Expanded Use of Alternative Dispute Resolution in Programs Administered by the Department of Labor

SUMMARY: This notice amends the Department of Labor's interim policy on

the use of alternative dispute resolution (ADR), originally published

on February 28, 1992 (57 FR 7292), and revised on June 26, 1992 (57 FR

28701). The Department of Labor (DOL) is interested in expanding the

voluntary use of ADR in programs administered by the Department.

Accordingly, the Department seeks public comment on a proposed pilot

test of voluntary mediation and/or arbitration in six categories of

cases: Discrimination cases arising under Section 11(c) of the

Occupational Safety and Health Act; environmental ``whistleblower''

cases arising under the employee-protection provisions of the Clean Air

Act, the Comprehensive Environmental Response, Compensation, and

Liability Act (CERCLA), the Energy Reorganization Act, the Federal

Water Pollution Control Act, the Safe Drinking Water Act, the Resource

Conservation and Recovery Act, and the Toxic Substances Control Act;

cases arising under the Family and Medical Leave Act; cases arising

under the Fair Labor Standards Act; compliance review cases arising

under Executive Order 11246; and complaint investigation cases under

the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (38

U.S.C. 4212).

DATES: Comments are due by April 14, 1997.

ADDRESSES: Submit written comments to Roland G. Droitsch, Deputy

Assistant Secretary for Policy, U.S. Department of Labor, Room S-2312,

200 Constitution Avenue, N.W., Washington, DC 20210.

The Department is using this notice to experiment with the

electronic filing of comments. Submit comments in electronic format

through the World Wide Web of the Internet at the following Website:

http://www.dol.gov/dol/public/regs/comments/main.htm.

Commenters who file electronically do not need to confirm their

comments by submitting written confirmation copies. Interested parties

will also be able to review comments filed (whether submitted in

written or electronic format) at the same Website.

Questions about or problems with filing electronically should be

submitted to: [email protected].

All of the comments received can be viewed at the Office of the

Assistant Secretary for Policy, U.S. Department of Labor, Room S-2312,

200 Constitution Avenue, N.W., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Jim Jones, Office of the Assistant

Secretary for Policy, U.S. Department of Labor, Room S-2312, 200

Constitution Avenue, N.W., Washington, DC 20210. Telephone (202) 219-

6026. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: After discussing the legal authority for the

Department's use of ADR, this Notice describes: a prior pilot test of

ADR (the Philadelphia ADR Pilot), the use of ADR by public agencies,

the DOL programs involved in the current pilot test, and the details of

the test. The Department is interested in receiving comments on ADR and

the pilot test generally, as well as on a number of specific issues

identified in the Notice. For example, the Department invites comments

on the use of mediation and arbitration in the pilot test, as well as

on the relationship between these two ADR techniques, including the

issue of whether arbitration (in addition to mediation) should be

offered as an option in all categories of cases included in the pilot

test.

Legal Authority

On February 28, 1992, under the original Administrative Dispute

Resolution Act, Public Law 101-552, which expired on September 30,

1995, the Department published in the Federal Register (57 FR 7292) an

interim policy on the use of ADR in the programs administered by DOL.

On October 19, 1996, President Clinton signed the Administrative

Dispute Resolution Act of 1996 (ADR Act), Public Law 104-320, which

reauthorized alternative means of dispute resolution in the Federal

administrative process.

As did its predecessor statute (codified at 5 USC 575-580), the ADR

Act of 1996 authorizes and encourages federal agencies to use

arbitration, mediation, negotiated rulemaking, and other consensual

methods of dispute resolution. With respect to arbitration, the ADR

Act, in conjunction with the Federal Arbitration Act (9 USC 1-16):

Provides for federal judicial enforcement of arbitration agreements;

provides for judicial review and enforcement of arbitration awards;

specifies the authority of the arbitrator; and establishes rules for

arbitration proceedings, as well as rules governing the effect of

arbitration awards.

The pilot test includes, among other methods of ADR, voluntary

arbitration to which the Department would be a party. The Department

believes that the arbitration procedure described in this Notice would

be consistent with the Constitution, as currently interpreted by the

Department of Justice.1 In compliance with Section 8 of the ADR

Act of 1996, before participating in binding arbitration, the

Department will consult with the Attorney General and will issue

guidance on the appropriate use of arbitration and when Department

staff are authorized to use arbitration.

