Marathon Mediations Aren’t Good For Employees

I’m a mediator, and I’ve been one pretty much since mediation has existed. When I was trained, in the olden times, mediations were scheduled in 2 – 3 hour sessions. If they lasted longer and the parties were making progress, the mediation was reconvened another day, when the parties were fresh. I’ve found that most cases, if they’re going to settle, can settle in 2 – 3 hours. Yet I find that mediations these day seem to be expected to last 6 – 8 hours or more. So what’s happened to those reasonable-sized mediations?

I actually recently had a mediator say to me recently that her mediations frequently go until midnight. She was quite shocked when I responded that this one would not do so, and that, in fact, I had an appointment in my office at 4:00.

I started wondering. Am I just a curmudgeon?

Then I took my mother car shopping. It was while cooling our heels for hours waiting for the contract to show up that I realized why I absolutely despise the new, trendy marathon mediations. It’s because the employee is just like a car buyer. The employee is either alone or with their one lawyer. The other side is there with a lawyer, an HR rep, maybe a couple other folks. Management is the car dealer. The mediator in the marathon is the salesman, trying to get the sale done. The marathon sale is a pretty nasty sales technique, used by car dealers for years successfully, and for one reason – to get the upper hand with the consumer.

Here’s why I am going to continue to object to mediations that go beyond 3 – 4 hours:

Exhaustion: Just like the car buyer, the marathon process wears the employee down. They get careless, restless. Ready to take anything just to get out of there. They maybe have one lawyer, who is also tired. Management has an entire firm, just waiting by the phone and their computers. Possibly an insurance adjuster too. They can have multiple eyes on draft agreements to catch errors, even at midnight. Employees and their lawyers don’t have that kind of backup. There is absolutely nothing beneficial to employees that can happen after 6 or 8 or 12 hours of mediation in one day. It’s best to break it up into smaller sessions so everyone is refreshed and thinking clearly. I even wonder – is a mediator who allows a session to go that long meeting their ethical obligations to the employee? Don’t they have a duty to make sure the parties are capable of clear thinking?

Abuse: Marathon mediations have an incredible ability to abuse the employee through time wasted, trickling out one by one all the reasons the employee sucked and deserved to be fired. They become shell-shocked, even depressed. They’re already tired. The doubt creeps in.

Expense: Most mediations are borne half by the employee and half by the employer. At several hundred dollars an hour, the employer can make an already-poor former employee shell out dollars they can’t afford with no intention of ever offering anything. If there’s no offer after an hour, something is wrong in my opinion.

Here’s how the marathon mediation starts. The employee gives an opening that lasts about five minutes. The mediator asks lots of questions. Lots. Of. Questions. This, despite getting a detailed position statement ahead of time. Then the employer goes, and speaks for half an hour. More questions.

Then comes the caucus. The mediator spends an hour with the employer side, then comes back without an offer. He wants to go over some facts instead. He’d like to spend an hour or so with us, then go back to the employer. That’s when I’m certain the mediation is going to be a marathon.

Here’s how I stop it from being a marathon. I ask if there’s an offer on the table, and he looks at me funny. I say that, unless I have an offer over a specific amount in the next 30 minutes, he can call it an impasse. The mediator acts like I’m being the bad guy. But because I’m not exhausted, I’m not easily swayed. If, after an hour and a half, there’s no offer (and by an offer I don’t mean $500 or even $5000), it’s time to go. Any mediator worth their salt can get an offer from management in an hour and a half.

I place a firm time limit on the mediation. In my case, I have a pretty immovable time deadline to pick the kids up from school. But it can be anything – a meeting scheduled afterwards, dinner plans, anything that keeps you from being persuaded to lapse into the marathon. Sure, if we’re almost settled and I just need a few minutes, I can usually make arrangements to stay a bit later, but if we aren’t close, then at the deadline we need to impasse or continue to another time.

Another thing I like to do is try to start negotiating even before the mediation. I like to see how close we can get before mediation so we’re not starting from scratch. Then we can tell the mediator where we left off. If we impassed before mediation, the ball is almost always in management’s court, since I always, always make a counter to any offer I’ve received. That way, the mediator can start with management. I don’t understand why some management-side attorneys don’t want to talk before the mediation when they aren’t paying someone by the hour to talk to me. But most will gladly talk beforehand.

From now on, I’m going to tell the mediator right up front my time limit for the mediation. I’m going to tell them why. I’ll even tell them about car dealer tactics if I have to. If we can’t resolve it in that amount of time, then we can break and reconvene another day. Just like in the olden times.

