ACSI – Mediation/Arbitration Clause Update 

This article originally appeared as an internal document for Association of Christian Schools International and is reprinted by permission.For a number of years, ACSI has recommended that schools utilize mediation/arbitration agreements in their personnel contracts and/or employee handbooks. ACSI has published a sample employment contract in its Personnel Forms Resource Packet that utilizes that approach. Mediation/arbitration agreements have been recommended because they attempt to resolve misunderstandings biblically, in less time, and usually for less total cost to an employer. As a result, a majority of Christian schools now use the agreements.

ACSI contacted attorney John Cooley of Wooten & Hart, Roanoke, Virginia; attorney Richard Connell of Ball, Skelly, Murren & Connell, Harrisburg, Pennsylvania; and attorney Gary Friesen of Peacemaker Ministries’ Institute for Christian Conciliation, Billings, Montana, for the latest updates regarding the use of mediation/arbitration agreements. If your school uses such agreements, please read this article carefully. You will learn from their insights.

New EEOC Policy Statement

Richard Connell. “The Equal Employment Opportunity Commission (EEOC) has taken the position that agreements which mandate binding arbitration of discrimination claims as a condition of employment are contrary to the fundamental principles of laws against discrimination. The EEOC on July 10, 1997, issued its “Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment.”

Even though the United States Supreme Court specifically allowed enforcement of mandatory arbitration agreements [Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 33 (1991)], the EEOC in its Statement said it “believes that such agreements are inconsistent with civil rights laws.”

The EEOC will, it says, challenge the legality of specific agreements that mandate binding arbitration of employment discrimination disputes as a condition of employment. That does not mean that every case will bring an invalidation of a binding arbitration clause. It means that the EEOC has made known its views and may take action.

Binding arbitration agreements are not illegal per se; they are merely suspect in the eyes of the EEOC.

ACSI member schools need not abandon the arbitration clauses that are in employment handbooks or contracts. There needs to be an awareness that the EEOC may, in individual cases, challenge the binding nature of such a clause. That does not mean though that such clauses are invalid. The EEOC did not, in its statement, consider an agreement between a Christian school and a Christian employee to forego litigation. Whether it would react differently where there is an underlying religious belief for referring disputes to arbitration rather than litigation is unclear.

It must be remembered that in instances of alleged religious discrimination by an ACSI member school, ACSI continues to successfully challenge the jurisdiction of the EEOC to investigate, or the courts to hear, such cases. That jurisdictional argument is unaffected by the EEOC statement.”

John Cooley. “The EEOC is taking the position that it will challenge binding arbitration clauses where possible. In all likelihood, it will take several years before a case addressing the issue reaches the United States Supreme Court. Until then, my advice is that Christian schools continue to utilize the mediation/arbitration agreements with the understanding that the primary goal is to resolve conflict biblically, not just avoid litigation.

Editor. Even with the EEOC taking this position, Christian schools may have additional protection because they are using the mediation/arbitration agreements for religious reasons, not just for the various good secular reasons. If challenged, a Christian school could argue that their practice is based on 1 Corinthians 6 and should be allowed to continue. Until faced with that type of confrontation and the resulting decision, schools should continue using such agreements.

Determine the Right Reason to Use the Agreement

If a school utilizes a Christian mediation/arbitration agreement, the board and administration should be committed to its purpose and make every effort to resolve disputes in a Christ-like manner. This includes working with the disgruntled employee (or parent, if you use such an agreement in your enrollment contract) on a reasonably quick time schedule to resolve differences.

John Cooley on motivation: “We all realize that we operate in a litigious society. One of the goals of my ministry and work with ACSI has been to enable Christian schools to practice preventive law; that is, help schools avoid litigation.

With an ever-increasing emphasis on personal rights and with the expense of litigation, the desire to limit court costs and expenses is admirable and appropriate. Mandatory arbitration clauses are laudable for this reason. However, in the Christian school context, this desire should not serve as the primary motivating factor for inclusion of the agreement in employment contracts and employee handbooks. Rather, the desire should be to resolve conflict biblically.