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\1\ The most recent views of the Department of Justice are

reflected in a September 7, 1995 memorandum from Walter Dellinger,

Assistant Attorney General, Office of Legal Counsel, to John

Schmidt, Associate Attorney General (``Constitutional Limitations on

Federal Government Participation in Binding Arbitration'').

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The Department also believes that the pilot test would advance the

goals of Executive Order 12988 on Civil Justice Reform, issued by the

President on February 5, 1996 (61 FR 4729). Section 1(c) of the

Executive Order encourages the use of ADR techniques and processes by

litigation counsel for federal agencies, if the ``use of a particular

technique is warranted in the context of a particular claim or claims,

and * * * such use will materially contribute to the prompt, fair,

and efficient resolution of the claims.''

The Philadelphia ADR Pilot

The Department issued its 1992 interim ADR policy in conjunction

with the start of a pilot test in the Philadelphia Region in which DOL

managers served as mediators for enforcement cases that were awaiting

litigation. The results of the Philadelphia ADR Pilot were encouraging.

Of the 27 cases mediated in the pilot, 22 (81 per cent) were settled,

and most were resolved in a single mediation session. The DOL

participants independently concluded that the settlements were at least

comparable to the likely outcome of litigation. Some of the cases were

[[Page 6691]]

complex and would have cost the Department and the outside parties

substantial time and resources to litigate.

Public Agency Use of ADR

In 1993, a National Performance Review report strongly endorsed ADR

as a means of reducing governments costs and improving efficiency.

Today, the use of ADR by public agencies is growing.

In the federal government, for example, the Equal Employment

Opportunity Commission (with the assistance of the Federal Mediation

and Conciliation Service) and the National Labor Relations Board are

exploring various ADR techniques for employment-related disputes

brought before those agencies. The Department of Justice (DOJ), in

turn, has begun a program to facilitate mediation in civil litigation

handled by DOJ. A pilot test of mediation to resolve complaints under

the Americans with Disabilities Act is also underway at DOJ.

The States have begun to expand their use of alternative dispute

resolution as well. On February 16, 1996, for example, the

Massachusetts Commission against Discrimination (MCAD) launched an ADR

program that will offer voluntary arbitration of employment

discrimination disputes. The MCAD program will operate under a new due-

process protocol to assure that the arbitration process is fair.

The December 1994 Report and Recommendations of the Commission on

the Future of Worker-Management Relations (the Dunlop Commission) urged

the Department to expand the Philadelphia ADR Pilot to the remaining

DOL regions and to enlarge the mix of cases submitted to mediation. The

Dunlop Commission also advised DOL to ``explore the use of different

forms of ADR, including mini trials, early neutral evaluation, and

arbitration to determine which processes are most effective for

different kinds of cases.''

Proposed Pilot Test

In light of the enactment of the ADR Act of 1996, the

recommendations of the National Performance Review and the Dunlop

Commission, as well as the ADR initiatives of federal and state

agencies, the Department is interested in building on its past use of

mediation and in exploring the possible benefits of arbitration, under

appropriate circumstances. After inviting and considering public

comments, the Department therefore plans to proceed with a pilot test

to help determine whether private, voluntary mediation and/or

arbitration can achieve the goals of (1) resolving disputes faster and

more cheaply than conventional litigation; (2) producing resolutions

that satisfy the parties and DOL; and (3) using the enforcement and

litigation resources of DOL more effectively. (The Department will

continue to consider, on a case-by-case basis, other opportunities to

participate in ADR, either when DOL is asked to do so by an outside

party or by a court or other adjudicative authority, or when a DOL

agency otherwise believes that ADR would be effective in resolving a

particular dispute.)

Under the proposed pilot test, the Department will continue to

fully investigate employees' complaints of violations of the laws

covered by this pilot test, as warranted. In selected cases, as

described below, employees and employers will be offered the option to

mediate and/or arbitrate disputes under the Department's auspices. In

these cases, the Solicitor's Office may provide legal representation to

employees. In other types of cases, as indicated, the Department would

offer an employer/contractor the option of mediation or arbitration,

and the Department itself would be a party to the proceeding. The pilot

test will not include disputes in which private parties entered into an

arbitration or mediation agreement prior to the dispute.

