Unemployment is high, and employment litigation is increasing. We’re seeing more wrongful discharge, discrimination, and wage cases than ever. What will you do if your business is served with a lawsuit or discrimination charge by a current or former employee? We have some suggestions that can help keep your legal bills reasonable and assist your lawyer in handing employment disputes efficiently.
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1: Plan ahead
You can be served with a lawsuit or discrimination claim in a number of ways. You might get served with papers via the mail, or they may be sent to your company’s registered agent, who will then forward them to the company. It may be that the person serving you with notice of litigation might leave the papers with the receptionist. Front desk associates and employees who are in charge of receiving and sorting mail should be trained on what to do with any legal papers that come in the door. Every lawyer can relay horror stories about papers alerting them to a lawsuit that got misfiled or languished in a pile on someone’s desk. The consequences can be dire!
All lawyers don’t do the same kind of work. The attorney who drafts your business documents may not be the best person to consult about employment disputes. Get to know which lawyers in your area specialize in employment law. Not only can they advise you about avoiding lawsuits, but they can also be an excellent resource if your company is sued.
2: Notify your insurance company
Many employment claims are covered by employment practices liability insurance, which is sometimes part of an employer’s liability policy. The insurance company may want to choose the lawyer to represent your company. If you’re served with a lawsuit, you should immediately check to see if your insurance covers the claims asserted against you. Call your agent and notify her of the lawsuit. Send her a copy of everything that was served on your company.
3: Talk to your lawyer right away
If the insurance company refuses to defend you or fails to provide a lawyer, you’ll have to find an attorney on your own. Once you’ve received the lawsuit or charge of discrimination, don’t take any action until you speak with an attorney ― but don’t wait too long! If you’re served with a lawsuit by a process server, you’ll likely have only 20 days to answer the complaint. If you’re served by mail, you may have only 10 days to respond to a charge of discrimination. The period could be longer if you’re responding to a lawsuit. If you miss the deadline, you could be in real trouble.
4: Get organized
Lawyers generally charge by the hour. Since you probably don’t want to pay your lawyer to put your files in order, it pays to do some work on your own. You should gather all the files and documents that are related to the employee and the case. Find the employee’s personnel files, but don’t add anything to or take anything from them. Additionally, you should notify everyone involved that they shouldn’t change or destroy any documents, e-mails, or electronically stored information, even if it’s slated to be destroyed under your document-retention policy. Gather all your employee handbooks and policies, but don’t make decisions about what is relevant. The lawyer can do that. Include everything you can find that is related to the employee and the allegations he has made.
Start a file for the lawsuit or charge. Keep it separate from regular employment files, and mark it “confidential.” You’ll be putting all the correspondence from your attorney and the papers that are filed with the court or administrative agency in the file, so be sure to keep it locked up. If you don’t have time to oversee the matter and get your own work done, appoint a person in management to be in charge of the files and stay in contact with the attorney. You might choose an HR manager or financial manager to be responsible for reviewing and paying the bills.
5: Prepare your presentation
You’ll want to give your lawyer a clear picture of what happened. It may be helpful to create a chronology of events so you can explain what occurred in a logical fashion. Include the employee’s date of hire, salary history, and any promotions, demotions, or disciplinary actions. Include the names and titles of any supervisors or other employees who are involved. If the employee has filed any grievances, those should be included along with his date of termination if he is a former employee. Include the information in a memo to the attorney and mark it “confidential attorney-client communication.”
6: Make the most of your meeting
When you do meet with your lawyer, come prepared to discuss the case. Make sure your attorney has everything that has been served on your business as well as all the documents and information you’ve gathered. Bring your business card so that your contact information can be put in the file, and give your attorney the names and contact information of other individuals who might be involved in the investigation and defense of the claim. Clarify whether your lawyer will want to communicate with you by telephone or e-mail, and set aside enough time to respond to her questions and information requests.
7: Maintain attorney-client confidentiality
The attorney-client privilege protects communications between you and your attorney, but not all communications are privileged. For example, your attorney can’t be asked about facts you’ve provided to assist him in representing you. Similarly, you can’t be asked about legal advice your attorney has given you. The privilege attaches to documents and oral communications, but it can be lost if the information is shared with third parties or employees who aren’t involved in the matter. It’s definitely not a good idea to discuss the merits of the case with friends, relatives, or neighbors.
Note that the privilege is between the attorney and the client. When a corporation is sued, the client is usually the corporation, not individual officers or directors. If both the company and an individual officer are named, then you must clarify to the attorney who is actually the client ― one or both? If there could be a conflict, one or the other might have to hire a separate attorney.
8: Use your time wisely
You should know that if you call your attorney or drop in without making an appointment, she may not have your file on her desk and you might be charged for some unproductive time. If you expect to have a substantive discussion, make arrangements ahead of time to call or visit. That way, your attorney ― and you ― will be prepared to focus on the case. If you don’t understand what’s going on or the attorney says something that baffles you, speak up. Your attorney does this stuff every day; you don’t. Be sure to ask if something confuses you.
9: Keep communicating
You must keep your attorney informed of any developments in your case, and your attorney should be keeping you informed as well. Don’t change your job, address, or phone number without notifying your lawyer. If you’re unhappy with her services, let her know! If she can’t solve the problem, you may have to find another attorney. If you do, the court will require the first attorney to formally withdraw from the case. Never simply quit communicating.
10: Think about a resolution
At first, you’ll probably feel angry or defensive. That’s normal, particularly if you think you haven’t done anything wrong. As time goes by, though, you’ll start to realize that the case is taking up a lot of time and money that might be better spent attending to business. At that point, the employee’s attorney and the insurance company may begin exploring the idea of settling with you, or the court or agency might encourage mediation to resolve the dispute. Since most employment lawsuits settle before trial, it’s not unrealistic to think that your matter might settle as well. Be open to that, but realize that a good settlement is a compromise that often leaves both sides with a little heartburn.
11: What is a fair settlement?
Typically, an employee (or former employee) wants money to drop his claims. However, he might ask for something else, such as continued health insurance benefits or that training be provided to management.
At a minimum, in exchange for paying the settlement amount, you should expect to get a complete dismissal of the case and a release stating he won’t sue the company or its officers for any claim that he currently has, even if it isn’t specifically set out in the lawsuit. You may also ask that the employee keep the amount and terms of the settlement confidential and ensure that his relatives are prohibited from talking about it.
Exactly what qualifies as a “good” settlement depends on the facts of your case, but there are a few things to keep in mind. First, you’ll have to withhold state and federal taxes, Medicare, and social security from any portion of a settlement that represents wages. If you don’t, the IRS may come after you. Second, the employee’s lawyer receives her fees and costs from any settlement amount. The attorney likely will have agreed to take a percentage (usually 33 to 40%) plus costs from any recovery obtained. That means the employee might pocket only one-third of the settlement. You have to take that into consideration if you decide to settle. Realize, however, that sometimes you just can’t reach an agreement. When that happens, you may have to attend a hearing or go to trial.
12: Listen to your lawyer
You’re paying your lawyer to provide you with advice based on her experience and knowledge. Understand that you might be a business superstar, but you don’t have her experience or knowledge. Consider all the advice your attorney gives you when you’re deciding on strategy and trial tactics, especially if you’re called to be a witness at a deposition or trial. More than one case has been lost because a key witness didn’t take time to prepare or didn’t cooperate with counsel. If you are that witness, you’ll hate yourself in the morning.
BLR and HRHero work with the Employers Counsel Network, a select group of lawyers from all 50 states and Canada who represent employers in many industries and areas. To find out more about these attorneys or find one in your state go to www.employerscounsel.net