Paul, in 1 Corinthians 6, asked believers why they were taking each other to a court held at a local heathen temple where sacrifices were made a part of the judgment process. Paul admonished the Corinthian church to seek judgment from believers. Whether mediation or arbitration is used, this admonition should be the primary motivating factor. Too often, the desire is only to avoid courtroom litigation. When approached with the wrong motivation, the process can become frustrating, can consume more time than necessary, and can lead to increased settlement demands. Christian schools should have policies supporting Christian mediation/arbitration and should include clauses requiring this process in their employment contracts. In doing so, however, the school must analyze its motivation and ensure that fulfilling biblical mandates is the primary priority.”

Gary Friesen on timeliness: “A quick response by a school to a request for mediation/arbitration can make all the difference because it communicates to the disgruntled party the school’s commitment to resolve conflict in a biblically faithful manner. The Institute for Christian Conciliation has documented several Christian school cases recently where there was little or no effort by the schools to help facilitate the mediation process, and weeks/months passed without resolution. Because of their frustration, the disgruntled parties then started asking for monetary damages for the first time. Had there been a quick and sincere Christian effort to resolve the issues, there would have been a greater chance for reconciliation, and there would not have been the later demands for monetary damages.”

Editor. It is vital for schools to understand the “Matthew 18 Principle” found in Matthew 18:15–17. If a school board, administration, and staff fail to understand and practice this teaching, the door is left open for a lot of personnel problems. Good faith belief in the Matthew 18 Principle should motivate the school leadership to try to resolve personnel matters in a timely fashion and not to let personnel problems fester for weeks and months without resolution.

Understand the Process

When an employee of a Christian school is disgruntled because of discipline, discharge, or nonrenewal of a contract, there is often a lack of understanding as to how the whole mediation/arbitration process operates. As a result of this lack of understanding, former employees and schools make inappropriate assumptions or attempt to resolve the dispute in an inappropriate manner. For example, the typical wording in agreements requires the parties to initially undertake mediation. This mediation can be arranged locally with a neutral person or can be conducted under the auspices of a Christian conflict resolution organization. However, unless the employee and school agree otherwise, mandatory mediation must occur before the parties can enter the arbitration phase. Of course, the language agreed to or policy in effect controls how the process works.

Once mediation has occurred or the parties mutually agree to proceed to the arbitration phase, the suggested wording envisions the parties selecting independent individuals to serve as arbitrators. These arbitrators will make the decision in the case. While each party selects arbitrators, they are not representing the school or employee. They should be unbiased and have an appropriate legal and/or biblical background.

John Cooley. “After dealing with this selection process in numerous instances, we have learned that in certain circumstances selecting just one arbitrator, as opposed to three, may be a viable option. This can serve to reduce the cost of the process and speed it along. However, before definitively deciding on utilizing one or three arbitrators, the school should consult legal counsel. In my opinion, schools should not make this choice independently. The school’s attorney may have valid concerns involving the number of arbitrators used, and the school should examine such concerns.”

The suggested language in the mandatory Christian mediation/arbitration clause also specifically refers to the rules of procedure from the Institute for Christian Conciliation (ICC), a division of Peacemaker Ministries™ located in Billings, MT. [(406)-256-1583]. Every arbitration process must be conducted according to an established set of rules. Schools should fully explain to their employees the reason for the rules. The arbitration is not necessarily conducted directly under the auspices of ICC, nor does the Institute necessarily advise schools or employees on the merits of a claim. Rather, it publishes “Rules of Procedure for Christian Conciliation” in its booklet entitled Guidelines for Christian Conciliation. This booklet is available from ICC or the ACSI Order Department [(800)367-0798] for a nominal fee. The booklet is included in the 1997 edition of ACSI’s Personnel Forms Resource Packet.

Editor. Copies of the booklet should be available for employees to read. Many schools provide each employee with an individual copy. Some schools thumbtack a copy to the faculty bulletin board and have additional copies available upon request in the school office. Failure of employees to have easy access to the “Rules of Procedure” can void the agreement.

Gary Friesen. “As you indicated, the ‘Rules of Procedure for Christian Conciliation’ are a necessary companion to this clause and should be accessible to every teacher for review before he/she signs a contract.”

Check with Local Counsel

Gary Friesen. “I encourage schools to have the contract language reviewed by a local attorney to make sure that it satisfies the specific statutory notice requirements of that state. For instance, Montana requires that contracts subject to arbitration must include a statement, as shown below, on the first page of the contract:

THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO THE MONTANA ARBITRATION ACT, TITLE 27, CHAPTER 5, MONTANA CODE ANNOTATED.

