Updated on April 19th, 2023

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 A Hostile Work Environment?

The law defines an unlawful hostile work environment to mean when a superior or coworker communication or behavior that is offensive, intimating, or discriminate on the basis of gender, religion, race, ethnicity, etc.

Can you take unpaid time off in California?

There is no legal requirement in California that an employer provide its employees with either paid or unpaid vacation time. However, the federal Family and Medical Leave Act (FMLA) gives eligible employees the right to take up to 12 weeks of unpaid leave per year.

DFEH Right to Sue

To file a lawsuit for discrimination, you must file a complaint with DFEH and obtain a Right-to-Sue notice.

Is It Illegal To Not Pay Overtime?

Yes, it is illegal for employer to not pay overtime because California law requires that employers pay overtime, whether authorized or not.

What Is Rate Pay Meaning?

The meaning of pay rate is the average hourly rate an employee is paid calculated by dividing the total pay for employment in a work week by the total number of hours actually worked.

California Break Laws

Under California law, non-exempt workers are entitled to two paid 10-minute rest breaks and one unpaid meal break during their eight-hour shift. 

Not Getting Paid for Work I Have Done

Workers who have not been paid for work have the right to file a claim with the federal and state Department of Labor for unpaid wages.

California Overtime Law

Under California overtime law, an employee who works over eight hours a day or over forty hours per week is entitled to overtime pay at one and one-half times the regular rate of pay.

Who is exempt from overtime pay?

As of 2023, to be exempt from overtime pay, any employees who are paid at least $62,400 per year and work are primarily professional, executive, creative, managerial, or intellectual and require the exercise of independent judgment.

Can Previous Employers Talk Bad About You?

There are no state or federal laws prohibiting what a previous employer can or cannot say about a former employee. However, previous employers are not permitted to make up lies to damage your reputation and make it difficult for you to get another job.

Can An Employer Cut Your Pay as Punishment?

Employers cannot cut hours to retaliate against employees. Cutting the hours of an employee should never be used as discipline or in an attempt to make an employee quit. 

California Random Drug Testing Law

Random drug testing is not permitted in California, and employers must give their employees notice before a drug test is given.

What happens if you get caught working under the table?

Generally, it is not illegal for your employer to pay you in cash. However, if the employer paid you under the table and did not report your earnings, you may be entitled to money damages under California Labor Code 226.

ADA Proof of Disability

An employer has no right to ask an employee to provide proof of disability unless the employee requests a reasonable accommodation and the employer does not believe disability exists.

FMLA Retaliation and Wrongful Discharge

An employer is prohibited from retaliating, interfering with, restraining, or denying an employee’s exercise of any FMLA right. If an employer wrongfully terminates an employee for FLMA taking medical leave, the worker could have a lawsuit against the employer.

Per Diem Employee Rights

A per diem employee is a worker who work on an as needed basis. A per diem employee does not have a regular schedule or shift but instead works hours as assigned.

How To File A Workplace Harassment Complaint

You can always file a harassment complaint with the EEOC about the harassment. Also, you can retain our employment law attorney to help with no upfront money from you.

Wrongful Termination Settlements

When a worker wins a wrongful termination lawsuit, the average payout amount is $9000 to $95,000, depending on how much the worker would have made during employment.

Can employer ask for proof of disability?

If a worker asks for reasonable accommodation, the employer can ask for proof of disability. However, an employer cannot ask for proof of disability if its part of a hiring decision.

What is an EDD Audit?

An EDD audit is a payroll tax audit initiated when a former worker you classified as an independent contractor applies for unemployment with EDD.  The EDD thinks you misclassified the worker as an independent contractor and audits your company. 

Using PTO for Paid Vacation Time

PTO is any time an employee gets paid while away from work, including paid vacation time. PTO is paid time off, meaning a worker may use PTO for any reason, such as paid sick leave or paid vacation time.

When to hire an employment attorney?

You should hire an employment attorney as soon as you are aware of the issue or believe something is wrong and that the employer is not remedying the issue, such as harassment, wrongful termination, or discrimination.

Is PTO Required by Law?

Employers in California are not required to provide any PTO, such as paid time off or paid or unpaid vacation, to their employees.

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