Common employment law mistakes made by employers: #3 Leaving the real decision maker behind during mediation.
A mediated settlement discussion is a dynamic matter that does not lend itself well to a fixed strategy for settlement. Often in preparation for a settlement discussion HR managers will meet with their lawyers to plan a financial range within which the employer is comfortable settling. Often HR managers are instructed on what bottom line the employer would accept and are left in charge of instructing counsel within that range at the mediation.
In the course of mediation previously unknown facts are often disclosed and HR managers can suddenly find they have a very different case on their hands. The revelation of these new facts can often be followed by the plaintiff making a reasonable offer to settle based on those new facts, but which exceeds the pre-approved bottom line set by the employer. In these circumstances, HR managers cannot enter the agreement without approval from their boss who is back at the office and who has not spent six hours in mediation or had the opportunity to hear the new facts or re-evaluate the litigation. It is very difficult for an HR manager to compress the events of the day into a convincing timely discussion which allays the concerns of their superior and allows for the prompt settlement of the matter. The company representative can also suffer embarrassment and be discredited when they have to inform the mediator that they need to call the office after stating at the outset that they had full authority. So the question for a HR manager in this position becomes: What is going to hurt my career more – settling for a lesser amount or going to court and losing much more at trial?
If the manager can blame a trial loss on the judge but claim the win as their own then they have a real incentive to forgo the settlement. No one can be blamed for not risking their own career to settle a matter but this situation can be easily avoided if each party brings the people who hold real decision making authority to the mediation. In the Employer’s case, this means bringing senior managers with real authority to make decisions. As a mediated settlement is often a fleeting opportunity to resolve a matter one should not delegate this task to others if they do not have real authority to settle a matter.