`[Federal Register Volume 62, Number 29 (Wednesday, February 12, 1997)]
[Proposed Rules]
[Pages 6690-6695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3475]



[[Page 6689]]

_______________________________________________________________________

Part VI





Department of Labor





_______________________________________________________________________
Office of the Secretary

Wage and Hour Division

Occupational Safety and Health Administration



Office of Federal Contract Compliance Programs

_______________________________________________________________________



29 CFR Parts 24, et al.



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

  Federal Register / Vol. 62, No. 29 / Wednesday, February 12, 1997 / 
Proposed Rules  

[[Page 6690]]



DEPARTMENT OF LABOR

Office of the Secretary
Wage and Hour Division
Occupational Safety and Health Administration
Office of Federal Contract Compliance Programs

29 CFR Parts 24, 825, and 1977

29 CFR Chapter V

41 CFR Chapter 60


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

AGENCY: Office of the Secretary, Wage and Hour Division, Occupational 
Safety and Health Administration, Office of Federal Contract Compliance 
Programs, Labor.

ACTION: Notice; request for comments.

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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]
BILLING CODE 4510-23-P`