The Department recognizes that Federal agencies acquired little if

any experience with arbitration during the five-year life of the

original ADR Act (1990-1995) and thus intends to proceed carefully in

this area. For example, the Department is committed to following proper

due process safeguards in any use of ADR techniques. In proposing the

pilot test described in this Notice, the Department reviewed the ``Due

Process Protocol for Mediation and Arbitration of Statutory Disputes

Arising out of the Employment Relationship'' issued by the Task Force

on Alternative Dispute Resolution in Employment. (The Task Force, an

outgrowth of the Dunlop Commission, included representatives of diverse

organizations involved in labor and employment law.) In addition to

developing fair ADR procedures, the Department would also make

arbitrators' decisions available to the public.

The Department's proposed pilot test will be limited to six types

of cases, described below. These programs were selected because they

seem to present promising opportunities for effective use of voluntary

ADR. The results of the proposed pilot test will guide DOL in future

ADR initiatives, including the possible expansion of voluntary

mediation and/or arbitration to other types of cases. The Department

invites comment on its selection of programs for the proposed pilot

test and on possible alternatives or additions to the programs

selected.

The six types of cases that would be included in the Department's

pilot test are: (1) Discrimination cases under Section 11(c) of the

Occupational Safety and Health Act (OSH Act), 29 U.S.C. 660(c); (2)

environmental whistleblower cases under the employee-protection

provisions of seven separate environmental safety and health statutes;

2 (3) cases under the Family and Medical Leave Act of 1993 (FMLA),

29 U.S.C. 2601 et seq.; (4) cases under the Fair Labor Standards Act of

1938 (FLSA), 29 U.S.C. 201 et seq.; (5) compliance review cases under

Executive Order 11246; and (6) complaint investigation cases under the

Vietnam Era Veterans' Readjustment Assistance Act, 38 U.S.C. 4212.

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\2\ The statutes are: the Clean Air Act, 42 U.S.C. 7622; the

Comprehensive Environmental Response, Compensation, and Liability

Act (CERCLA), 42 U.S.C. 9610; the Energy Reorganization Act, 42

U.S.C. 5821; the Federal Water Pollution Control Act, 33 U.S.C.

1367; the Safe Drinking Water Act, 42 U.S.C. 300j-9(I); the Resource

Conservation and Recovery Act, 42 USC 6971; and the Toxic Substances

Control Act, 15 U.S.C. 2622.

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OSH Act Discrimination Cases: Section 11(c) of the OSH Act

prohibits employers from discharging or discriminating against

employees for engaging in protected, safety-related activity under the

Act. Discrimination cases under Section 11(c) are initiated by an

employee filing a complaint with the Occupational Safety and Health

Administration (OSHA). OSHA investigates such complaints. Meritorious

complaints which OSHA cannot settle administratively are referred to

the Solicitor's Office for legal action. The OSH Act authorizes the

Secretary of Labor to file suit in federal district court to enforce

Section 11(c). The statute does not create a private right of action

for employees. (The Department's regulations interpreting OSH Act

Section 11(c) appear at 29 CFR Part 1977.)

In recent years, OSHA has been receiving approximately 3,200-3,300

complaints under Section 11(c) annually. The great majority of these

complaints are either determined to be meritless or are settled

administratively. On average, about 120 cases per year are referred to

the Solicitor's Office, which in turn files about 20 cases per year in

federal district court. Because of heavy caseloads in the courts, these

cases can be subject to significant delays.

[[Page 6692]]

Environmental Whistleblower Cases: The Secretary of Labor is

responsible for administering the employee-protection provisions of

several environmental safety and health statutes (identified above).

(The Environmental Protection Agency, the Nuclear Regulatory

Commission, or the Department of Energy otherwise administer and

enforce these laws.) These laws protect employees against discharge or

discrimination for certain conduct, such as testifying in a statutory

enforcement proceeding.

Environmental whistleblower cases are handled in an administrative

process which results in a determination by the Department's

Administrative Review Board (ARB). Employees who believe that they have

been discriminated against may file complaints with the Occupational

Safety and Health Administration. (Under Secretary's Order 6-96, issued

on December 27, 1996, responsibility for handling these cases was

transferred to OSHA, from the Wage and Hour Division of the Employment

Standards Division.)

