Alternatives To Litigation: Employee Peer Review—How Does It Work? Is It Right For You?

An employee is accused of violating a company rule, and after investigating you decidetermination is appropriate. The worker continues to claim innocence and accuses you of unfair treatment. Typically their next step would be to call a lawyer or complain to a government agency.But some employees now have another option: peer review by a committee of co-workers.

To head off costly and time-consuming employee lawsuits, an increasing number of employers have established procedures for co-workers to hear employee complaints about discipline and termination. And although peer review isn’twithout negatives, many employers and workers

are discovering it can work effectively and efficiently to resolve disputes.

Pros and Cons

The most important limitation of peer review is that it is never binding on employees unless they agree, so it won’t prevent all employee lawsuits. But it can substantially reduce litigationcosts by providing employees with an alternative way to vent theirgrievances, according to Robert M. Cassel, a partner with theSan Francisco office of the law firm Jackson, Lewis, Schnitzler& Krupman. Peer review, though, does require a significanttime commitment on the employer’s part, as well as the willingness to give up some measure of control to the employee committee.

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Peer Review Issues

Before setting up a peer review program, you’ll need to resolve a number of practical issues. Consider these six preliminary questions:

1. At what stage can someone request peer review? Some employers allow peer review immediately after a worker is terminated. Others require a discharged employee to submit a request for reconsideration or file an internal grievance first.

   You also must decide whether to reserve peer review for termination cases or to allowit for other disciplinary matters.

2. Who will be on the committee? Most peer review panels have one management representative to act as a facilitator, according to Cassel. Employee members should always receive special peer review training.
3. How much authority will the committee have? One crucial issue-which could have some unwelcome legal consequences-is the level of authority to givethe peer review committee. For example, the panel could be authorizedto make recommendations only, or it could have binding authorityto decide whether a decision should be overturned.

   A potential legal problem could arise, however, if the peer review committee has too much authority over employment condition. This could cause a courtto decide the committee is acting as an illegal, employer-dominated labor union, which can cause many complications.

   But if you give the committee only the power to make recommendations, employees mayhave less confidence in the program. Many employers resolve thisdilemma, according to Cassel, by granting peer review panels the authority to make “strong recommendations.” This meansthe committee informs management of its recommendation, andthe relevant supervisor is then instructed to carry it out unless the manager has compelling reasons to decline.

4. What kind of information will the committee receive? The worker may prepare a short written statement for the panel summarizing the reasons for requesting peer review. The committee may also receive a copy of the worker’s personnel file. But sensitiveinformation, such as medical data, that is irrelevant to the dispute should be removed first.
5. Will the committee have investigative authority? Having the power to call witnessesor conduct its own investigation can make the committee more effective,but it also carries risks. Among other things, the investigation’s results could be used as evidence if the matter ends up in court.One alternative is to have the complaining employee sign an agreement in advance stating that the committee’s findings and conclusionscannot be used in any other context, such as a lawsuit. Courts, however, may not always honor these agreements.
6. How will you handle confidentiality issues? Have the employee sign an agreement permitting disclosure to the committee of all information related to the dispute. Everyone involved should agree in writing to keep the proceedings confidential.

    

Setting Up a Program

These issues can provide a framework for analyzing some of the most important questions raised by peer review. But because this is a cutting-edge employee relations process, you should consider getting professional assistance from someone experienced with peer review programs.