Schools in other states may also need to have some type of wording in a specific place on the contract for the mediation/arbitration clause to be valid. Again, I urge schools to contact their local attorney for any necessary modifications.”

Do Not Change the Wording

John Cooley. “Over the last several years, I have reviewed a number of contracts that contain the mandatory agreement. Most of these clauses have utilized the suggested wording published by ACSI. However, schools on occasion have changed the wording without consulting legal counsel. The result has been several instances in which the revised wording has changed the enforceability of the clause in question. Leaving out portions or materially changing the language can have significant adverse effects on the practical application of the agreement or, if challenged in court, jeopardize its legality.”

Enforcement of the Agreement

Since the United States Supreme Court’s decision in Gilmer v. Interstate Johnson Lane Corp., 500 U.S. 33 (1991), more and more employers have included binding arbitration language in employment contracts or policy manuals. Numerous federal and state courts have concluded that such clauses are enforceable. As a result, those courts have dismissed lawsuits, permitting the parties to address the issues through private arbitration.

John Cooley. “While numerous courts have upheld binding arbitration clauses, some jurisdictions have examined these very closely and, where the clause was ambiguous or the employer did not fully apprise the employees of their rights, the courts have struck down the agreements. To be fully enforceable, the agreement must contain a full explanation of the rights, reference the rules of procedure, and allow the employee the opportunity to have access to the rules prior to employment. The arbitration clause must also state the areas of the law covered under the agreement. For example, does the arbitration language include statutory claims such as Title VII, age discrimination, disability, etc.? The suggested wording published by ACSI appears to meet the criteria currently required. Thus, at the present, it appears that the agreement would be enforceable.”

At the Arbitration Stage, Retain Competent Legal Counsel

John Cooley. “Any time a Christian school faces a claim of wrongful discharge, breach of contract, or violation of federal or state anti-discrimination statutes, major legal concerns are present. In my opinion, schools should not attempt to conduct binding arbitration without competent legal counsel. That counsel will represent the interests of the school but is not an arbitrator. Rather, counsel will present the case to the arbitrator or arbitration panel. This procedure will generally involve the presentation of evidence by witnesses, as well as the presentation of legal theory and argument. On occasion, depositions or other discovery may need to be taken prior to the arbitration hearing.

Schools should select counsel in whom they have confidence. Schools may choose local counsel or counsel outside the area. However, Christian schools should consider using counsel familiar with employment law issues and the philosophy of Christian school education. In many cases, biblical issues and doctrine are involved. Thus, counsel should be able to understand scriptural principles as well. Regardless of who is selected, a Christian school is unwise, and the school board arguably is not meeting its fiduciary duty, when proceeding to arbitration without appropriate legal advice.”

Update Your Written Agreement

Editor. Gary Friesen suggests that there be a wording change in ACSI’s recommended language for mediation/arbitration agreements. As currently worded, the “Rules of Procedure for Christian Conciliation” apply only to the arbitration stage of the resolution process. The ambiguity of the clause has left “wiggle room” for various parties to a dispute to delay and otherwise create problems in the mediation phase because no rules or procedures are mandated for all parties. Please see the revised wording for mediation/arbitration agreements in the boxed sample agreement. Be sure to also change the wording in your employee handbook for the sake of consistency.

Editor. In the late 1990’s, the Tenth U.S. Circuit Court of Appeals ruled mediation/arbitration agreements VOID if they required the parties to split the arbitration expenses incurred for settling their dispute. While this decision directly affects the legitimacy of such agreements in the states of Arizona, Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming, it is wise for schools in all fifty states to drop the last paragraph of the recommended language regarding costs in the mediation/binding arbitration agreement found in the 1997 edition of ACSI’s Personnel Form Resource Packet. Failure to take this step may open the door for the disgruntled party to take the disputed matter directly to secular court. The Rules of Procedure already deal with how to care for the expenses. Simply follow those printed directions which are still legal.

