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October 31, 1994
Ms. Thomasina Rogers
Chair, Administrative Conference
of the
United States
2120 L Street, N.W., Suite 500
Washington, D.C. 20037
Dear Ms. Rogers:
This is in reply to your request for information about the Department of
Labor's implementation of the Administrative Dispute Resolution Act and the
Negotiated Rulemaking Act.
As you know, the Administrative Conference has been of great assistance
to the Department in helping us implement both ADR and negotiated rulemaking. I
am pleased to report that the Conference's contributions have helped us achieve
great strides in these areas.
In recent years, the Department of Labor has published regulations that
provide for alternative "settlement judge" proceedings for cases before our
Administrative Law Judges. A pilot test of mediation in grant and contract
disputes is underway in the Employment and Training Administration. The Office
of Civil Rights has started a pilot test of mediation in equal employment
opportunity complaints filed by the Department's employees. A negotiated
rulemaking process to establish an OSHA standard for steel construction is
underway.
In the labor standards enforcement area, with the Conference's
assistance, the Department conducted a pilot test of using our own program
managers to mediate cases in the Philadelphia Region. The results of this pilot
were so encouraging that the Congress has authorized funding in FY 1995 to
begin expansion of this process to the remaining regions.
Enclosed are responses to the questions raised in your correspondence
and separate reports on the Department's ADR experience in the areas in which
it has been tried. I am also enclosing copies of our report on the
Philadelphia ADR Pilot Project, a
cost benefit analysis of that pilot, and a copy of the Department's negotiated
rulemaking handbook. Any additional information can be obtained from Roland
Droitsch, Deputy Assistant Secretary for Policy, at 219-9058.
I hope that the Conference can continue to work with the Department as
we expand our use of Alternative Dispute Resolution.
Sincerely,
Robert B. Reich
Enclosures
ADR Questions from ACUS
(1) Efforts to Comply with the Act
Dispute Resolution Specialist - The Department of Labor has
designated the Assistant Secretary for Policy and Budget as the agency's
dispute resolution specialist. The Solicitor of Labor has lead responsibility
for implementation of the Negotiated Rulemaking Act.
Survey of Agency Disputes - In 1991, DOL conducted a survey of
all its component agencies to gather information about the types of disputes
that arise in their programs, the methods used to resolve them, and any
statutory, regulatory or procedural barriers that exist to the use of ADR. The
survey, and follow-up meetings with some of the respondents, proved very useful
in obtaining information on the enormous variety and complexity of disputes
arising in DOL. It also provided important background data on the many formal
and informal methods in place for resolving these disputes. A copy of the
survey form and a summary of its results are contained in the report on the
Philadelphia ADR Pilot test.
ADR Policy - In 1992, after a request for comments in 1991, DOL
published in the Federal Register an interim policy on the use of ADR and a
subsequent amendment to the policy that expands the potential use of mediation
in enforcement cases (copies are included in the report on the Philadelphia ADR
Pilot test).
Training - With the assistance of the Administrative Conference
of the United States (ACUS), the Federal Mediation and Conciliation Service
(FMCS), the Army Corps of Engineers, and the Department of Health and Human
Services, national office managers and attorneys received an overview of ADR
and its potential applications in the federal sector. With the assistance of
ACUS and FMCS, DOL managers and attorneys of the Philadelphia Region received
more specific training at a two-day conference at the start of that region's
ADR pilot test. FMCS provided classroom and mentoring training to DOL managers
who served as mediators in the Philadelphia Pilot. FMCS trained mine safety
personnel to serve as settlement officials of penalty cases for the
Department's Mine Safety and Health Administration. Additional training is
planned for regional expansion of the mediation program and for administrative
law judges who will serve as settlement judges.
