What to Do as an Employer When an Employee Threatens a Lawsuit

Farhad Novian | August 13, 2024 | Employment Law

When an employee threatens a lawsuit, it’s a serious matter that demands your immediate and careful attention. In such a situation, it is best to remain calm and composed. This way, you can clearly assess the situation and respond in a professional manner.

Additionally, it is good to reach out to an employment lawyer for legal counsel as they would be able to guide you in responding both professionally and legally in these cases.

At Novian & Novian, we have over 30 years experience navigating employment law. If your employee is threatening you with a lawsuit, our employment lawyers are available to give you professional guidance and support. Contact us now! 

In this post, we will give you a step-by-step guide on how to respond effectively to an employee’s lawsuit. We will also share reasons why an employee could sue and preventive measures you can take as an employer.

What Reasons Could an Employee Have to Sue?

Employees may decide to sue their employers for various reasons, often related to workplace rights and conditions. Common reasons why employees sue employers include – retaliation claim, discrimination, wage and hour claim, sexual harassment, wrongful termination, breach of contract and unsafe working conditions.

As an employer, it is important for you to comply with federal, state, and local anti-discrimination laws as these are laws created to protect the rights of employees. These laws include the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA).

If you find yourself facing a discrimination lawsuit, it would often be based on race, color, religion, sex, national origin, age, disability, or genetic information. However, wage and hour claims are usually related to unpaid wages, overtime wages, misclassification of employees, and meal and rest break violations.

For such situations, you need either a discrimination defense or a wage and hour defense attorney. They could help you come up with a sustainable legal defense and even give you legal representation.

Furthermore, if an employee files a lawsuit based on sexual harassment, it usually centers on unwanted sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature. If you find yourself facing such claims as an employer, you need to reach out to sexual harassment defense lawyers. 

In addition, wrongful termination claims are filed for termination in violation of employment contracts, public policy, or laws protecting employees from discrimination or retaliation. Wrong termination employer defense attorneys would be helpful in such situations. 

What Can You Expect from a Lawsuit?

When facing employee lawsuits, you can expect to either go to court or settle out of court. Typically, most employment disputes are settled out of court to avoid the costs and uncertainties of a legal action. On average, the cost of defense settlements is usually around $75,000. However, if a settlement isn’t reached, the case may go to court. This can be lengthy and expensive as the average cost to defend an employment lawsuit could easily exceed $125,000.

Furthermore, legal battles can damage your company’s reputation, disrupt business operations, and negatively affect employee morale. Often, the stigma of such lawsuits takes time to die out. However, having legal representation can help as employment lawyers specialize in defending employers and have the expertise to navigate complex legal issues and provide strategic advice. With such expertise, they provide legal representation to protect your company from substantial financial and reputational damage. Working with an employment lawyer is necessary as they will help you understand certain employment laws better and ensure that your organization stays compliant.

What to do When an Employee Threatens a Lawsuit – Stay Calm and Assess the Situation

When an employee threatens a lawsuit, it is best to remain calm and composed. If you swing into immediate defensive reactions, it can escalate the situation and make matters worse. By staying calm, you can better assess the situation and respond in a measured and professional manner.

Furthermore, you should avoid jumping to conclusions or making hasty decisions. Instead, take the time to understand the threat fully before making a decision so as not to potentially worsen the situation or hinder a fair resolution.

Gather Information

When faced with employment claims, you should gather all relevant information, including the nature of the threat, the context in which it was made, and any accompanying documentation or communications, and turn them into encompassing documentation. This documentation would help you understand the issue and prepare a response. 

When going through the documentation, identify the underlying concerns and the complaints that led to the threats. This understanding would help address the employee’s claims effectively and potentially resolve the matter before it escalates. 

Review Company Policies and Legal Obligations

The next step would be to examine your company’s policies and procedures to ensure that you have adhered to them. This includes reviewing the relevant guidelines on employee conduct, grievance handling, and termination processes. This review ensures that your actions are consistent with company policies and can help in managing the situation effectively.

Importantly, make sure that all actions taken in response to the threat are in line with company guidelines and legal requirements. This alignment helps in maintaining fairness and legality in your handling of the situation.

Consult with Legal Counsel Specializing in Employment Law

As an employer, it helps to work with a legal defense that understands and specializes in employment law. This legal counsel will help you understand the potential legal implications of the threat and provide valuable advice on how to navigate the situation. 