Conclusion

John Cooley. “The primary goal of Christian school education should be to so inculcate biblical values and principles in students so that they will, as adults, be mature Christians, reflecting the life of Christ. To accomplish this goal, Christian schools must also reflect biblical principles. This includes to “do justice.” Utilizing Christian mediation/arbitration clauses allows the Christian community to deal in a Christlike fashion with issues raised within the employment setting. I am convinced that these agreements are fair to both parties. However, to carry out that fairness, Christian school administrators and board members need to analyze their rationale for the mediation/arbitration clauses, deal with situations appropriately as they arise, and understand the attendant implications and procedures.”

Author/Editor: Burt Carney, ACSI Director, Legal/Legislative Issues.


 

IMPORTANT: Update Your Mediation/Arbitration Agreement

Add the Words in Bold Type
Strike the Last Paragraph
The parties to this agreement are Christians and believe that the Bible commands them to make every effort to live at peace and to resolve disputes with each other in private or within the Christian community in conformity with the biblical injunctions of 1 Corinthians 6:1-8, Matthew 5:23-34, and Matthew 18:15-20. Therefore, the parties agree that any claim or dispute arising out of, or related to, this agreement or to any aspect of the employment relationship, including statutory claims, shall be settled by biblically-based mediation.

If resolution of the dispute and reconciliation do not result from mediation, the matter shall then be submitted to a panel of three independent and objective arbitrators for binding arbitration. Each party to the agreement shall have the right to select one arbitrator (unless the parties mutually agree to the use of only one arbitrator). The two arbitrators selected by the parties shall jointly select the neutral, third arbitrator. If there is an impasse in the selection of the third arbitrator, the Institute for Christian Conciliation division of Peacemaker Ministries of Billings, Montana [(406) 256-1583] shall be asked to provide the name of a qualified person who will serve in that capacity. The mediation and arbitration process shall be conducted in accordance with the “Rules of Procedure for Christian Conciliation” contained in the Peacemaker Ministries booklet, Guidelines for Christian Conciliation.

The parties agree that these methods shall be the sole remedy for any controversy or claim arising out of the employment relationship or this agreement and expressly waive their right to file a lawsuit against one another in any civil court for such disputes, except to enforce a legally binding arbitration decision.

Each party, regardless of the outcome of the matter, agrees to bear the cost of his/her/its own arbitrator and one-half of the fees and costs of the neutral arbitrator and any other arbitration expenses. (If the parties mutually agree to use only one arbitrator, each party shall bear the cost of one-half of the fees, costs, and any other arbitration expenses).

Wording from ACSI’s Personnel Forms Resource Packet, 1997 edition.

Definitions Used in This Article

Administrator refers to any individual or organization that provides or facilitates Christian conciliation services pursuant to these Rules. When referring to an organization, Administrator includes any staff, directors, volunteers, or conciliators who serve on behalf of the organization.

Conciliation is the voluntary submission of a dispute for biblically-based conflict counseling, mediation, arbitration, or mediation/arbitration.

Conciliator refers to a counselor, a mediator, or an arbitrator.

A conciliation clause in a contract is a provision written into a contract that requires future disputes related to the contract to be resolved by mediation/arbitration or arbitration.

The conciliation process includes all phases of conciliation, from the initial contact with the Administrator through the conclusion of mediation, arbitration, or other contact with the Administrator.

Mediation utilizes one or more neutral intermediaries who assist the parties in arriving at their own voluntary and mutually satisfactory resolution.

Arbitration is the submission of a dispute to a single arbitrator or a panel of arbitrators for a legally binding decision that may become, and have the same effect as, a judgment of a civil court.

Mediation/arbitration is the submission of a dispute to mediation, and, if mediation is not successful, to arbitration.

Excerpted with permission from Guidelines for Christian Conciliation, Institute for Christian Conciliation, Billings, Montana.

Contributors to This Article

 

John Cooley
Wooten & Hart
P.O. Box 12247
Roanoke, VA 24024
(540) 343-2451
Gary Friesen
PeaceMaker Ministries
Institute for Christian Conciliation
PO Box 81130
Billings, MT 59108
(406) 256-1583
Richard Connell
Ball, Murren & Connell
P.O. Box 1108
Harrisburg, PA 17108
(717) 232-8731

Individuals calling the attorneys listed above for help or clarification regarding this article or other issues should expect to pay a fee for professional services rendered.

Skills

Posted on

February 15, 2015