(2) ADR Programs, Pilot Projects, and Demonstrations
In recent years, the Department has experimented with ADR in a number of
areas. Separate reports on each of these areas are attached. DOL has published
regulations that provide for alternative "settlement judge" proceedings before
the OALJ. A pilot test of mediation in grant and contract disputes is underway
in the Employment and Training Administration. The Office of Civil Rights
(OASAM) has started a pilot test of mediation in DOL employee equal employment
opportunity complaints. A negotiated rulemaking process to establish an OSHA
standard for steel construction is underway. In the enforcement area, the
Department conducted a regional pilot test of in-house mediation in the
Philadelphia Region, and plans are being developed for expanding this pilot
test to the remaining regions.
(3) Other Examples of ADR
DOL's interim ADR policy provides a process for the agency to agree to
ADR on a case-by-case basis outside the bounds of the regional tests of
mediation. For example, a request for a settlement judge process in Denver was
accommodated, prior to the issuance of the settlement judge rule and an
agreement was reached to use mediation in an enforcement case in California,
although that region has not yet instituted a pilot test of mediation. More
specifically, the Solicitor's Office has participated in various forms of ADR
on a case-by-case basis. A summary of a number of these cases is attached.
(4) Public Information
The Department has made significant efforts to inform the public of the
availability of ADR. In May of 1991, DOL invited public comments in the Federal
Register on areas of the Department's operations which might benefit from the
use of ADR or negotiated rulemaking. A number of press releases have been
issued on specific steps DOL has taken to implement ADR. Most importantly,
copies of the Department's report on the
Philadelphia ADR Pilot, an
accompanying cost analysis, and a negotiated rulemaking handbook have been
reprinted and widely distributed. DOL plans to conduct an extensive public
information program as a part of the ADR expansion effort to be implemented
over the next two years. (Copies of the request for comments and several press
releases are included in the report on the Philadelphia ADR pilot test).
(5) ADR Evaluation
The Philadelphia pilot test
included substantial analysis of the effectiveness of mediation in enforcement
cases. The report on the outcome of the pilot test summarizes the findings of
this analysis that mediation -- and specifically, the use of in-house mediators
-- is effective in at least some kinds of enforcement cases. Also, a separate
cost analysis confirmed that mediation reduced the time and resources required
to resolve the pilot test cases.
The ADR expansion plan will include provisions for a thorough analysis
of mediation in a wider spectrum of DOL programs than was possible in the
Philadelphia pilot test.
(6) Problems/Necessary Legislative Changes
The ADR Act has worked well in encouraging agency participation and
should be re-enacted in 1995. DOL has not encountered significant problems in
implementing ADR, other than those anticipated, such as resource and personnel
limitations, and those inherent in starting a program that affects an
organization of its size.
In-House Mediation
The vast majority of disputes to which DOL is a party cover allegations
of labor standards violations (principally OSHA, Wage-Hour,
OFCCP, ERISA, OLMS, and
MSHA). Historically, most cases are settled
without going to a court or ALJ --either by administrative settlement with the
program agency or through subsequent negotiations with the solicitor's office.
However, many of these cases take years to resolve (during which time the
violation may be continuing) and require resources (follow-up investigations,
discovery, depositions) that otherwise could be spent on cases that can only be
resolved by a court.
In 1992, the Philadelphia Region initiated a pilot test to determine
whether the use of in-house mediators, could speed up the resolution of these
cases.
The Administrative Conference of the United States (ACUS) and the
Federal Mediation and Conciliation Service (FMCS) agreed to participate in the
Philadelphia Pilot because of its novel approach and broad scope. ACUS, the
agency overseeing federal implementation of the ADR Act, organized an
introductory training seminar for about 100 of the region's managers and
attorneys. FMCS provided formal classroom and on-the-job training in mediation
to twelve experienced DOL managers who volunteered and were selected by the
region to serve as the mediators for the pilot.
To provide neutrality, the mediators handled only cases outside their
agency's responsibilities (e.g., a Wage-Hour manager would act as the mediator
in an OSHA case). The mediators did not serve in any way as arbitrators.
Instead, the mediators facilitated the discussions between the parties (agency
representative, RSOL attorney, employer, and employer's counsel) as they
attempted to reach a settlement.
