If you have a discrimination complaint at the Equal Rights Division (ERD) and are scheduled for mediation (settlement discussions), you can prepare in the following ways to improve your chances of reaching a favorable settlement. While the information below is tailored to ERD proceedings, it should be useful for EEOC mediation and other types of mediation and/or settlement negotiations.
– Closely review the ERD’s materials about mediation, and become familiar with the mediation process.
You are probably aware that ERD mediation is a process in which an employee (Complainant) and employer (Respondent) try to negotiate a settlement. It is important you consult with available materials and resources to learn all you can about the ERD mediation process. For example, it may help you to know that mediation discussions cannot be used as evidence or admissions at an ERD hearing. In other words, what you say at mediation cannot be used as evidence against you. Knowing things like this about the mediation process may help with your level of comfort and preparation.
– Calculate what your costs would be, and what your financial award (“damages”) would be, were you to proceed to an ERD hearing and win.
Before you go to mediation, it is important you estimate how much money it could cost you-and how much money or “damages” you could be awarded- if you proceed with your matter through an ERD hearing.
If you proceed to an ERD hearing, you may have to pay, out-of-pocket, the following types of costs:
– Attorneys fees (unless the attorney works on a contingency, pay-only-if-you-win, basis);
– Deposition costs (often somewhere between about $200 to $750 per deposition;
– Expert witness costs (e.g. what a doctor will charge to testify about your medical condition, sometimes up to $1,000 per hour or more);
– Vendor costs (e.g. Kinkos or Federal Express charges for document preparation, private investigator costs);
– Witness costs (e.g. subpoena service costs, witness fees required by law); and
– Miscellaneous costs you can think of, such as wages you may lose for taking work off, mileage costs, etc.
It is important you come up with an estimate of what these costs would add up to in the time before the ERD hearing. For example, if a doctor requires $1,000 per hour to testify in your disability discrimination case and you could rack up $5,000 or more in costs, you want to know this kind of information well in advance of the ERD hearing. You should also know the information prior to mediation, so you know what financial risks and costs will arise if mediation is unsuccessful and settlement not reached. In other words, if “Plan A” (mediation) is unsuccessful and you want to decline settlement, you should know what “Plan B” (going to an ERD hearing) will cost you.
If your costs are particularly high, and you do not have a lot of money to invest, this may affect your settlement valuations, and the level to which you may compromise at mediation. You should keep in mind that if you go to your ERD hearing and lose-which is there is always at least some risk of, no matter how strong your case- you will not recover your costs.
Damages (Monies That May Be Won)
Before mediation, it is also important you know the maximum monies or “damages” you stand to gain if your matter proceeded to an ERD hearing, and you won. At mediation, the value of potential damages may provide leverage to you (if a large-dollar amount) or to the employer (if a small-dollar amount). If you do not know how your damages are calculated, and/or fail to estimate your damages, you may grossly overestimate or underestimate the value of your case, and fail to offer or reach a reasonable settlement.
So, how do you calculate damages? If you win your ERD hearing, the ERD will likely award you with lost back pay. “Back pay” is the value of income you lost as a result of the discriminatory action (e.g. job termination), plus the value of out-of-pocket and benefits-related monies you lost due to the discriminatory action (e.g. job-search expenses & COBRA insurance payments you paid), minus the value of actual income or benefits that you have received since the discriminatory action. Back pay is basically the amount of monies it would take to be “made whole” for the financial losses you suffered due to being terminated. (Sometimes potential damages other than back pay may be available, such as front pay or other damages your attorney assesses to have value; because such damages are speculative and less likely to be awarded at ERD, they are not discussed here).
As an example of calculating back pay, consider the following situation.
– An employee’s job was terminated for discriminatory reasons on January 1, 2007.
– At the time of termination, the employee was receiving health insurance, making $15.00 per hour, and working 40 hours per week.
– The employee received 6 months of unemployment benefits (totaling $9,300 in income received), and went without work for 8 months total.
– The employee had to pay 8 months’ worth of COBRA health insurance at $400/month, totaling $3,200.
– The employee picked up a new job on January 1, 2008, where he still works, which pays him $12.00/hour, 40 hours per week, with health insurance.
– The employee has an ERD hearing on July 1, 2008, which is 18 months (or approximately 78 weeks) after the job termination. At the point of the ERD hearing, the employee will have worked about 26 weeks at his new job.
Here is an estimate of that employee’s potential damages if he won the ERD hearing:
– January 1, 2007 (termination date) thru July 1, 2008 (ERD hearing date) = @78 weeks
– 78 weeks x 40 hours/week x $15.00/hour (would have made for Employer) = $46,800 would have made for Employer, if no discriminatory termination
– $3,200 COBRA payments (paid because of discriminatory termination)
TOTAL Monies Lost: $50,000
MINUS ($9,300) unemployment income
MINUS ($12,480) income from new job (26 weeks x 40 hrs/wk x $12.00/hr = $12,480)
Total ERD Damages/Back Pay: $28,220
In the preceding example, the employee would stand to gain approximately $28,220 if he won an ERD hearing. (Also, note that if the employee uses an attorney for ERD proceedings, reasonable attorneys fees would likely be awarded if the employee prevails at the ERD hearing; thus, a reasonable estimate of attorney fees could be included in the valuation above as well).
While estimates of potential damages cannot be exact-and actual damages awarded could be higher or lower than the estimate-it is important that the employee comes up with a damages estimate based on the best information available, and uses this information for mediation.
