Defending an employment lawsuit is very costly. Defending an employment lawsuit up to discovery and a motion for summary judgement can cost up to $125,000 for an employer. If you lose the summary judgement, then expect to spend up to $250,000 to take the case to trial.
Most employers will make the wise decision to keep an employee instead of risking a legal bill of up to $250,000. Also, if you have a history of settling each employment claim, you risk looking like an easy target for every ex-employee.
If you do need to fire an employee, it is wise to offer a severance package in exchange for a waiver releasing any claims and legal recourse. This should be offered to all employees who are fired unless they are fired of intentional and egregious misconduct. Offering a severance in exchange for a release of claims, you are limiting the exposure to wrongful termination lawsuits.
Employee’s Legal Fees
Many employees hire their lawyers on a contingency basis, which means they will not pay any legal fees unless their lawyer wins the case. This is a no-risk proposition for your employees.
However, if their attorney wins the case, you will be on the hook for your employee’s legal fees. Instead of just paying a settlement amount, you now have to pay an additional $80,000 or more in legal fees too!
Your employee’s legal fees are broken down into two categories: attorney fees and costs.
Attorney fees are the cost of counsel or the work an attorney does on behalf of their client. This can be up to $550 per hour, depending on the attorney. Litigation can drag on for months, creating a very steep bill.
Costs are the additional expenses that occur during a legal case: filing fees, postage and shipping, copying fees, and transcripts. These expenses can easily add up if the case drags on for a long time.
How To Protect Your Business From Employee Lawsuits
California is one of the best states in the country for protecting employee rights. This is a fantastic thing, but it also means that opportunistic employees and their lawyers will seek to exploit your company for an “easy” payday.
It is important to have protections in place to protect your business from opportunistic lawsuits. Unfortunately, the more successful your business is, the more lawsuits you will attract.
Even if you have done nothing wrong and there is a mountain of proof of your innocence, it is often in your best interests to settle rather than running up legal fees. If you settle and end up paying $10,000, this is a much better result than paying up to $100,000 if you lose. You will be paying for the settlement, your legal fees, and your employee’s legal fees.
It is important to have strict company policies in check to minimize legitimate discrimination cases. It is also important to have a strict company policy in place for terminating employees and to consider the benefit of offering a generous severance package in exchange for releasing your company from legal claims.
One of the most important ways to safeguard your business from employment lawsuits is to hire a skilled employment lawyer. They will help you set up employee handbooks, policies, and documents to ensure your company is less likely to violate employment law, and therefore, less likely to be sued. Your attorney will also advise you in situations which may turn into a lawsuit or if an employee is threatening a lawsuit.
Nakase Accident Lawyers and Employment Attorneys work on both sides of employment lawsuits, and so are well-equipped to represent your business. We know federal and California employment law inside and out and will help you to safeguard your business against legal attacks. We have a great track-record of reducing the risk of lawsuits for companies. If you do fall victim to a lawsuit, though, we will not hesitate to aggressively litigate and win your case.