How Should a Company Respond to an Employee Lawsuit?

How should a company respond to an employee lawsuit? If faced with a lawsuit, should the company just settle out of court? Or is it worth it to proceed with litigation?

There’s no set answer for that and as with anything, the answer depends on the facts and circumstances of the case.

In general, people shy away from costly litigation. So there is a general notion that settlement is better than a long drawn-out battle in court. Not all would agree, however.

In general, litigation is drain on the company. A full blown lawsuit can drag on and as a result, costs can add up. Furthermore, litigation may require employees to take time away from work for depositions, or to provide and gather other types of evidence.

A contentious court case can also result in bad press. That can put a company and its employees in an awkward situation. Are there any advantages to taking the case to court?

The one advantage is preserving the company’s name. If the employer did nothing wrong, then the company might want to salvage its good name. In a frivolous case, there is less incentive to settle.

Furthermore, settling may make it look like the employer was in the wrong. This isn’t always the case, but it can send that message to the public. There are times when the allegations alone are harmful to a company’s image. If that’s the case, settling could give the public the message that the company didn’t want more negative publicity.

Fighting it out in court can also prove a point to potential litigants that the employer will not be bullied by frivolous lawsuits. It’s generally known that many employers prefer settlement over litigation. Taking a case to trial sends a message that the company doesn’t fold that easily. That message can be a powerful deterrent for others who want to sue.

There are pros and cons to settling out of court in an employment lawsuit. If you’re the employee, know that your employer has incentives on both sides. Your case might be one where the employer settles or it may be one which the employer wants to fight out. A seasoned employment lawyer can help you figure out what your options are.