VOL. 131 | NO. 89 | Wednesday, May 4, 2016
Actions to Take When an Employee Sues
By Kannon Conway and Laura Martin
KANNON CONWAY and LAURA MARTIN
The 2015 Hiscox Guide to Employee Lawsuits reports that U.S. companies have at least an 11.7 percent chance of having an employment charge filed against them. In Tennessee, the odds increase to nearly 32 percent. Arkansas and Mississippi are also above the national average, with a 42 percent chance in Arkansas and a 51 percent chance in Mississippi.
While an ounce of prevention is worth a pound of cure, sometimes even the savviest business owners are faced with an employee lawsuit. In Tennessee, employees are required to file a discrimination claim with the Equal Employment Opportunity Commission before filing a suit, so an employer should receive notice of a discrimination claim before a lawsuit is filed. However, certain employee claims, such as ones for unpaid overtime, wrongful discharge and whistleblower actions do not require administrative review before a lawsuit can be filed. Often, an employer has no idea that an employee has an issue until after a lawsuit is filed.
Employee lawsuits can be a heavy burden to bear for small-business owners, so it’s important to know what to do and when to do it.
Less talk, more action. It might be tempting to contact an employee directly if a lawsuit has been filed, but it is never a good idea to communicate directly about the lawsuit. Any communication with the plaintiff or his or her attorney must be avoided. You should contact your lawyer and insurance representative immediately and send a copy of everything you received.
Act quickly. Tennessee courts require that you respond to the complaint within 30 days from the date you were served, and your lawyer will need time to investigate the claim and prepare the appropriate response. Because there are specific rules for properly serving a lawsuit, make sure you tell your lawyer how you or your business was served. Finally, you must preserve all emails, text messages, video surveillance, etc., that could be relevant to the case.
Communicate with your lawyer. It is important to understand the claims being made against you so that you can help your lawyer prepare a legal strategy. You should also ask your lawyer about potential financial losses if the plaintiff is successful. Discuss the costs of defending the lawsuit, the length of time it could take to bring the case to trial and the benefit of settling early, as well.
Being sued can be very frustrating for a small-business owner. However, it is important that you set aside emotions and focus on the best course of action, taking into account the plaintiff’s potential for recovery and estimated defense costs. If you work with your lawyer early in the case to develop a smart defensive strategy, you will save money and hassle in the long run.
Kannon Conway and Laura Martin are members of Harris Shelton Hanover Walsh PLLC.