Under DOL regulations (29 CFR Part 24), within 30 days, the

Department must complete an investigation, determine whether the

alleged violation occurred, and notify the parties. That determination

becomes final unless the employee or the employer seeks a hearing

before the Department's Office of Administrative Law Judges. After the

hearing, the administrative law judge (ALJ) will issue a recommended

decision, which is forwarded to the ARB for a final order. Final orders

may be appealed to the federal courts of appeals. The DOL Solicitor's

Office does not represent employees in the administrative hearing

process, nor does DOL typically participate in the administrative

adjudication. Employees must secure their own legal representation.

In recent years, the Department has received about 90 environmental

whistleblower complaints every year. The Department's Office of

Administrative Law Judges (OALJ) conducts about 80 hearings each year

in this type of case, resulting in 30 to 40 final decisions of the ARB.

In the past, there have been significant delays in the administrative

adjudication process. Most recently, cases have been adjudicated or

resolved more promptly. The OALJ has instituted a ``settlement judge''

procedure, in which cases may be temporarily transferred from the

presiding judge to another judge, whose role is to explore the

possibility of settling the case.

Family and Medical Leave Act Cases: Under the recently-enacted

FMLA, the Department's Wage and Hour Division is authorized to receive,

investigate, and attempt to resolve complaints of statutory violations.

The Wage and Hour Division first seeks to resolve complaints by

conciliation. If that effort is unsuccessful, the Division may choose

to conduct a complete investigation. Meritorious complaints that cannot

be settled administratively are referred to the Solicitor's Office,

which may bring suit in federal district court. The FMLA also creates a

private right of action for employees, who may bring suit themselves in

either state or federal court.

Since the FMLA was enacted in 1993, the Department has received

more than 6,300 employee complaints, through September 30, 1996. The

great majority of these complaints were resolved through conciliation,

many without the need for a full investigation by the Wage and Hour

Division. The Solicitor's Office has filed fifteen lawsuits to enforce

the FMLA. Federal courts have issued preliminary or final rulings in

more than twenty FMLA cases brought directly by individual employees

against their employers.

Fair Labor Standards Act Cases: Under the Fair Labor Standards Act,

which establishes minimum-wage and overtime compensation standards (as

well as other employee protections), the Wage and Hour Division is

authorized to receive, investigate, and attempt to resolve complaints

of statutory violations. Meritorious complaints that cannot be settled

in conciliation are referred to the Solicitor's Office, which may bring

suit in federal court. The FLSA also creates a private right of action

for employees, who may file suit in either state or federal court. The

vast majority of cases under the FLSA are brought by private employees

directly against their employers.

Compliance Review Cases under Executive Order 11246 and Complaint

Investigation Cases under the Vietnam Era Veterans'' Readjustment

Assistance Act: The Department's Office of Federal Contract Compliance

Programs (OFCCP) administers three equal employment opportunity

programs applicable to Federal contractors and subcontractors:

Executive Order 11246, Section 503 of the Rehabilitation Act, and the

affirmative action provisions of the Vietnam Era Veterans''

Readjustment Assistance Act (VEVRAA). Taken together, these laws

require covered contractors and subcontractors to refrain from

discrimination and to take affirmative action to ensure equal

employment opportunity without regard to race, color, sex, national

origin, religion, or status as an individual with disabilities, a

Vietnam era veteran, or a special disabled veteran.

OFCCP conducts compliance reviews of covered contractors and

subcontractors, and investigates and attempts to resolve complaints

received from employees and job applicants who allege that there have

been violations of these laws. OFCCP first seeks to resolve complaints

and issues revealed during a compliance review by conciliation. If that

effort is unsuccessful, OFCCP refers the matter to the Solicitor's

Office, which is authorized to institute administrative enforcement

proceedings.

After a full evidentiary hearing, a Department of Labor

Administrative Law Judge issues a recommended decision. On the basis of

the entire record, the Department's Administrative Review Board issues

a final administrative order. Contractors may appeal final adverse

orders to the Federal district courts. The laws administered by OFCCP

do not create a private right of action for contractors'' employees or

job applicants. (OFCCP regulations implementing contract compliance

laws are published at 41 CFR Chapter 60.)