So, do you agree with me, employee-side lawyers? Are marathon mediations bad for your clients? What about management-side? Do they actually benefit anyone but the lawyers and mediator? Are there any mediators out there who still limit mediations to no more than 3 – 4 hour sessions? If you think I’m wrong, I’d love to hear that too.

Work for a Church or Religious School? You May Have No Civil Rights

The Supreme Court unanimously ruled last Wednesday on the so-called "ministerial exemption" to employment discrimination laws on Wednesday, finding that churches are allowed to discriminate. The exemption is something you won't find in Title VII or other discrimination laws, but is purely a creation of the courts.
While Title VII does have a limited exemption for religious organizations, it is narrow:

This subchapter shall not apply to a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.

The Americans With Disabilities Act has a similar exemption:
 

Religious entities:

(1) In general

This subchapter shall not prohibit a religious corporation, association, educational institution, or society from giving preference in employment to individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.

(2) Religious tenets requirement

Under this subchapter, a religious organization may require that all applicants and employees conform to the religious tenets of such organization.

In other words, Congress said that religious organizations can prefer to hire members of their own religion and comply with religious rules. That's it.

The Supreme Court broadened all religious organizations' rights to discriminate, saying . . . read more here in The Huffington Post.

Don’t Make Me Gag: Confidentiality of Settlements When The Other Side Blabs

The Herman Cain sexual harassment case brought up an issue that has concerned me for years: one-sided confidentiality agreements. As you may recall before your holiday eggnog distracted you, Mr. Cain settled some sexual harassment cases before he ran for President. The agreements said the women couldn’t disclose the terms of the settlements or comment about the cases. When the press dug up the story, he publicly accused the women of making false allegations. The women were gagged, but could they defend themselves?

When I settle cases, I always ask for mutual confidentiality. That would have solved the problem in this case. If the women were prohibited from speaking about the settlement or saying negative things about Mr. Cain, he should have also been prohibited from doing the same thing to them. I ask for mutual confidentiality for a more common (and possibly South Florida only) phenomenon: HR people getting cute in references and saying, “I need to look at the agreement to see what I’m allowed to say.”

When I’ve carefully negotiated neutral references, so the employer can’t say negative things in job references, that kind of statement violates the spirit of the agreement. It also probably violates the letter, because a neutral reference clause says the employer can only give out dates of employment and job title and no other information. Still, because I’m dealing with South Floridians, I like to drive the point home. As much as I enjoy dealing with some of my opposing counsel, I prefer to avoid unnecessary conversations about stupid things like this.

Let’s say you did sign a one-sided confidentiality agreement and the other side leaks like a sieve. You also agreed not to disparage them, but they didn’t do the same. Can you defend yourself? Here are a few things that might help:

Implied covenant of good faith: Every contract has an implied covenant of good faith and fair dealing. If you are gagged and suddenly find your reputation smeared, they may have violated the implied covenant of good faith and fair dealing.

Waiver: If they’ve blabbed to the press, you certainly can argue that they waive the right to confidentiality. Once it’s out, you can argue that you have the right to defend yourself.

Defamation: If they’re saying you are a liar, that you made it up, and you have proof it’s true, then you may have a case for slander or libel. Truth is a defense to a defamation case, so if you did make it up you’ll lose. If you were telling the truth, then your reputation is damaged and you might have a claim.

Herman Cain gave me one more good reason to ask for confidentiality and non-disparagement clauses to be made mutual. Management-side lawyers should want this too, so they don’t have to deal with the specter of seeing their client doing a press conference about a settlement they worked hard to keep secret. But they’ll say, “I can’t bind everyone in the corporation.”

True, they can’t bind the janitor. However, they can bind management-level people. Anyone who reads the agreement will also read that it’s confidential. And they can caution everyone involved that it’s confidential. So don’t buy the silly argument that they can’t bind everyone.

If both sides have to keep agreements confidential, it’s less likely that there will be Cain-sized problems down the road.

Will I Be Taxed on My Employment Law Settlement?

There’s nothing certain in life but death and taxes. So what made you think you wouldn’t be taxed on your employment law settlement? I ask people this all the time when they express absolute shock that taxes were withheld from their severance check and that they’ll get hit with a tax bill in April on their emotional distress damages.

            It’s not for lack of trying. Employment lawyers and advocacy groups on both sides of the aisle have been trying for years to get the Civil Rights Tax Relief Act passed, and 2011 was no exception. It was reintroduced in the Senate on November 2, 2011 to match the House version that was introduced in October.

