Summary

The number of discrimination lawsuits filed in federal courts has increased dramatically in recent years. Employers have become more and more concerned about the costs involved in resolving these complaints--in time, money, and good employees relationships. Some employers have turned to internal alternative dispute resolution approaches, including arbitration, which requires submitting disputes to a neutral third person for resolution. Some require their employees to agree to mandatory, binding arbitration of discrimination complaints as a condition of their employment, forcing employees to waive the right to sue. GAO estimates, on the basis of a survey of 2,000 businesses, that almost all employers with 100 or more employees use one of more alternative dispute resolution approaches. Arbitration is one of the least common approaches reported. Some employers using arbitration make it mandatory for all workers. Employer policies on arbitrating discrimination complaints vary considerably. However, some of these policies, such as those for employees obtaining information and empowering the arbitrator to use remedies equal to those under law, would not meet standards of fairness proposed recently a Commission established by the Secretary of Labor and the Secretary of Commerce.

GAO found that: (1) in fiscal year 1994, the Equal Employment Opportunity Commission (EEOC) received over 90,000 discrimination complaints from employees; (2) ADR approaches include negotiation, fact finding, peer review, internal mediation, external mediation, and arbitration; (3) almost all employers with more than 100 employees use one or more ADR approaches to resolve discrimination complaints; (4) some employers' arbitration policies do not meet the fairness standards proposed by the Commission on the Future of Worker-Management Relations; (5) almost 40 percent of private-sector employers use a trained mediator from within the company to help resolve disputes, and only 10 percent of these employers use arbitration; (6) firms that have some workers covered by collective bargaining agreements are more likely to use arbitration; and (7) arbitration is usually the final step in a grievance policy, which includes other ADR approaches.