The region was given very little guidance on what kinds of cases to
select, other than to exclude criminal cases. Intentionally, the region was
permitted wide latitude to select cases and was given formal reassurance that
their judgements on case selection, case settlements, and pilot evaluation
would not be questioned. In each case, the RSOL, the program agency and the
outside party had to agree to the use of mediation. All DOL and outside party
representatives at the mediation sessions had to agree to any settlements.
Of the 27 cases selected from the RSOL's inventory and actually mediated
in the pilot, 22 (81%) were settled, and most were resolved in a single
mediation session. The various DOL participants independently concluded that
the settlements were at least as good as the likely outcomes of litigation.
Some cases were very complex and would have cost DOL and the outside party
substantial resources and time to bring to trial. Because of the mix of
suitable cases available in the brief duration of the pilot, however, the cases
mediated could not represent the full range of DOL programs: One MSHA case was
mediated, and the remainder were evenly divided between OSHA and Wage-Hour.
Mediation Expansion Plan
The Philadelphia pilot showed that in-house mediators can speed up the
resolution of at least some types of enforcement case litigation. Based on this
experience, the Secretary made the decision to expand ADR nationwide, and some
start-up funding for this purpose is available in DOL's 1995 Appropriation.
Planning for the expansion is underway, however, it is likely that the
expansion will follow the Philadelphia pilot as a model with some
modifications.
Settlement Judge Process
On January 11, 1993, the Department of Labor published a notice of
proposed rulemaking in the Federal Register (58 FR 3822-3823) which set forth
proposed settlement judge procedures to be offered by the Office of
Administrative Law Judges (OALJ) in furtherance of the Administrative Dispute
Resolution Act of 1990; Executive Order No. 12778 (October 23, 1991); and the
Department's Alternative Dispute Resolution Interim Policy, 57 FR 7292 (1992).
After an appropriate notice and comment period, the final rule became effective
on August 16, 1993. (58 FR 38498-38501).
The rule is modeled on Recommendation 88-5 of the Administrative
Conference of the United States, 1 CFR 305.88-5. It is incorporated into the
Rules of Practice and Procedure for Administrative Hearings before the Office
of Administrative Law Judges, 29 C.F.R. §18.9. It allows use of settlement
judges for mediation in certain proceedings.
To preserve confidentiality, the settlement judge cannot be the judge
assigned to hear and decide the case. All discussions between the parties and
the settlement judge are confidential. No evidence about statements or conduct
in settlement judge proceedings is admissible in any Department of Labor
proceeding, unless the parties agree. Documents disclosed in settlement judge
proceedings cannot be used in litigation unless obtained through discovery or
subpoena. The settlement judge cannot be subpoenaed or called as a witness
regarding settlement proceedings in any hearing of the case or subsequent DOL
proceeding.
Since the rule went into effect, OALJ has assigned 8 cases to settlement
judges, including 3 OFCCP cases, a whistleblower case under ERA, and ERISA
penalties case, and a labor standards case. Two of the OFCCP cases are pending
old cases sent from the Office of Administrative Appeals to see if they could
be resolved without additional litigation. Our successes have included a labor
standards case in which Judge Mahoney was the settlement judge, and an OFCCP
employment discrimination case in which Judge Barnett was the settlement judge.
We plan to expand the program after training additional judges in
mediation techniques. A training program is planned for December 6-7, 1994. Our
instructor will be Linda Singer, a noted authority in the field of alternative
dispute resolution who has pioneered in the training of mediators for
court-annexed mediation programs. We will then include a description of the
program and notification of its availability in the Notice of Docketing sent to
all parties upon filing of cases with our office.
