The Open-Door Policy Is an Example of an Alternative Dispute Resolution

ADR at Darden Restaurants and Hooters of America More companies are turning to alternate dispute resolution (ADR) as an alterative to the judicial system for settling employee disputes. There are some clear advantages and disadvantages to ADR for both employers and employees. The best-designed ADR programs are those that are fair and impartial. A good ADR program should seek to find the best possible outcome for both parties while saving time and money and preserving relationships.

The least effective ADR programs tend to be unfair and perpetuate the imbalance and bargaining power discrepancy frequently found in employer-employee relationships.

In this paper, I will compare the ADR programs of Darden Restaurants and Hooters of America. My basis for comparison will be measured primarily on how well they address the advantages of ADR equally for the employer and the employee. It should be noted that Darden’s is considered to be a model program due to its comprehensiveness and fairness.

By contrast – perhaps unsurprisingly – it is disappointing to see that Hooters has constructed an ADR program that offers little justice to its employees.

Advantages of using ADR ADR can save vast amounts of time and money. While lawsuits can take years and thousands of dollars to settle, through ADR, conflicts can often be resolved in a matter of weeks or months at a greatly reduced cost. There are potential savings in court costs, attorney fees, and expert witness fees when a dispute is settled through mediation, arbitration, or a combination of both.

Potential disadvantages of ADR are the wasted time and increased cost that are incurred when a dispute goes through ADR but still ends up in court.

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At Darden, there are four ways to resolve workplace disputes – Open Door Policy, Peer Review, Mediation, and Arbitration. Each is designed to encourage settlement without litigation and each is promoted as an effective alternative to litigation that is fair to all parties. The first step toward resolving disputes at Darden is use of the open door policy.

If the employee is not satisfied with the first three steps of the ADR program mentioned above, the matter can move on to the final step: arbitration. The court has determined that the Darden program appears to meet the legal tests for ADR. It is important to note that Darden does not expect to reduce expenses via reduction in the payout of damages and compensation to employees with legitimate claims; rather, their expected cost savings lies in reducing court-related fees. In stark contrast, Hooters’ ADR program is a one-sided agenda designed to help the company win arbitration cases and save time and money.

The ADR program takes advantage of the company’s superior bargaining power: employees must sign the agreement to arbitrate disputes in order to be eligible for raises, transfers, and promotions. Employees are allowed only five days to review and decide if they will accept or reject the agreement. Hooters’ ADR agreement states that the company has the right to change the rules and procedures at any time – even while in the midst of an arbitration proceeding – without notice. In addition, the rules require employees to disclose their cases to the company, along with a list of witnesses and a record of facts known to each witness.

Hooters, meanwhile, is not required to reciprocate by disclosing the details of its defense. The United States Court of Appeals for the Fourth Circuit summed it up by stating that the Hooters rules are “so one-sided that their only purpose is to undermine the neutrality of the (arbitration) proceeding. ” The basis for a workable ADR program is that it should guarantee neutrality; a neutral party is hired or retained to hear and decide on cases. At Darden, the choice of a neutral party is governed by outside rules preventing abuse in the selection of a biased arbitrator or mediator.

The neutrals at the proceedings are experts belonging to the American Arbitration Association (AAA). AAA is a public-service, non-profit organization serving businesses and government. Meanwhile, Hooters’ mechanism for selecting a panel of three arbitrators is crafted to ensure a biased decision maker. The employee and the company each select an arbitrator. These two arbitrators in turn select the third arbitrator. The biggest problem with this process is that all of the arbitrators must be selected from a list created exclusively by the company.

Hooters can nominate its managers or select arbitrators who have a financial interest in the company to be placed on the list. Anyone deemed as being against the company can be taken off the list. ADR is a legitimate and potentially highly beneficial alternative to litigation, and its use can save employers and employees both time and money. ADR can decrease the adversarial dynamic between parties and offer greater flexibility in settlements. Further, it provides the potential to preserve business relationships. Darden Restaurants has a good ADR program that addresses these issues.