About 4,000 compliance reviews are closed by OFCCP annually. About

3,000 reviews result in findings of violations. About 200 complaints

per year alleging violations of the affirmative action provisions of

VEVRAA are filed with OFCCP. On average, OFCCP refers 20 cases a year

to the Solicitor's Office, which in turn files about 10 administrative

complaints annually. Lengthy delays may occur in cases resolved through

the complete formal enforcement process.

Scope of Mediation or Arbitration Under the Proposed Pilot

The Department invites comment on the scope of mediation and

arbitration under the proposed pilot test. In DOL's experience,

employment disputes that involve laws enforced by the Department often

implicate other statutory, common-law, or other legal rights, outside

of DOL's jurisdiction. For example, an employee with a colorable claim

under the Family and Medical Leave Act or Section 503 of the

Rehabilitation Act may also have a claim under the Americans with

Disabilities Act. An employee with a colorable OSH Act discrimination

claim or environmental whistleblower claim may also have claims under

the National Labor Relations Act, a private collective bargaining

agreement, or state common law.

[[Page 6693]]

An ADR proceeding that addresses only claims under DOL-administered

laws may not resolve the entire dispute between an employee and an

employer. Employers may be reluctant to participate in a process that

leaves some employee claims outstanding. The Department's authority,

however, is limited to the laws it administers and enforces. DOL

invites comments on how best to ensure that the pilot test

appropriately addresses the full range of employees' legal rights and

remedies.

Case Selection Process

Cases for the proposed pilot test will be selected from the six

categories described. After a complaint has been investigated and found

to have merit (or violations have been identified during a compliance

review), and after efforts to settle the case administratively have

failed, cases will be screened for ADR suitability by the local office

of the program agency (e.g., OSHA), in consultation with the regional

office of the Solicitor. (The criteria for case selection are described

below.) Employers who agreed to mediate or arbitrate a dispute would be

expected to waive any applicable statute of limitations.

OSH Act Discrimination Cases: As explained, Section 11(c) of the

OSH Act creates no private right of action for employees. The

Department thus anticipates that in OSHA discrimination cases, the

Department would decide whether to seek mediation or arbitration.

This decision would be made after an employee's complaint was

investigated, but before suit was filed in federal district court. In

selecting cases for mediation or arbitration, the Department would be

governed by the case selection criteria set forth in this Notice. The

Department would consult the complaining employee, as well as the

National Labor Relations Board (NLRB) if the employee has filed a

related complaint with the NLRB. The Department invites comment on

whether it should ever pursue mediation or arbitration without the

agreement of the complaining employee.

DOL would be a party to the subsequent mediation or arbitration

proceeding, and the Solicitor's Office would represent the public

interest and the interests of the employee. The Department would be

bound by the results of the ADR proceedings, except as otherwise

provided by law. The Department invites comment on whether employees'

own attorneys or other representatives should ordinarily be permitted

to participate in a mediation or arbitration proceeding.

Alternatively, if the Department determined that a case is suitable

for ADR under the criteria described below, DOL could invite the

employee and the employer to participate in a mediation or arbitration

proceeding. DOL would not be a party or a participant, nor would it

necessarily be bound by a settlement or an arbitrator's decision.

Rather, the Department would determine whether to defer to the parties'

resolution by foregoing its exclusive right to bring suit under Section

11(c) of the OSHA Act. (The Department's current policy on deferral to

the outcome of other proceedings initiated by a complainant appears at

29 CFR 1977.18(c).) The Department invites comment on this alternative

approach.

Only the OSH Act discrimination complaint would be subject to

mediation or arbitration. Consistent with longstanding OSHA practice,

the underlying allegation of a safety or health standard violation

would be handled separately in administrative proceedings prescribed by

the OSH Act.

The Department would revise or supplement its existing regulations

for OSHA discrimination cases (29 CFR Part 1977), as necessary, to

incorporate the procedures described here.

Environmental Whistleblower Cases: Environmental whistleblower

cases are handled through an administrative process (described above)

in which employees are responsible for securing their own

representation or proceeding pro se. Under the proposed pilot test,

after an employee's complaint had been investigated by the Department,

DOL would determine whether the case was suitable for ADR under the

criteria described in this Notice. If ADR was appropriate, the

Department would offer the employer and the employee the option of

mediation and/or arbitration, conducted either by a Settlement Judge in

DOL's Office of Administrative Law Judges or by a private mediator or

arbitrator. The Department would not be a party to, or participant in,

this mediation or arbitration. The Department invites comment on how

best to coordinate the pilot test with OALJ's existing settlement judge

process.

