Steps you can take when a former employee threatens to sue

Author: Stephen D. Hans

In recent years, thousands of companies have felt the impact of a slumped economy, increased costs and regulations.  These conditions have forced employers to cut costs, reduce hours and downsize staffs.  Consequently, employee lawsuits and job discrimination charges have risen.  In fact, the U.S. Equal Employment Opportunity Commission (EEOC) reported that in both 2010 and 2011, there were a 100,000 workplace discrimination complaints filed.

After all the time and energy you have put into your business, it can be very stressful to receive notice that you are being sued by a former employee.  It is easy to imagine all of your blood, sweat and tears circling the drain and leaving you with nothing.  However, rather than panicking, you should take the following steps:

What to do:

  • Weigh your options calmly and determine the possible damages if the suit/complaint is decided in your employee’s favor.
  • Keep and maintain all records and other evidence that may relate to the case
  • Have you IT Department maintain all electronic records so that they are ready if a case proceeds
  • Consult your insurance policy for clauses that cover legal costs
  • Talk to your broker about any special riders to your policy that may help defray legal costs
  • Review your supplier and manufacturer contracts to determine if you are indemnified against legal liability.

What not to do:

  • Do not panic and assume all is lost
  • Do not destroy records or any documentation that may be considered evidence
  • Do not discuss the case with anyone who is not directly involved or with anyone who may be potentially a witness, except as advised by your attorney
  • Do not contact your former employee about his or her claim
  • Do not call your former employee to try to settle the case yourself
  • Do not contact your former employee to tell them off or to vent about feelings of betrayal

Discuss employee claims with an experienced NY business litigation attorney
The fact is that just being named in a suit or complaint does not mean you will lose your company or that you will even end up in court.  Plaintiffs often name several defendants in an attempt to hit all the bases.  Your company may only be named because if it is in a related field or thought to be involved.  If so, your attorney may be able to get your company dismissed from the suit.  Employee disputes and claims can be nerve-wracking but a NY business litigation attorney can help you determine the best strategy to take in your situation.
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