Before the mediation, inform the employer of your damages estimate so the employer has advance notice of your valuation of damages.
In my opinion, it is usually helpful to inform the employer of your damages valuation in advance of the mediation. That way, when mediation day comes the employer will not be shocked to hear your valuation of damages, or to hear settlement offers based on that valuation. If the employer agrees with your valuation (or at least feels you are in the ballpark of what a likely damages award would be), the employer may come to mediation with authority to make higher settlement offers than it would otherwise have made.
Be prepared to compromise down from your damages value at mediation: the extent of compromise depends on various factors and leverage.
In the example above, the employee would not have a realistic chance for settlement if he walked into mediation expecting to settle at $28,220. This number reflects what the employee would get if he won an ERD hearing. If he expects to settle, he should know that settlement, by its nature, involves compromise.
How much should the employee compromise? This, of course, depends on the situation, and the employee’s leverage.
The following factors tend to increase leverage:
– if the employee was out of work a considerable time, and has a large amount of damages at issue;
– if the employee has witnesses or documents available that prove discrimination occurred (and thus increase the chance of winning at the hearing);
– if the employee has financial resources necessary to pursue her case to completion (e.g. she can afford the necessary costs to complete the ERD hearing, and even the costs to take the case to federal court and pursue larger damages);
– if the employee is represented by an attorney;
– if the employer is not represented by an attorney;
– if the employer is represented by an attorney but worried about legal fees or liabilities; and
– if the employer is obviously lying, irrational, disorganized, and/or poorly-prepared for hearing.
These factors, and several others, can affect an employee’s chances of winning an ERD hearing, and thus can affect her leverage at mediation. The more favorable factors present, the less the employee should compromise from the maximum potential damages. Again, however, at mediation the employee should always offer at least some compromise downward from the maximum damages. If the employee is only willing to settle at amounts equal to, or greater than, maximum damages, then the employer may be better off losing the hearing, and paying less for a judgment than for the employee’s unreasonably high settlement offer.
Too often, employees in ERD mediation will overestimate their damages and settlement valuations, and demand a settlement that feels “fair” to them, but is in fact higher than the maximum that Wisconsin law allows. I often tell clients that you could not get a higher damages award than what the law allows any more than you could travel faster than the speed of light. The damages limitations, like the speed of light, have a fixed maximum value, and that maximum value cannot be exceeded no matter how bad the employer’s discriminatory conduct, how “unfair” the maximum damages seem, etc. This may be a bitter pill to swallow, but it’s better to come to grips with these legal limitations before mediation than after.
In sum, before you go to ERD mediation, you should have an understanding of what types of damages are available, and you should estimate the potential damages for your own situation.
– Show up to mediation with (1) your damages calculations; (2) your settlement range; (3) your important documents and witness statements; (4) your attorney (if you have one); and (5) legal research/cases that are important to your matter.
When it comes time for mediation, you should walk in with a good understanding of what your estimated damages are. You should also have a reasonable range of settlement. That is, you should have an opening offer, and a “bottom line” offer, based on your potential damages and leverage factors as described above.
You should also bring copies of important documents and witness statements, so you can show the mediator and/or employer the strong evidence that you have in your favor, and the likelihood you would win an ERD hearing if things progressed that far. If you have an attorney or plan on getting one, bring her to mediation. Having the other side see you have an attorney can be just as important for perceived credibility purposes as for advice purposes-that is, simply having an attorney show up should show the employer that you are serious about your matter. An attorney may bring legal cases and authorities to cite, in anticipation of legal arguments that the employer may make.
– Leave your anger, righteousness and thin skin at home.
Often, parties in an ERD proceeding have hard feelings towards each other, and the proceedings that led up to mediation were negative and stressful. When you show up at mediation, be emotionally-prepared to communicate with the other party in a non-antagonistic manner. Be prepared to ignore antagonistic behavior from the employer.
Mediation is a time to leave those feelings behind, and a time to rely on logic and financial risks (not emotion) to resolve your dispute. Rarely does any employer or employee feel they are wrong, nor can they be convinced to feel they are wrong. Parties can be convinced to reach settlement so they can avoid financial risk, and reach closure on longstanding, difficult issues.
When you present your settlement offers and points of leverage (e.g. discussing a witness statement), do so politely and factually. For example, at mediation it would be acceptable to say something like the following: “Witness Jones gave a statement saying he observed Supervisor Smith say my termination was based on my medical condition. Because of this evidence and other evidence, I believe ERD would find my termination was discriminatory.” It would not be productive to state: “Witness Jones gave a statement saying Supervisor Smith discriminated against me, just like he did against everyone with medical problems. Supervisor Smith was ridiculous, and he knows it. The employer would be lucky to get out of this for $28,220.”
It may seem obvious to avoid talking like this, but know that settlement discussions can revive painful issues and old disputes between the parties. It is likely you will feel tempted, at some point during mediation, to speak negatively to or about the employer. Avoid the temptation. Politely stick to the facts. If you keep this and the other information above in mind, you will increase your chances of having a positive mediation experience and reaching a reasonable settlement.
DISCLAIMER: The information in this blog is NOT legal advice, nor does it establish an attorney-client relationship between you and Peterson, Berk & Cross. Legal advice often varies between situations. If you want legal advice for your specific circumstances, you must consult with an attorney.