For Employee Lawsuits, Trial or Settlement? - Free Enterprise
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For Employee Lawsuits, Trial or Settlement?

What's the best way to respond to an employee lawsuit? Many people want to avoid costly litigation, so there is a prevailing idea that settlement is better than fighting it out in court.

But is that really the case? Is it better to pay off the employee, rather than take the battle all the way to trial?

There are arguments to be made on both sides of the issue.

For example, here are a few obvious reasons why an out-of-court settlement may be preferred:

  • Litigation can be a drain on the company. A settlement can speed things up, while a full-blown litigation case can drag on. As a case drags on, legal bills can pile up. Plus, litigation can be a drain on a company, often requiring important employees to take time away from work to deal with the litigation, depositions and even testifying at trial.

  • Bad press. Litigation usually plays out in open court. As a result, the employer can find themselves in a position where internal company issues are divulged, which can put the company in a bad place from a public relations standpoint.

But there are also some potential advantages to fighting an employee lawsuit in court. For example, you may want to consider:

  • It's the employee's case to lose. If the lawsuit is a frivolous one, then there is no point in settling. But in order to even know how frivolous the case is, the employer would have to do some research and investigation. Still, there's really not much point in settling if the case has no merit.

  • It proves a point. Employees know that companies like to settle. So by fighting the case through to the end, it sends a message that your company takes a different stance. That message can be a powerful deterrent. Take, for example, the case of one business owner who actually had the suing employee write an apology letter for filing a frivolous case. The owner now proudly displays that letter to show others that he does not back down, The New York Times reports.

  • The case has bad publicity already. Settling could raise the assumption that you were in the wrong. Sometimes, false allegations can be harmful to your company's image. In such a case, settling could send a message to the public that you didn't want more bad press or bad stories leaking out. It can give the message to the public that you have something to hide.

Of course, each case is different, and employers must consider many factors when faced with an employee lawsuit. It's often wise to consult an employment lawyer to figure out whether you should settle the case, or take it all the way to trial.

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