What is a typical employment lawsuit settlement?

Typically, the average employment lawsuit settlement is $40,000, but that doesn’t nearly tell the whole story.  A sexual harassment lawsuit may settle for $120,000, while an unpaid wage lawsuit averages $40,000. Wrongful termination may range from $120,000 to $1 million.

Brad Nakase, Attorney

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The average discrimination settlement amount differs from a wage claim amount. Employment lawsuits and claims are the most significant and most time-consuming losses that a business will face. The average employment lawsuit will cost a company $200,000; this is made up of $80,000 for the employer’s attorneys’ fees, $80,000 for the employee’s attorneys’ fees, and $40,000 in settlement to the employee. The “average” is not a good benchmark because the issues alleged in the lawsuit determine the settlement amount. For example, the average discrimination settlement amount may be $80,000; likewise, an employee’s lawsuit alleging wage violations maybe $10,000.


During the last five years alone, 60% of employers have faced employment lawsuits. Every year the EEOC secures approximately $404 million from U.S employers. So, yes, your company is at risk for lawsuits.

The Cost of Defending an Employee’s Lawsuit

The average cost of out-of-court settlements for employee lawsuits is approximately $40,000. About 10% of discrimination and wrongful termination cases will have a $1 million settlement. The majority of employment cases, when taken to court, are ruled in the employee’s favor.

Litigation costs are getting more expensive. In 2000, the average cost of litigation was $66 million. In 2008 it rose 73% to $115 million. This means that the cost of litigation increases approximately 9% a year.

Types of Employment Lawsuits

It is important to know the most common employment claims so you can protect your company against them.

  • Sexual harassment
  • Wrongful termination
  • Discrimination
  • Retaliation
  • Breach of contract
  • Whistleblower
  • Negligent hiring, supervision, promotion, and retention
  • Disabilities
  • Invasion of privacy
  • Emotional distress and mental anguish

Retaliation has become the top reasons for discrimination lawsuits, higher than even racial discrimination.

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What is paid time off?

Paid time off - also known as personal time off - is when an employee takes off work while still getting paid by the employer. Likewise, personal time off is when an employee gets paid or unpaid while away from work.

What does an employment lawyer do?

An employment lawyer help employers and employees understand their respective rights and obligations, such as wages, wrongful termination, overtime, PTO, disability, discrimination, harassment, etc.

13 Wrongful Termination Examples

Employees wins millions of dollars in wrongful termination lawsuits against their employers. If an employee has been dismissed for the reason that is deemed illegal in California, then they may be able to sue their former employer for wrongful termination.

How do I know if I am exempt from overtime pay?

As of 2023, to be exempt from overtime pay, you must make at least $62,400.00 per year or $5166.66 per month. To be classified as an exempt employee, your salary must be at least twice California's minimum wage for full-time employment. 

Women’s Rights When Experiencing Sexual Harassment at Work

Title VII of the Civil Rights Act of 1964 (“Title VII”) makes it illegal for employers to allow anyone to be sexually harassed at work by anyone else, regardless of sexual orientation, gender, or sex. Women who experience sexual harassment at work may experience a range of negative consequences, including mental and physical health problems, lower earnings, and career interruptions.

How to respond to a notice of PAGA lawsuit?

5 steps to defend a PAGA lawsuit: 1) contact a PAGA lawyer after getting a PAGA Notice, 2) locate the arbitration agreement, if any, 3) determine if the safe harbor provision of the PAGA state applies, 4) compile a list of all employees that were similarly situated, 5) Collect the employee's manual.

What happens if you get an EDD audit?

An EDD audit is a process of verification that you have correctly withheld and reported personal income tax for wages paid to your employees. If you get an EDD audit, you may be liable for a wide range of fines, interest, and penalties on taxes that you owe.

What are the 4 Caregiver rights in California?

California caregivers are entitled to rest breaks, meal breaks, minimum wage, overtime pay for working over 8 hours per day, and double time for working over 12 hours, including overnight stays. Employers often face lawsuits from caregivers for violating caregivers’ rights, such as basic wages.

Terminating Employee with Cancer

Cancer is protected under the Disability Act, which protects an employee from retaliation and discrimination because of health impairment related to a cancer diagnosis. An employer cannot discriminate against an employee upon discovering that an employee has a severe illness or cancer.