The Administrative Review Board would not be bound by any

resolution reached by the parties, but instead would review the results

of mediation or arbitration. If appropriate (using the same standard

now applied in ARB review of certain environmental-whistleblower

settlements between employees and employers), the parties' mediated

settlement or the arbitrator's decision would be embodied in a final

order of the Administrative Review Board. The Department would revise

or supplement its existing regulations for environmental whistleblower

cases (29 CFR Part 24), as necessary, to incorporate these procedures.

Family and Medical Leave Act Cases: Under the pilot test, after an

employee's FMLA complaint was investigated and found to be meritorious,

and after administrative efforts to settle the case had failed, the

Department would determine whether the case was suitable for ADR under

the criteria described in this Notice. (The Department would consult

the complaining employee in making this determination.) If ADR was

appropriate, the Department would offer the employer and the employee

the option of mediation.

If requested by the employee, the DOL Solicitor's Office would

represent the employee in mediation. The employee would be free to

choose other representation (including representation by non-lawyers)

at the employee's expense, or to proceed individually. Whether or not

an employee was represented by the Solicitor's Office in mediation, the

employee would be free to resolve the dispute on terms acceptable to

the employee. If a mediated settlement were reached, the Department

ordinarily would close its file on the matter.

Because only a few judicial decisions have been issued under the

FMLA, the need to develop authoritative precedent on many issues

remains. This consideration will guide the Department's use of ADR.

Moreover, about ninety per cent of the FMLA complaints that the

Department finds to be meritorious are resolved in conciliation.

Therefore, the pool of cases that are appropriate for ADR may be quite

small. The Department invites comment on the types of FMLA cases that

are most likely to be appropriate for mediation.

Fair Labor Standards Act Cases: Under the pilot test, after an

employee's FLSA complaint was investigated and found to be meritorious,

and after administrative efforts to settle the case had failed, the

Department would determine whether the case was suitable for ADR under

the criteria described in this Notice. (The Department would consult

the complaining employees in making this determination.) If ADR was

appropriate, the Department would offer the employer and the employee

the option of mediation.

If requested by the employee, the DOL Solicitor's Office would

represent the employee in mediation. The employee would be free to

choose other representation (including representation

[[Page 6694]]

by non-lawyers) at the employee's expense, or to proceed individually.

Whether or not an employee was represented by the Solicitor's Office in

mediation, the employee would be free to resolve the dispute on terms

acceptable to the employee. If a mediated settlement were reached, the

Department ordinarily would close its file on the matter.

Executive Order 11246 Compliance Review Cases and Complaint

Investigation Cases under the Vietnam Era Veterans' Readjustment

Assistance Act (38 U.S.C. 4212): As explained, there is no private

right of action under the laws administered by OFCCP. Under the pilot

test, after an Executive Order 11246 compliance review or a Vietnam Era

Veterans' Readjustment Assistance Act discrimination complaint

investigation are completed, violations have been identified, and

administrative efforts to resolve the case have failed, the Department

would determine whether the case was suitable for ADR under the

criteria described in this Notice. If ADR was appropriate, the

Department would offer the contractor the option of mediation. If the

contractor agreed to mediation, the Department's OFCCP staff would

represent the interests of the Department in the mediation process. The

Department would revise or supplement its existing regulations (41

C.F.R. Chapter 60), as necessary, to incorporate these procedures.

Case Selection Criteria

Whether or not DOL is a party to an arbitration or mediation

proceeding, the Department will use, encourage, or defer to ADR only

when it is consistent with existing law. The Department will not use,

encourage, or defer to ADR when it believes (1) That the need for

injunctive relief makes ADR inappropriate; or (2) based on consultation

with the Department of Justice or other concerned government agencies,

that the dispute involves a criminal violation; or (3) that the dispute

implicates the authority of the DOL Inspector General. Nor will the

Department recognize any prior agreement that makes the use of

mediation or arbitration a condition of employment or otherwise

prospectively requires the use of ADR in an employment dispute.

