“Can my former employer require me to resolve my claims against it by using their own ‘resolution program,’ instead of in court?”

Question: Hello, Alan, I am involved in a wrongful termination case with my ex-employer located in California.

I just found out they have a program called the “Resolve Program” which consists of four steps:  (1) first, an internal HR review of what happened; (2) second, if that doesn’t work, an internal appeal group to review what happened; (3) third, if that doesn’t work, an outside “mediation” which is a non-binding meeting with an independent person; and (4) fourth and finally, if that doesn’t work, an arbitration, which is a meeting with an independent person whose decision is final and binding.

This Resolve Program says that I must use this system to resolve all claims, even legal claims, and that I cannot file a lawsuit in a court. Supposedly, if I go to Court, the company’s attorneys can have the judge force me to go through the company’s Resolve Program.

I thought you can sue anyone you want, especially in a case like this. Is this legal?

     Rick
Los Angeles, California

Answer: Hello, Rick. It may surprise you, but (a) what you describe is entirely legal, and in fact, (b) what you describe is actually quite common, and becoming more common as time goes on. 

Your former employer’s Resolve Program is Legal, and Common. What your former employer calls its “Resolve Program” is an example of what is called “alternative dispute resolution.” It’s a system that your company has instituted to make sure that they stay out of court, away from a jury of your peers, and that their errors in the way they treat employees remain private. The four stages that your former employer’s “Resolve Program” includes, are actually quite common, too. In my experience, this is a growing trend.

Many years ago people and businesses started agreeing to resolve their differences using privately-hired arbitrators, bypassing the courts. The idea then – although it has changed dramatically since – was that such “private justice” programs were faster and cheaper. Over time, the courts have come to support these “private justice” mechanisms, as they reduce the number of cases in the courts. The number one requirement for a court to accept such “private justice” measures is that you previously agreed to limit your future conduct in this way. If you did not sign an agreement by which you agreed to use this “Resolve Program” instead of going to court, then you do not have to use it, but are free to go to court.

However, such an “alternative dispute resolution” program must afford basic fairness. Every state I know of – including California – will enforce such required resolution programs provided (a) you agreed to it in the past, and (b) it contains basic fairness in the way it is carried out. You should understand that the first three of the four steps in your employer’s Resolve Program are not final and binding on either the employer or the employee; just the final step – arbitration – is a final and binding procedure.

These are the elements of basic fairness that courts look for in deciding if a required arbitration procedure is sufficiently fair:  (1) a neutral arbitrator; (2) the right to conduct “discovery” (which means finding out facts before the hearing or trial); (3) a requirement that the arbitrator give some reasoning for his or her decision; (4) that both employer and employee are required to use the process; (5) the arbitrator being permitted to render any award that a court could render; and (6) the procedure will not cost the parties an exorbitant amount of money, more than would a court case.

I am not a fan of arbitration mechanisms for two basic reasons: first, I find arbitrators almost always favor large companies over individual employees, and second, it is now almost always more expensive to arbitrate than it is to go to court. If you would like to read my views on the subject, [click here].

Ask to see a copy of any agreement you signed requiring this “ADR.” So, step one: if you don’t recall signing an agreement that limits you to the Resolve Program instead of going to court, request a copy of the agreement you allegedly signed; if they can’t provide it to you, then they can’t provide it to a judge, and so you are free to go to court.

If you agreed to this Resolve Program, ask for a copy of its rules, procedures and deadlines. If you did sign such an agreement requiring all disputes to be resolved under the Resolve Program, ask to see all of the rules and procedures of the Resolve Program. Make sure you don’t miss any deadlines and that you use any required procedures and forms. 

Hope this is helpful. If it is, I would love to hear from you in a few weeks to hear (a) what you decided to do, (b) what you did, and (c) how you’ve done. We are beginning a new feature called “Walking Taller at Work” which shares with readers the experiences of those, like you, who write in. 

          Best, Al Sklover   

© 2010 Alan L. Sklover, All Rights Reserved.