            Right now, the law says that, if you are injured in a car accident or have another personal injury, your settlement or judgment isn’t taxable at all. However, if you’re the victim of discrimination and suffer emotional distress, you are taxed. You also can’t average the income, so you can be taxed at a very high rate. 

            Here are the types of recovery you might receive in your employment case, and how IRS looks at it.

            Back pay: You will be taxed. Payroll taxes must be withheld. You are taxed at a “supplemental wage rate.” It’s reported on a W-2. If the Civil Rights Tax Relief Act passes, multi-year back pay could be averaged over several years for tax purposes, lessening the tax hit.

            Front pay/future lost wages: You will be taxed. Payroll taxes must be withheld. You are taxed at a “supplemental wage rate.” It’s reported on a W-2. If the Civil Rights Tax Relief Act passes, multi-year front pay or future lost wage payments could be averaged over several years for tax purposes, lessening the tax hit.

            Severance: You will be taxed. Payroll taxes must be withheld. You are taxed at a “supplemental wage rate.” It’s reported on a W-2. If the Civil Rights Tax Relief Act passes, multi-year severance payments could be averaged over several years for tax purposes, lessening the tax hit.

            Emotional distress: Even if there are physical symptoms, you will be taxed. However, you don’t have payroll taxes withheld. The danger here is you’ll get hit with a big tax bill in April and, if you don’t put a big chunk of money aside to pay, you’ll be in trouble with the IRS. The employer has to report this payment to IRS, so you will definitely have to pay. It’s reported on a 1099-MISC. If the Civil Rights Tax Relief Act passes, emotional distress damages would no longer be taxable or reported as income to IRS. They would be treated similarly to physical injuries..

            Physical injuries: If you’re actually attacked, such as in a sexual harassment case with a rape, then money received for your physical injuries is not taxable income. However, if you mischaracterize emotional distress injuries as physical injuries, you could run into trouble in an audit. It is not reported to IRS.

            Liquidated damages: You will be taxed, but they are not wages. They will be reported to IRS on form 1099-MISC.

            Attorney’s fees: Attorney’s fees paid in your settlement are income to you, but are not wages. These will be reported as income to your attorney and you. However, under an earlier iteration of the Civil Rights Tax Relief Act where Congress only passed the portion addressing attorney’s fees, the fees are an above-the-line deduction for you in most employment law cases. In other words, you have to report them, but you won’t be taxed on them. This is something you need to discuss with whoever is preparing your tax return and make sure they understand it.

            Costs: Taxable but not wages. These are reported to IRS on 1099-MISC. You will be taxed on them, although they may be deductible.

            Interest: Taxable but not wages. This is reported to IRS on 1099-INT. Interest is taxable.

            Punitive damages: This is taxable but not wages. It will be reported on 1099-MISC.

            Overtime: Overtime payments will be taxed as wages. That means payroll taxes will be withheld and it will be reported to IRS on a W-2. If the Civil Rights Tax Relief Act passes, multi-year overtime payments could be averaged over several years for tax purposes, lessening the tax hit.

            Taxes: One solution that lawyers have negotiated in some large settlements involving back pay that represents years of income is to have the employer pay part of the employee’s tax hit that results from a lump sum payment. But the payment towards taxes is considered taxable wages. It will be reported on a W-2. This would no longer be necessary if the Civil Rights Tax Relief Act passes.

            Because the Civil Rights Tax Relief Act has been attempted and failed so many times, I’m not optimistic that it will pass anytime soon. Yet both employee-side organizations and business organizations support it. Both sides agree that it will make cases easier to settle, which means that litigation costs will go down. The courts will be less clogged. It will be good for just about everyone. 

            Maybe sometime before I retire this sensible bill will pass. If you think it’s a good idea, contact your Senator and Congressional representative and ask them to support the Civil Rights Tax Relief Act.

Why Repealing Child Labor Laws Is a Truly Stupid Idea

Did you hear the one where the Republican contender for president said we ought to repeal child labor laws? Sounds like the beginning of a bad joke, but if you weren't paying attention due to all the holiday parties, you might have missed Newt Gingrich's comments on the subject. He said that child labor laws are "truly stupid." He wants poor 10-year-olds to become school janitors.

As the mother of a 10-year-old, Mr. Gingrich's comments have been weighing on me. I had to speak up. Talk like this might get some headlines and votes, but it's shortsighted to even think about abolishing child labor laws.

Anyone who is thinking that this proposal is anything but idiotic needs a little history lesson:

Read more in The Huffington Post.

Thanks again to Gina Misiroglu of Red Room for putting me in touch with the Huffingto Post people!