Employment and Training Grant and Contract Disputes
Based on the results of an internal survey of dispute-related activity,
the Employment and Training Administration (ETA) decided to pilot test ADR in
the audit resolution and debt collection areas. The pilot is being conducted in
ETA's National Office because Grant/Contract Officer authority is centralized
there and the National Office has the largest pool of cases. The Department of
Labor's (DOL) Office of the Solicitor (SOL), as well as the Office of the
Inspector General (OIG), was involved in the development of the plan for the
pilot and the pilot procedures provide for the review and approval of the OIG
and SOL of each case prior to referral for mediation.
The pilot began in 1992 and is still ongoing. In 1994, ETA expanded the
pilot to include contract disputes, i.e., disputes involving a contractor's
claim for an equitable adjustment.
As of October 15, 1994, nine cases have been referred for mediation.
Additional cases are currently under consideration. Of the nine cases referred,
two have settled successfully, one was withdrawn, and six are pending. The
prognosis for the cases still in mediation, according to the mediator, is
positive. In addition to these nine cases, ETA, through the Solicitor's Office,
has participated in the mediation of five cases under review by the United
States Court of Appeals. All five settled successfully. ETA also participated
in a Settlement Judge Procedure at the suggestion of the Office of
Administrative Law Judges. ADR was not successful in this case.
Under the pilot, ADR is provided at various stages in the
resolution/appeal process and deals with a variety of issues. The claims being
mediated vary in complexity and dollar value. One case involves two separate
claims for a total of $6 million. Cases have been mediated by both DOL staff,
who were trained as part of the Regional Pilot, and staff from the Federal
Mediation and Conciliation Service.
ETA has publicized its ADR program through internal as well as outside
meetings. At recent workshops on indirect costs, approximately a hundred
non-profit and Indian grantees and contractors were provided information on
ETA's ADR pilot. A two-page handout on mediation and the pilot was provided to
each participant.
ETA's pilot plan prescribes a strong evaluation component. All
participants in the mediation complete a survey form upon completion of the
mediation. On completion of the pilot, a comprehensive report will be prepared
in order to share the knowledge gained through this effort to test the
applicability of ADR in the resolution of disputes involving audit resolution,
debt collection and contractor claims.
Early Resolution of EEO Complaints
Within recent years, the Federal Government has been encouraged by
Congress to use alternative methods to resolve disputes. The Administrative
Dispute Resolution (ADR) Act of 1990 provided flexibility in the implementation
of this mandate. In September 1993, the following Accompanying Report of the
National Performance Review contained a recommendation geared to swift
resolution of employee complaints:
- HRM08 - Improve Processes and Procedures Established to Provide
Workplace Due Process for Employees
An action item in this report stated that by December 1994, each agency
head should make available to all worksites methods and options for resolving
disputes that are alternative to established procedures governing EEO
complaints, labor disputes, grievances and appeals.
ESTABLISHMENT OF PILOT PROGRAM:
To address this issue the six-month pilot effort, Early Resolution of
EEO Complaints (EREC), was implemented on April 1, 1994. Mediation was chosen
as the method to resolve disputes during the informal complaint process. This
method allowed a neutral third party to assist in reaching mutually
satisfactory resolutions of disputes. Employees elected the EREC process by a
signed agreement of voluntary participation during the informal complaint
stage.
INFORMAL COMPLAINT PROCESS - RESULTS OF SIX-MONTH PILOT PROGRAM:
From April 1 to September 30:
- Thirty-eight (38) employees were counseled either by Agency
Collateral Duty Counselors or DCR Counselors (includes one non-pursuit).
- Twenty-two (22) employees filed informal complaints.
- Eleven (11) of 22 employees did not elect the EREC process. These
employees were counseled by Agency EEO Counselors. No resolutions were reached
for those employees.
- Eleven (11) of 22 employees elected the EREC process. These employees
were counseled by full-time DCR counselors. Four (4) of the eleven (11) EREC
cases resulted in signed settlement agreements. Seven (7) of the (11) EREC
cases are pending resolution.
THREE EREC-MEDIATED CASES
Three (3) of the eleven cases reached the EREC mediation process. Two
(2) of the three (3) mediated cases resulted in signed settlement agreements.
