Managing difficult negotiations with third-party approaches

Negotiation

Difficult Negotiations: Arbitration in the Red Lobster-Olive Garden employment lawsuit

In Chapter 19 of Negotiation, authors Roy J. Lewicki and David M. Saunders provide an example of a Red Lobster waitress accused of stealing a customer complaint from a box of comment cards that were supposed confidential. However, this is only one example from the restaurant chain's much longer history of problematic labor negotiations. And unlike this singular example, which was dealt with internally as a part of a peer review board, some employee disputes have spiraled beyond the company's immediate framework of control, and necessitated third party and legal intervention.

In 2002 employees of California Red Lobster and Olive Garden restaurants alleged that the chains, both run by a subsidiary of Darden Restaurants, Inc., refused to allow breaks for its employees, charged workers for uniforms, and made employees maintain their own uniforms. Under California Labor law employees working at least 31/2 hours are entitled to one paid break, and earn a second paid break after six hours. Employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Employees are entitled to a paid ten-minute break for every four hours of work. Also, employers are required to pay for the cost of purchasing and maintaining employee uniforms "and may not require employees to purchase anything of value, including uniforms, from the company "("Red Lobster and Olive Garden Employees Settle Meal and Rest Break Class Action for $9.5 Million," 2006, Wage Law: California Wage and Hour Law).

The California court denied the defendant's motions for summary judgment upon the alleged violations and compelled the restaurant workers and representatives of both chains to enter into a process of formal arbitration (Lewicki & Saunders 2005: 46-47). Presumably this marked a "failure of previous negotiation processes" (Lewicki & Saunders 2005: 43-44). This case was not responsive to internal review, as many of the plaintiffs no longer worked for the company, but still alleged that they deserved to be compensated for back pay and for the costs they had unfairly born in the upkeep of their uniforms. The arbitrated negotiations that transpired only brought a satisfactory conclusion to one of the largest rest period class actions ever in California after three long years.

Employees demanded payment of up to one hour of pay per day for each meal period violation, and one hour of pay per day for each rest period violation and restitution for employees who were required to purchase uniforms or equipment. In the eventual settlement that was reached, the company did not admit liability but did compensate the workers ("Red Lobster and Olive Garden Employees Settle Meal and Rest Break Class Action for $9.5 Million," 2006, Wage Law: California Wage and Hour Law). Although the negotiation that was eventually reached was successful, its long duration may be testimony to the third party technique's supposedly anesthetizing effect. Also, the tendency to "split the difference," or for arbitrators to put a dampener on what they see are extreme requests by plaintiffs in terms of dollar awards may have caused the parties involved to drag their feet, in hopes of gaining more money on the part of the plaintiffs, and of eventually compelling a more favorable summary judgment on the part of Red Lobster and the Olive Garden (Lewicki & Saunders 2005: 48).

Regardless, it is difficult to conceive of a different type of negotiation process that could have better satisfied both parties or resulted in a more expedient settlement. One factor to remember is that that the issue in dispute was not the correctness of company policy, as it was a matter of law that rest breaks be mandated and that employees were not required to pay to maintain their uniforms, rather company compliance and compensation was the question. Fact-finding required verification from outside parties who were deemed to be objective enough in determining whether the various chains had been compliant with California law or not. Another factor to remember is that arbitration can result in a scenario where disputants are "less than fully committed" to seeing the resolution put through and during this negotiation as many of the plaintiffs were no longer working for the Red Lobster or the Olive Garden they had no leverage to 'walk out' of negotiations if nothing could be settled in a more informal mediation process (Lewicki & Saunders 2005: 49). Furthermore, the fact that the plaintiffs came from numerous chains meant that the two parties did not have a long-standing and general relationship that might emotionally compel one side to yield to the other side without formal pressure from an arbiter.

The eventual settlement did not dictate any change in the restaurant chain's practices, as the practices themselves were not the issue, only the issue of compliance and the restaurant chains' responsibility in ensuring its managers upheld state law. "However, attorneys for the class do not foresee any ongoing problems," since 2002, the chains eventually 'cleaned up their acts' as reports of employees missing their meal and rest breaks declined sharply, and "restaurant managers who did not permit employees to take breaks have been subject to discipline by the company," which was not the case before the lawsuit and employees were no longer required to purchase uniforms at any branch ("Red Lobster and Olive Garden Employees Settle Meal and Rest Break Class Action for $9.5 Million," 2006, Wage Law: California Wage and Hour Law).