3 steps you need to take when facing an employee lawsuit

3 steps you need to take when facing an employee lawsuit

Feb 21, 2020 | Employment Law


When you hire someone new for your business, you likely go into this new relationship optimistic and excited about the skills that they can offer your company. Unfortunately, employment relationships, just like personal ones, can sour over time, leading to conflicts and even to lawsuits if an employee believes your company violated their rights.

If you find yourself facing an employee lawsuit, don’t panic. Regardless of the kind of lawsuit the plaintiff has filed, there are three important steps that can help you properly respond to the pending litigation.

Gather documentation and records immediately

Your company probably retains records about each staff member, from their initial contract to their quarterly or annual performance review documentation. Additionally, you may have paperwork for each interaction with human resources (HR) or management. Collecting and reviewing all of that documentation, including the language in the employment contract for this particular staff member, can help you determine the seriousness of the claim.

In some cases, the contract itself will demonstrate that the lawsuit is frivolous because there was no severance package promised or an at-will work contract in place. Other times, you may have internal records, such as those maintained by HR, that show you attempted to address claims of harassment or discrimination as soon as the employee reported them or that they never followed the right process for reporting an issue.

Get legal advice from someone who knows employment law

Many people who run small- or medium-sized businesses don’t have an attorney in house or on retainer. In fact, some of these companies fall victim to one of the classic employment blunders, which is using boilerplate employment documents in order to avoid attorney expenses.

Don’t assume that you can successfully protect your company from a lawsuit without legal help, particularly if the plaintiff has brought on an aggressive litigator to represent them.

Consider the financial impact and weigh the value of a settlement

Even if you know that the individual’s claims are spurious or contrary to your records and the contract the employees sign, litigating in court could cost your company tens of thousands of dollars, without any guarantee of the outcome.

For many businesses facing employee lawsuit, a settlement may be the best option available. Looking at the likely expense of the specific lawsuit and what a reasonable settlement would be can help you determine if offering a settlement now could save your company expense and embarrassment due to an employee lawsuit.