Can I be fired for work restrictions?

No, you cannot be fired for work restriction if it is based on disability. However, an employer can fire an employee in some situations if the employee has work restrictions.

Annualized Compensation

An annualized compensation is to a predetermined gross pay per month paid to an employee for twelves months, totaling an estimated annual income.  In other words, annualized compensation - also known as annualized salary - is an estimate of how much pay an employee will earn over the course of a year if they were to work the full year. For example, teachers commonly do not work summer months and therefore need to annualized their salary for reporting taxes.

Is it illegal to pay my employees late?

Yes, it is illegal to pay workers late. When an employer didn't pay a worker on payday, the employee can sue and the employer has to pay waiting time penalty in the amount of 10 days' wages.

What is prevailing wage in California?

Prevailing wage in California is the minimum hourly rate employees earn on public work project. All workers employed on public works projects must be paid the prevailing wage. Our prevailing wage lawyer can protect your rights if you're not paid the California prevailing wage.

What qualifies as wrongful termination?

A termination is wrongful if the employer fires or laid off the employee on the employee based on a protected class such as sex, gender, race, ethnicity, religion, or age.

At Will Employment

At will employment means that the employer or the worker may end the employment relationship at any time. When an employment is at will, the employer can terminate employees for no reason.

Can You Get Fired for Looking for Another Job?

Firing an employee for looking for another job is legal under California Labor Code § 2922. Employees in California are employed on an “at-will” which means the employee or employer can terminate the working relationship at any time for any reason.

Can an employee be terminated while on medical leave?

It depends on the reason the employee is on medical leave. Under the FMLA, an employee cannot be terminated simply because they take leave. An employee is free to take medical leave without fear of losing their job. However, if there is a reason unrelated to the medical leave, an employer does have the right to terminate an employee.

Can Slack Admins Read DMs?

Yes. Slack admin and employer can read every DMs, private channels, private messages sent between team members. Employers on either Slack's free tier or paid tier need to submit a request to Slack before they can access your private chats.

Four Hour Minimum Pay

Yes - under California employment law, when an employee is scheduled to work an eight-hour shift, and the work is canceled, the employer must pay a minimum of four hours.

How far back do PAGA claims go?

A PAGA claim is generally one year from the date of the last employment law violation on which the PAGA claim is based.

FICA Withholding: What is FICA tax on my paycheck?

What is FICA tax on my paycheck? FICA is a federal wage tax. FICA taxes requires withholding from an employee’s gross earnings: 6.2% for social security and 1.45% for Medicare. The employer matches these percentages for a total of 15.3%.

Why Does EDD Do a Benefit Audit?

The EDD conducts benefit audits to help pay Unemployment Insurance benefits to only eligible claimants only, prevents fraud in the UI program, and helps companies control UI costs. The EDD’s responsibility is to collect payroll taxes and conduct payroll audits of businesses.

What Does PAGA Mean in a Lawsuit?

The word PAGA is an acronym for the Private Attorney General Act, which is the Labor Code that authorizes employees to file a lawsuit to recover civil penalties for themselves and other employees. PAGA confers a private right of action to individuals to prosecute under PAGA and incentivizes the employee to keep 25% of collected civil penalties.

Can my employer call my doctor?

Generally, yes, your employer can call your doctor; however, the questions your employer ask is limited and protected by HIPAA Privacy Law. Your employer has the right to contact your doctor to verify the authenticity of a doctor’s note but cannot ask about your medical condition or diagnosis.

What Qualifies as an EEOC Complaint?

The EEOC is a federal agency that investigates workplace discrimination and harassment based on race, gender, ethnicity, national origin, age, religion, medical status, and disability. There are time limits for filing a complaint with the EEOC.

EEOC Complaint Process

Before filing an EEOC complaint, employees should understand the entire EEOC complaint process. This article answers many Frequently Asked Questions on the EEOC complaint process.

Do guys get paid paternity leave?

A father is eligible for paternity leave if three conditions are met: 1) welcome a new child within the first twelve months; 2) Paid into the State Disability Insurance; 3) Has not taken more than eight weeks of paternity leave in the past twelve months.

California PTO Payout Law

California law declares vacation time to be earned wages, and vacation time is accumulated as work is performed. So, an employee who has the right to ten days of vacation per year will after six months of work earn five days of vacation time.

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