In selecting cases for possible voluntary mediation or arbitration,

the Department will follow the ADR Act, which provides that:

An agency shall consider not using a dispute resolution proceeding

if--

(1) a definitive or authoritative resolution of the matter is

required for precedential value, and such a proceeding is not likely

to be accepted generally as an authoritative precedent;

(2) the matter involves or may bear upon significant questions

of Government policy that require additional procedures before a

final resolution may be made, and such a proceeding would not likely

serve to develop a recommended policy for the agency;

(3) maintaining established policies is of special importance,

so that variations among individual decisions are not increased and

such a proceeding would not likely reach consistent results among

individual decisions;

(4) the matter significantly affects persons or organizations

who are not parties to the proceeding;

(5) a full public record of the proceeding is important, and a

dispute resolution proceeding cannot provide such a record; and

(6) the agency must maintain continuing jurisdiction over the

matter with authority to alter the disposition of the matter in

light of changed circumstances, and a dispute resolution proceeding

would interfere with the agency's fulfilling that requirement.

5 U.S.C. 572.

The Department invites comment on appropriate case-selection

criteria. In particular, the Department invites comment on the

suitability of ADR proceedings, especially arbitration, in cases in

which an employee-complainant lacks legal or other representation. The

Department is advised that some court-sponsored ADR programs exclude

unrepresented persons.

Selection of Mediators and Arbitrators

Mediators and arbitrators under the proposed pilot test will be

selected consistent with all applicable legal requirements.

The Department intends for mediation and arbitration to be

conducted only by impartial, experienced, and qualified persons.

Mediators and arbitrators who participate in the pilot test would be

required to disclose to the parties and to the Department any

relationship that might reasonably constitute or be perceived as a

conflict of interest. The Department invites comment on appropriate

conflict-of-interest standards.

The Department also invites comment on the best means of selecting

suitable mediators and arbitrators. DOL anticipates that it will

maintain a roster of qualified persons. Parties to a mediation or

arbitration proceeding would be provided with a panel of mediators and

arbitrators from which they could make a selection.

The Department is considering entering into an agreement with a

qualified nation-wide contractor who would serve as a sponsor of

mediators and arbitrators and who would handle the administration of

the roster. The Department would reserve the right to set standards for

inclusion on the roster and to oversee its final composition. DOL

invites comment on this approach.

The Department also invites comment on the specific qualifications

that should be required for mediators and arbitrators. DOL believes

that only mediators and arbitrators who are able to provide evidence of

an established part-time or full-time practice in mediation or

arbitration, and to complete a DOL classroom training course in the

relevant statutes and ADR procedures, should be eligible for the pilot-

test roster. In addition, DOL believes that the following factors,

among others, should be considered: (1) Professional standing and good

character; (2) experience as an arbitrator, mediator, adjudicator, or

litigator of employment-related disputes, particularly in the areas

covered by the pilot test; and (3) other experience in the fields of

labor and employment law, industrial relations, or dispute resolution.

Compensation of Mediators and Arbitrators

Mediators and arbitrators who participate in the proposed pilot

test would be compensated by the parties to the proceeding (including

the Department), according to their agreement. The parties themselves

would determine how to fairly allocate the fees and expenses of a

mediator or arbitrator.

The Department believes that requiring the parties to share the

fees and expenses of the mediator or arbitrator helps ensure

impartiality. In cases in which the Department is a party or a

participant, DOL generally expects that it would pay one-half of the

mediator or arbitrator's fees and expenses. The Department invites

comment on whether permitting the negotiation of a different

arrangement is advisable. To reduce the possibility of bias based on

disparate contributions, payment would be forwarded to the mediator or

arbitrator by the sponsor of the roster (or by the Department, when it

is not a party or participant), without disclosing the parties'

respective shares.

One of the potential benefits of using ADR is lower litigation

costs to the parties and, in the case of government agencies, the

ability to resolve more cases with the same resources. Based on its

experience with the Philadelphia ADR pilot test, the Department

believes that ADR can reduce enforcement and litigation costs per case.

In this pilot test, the threshold questions of who

[[Page 6695]]

pays the private mediator or arbitrator (the neutral) and how much the

neutral is paid are central to the evaluation of the program's costs

and benefits.