One (1) of the three (3) mediated cases remains unsettled. Settlement of the
case is pending the employee's signature.
TWO EREC SETTLEMENTS WITHOUT MEDIATION
Two (2) cases were settled without the DCR-arranged EREC mediation
process. One through the efforts of an assigned mediator; the second through a
full-time DCR counselor. The mediator and counselor reviewed the facts
contained in the summary report submitted by the EEO Counselor and met with
employees and settlement officials, outside of the EREC mediation process, to
resolve the issues.
SIX EREC CASES PENDING
- Four cases were either being prepared for the mediation process, or
possible resolution between employees and agencies.
- One (1) case did not contain issues that warranted the EREC mediation
process. It is anticipated the employee will elect the formal complaint route.
- One (1) case had not been assigned to a DCR counselor at the
applicant's request.
SYNOPSIS OF PRELIMINARY FINDINGS:
Feedback from individuals involved in the process indicated the pilot
program was a successful venture. The three DOL mediators were satisfied with
assistance received from DCR staff throughout the mediation sessions. In
addition, they believed that this process will continue to work in the EEO
arena.
One employee, who received a settlement during an EREC mediation, stated
he did not know what to expect, but found the process to be very good. He
further stated that the mediator performed in an outstanding manner; and that
the process might not work for every case--but worked in his case.
FUTURE ACTIONS:
In order to capture additional data, and fully document, analyze and
review the variety of resolutions reached during the mediation process, this
pilot effort will be extended through March 31, 1995. A status report on the
pilot EREC effort will soon be transmitted to DOL Agency Heads.
Case-by-Case Use of ADR
A recent survey of the Department's Office of the Solicitor disclosed
that the Office's Civil Rights Division and Boston region have engaged in a
number of ADR efforts.
The Civil Rights Division has been involved in the use of ADR in three
cases under Executive 11246. In the first case, a pattern or practice sex
discrimination case, the Secretary of Labor issued an Order addressing several
procedural issues in the case and invited the parties to engage in mediated
settlement discussions. A mediator was provided by the Department of Health and
Human Services Departmental Appeals Board. These efforts were unsuccessful.
Subsequently, the Secretary issued a substantive Order, after which the parties
reached a settlement agreement.
The second case, a class-wide discrimination case, is currently
utilizing a Settlement Judge appointed by the Office of Administrative Law
Judges, pursuant to a Secretary's Order.
The third case involving the Civil Rights Division is also a class-wide
discrimination case. In this case the company requested the appointment of a
Settlement Judge by the Office of Administrative Law Judges, and the Department
concurred. After a meeting and several conference calls the parties reached a
basic agreement in principal. However, despite two time extensions, no formal
agreement was finalized and the case was referred back for the litigation to
continue. Shortly thereafter, the partes finalized and filed there formal
Consent Decree to resolve the case.
The Boston Regional Office has engaged in several ADR efforts in a
number of enforcement areas. Prior to passage of the ADR Act, in 1988 this
office engaged in the global mediated resolution of all litigation arising from
a building collapse in Bridgeport, Connecticut. As part of the global effort,
five OSHA cases involving the collapse were mediated. The mediation was
conducted by Senior U.S. District Judge Robert Zampano (D. Conn.) and
Connecticut Superior Court Judge Frank Meadows. Due particularly to Judge
Zampano's remarkable effort, the global settlement of all cases (including
payment of over $400,000 in OSHA fines) was effectuated.
The Boston Regional Office has also resolved two complicated Employee
Retirement Income Security Act (ERISA) cases through the use of ADR. One case
involved fiduciary violations by former trustees of a union local and knowing
participation in the breaches by lawyers and other parties. The case was
referred for attempted mediated resolution to Senior U.S. District Judge Robert
Zampano (D. Conn.). Judge Zampano enlisted the assistance of two other
mediation panel members, a respected real estate attorney, and a professor in
the law of trusts. The panel held a non-binding three-day "mini-trial." At the
conclusion, in response to a request from Judge Zampano, the Department advised
that in its view the defendants should pay $1.8 million. The judge then met
with the defendants who thereafter agreed, in various proportions, to pay that
amount. In 1989, the agreement was reduced to a Consent Judgement which was
filed with, and signed by, the U.S. District Judge assigned to the case.
