From allegations of workplace discrimination, sexual orientation discrimination to violations of non-compete clauses or breaches of contract, lawsuits between organizations and their employees are an ever-present threat for businesses today. According to one report, a whopping 99% of Fortune 500 companies made payments as part of at least one employment lawsuit involving discrimination or harassment between 2000 and 2019. While most of those cases resulted in confidential settlements, the public verdicts and settlements alone added up to nearly $2 billion in penalties.
The risks and costs of employment litigation put corporate legal teams and law firms in a difficult position. They must work diligently toward favorable outcomes to help their organizations and clients avoid the harshest penalties, but they’re also under constant pressure to stick to a budget and curtail spending. What do employment litigation teams need to know to satisfy these conflicting goals?
In this post, we’ve assembled a complete guide to common issues in employment litigation. First, we’ll define employment litigation, outline the most common types of labor and employment law claims, and explain what the litigation process looks like. We’ll then review the risks associated with employment claims and suggest five best practices for avoiding them. Finally, we’ll wrap up by exploring how technology can help organizations tackle employment litigation not only effectively but also cost-efficiently.
What is employment litigation?
Employment litigation is a broad phrase that describes any civil lawsuit involving an issue that arises out of the work-based relationship between an employer and its employee.
Individuals, organizations, and government agencies file employment lawsuits for all kinds of reasons. Employees may sue their employers for perceived mistreatment, from unsafe working conditions to wrongful termination. Employers, on the other hand, may sue employees for breaching their employment contract or defamation.
While employment litigation encompasses a wide range of potential issues, some types of employment litigation crop up repeatedly, as we’ll explore next.
The most common types of employment litigation
Most employment litigation claims fall into one of these six general categories.
Discrimination remains rampant in many workplaces. One study by Glassdoor found that the majority of employees in the US (61%) have seen or experienced workplace discrimination. Multiple employment discrimination laws provide employees and administrative agencies with the right to sue employers for treating certain employees differently based on their membership in a protected class.
For example, Title VII of the Civil Rights Act of 1964 prohibits discrimination based on a person’s race, color, religion, sex, or national origin. An employee may bring a Title VII claim against an employer if they belong to one of these protected classes, so long as their employer has at least 15 employees.
Similarly, the Age Discrimination in Employment Act of 1967 prohibits discrimination against current or prospective employees who are 40 years old or older based on their age.
Finally, the Americans with Disabilities Act of 1990 (ADA) prohibits discrimination against current or prospective employees based on their disability. The ADA also requires employers to extend reasonable accommodations to employees with disabilities unless it would place an undue hardship on the organization. For example, the ADA may require an employer to build a ramp to allow wheelchair access to a building, but it will likely not require an employer to install an elevator if doing so would require extensive remodeling.
While harassment can be a form of discrimination, it’s generally defined as a series of actions that, in sum, create a hostile work environment for a specific individual based on their membership in a protected class. Harassment is often sexual in nature, but it can also involve racial slurs or derogatory comments about a person’s religion or religious practices.
3. Whistleblower and other retaliation
Various state and federal laws prohibit employers from taking adverse employment actions—such as firing, demoting, or failing to promote—against employees in response to their participation in protected activities. For example, if an employee reports that the company they work for is exposing employees to toxic chemicals without taking adequate precautions to protect them, the Occupational Safety and Health Administration (OSHA) can protect the employee under the applicable law’s whistleblower provision.
4. Compensation and benefits
An employee can also sue their employer for failing to provide adequate compensation or employee benefits. For example, an employee may claim that their employer didn’t offer them worker’s compensation after they were injured on the job, or that it unlawfully denied them family or medical leave to which they were lawfully entitled.
A tort is an act—or a failure to act—that constitutes a civil wrong. Torts may involve intentional or negligent conduct. For example, an employer may sue an employee for the tort of defamation if the employee made false statements that harmed the employer’s reputation. And torts go both ways: an employee may sue their employer for negligence if the employer directs the employee to operate a vehicle that isn’t in safe working condition.
Many employment-related claims arise from contracts. Any violation of an employment agreement can lead to an employment lawsuit. For example, an employee may sue an employer for firing them without cause or warning if that violates their employment contract, while an employer may sue an employee for providing services to a competitor if their contract includes a non-compete provision.
When employment disputes such as these arise, how do they become lawsuits? Let’s explore how the employment litigation process unfolds.
Stages of the employment litigation process
The process of bringing an employment claim to supreme court may vary based on the nature of the case and the specific state and federal court and procedures. Generally speaking, though, there are six possible stages in an employment lawsuit.
Pre-litigation includes everything that occurs before a plaintiff files a lawsuit. A prospective plaintiff will typically consult with an attorney, begin an investigation, and send a demand letter to the would-be defendant outlining the issue and asking them to take—or stop taking—a particular action. This process can lead to informal dispute resolution and prevent the need to file a complaint. (We’ll return to the possibility of an out-of-court settlement in a minute.)
2. Filing of the complaint
To initiate a lawsuit, a plaintiff must file a formal complaint with the appropriate court. A complaint in an employment lawsuit should name the parties involved, describe the facts of the case, cite the relevant laws that have been violated and that give rise to a claim, and explain the damages and any other relief that the plaintiff is seeking. After filing the complaint, the plaintiff must serve it on the defendant.