DOL tentatively estimates that the typical neutral's fees in cases

under the proposed pilot test will be in the range of $1,000 to $1,500

per case. (The Department invites comment on this estimate.) If the

Department pays these fees, the opportunity to reduce agency costs per

case (and to increase DOL's ability to process more cases with the same

resources) will be greatly diminished. At the same time, the Department

recognizes both that employer payment of the arbitrator or mediator

raises conflict-of-interest concerns, and that in many cases employees

will be unable or unwilling to pay half of the neutral's fee.

Accordingly, the Department invites comment on the best mechanism

for compensating mediators and arbitrators, as well as on the following

specific issues: (1) Whether the Department should consider making a

contribution toward the fees of a mediator or arbitrator in cases

involving a low-income complainant; and (2) whether to authorize

arbitrators to tax attorney's fees and costs to the losing party (if

lawful) and/or to apportion the arbitrator's fees and costs equitably.

Authority of the Mediator or Arbitrator; Arbitration Proceedings

The authority of mediators and arbitrators under the proposed pilot

test, as well as the rules for arbitration proceedings, would be

determined largely by the ADR Act.

The Department anticipates that consistent with the ADR Act, DOL

would draft standard mediation and/or arbitration agreements

recognizing the authority of mediators and arbitrators under the pilot

test. Parties who agreed to mediation or arbitration would be expected

to sign such a standard agreement.

Under Section 8 of the ADR Act of 1996, arbitration agreements

``shall specify a maximum award that may be issued by the arbitrator

and may specify other conditions limiting the range of possible

outcomes.'' DOL anticipates that arbitrators would be authorized to

make awards imposing the full range of remedies provided by the

statutes involved in the pilot test.

Consistent with the ADR Act, arbitrators would have the authority

to regulate the course of and conduct hearings, to administer oaths and

affirmations, and to compel the attendance of witnesses and the

production of evidence to the extent permitted by law. The Department

also expects to authorize pre-hearing discovery by the parties, such as

the production of documents.

With the consent of the parties, arbitrators would be responsible

for ensuring that a record (stenographic or tape recording) of the

proceeding was made. Arbitrators would also be required to issue a

written opinion and award within 30 days of the close of the

proceeding. Copies of the opinion and award would be provided to the

parties and to the Department and would be made available to the

public.

The Department invites comment on the relationship between

mediation and arbitration proceedings. In some instances, the parties

may wish to attempt mediation and proceed to arbitration only if

mediation fails. In those cases, it may be inappropriate for the

mediator to serve as an arbitrator of the dispute.

Effect of an Arbitrator's Award

If a case were mediated to a successful conclusion or arbitrated

under the proposed pilot test, the Department would ordinarily close

its file on the matter at the conclusion of the proceeding. In

environmental whistleblower cases (as described above), an arbitrator's

award would, if appropriate, be incorporated in a final order of the

Administrative Review Board.

The binding effect of an arbitrator's award under the pilot test

will be determined by the ADR Act, which provides that an award becomes

final 30 days after service on all parties, that a final award is

binding on the parties, and that a final award may be enforced pursuant

to the provisions of the Federal Arbitration Act (9 USC 9-13).

The Federal Arbitration Act (9 USC 10) specifies the circumstances

under which a federal court may vacate an arbitration award. They

include cases: where there has been dishonesty by a party or an

arbitrator, where there has been prejudicial misconduct by the

arbitrator, or where the arbitrator has exceeded his authority or

failed to make a definite award. Only in such cases would the

Department choose not to recognize an arbitration award issued under

the pilot test.

The Department invites comment on its appropriate role in reviewing

the results of ADR proceedings to ensure fairness to the parties and

conformity with the law.

Evaluation

The Department has not yet established a time-table for the

proposed pilot and invites comment on this issue. DOL does intend to

carefully evaluate the results of the pilot test described in this

Notice. This evaluation would be conducted by a working group drawn

from participating DOL agencies and from the Solicitor's Office,

comprised of both field and national office staff members. The

Department also contemplates a review of the pilot test by

representatives of employees, employers, and the public. Comments and

suggestions on the implementation of the Department's ADR policy are

welcome.

Signed at Washington, DC this 6th day of February, 1997.

Cynthia A. Metzler,

Acting Secretary of Labor.

[FR Doc. 97-3475 Filed 2-11-97; 8:45 am]

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