversary to know or that may unnecessarily derail settlement discussions. Even if the mediation statement is only for the mediator, you should remain cautious about what you disclose.
Regardless of whether the mediator requests a mediation statement, you should prepare for the mediation by strategizing with your client and taking stock of the strengths and weaknesses of the case as well as the potential liabilities and damages. Additionally, you, your client, and, if applicable, the client’s insurance company, should determine what would constitute an acceptable settlement. You should also discuss whether your client would consider any non-monetary relief as part of the settlement (e.g., changing a policy or practice). Mediations often provide a good opportunity to work out creative solutions to disputes.
No set format exists for a mediation conference, and the mediator’s and/or the parties’ preferences generally guide its process.
The conference typically—although not always—begins with an informal joint session involving all principals to the dispute and their lawyers. The mediator describes general procedures, including ground rules for presentations by the parties and the confidentiality of proceedings. In many mediations, each party may then present its view of the dispute in the presence of the other side. Presentations to the other side do not occur in every mediation, and, again, this process generally is driven by the preferences of the mediator and the parties. Parties may be more likely to agree to have opening presentations when the plaintiff is not familiar with the mediation and litigation process and/or when the litigation is at an early stage when the parties are not familiar with each other’s positions and the employer’s attorney may have had limited or no contact with the plaintiff. There has been a trend towards having fewer opening presentations at mediations where the parties are sophisticated and/or where the litigation is at a late stage (e.g., after depositions are complete or before trial) and the parties are already intimately familiar with each other’s positions. In these mediations, the parties often go directly into caucus sessions with the mediator.
If presentations are made to the other side, you need to strategically decide how to handle your client’s presentation. For example, you will need to decide whether it would be better for you to present your client’s position or for the employer’s representative to present the employer’s position him- or herself. It could make a more impactful and positive impression on the mediator and the opposing party if your client makes this initial presentation him- or herself. On the other hand, if there is tremendous animosity between the parties, it might be more productive for you to make the initial presentation. You may decide that a show of strength of your client’s position will help obtain a favorable settlement. On the other hand, in more sensitive or volatile situations, a more conciliatory approach may lead to more fruitful negotiations.
After the mediator’s introductory remarks and the parties’ respective presentations (if they make opening presentations), the parties will typically go to separate rooms. The mediator then meets with each party separately in what are called caucuses. In the caucuses, which involve a sort of shuttle diplomacy, the mediator clarifies each party’s version of the facts, priorities, and positions, attempts to loosen rigid stances, elicits demands and offers, explores alternative solutions, and seeks possible tradeoffs. Although the mediator will have gathered facts about the dispute from the mediation statements and the preliminary presentations (if any), during caucuses the mediator also tries to understand each party’s perceptions, positions, and interests.
Unlike judges, mediators actively facilitate communication between the parties. They candidly discuss the strengths and weaknesses of each party’s position as well as possible means of resolution. During these caucuses, each party may share information with the mediator that the party specifies may not be shared with the other side. If you do not wish the mediator to share certain information, you should clearly state that limitation.
Each party is led to think through its views and demands in response to the other party’s arguments and the mediator’s reactions, which can serve as a surrogate for those of a judge, arbitrator, or jury. Ideally, the mediation will create an environment for the parties to assess realistically the alternatives of continuing the dispute or resolving it. This process helps the parties move toward tradeoffs and acceptable accommodations; in short, toward a workable resolution.
When the parties reach an agreement, the mediator may hold a final joint session to verify the terms of settlement. The mediator may make certain the settlement is agreeable to the parties and resolves all aspects of the dispute. The mediator may also assist the parties in reducing the terms to writing during that session or in subsequent communications. If the parties do not reach a settlement, the parties should consider whether they wish to try another day of mediation with the same mediator, switch to another mediator, or discontinue mediation altogether. If the parties choose to discontinue mediation altogether, the parties remain free to explore resolution of the matter on their own.
Patrick J. Lamparello, a partner in the Labor & Employment Law Department at Proskauer Rose, devotes his practice to representing employers in federal and state litigations, arbitrations, and administrative proceedings, as well as counseling clients in employment matters. Patrick represents clients on a wide variety of labor and employment matters, including employment discrimination, sexual harassment, retaliation, wrongful discharge, defamation, breach of contract, whistleblowing, and wage-and-hour issues. Noa M. Baddish is an associate in the Labor & Employment Law Department at Proskauer Rose. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour, and Whistleblower & Retaliation Practice Groups.
To find this article in Lexis Practice Advisor, follow this research path:
RESEARCH PATH: Labor & Employment > Discrimination, Harassment, and Retaliation > Claims and Investigations > Practice Notes
For more information on resolving FSLA claims, see
> SETTLEMENTS AND RESOLUTIONS OF FLSA CLAIMS AND POTENTIAL FLSA VIOLATIONS
RESEARCH PATH: Labor & Employment > Employment Contracts > Waivers and Releases > Practice Notes
For a checklist on mediating employment matters, see
> MEDIATING EMPLOYMENT DISPUTES CHECKLIST (INCLUDING SEXUAL HARASSMENT CLAIMS)
RESEARCH PATH: Labor & Employment > Discrimination, Harassment, and Retaliation > Claims and Investigations > Checklists
For an overview of the EEOC conciliation process, see
> CONCILIATING EEOC CHARGES
For a review of New York discrimination, harassment, and retaliation laws, see
> DISCRIMINATION, HARASSMENT, AND RETALIATION (NY)
RESEARCH PATH: Labor & Employment > Discrimination, Harassment, and Retaliation > EEO Laws and Protections > Practice Notes
1. See In re: Cases Assigned to Mediation by Automatic Renewal, No. 11 Misc. 003 (S.D.N.Y. 2015). 2. See In re: FLSA Pilot Program, Mediation Referral Order for Cases that Include Claims under the Fair Labor Standards Act 29 USC § 201 et seq. (S.D.N.Y. 2016). See also Mediation/ADR, (S.D.N.Y.). 3. N.Y. Gen. Oblig. Law § 5-336; N.Y. C.P.L.R § 5003-b. 4. 796 F.3d 199 (2d Cir. 2015). 5. See Gaughan v. Rubenstein, 261 F. Supp. 3d 390, 402 (S.D.N.Y. 2017).