Updated on September 6th, 2023
How Much Does It Cost To Defend an Employment Lawsuit?
It costs employers an average of $75,000 to defend a lawsuit and settle the claim. If the case does not settle, defending the employment lawsuit before trial costs upwards of $125,000.
Defending an employment lawsuit is very costly. Defending an employment lawsuit up to discovery and a motion for summary judgment can cost up to $75,000 for an employer. An employer may expect to spend up to $245,000 to take the case to trial. After trial, if the employee prevails, an employer is also responsible for the employee’s attorney’s fee of up to $250,000; the employer is also liable for the employee’s damages – whatever it may be. Most employers will settle the former’s claim instead of risking $250,000 to $500,000.
As a California employment attorney, I’ve defended hundreds of employers since 2006. My goal is to be mindful of my business clients’ bottom line, minimizing attorney’s fees and aggressively defending the employment lawsuit.
Who pays for the employee’s attorney fees?
The cost of mounting a defense against an employment lawsuit is considerable. Covering the expenses of defending such a lawsuit up until the discovery phase and the filing of a motion for summary judgment can reach up to $75,000 for an employer. To bring the case to a trial, an employer should anticipate potential costs of up to $245,000. Following the trial, in the event that the employee prevails, the employer becomes accountable for the employee’s attorney’s fees, which could amount to as much as $250,000. Additionally, the employer bears the responsibility for compensating the employee for any damages awarded—irrespective of the sum. Given the substantial financial risks involved, a majority of employers opt to settle the claim rather than expose themselves to the possibility of facing expenses ranging from $250,000 to $500,000.
With my experience as a California employment attorney stretching back to 2006, I have successfully defended hundreds of employers. My primary aim revolves around being mindful of my business clients’ financial interests, thus working to minimize attorney’s fees while vigorously advocating for a robust defense in employment lawsuits.
What does the labor code say about attorney fees?
As outlined in California Labor Code 218.5, employees who emerge victorious in employment lawsuits are entitled to recover their attorney fees. Conversely, an employer that successfully defends against an employment lawsuit may be eligible to recover attorney fees if the court determines that the employment lawsuit was initiated in bad faith.
According to California Labor Code 218.5(a): “In cases where legal action is initiated to address unpaid wages, fringe benefits, or contributions related to health and welfare or pension funds, the court shall grant reasonable attorney’s fees and expenses to the prevailing party if any party involved in the case requests such compensation upon commencing the legal action. Nonetheless, if the prevailing party in the court proceeding is not an employee, attorney’s fees and costs will only be awarded in accordance with this section if the court concludes that the employee brought the legal action with malicious intent. This provision does not apply to legal actions initiated by the Labor Commissioner.”
How to protect your business from employee lawsuits
California puts a strong emphasis on safeguarding employee rights. In the year 2022 alone, a notable total of 73,485 complaints were lodged with the EEOC by employees. It is imperative to establish protective measures to shield your business from potentially opportunistic legal claims. Paradoxically, the more prosperous your business becomes, the greater the likelihood of attracting lawsuits.
Even in situations where you have committed no wrongdoing and substantial evidence attests to your innocence, it often proves advantageous to opt for settlement rather than incurring escalating legal expenses. Settling a case and paying $10,000, for instance, yields a far more favorable outcome than facing potential costs of up to $100,000 in the event of a loss. These costs encompass the settlement amount, legal fees, and the legal fees of your employee.
Stringent company policies are pivotal in minimizing legitimate instances of discrimination. Similarly, having a well-defined policy for employee termination and considering the option of offering a substantial severance package in exchange for the release of legal claims can be advantageous.
Engaging a proficient employment attorney is among the most crucial steps in fortifying your business against employment-related lawsuits. They will assist you in crafting comprehensive employee handbooks, policies, and documents, thereby reducing the chances of inadvertently violating employment laws and consequently decreasing the risk of litigation. Your attorney will also provide guidance in situations that could potentially evolve into lawsuits or when an employee issues a lawsuit threat.
Brad Nakase, an accomplished employment attorney, is adept at handling both sides of employment lawsuits, making him well-equipped to advocate for your business. Possessing an in-depth understanding of federal and California employment law, we are committed to fortifying your business against legal challenges. Our impressive track record demonstrates our success in mitigating the risk of lawsuits for companies. However, should your business become entangled in a lawsuit, we are resolute in our determination to aggressively litigate and secure a favorable outcome.
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