In the second ERISA case, a multi-party case filed in Connecticut in
1991, the Department was ordered to report for a conference before a
parajudicial officer as part of a pilot project to target cases for early
resolution. The parajudicial officer conducted joint sessions to ascertain the
facts and then private sessions with each party. After two sessions the case
settled. The mediation was especially helpful in this case because the
defendants were also involved in numerous state law cross-claims which had made
the allocation of payments particularly complex.
Finally, the Boston regional office has participated in ADR in three
Fair Labor Standards Act (FLSA) cases. The first case involved the use of an
experimental "Summary Jury" process in the District Court of New Hampshire.
This was a non-binding, pre-trial procedure in which lawyers from both sides
addressed the jury as to their views of the case. After the jury returned
special verdicts in favor of the Department, the case quickly settled.
The second case involved a settlement conference before a U.S.
Magistrate Judge subsequent to the filing of a final pre-trial memoranda. The
Magistrate met separately with both sides and then strongly recommended back
wage payments close to the Department's settlement offer.
The third case involved violations of both the FLSA and Davis-Bacon and
Related Acts (DBRA). The ADR effort was an obligatory status conference with a
Parajudicial Officer. Prior to the conference, both sides were required to
submit confidential memoranda setting forth their positions and factual basis
of the claims made, the range of recovery, prospects of success, demands/offers
made, discovery time frame and motions contemplated. Parties were required to
be represented by someone fully authorized to decide all matters pertaining to
the case. Although only the FLSA violations were before the Court (DBRA
violations are heard administratively), the issues were so related that the
parties were able to come to an agreement which encompassed both cases at this
conference. Interestingly, there was pressure on both parties due to the fact
that the case was Docketed to go to trial at any time with 24 hour notice. The
resolution of this case saved the Department enormous resources since it saved
both a trial and an administrative hearing.
Negotiated Rulemaking
- To date the Department has previously attempted two negotiated
rulemakings and is currently conducting a third. All three that have been
attempted so far have all dealt with OSHA standards.
- The first attempt, which took place in 1983-84 and did not result in
a draft final rule, concerned a proposed standard for worker exposure to
benzene. While the negotiations reached an impasse and a rule was not drafted,
the agency was able to use the experience to narrow the issues and a final rule
was promulgated through traditional APA processes in 1987.
- The second attempt at negotiated rulemaking concerned a standard for
worker exposure to an animal carcinogen called MDA (Methylenedianiline) which
is used in the manufacture of plastics. The committee was convened in July 1986
and submitted a set of recommendations which were published by the agency in
July 1987. A proposed rule based on those recommendations was published in May
1989 and the final rule was published on August 10, 1992. This rule is one of
the few OSHA rules not to be seriously challenged in the courts, and, in fact,
the industry began voluntarily complying with the standard years before the
final rule was published.
- In December of 1992, OSHA announced in the Federal Register its
intention to undertake negotiated rulemaking to consider revising safety
requirements for workers engaged in the erection of structures made of steel
and possibly other materials. At this time, a negotiated rulemaking committee
has been formed and is meeting to discuss a proposed rule.
The Department's Negotiated Rulemaking Policy
- In December 1992, the Department published a policy on the use of
negotiated rulemaking by the Department and a Handbook for use by Department
personnel to determine if a potential regulation is appropriate for negotiated
rulemaking and how to go about conducting one. The handbook has been made
available to the public. Several hundred copies have been distributed.
- The Department's policy states that negotiated rulemaking shall be
actively considered for use by all of the Department's agencies. While no other
agencies have to date formally started a negotiated rulemaking, several are
considering it in connection with rules currently being considered.
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