An employment attorney will help you and your organization stay compliant with state and federal laws. At Novian & Novian, we have expert employment lawyers who would provide legal counsel if you’re facing a lawsuit from an employee. With years of experience, they are ready to help you prepare for any potential legal action. Contact us today!

Document Everything

As an employer, you must maintain comprehensive and accurate records of all communications and actions related to the threat. This includes written records of interactions with the employee, details of the complaint, and any actions taken in response. This would come in handy when you have to write up an employee. 

Having detailed documentation is necessary for defending against any potential legal claims and ensuring a clear record of events. This documentation will be valuable in understanding the context and addressing the issues raised. In drawing up this documentation, develop a timeline outlining the events that led to the employee’s threat. This timeline should include key interactions, decisions, and any incidents relevant to the issue. 

Communication with the Employee

In handling a disgruntled employee who has threatened a lawsuit, you must handle the situation delicately. This helps to maintain a professional relationship and prevent further escalation. On the other hand, if the employee has already been terminated, the focus shifts to addressing the claim and preparing for potential legal action while ensuring that communication is professionally and legally compliant. 

Schedule a Meeting

For current employees, arrange a private meeting to discuss their concerns. However, when setting up the meeting, ensure the setting is neutral to make the employee feel comfortable and avoid any perceived biases.

It is also important to choose a location that is neutral and free from distraction. This creates an environment conducive to open and honest communication, helping to resolve issues more effectively.

Listen and Respond

During the meeting, listen to the employee’s concerns carefully and without interruption. This demonstrates respect and a willingness to understand their perspective, which can help in defusing the situation.

Then, respond to the issues raised by the employee respectfully and constructively. While it is important to acknowledge their concerns, avoid making any promises that could be construed as admissions of guilt or liability. It also helps to focus on understanding the issues and discussing potential steps to address them.

Mediation and Conflict Resolution

When an employee threatens a lawsuit, mediation and conflict resolution can be effective strategies to address and resolve the underlying issues before they escalate further. It could be through internal mediation or external mediation. 

Internal Mediation

Internal mediation involves using resources within the company to address the conflict. This can be a cost-effective and timely way to resolve disputes and may prevent the need for external legal action.

For example, engage the human resources department or a neutral third party within the organization to mediate the conflict. A neutral mediator can help facilitate open communication and negotiation between the involved parties, aiming for a fair and amicable resolution.

External Mediation

Internal mediation could fail if the employees involved and certain managers allow their emotions get the best of them. If this happens, they wouldn’t be able to communicate effectively, and the issue would not be resolved. If internal mediation does not resolve the conflict, consider external mediation services. Typically, external mediators bring an unbiased perspective and have specialized training in conflict resolution, which can be particularly valuable in complex disputes.

Furthermore, external mediators work to understand the perspectives of all parties involved and facilitate discussions aimed at reaching a mutually acceptable solution. Their role is to guide the process, help clarify issues, and suggest possible solutions without imposing a decision.

Preventive Measures for the Future

There are certain preventive measures you can undertake as an employer to minimize the risk of employee lawsuits. These preventive measures also help maintain a positive and compliant work environment. 

One such measure is implementing regular training on conflict resolution and legal compliance. These training sessions are necessary for both employees and managers as they equip them with the necessary skills to handle disputes effectively and understand their legal obligations. Through the sessions, the chances of misunderstandings and conflicts escalating into legal actions will greatly reduce. 

Another preventive measure is promoting a culture of open communication and respect. By fostering such, you are encouraging employees to voice their concerns and grievances without fear of retaliation. This open communication helps in addressing issues early and prevents them from festering into bigger problems that might lead to employee lawsuits.

Furthermore, regularly review and update company policies. This helps in mitigating risks and ensuring that the company’s practices are aligned with legal standards. Additionally, ensure that employees are aware of and understand company policies. 

Need Legal Representation for an Employee Lawsuit?

When an employee threatens a lawsuit, it is best to handle the situation professionally and legally. Importantly, you must stay calm and assess the situation. Then, gather information, review company policies, consult with legal counsel, and document everything. You can also try engaging in mediation and resolution, where you advise the employees involved to choose settlements instead of going to court. 

As an employer, it is your duty to engage in proactive actions that prevent future issues for the company. This includes regular training, promoting a culture of open communication and respect, and advise employees to understand company policies. 

As a Los Angeles Employer Defense Practice, Novian & Novian provides expert legal representation and advice on handling employee lawsuits. Our experienced employment lawyers are here to guide you through every step of the process. Contact us now!