There are several alternative ways to resolve a dispute between employers and workers to avoid formal lawsuit, a process which usually takes long years, and are often expensive.
This is a process where both employers and workers agree that a third party will help them resolve a dispute. However, arbitration policy should be included in the employment agreement and that workers should explicitly consent to this.
Retired judges are traditionally chosen as arbitrators since they have an extensive experience in making legal decision. However, some companies prefer commercial firms to resolve employment dispute.
Meanwhile, employers and workers should both make a decision on who will be the arbitrator. If companies do not seek the consent of workers, the arbitration process is illegal.
Mediation through a Federal agency
The Equal Employment Opportunity Commission (EEOC) and other neutral parties can serve as mediators to resolve a dispute between employers and workers.
Usually, mediators focus on future improvements, not on the past. They also assist both parties to reach a mutual and voluntary resolution that will provide equal benefits.
Unlike arbitrators who ask for a service fee, the EEOCs National Mediation Program comes free of charge.
Unlike in arbitration and mediation processes, negotiation does not require a neutral third party to resolve the employment dispute. Involved parties are left to settle their differences and come up with a mutual and voluntary resolution.
In this process, involved parties can speak and make decisions for themselves. However, they can also hire lawyers who will negotiate on their behalf.
In negotiation, parties can focus on past, present, and future issues, unlike in mediation where the focus is only about future improvements of certain conditions.
To make this process legal, both parties should enter this voluntarily and without anyone forcing them to do so.
Offering Severance Pay to Workers
There is no federal or state law that requires employers to give severance pays to workers who are terminated, laidoff, or have resigned. However, if this compensation is included in the employment policy, employers are required to give this to workers. Failing to do so will make them liable for a lawsuit.
While severance pays are not mandated by law, many companies still provide these to their workers to avoid lawsuit. According to several studies conducted by occupational psychologists, employees who receive severance benefits are less likely to file lawsuits against their employers. (They think that their companies are generous enough and sincere to them.)
When establishing severance pay policy, companies should include in the employment agreement certain prerequisites such as: 1.) the number of years required to become eligible for this benefit, 2.) the cause of termination should not include misconduct, and 3.) other conditions.