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Department of Labor

Recommendations and Actions

DOL04: Expand the Use of Alternative Dispute Resolution by the Department of Labor

Background

The litigious nature of labor regulation places a significant burden on the Department of Labor's (DOL's) resources. With more than 24,000 litigation matters reaching the department's 530 attorneys each year, creative methods of dispute resolution are needed to assist the department in handling its cases.(1) One approach which the department should pursue is alternative dispute resolution (ADR).

ADR is any procedure in which the parties to a dispute bring in a neutral party to assist them in reaching agreement and avoiding litigation. In 1990, Congress sought to increase the use of ADR techniques by enacting the Administrative Dispute Resolution Act, which requires federal agencies to appoint a dispute resolution specialist to consider whether (and under what circumstances) ADR methods can assist the agency in serving the public more effectively.(2) The department has issued an ADR Interim Policy to accomplish this task.

As part of the interim policy to explore its possible application to enforcement programs, DOL pilot-tested ADR in its Philadelphia regional office. DOL chose a regional pilot "because it permitted testing ADR across a broad spectrum of DOL programs. . . . In addition, the pilot approach provided the opportunity to experiment with training and administrative issues."(3) The pilot focused on mediation rather than other techniques such as arbitration.

The regional office selected managers from various program offices to receive training in mediation. The managers performed mediation as a collateral duty, providing mediation services for cases arising in offices other than their own. For instance, a mediator from the Occupational Safety and Health Administration (OSHA) would mediate Wage and Hour Division cases, but not OSHA cases.

Most of the cases selected involved OSHA or Wage and Hour violations. This was partly a function of the selection criteria, which had been developed through a public comment process, and partly a result of the mix of cases handled by regional enforcement agencies at the time of the pilot.

Of 32 cases selected for possible mediation, 25 were mediated by the end of the pilot period, three were dropped prior to mediation, and four were still awaiting mediation. Of the 25 cases mediated, 19 resulted in settlement.(4)

DOL evaluated the pilot test by surveying both agency and outside participants, including the mediators. The results suggest that mediation has great potential for use in resolving DOL cases. In particular, the private sector participants indicated that use of in- house mediators was acceptable, although almost half indicated that they would be more comfortable with an outside mediator.(5) That preference was mitigated by the use of the Federal Mediation and Conciliation Service (FMCS) to train and provide mentors for the in- house mediators.(6)

The pilot project evaluation yielded a number of recommendations for expansion of the use of ADR. Although initially slow to follow up on these suggestions, the department recently reconvened the steering committee that oversaw the pilot test. ADR will be pursued in concert with DOL's reinvention effort.

In addition to the regional pilot, DOL has a clear opportunity to use ADR in other contexts. For example, the Employment and Training Administration (ETA) has implemented a pilot in the National Office to test the applicability of ADR in resolving disputes involving grants and contracts in the audit resolution/debt collection area. The Office of Administrative Law Judges (OALJ) has recently published procedures for the use of settlement judges to aid the resolution of its cases. DOL is also in the preliminary stages of looking at other areas, such as Equal Employment Opportunity (EEO), where ADR techniques might prove useful.

Action

DOL should expand the use of Alternative Dispute Resolution.

Additional regions should train and deploy mediators, and DOL should continue to pursue new applications. In doing so, DOL should test ADR in areas that were not included in the pilot project because either the cases are not handled at the regional level, or appropriate cases were not found in the Philadelphia region at the time of the pilot.

Implications

ADR involves some up-front investment in training and also can entail absorbing some costs for participants. Although ADR appears to be generally much less expensive and time consuming than litigation, the pilot project report notes some obstacles to assessing ADR's cost impact.(7) For example, the report notes that while the costs of using ADR can be calculated, the cost of not using it is much more difficult to ascertain.(8)

Increased use of in-house mediators also has implications for assessing the performance of DOL programs. During the pilot test, an opinion issued by the Administrative Conference of the United Sates (ACUS) affirmed that DOL would not be misappropriating funds by using personnel to mediate cases outside their assigned divisions. If these cross-program services are to be expanded, they will need to be taken into account when determining whether a particular agency is making effective use of its resources.

Fiscal Impact

Increased reliance on ADR can be expected to produce significant long-term savings as a result of reduced litigation. If a 5 percent reduction in litigation expenses resulted, the savings would be more than $2 million per year. Over the long run, the savings would more than offset the up-front costs of implementing the program nationwide.

Endnotes

1. Statistics derived from U.S. Department of Labor (DOL), Annual Report for Fiscal Year 1992 (Washington, D.C., 1992) pp. 115-137 and 218.

2. Public Law 101-552, codified as 5 U.S.C. 571-583.

3. U.S. Department of Labor, Alternative Dispute Resolution Steering Committee, Report to the Secretary of Labor on the Philadelphia ADR Pilot Project (October 14, 1992), p. 9.

4. Ibid., p. 35.

5. Ibid., p. 40.

6. Ibid., p. 54.

7. With few exceptions, little analysis of the cost implications of ADR has been performed by federal agencies. DOL recently initiated a more thorough review of the cost impact of its pilot project. The methods used may prove useful to other agencies in planning the use of ADR techniques.

8. DOL, Report to the Secretary of Labor on the Philadelphia ADR Pilot Project, p. 37.

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