During discovery, the parties gather and share information that’s relevant to the claims and defences involved in the case. Today, most discovery is electronic, hence the term “eDiscovery,” but the discovery stage also encompasses physical evidence as well as depositions.
Before trial, the parties typically file and respond to motions, prepare for trial, and participate in settlement discussions in an attempt to resolve the case without going to trial. Most cases are dismissed or resolved before trial—in 2022, less than 1% of federal civil cases went to trial.
Settlement is not a separate stage in the process; rather, it’s an option throughout an employment litigation matter, from before a claim is filed until the fact-finder reaches a verdict—and sometimes even later than that.
During trial, which may be before a judge or a jury, both parties make opening statements, present evidence, and explain their cases in closing arguments. Although the judge often decides what evidence is admissible before trial begins, the parties may also object to certain evidence or lines of questioning during trial.
After trial, the judge or jury announces the verdict, the court enters the judgment, and the parties have the opportunity to file an appeal. Unless the case is reversed on appeal, the prevailing party will attempt to collect on or otherwise enforce the judgment during this stage.
As you may have guessed, all of this can take a while.
How long does the employment litigation process typically take?
Because employment claims often involve complex issues, they can take a long time to resolve—anywhere from several months, if the parties reach an out-of-court settlement, to two or more years, if the matter goes to trial.
Regardless of the time it takes to resolve a case, an employment lawsuit can place an enormous burden on an organization, especially when it’s in the defendant’s seat.
The risks associated with employment disputes
Most employers have no interest in becoming embroiled in litigation—for good reason. Litigation can be extremely costly in itself, and if a court orders compensatory, punitive, or emotional distress damages, those costs add up quickly. An employment lawsuit can also place an enormous strain on an organization’s resources as its executives and employees work to complete discovery requests, answer questions in depositions, and participate as witnesses.
And that’s before even considering the non-monetary costs of a public court case: damage to the employer’s reputation, loss of business, reduced employee morale, and difficulty hiring future employees.
Due to the severity of these potential impacts, organizations are typically highly motivated to avoid employment disputes. But how?
5 best practices for avoiding employment litigation
Here are five best practices organizations can follow to avoid employment litigation claims.
1. Actively prevent employee misconduct.
Organizations are often held responsible for the actions of their employees. Organizations can prevent employees from violating employment laws and show that they did their best to create a lawful workplace by:
· creating written policies explaining and prohibiting unlawful conduct,
· including those policies in their employee handbooks,
· explaining their policies to employees in clear, understandable terms, and
· addressing issues as soon as they arise.
2. Provide thorough training.
Training is necessary to make sure employees at all levels of an organization—including leaders and executives—are aware of and understand their employment-related duties and the organization’s policies. Depending on an organization’s industry and business practices, it may need to provide training on topics such as:
· workplace health and safety,
· (age) discrimination and (sexual) harassment,
· whistleblower protection, and
· wage and hour regulations.
3. Establish multiple avenues by which issues can be reported.
Organizations should establish a clear, easy-to-follow procedure for employees and third parties who wish to submit a complaint. Each organization should establish multiple channels for submitting complaints, such as a hotline as well as a digital portal, and give complainants the option to report anonymously. These precautions help organizations catch issues early—so they can resolve them before they become bigger problems.
4. Adequately address complaints.
When an organization does receive a complaint, it should promptly investigate the situation and take any necessary corrective action. If the organization knows the complainant’s identity, it should inform them of its response and ask whether other issues need to be addressed.
5. Think twice before making adverse employment decisions.
Employers should bear in mind that their adverse employment actions may be treated as the basis for a lawsuit. As such, employers should consult with HR and legal professionals and explore alternative options when appropriate. For example, an organization might be able to resolve underperformance by placing an employee on probation rather than going straight to termination.
But despite all these efforts, sometimes employment litigation is unavoidable. When there’s no way around litigating legal disputes, organizations can turn to technology to improve their litigation workflows and avoid unnecessary costs.
Technology allows organizations to successfully handle employment litigation
Organizations faced with litigation—especially in the discovery stage—can save considerable time and money by using modern eDiscovery technology. These tools streamline eDiscovery and litigation workflows so organizations can quickly and easily sift through overwhelming volumes of data. That lets corporate legal teams and their law firms thoroughly search and review large volumes of data and timely respond to discovery requests—not to mention court deadlines—without overly straining organizational resources.
Prepare for employment litigation with IPRO’s litigation readiness solutions
Organizations that invest in modern technology can equip their in-house legal teams with the tools they need to succeed. IPRO specializes in creating powerful litigation readiness solutions that let both corporate legal teams and the law firms that serve them deliver better results without spending more.
For example, Live Early Data Assessment (LIVE EDA) is the in-place search solution for legal teams. The Live EDA platform can quickly draw valuable insights from an organization’s data before collection even begins, avoiding over-collection and keeping costs down. Users can then search and review large volumes of data across multiple repositories from a single interface. From there, users can add new custodians or data sources at any time without having to start the process all over again.
With the help of proven solutions like Live EDA, legal professionals can handle employment litigation more efficiently, achieve better results, and save their organizations and clients money.