What to Do If an Employee Is Suing You

No business owner wants to hear the words, “You’re being sued.” But in today’s workplace, employee lawsuits are more common than you might think. Whether a current or former employee wants to sue due to a claim of wrongful termination, discrimination, harassment, or wage disputes, it can feel overwhelming.

While it’s natural to feel stressed as an employer, how you respond in those first few days and weeks can make a huge difference in the outcome. As attorneys who’ve helped countless businesses navigate being sued, we’re here to give you straightforward, practical advice on what to do if your company finds itself in this situation.

Don’t Panic, But Don’t Ignore It

Getting served with a lawsuit for any company is stressful, it feels personal, it’s frustrating, and it can feel like a direct attack on your integrity. But the worst thing you can do is let emotions guide your response. Instead:

• Stay calm and resist the urge to retaliate or confront the employee.
• Take it seriously. Ignoring the lawsuit won’t make it go away. In fact, failing to respond properly could lead to a default judgment against you.
• Review the complaint carefully to understand the specific allegations. Even if they seem baseless, it’s important to know exactly what’s being claimed.

Steps to Take Immediately After Being Sued

1. Contact an Experienced Employment Attorney

Before you do anything else, reach out to an attorney who specializes in employment law. The sooner you get legal counsel involved, the better.

• Don’t attempt to handle it alone. Employment law is complicated, and even small mistakes can hurt your case.
• Provide your lawyer with all relevant documents—employment contracts, performance reviews, emails, and any prior complaints.
• Be honest and transparent with your attorney, even if the facts aren’t in your favor. Your lawyer can’t defend you effectively without the full picture.

2. Notify Your Insurance Provider

Many businesses carry Employment Practices Liability Insurance (EPLI), which can cover legal fees and settlements related to an employee’s lawsuits.

• Review your policy to see what’s covered.
• Notify your insurer immediately after being served. Delaying this step could jeopardize your coverage.
• Follow your insurer’s instructions on how to proceed, as they may have preferred legal counsel or specific guidelines to follow.

3. Preserve All Relevant Documents

Once you know a company lawsuit is in play, you’re legally required to preserve all documents related to the case. This is known as a litigation hold.

• Don’t delete emails, shred files, or alter any documents. Even accidental deletions can be seen as tampering.
• Gather everything—employment records, emails, texts, payroll documents, and any communication related to the complaint.
• Instruct your management team to do the same. Make sure no one accidentally (or intentionally) destroys evidence.

How to Protect Your Business During the Lawsuit

Limit Internal Discussions

It’s natural to want to vent or discuss the lawsuit with your team, but that can backfire.

• Keep discussions between you and your attorney. Attorney-client privilege ensures these conversations stay confidential.
• Avoid gossiping about the lawsuit with employees. It can create a toxic work environment and even open the door for retaliation claims.
• Instruct key staff (like HR) to maintain confidentiality and avoid discussing the case with other employees.

Avoid Retaliation at All Costs

Even if you feel the lawsuit is unfounded or unfair, don’t retaliate against the employee who filed it. Retaliation claims are among the most common—and most successful—employee lawsuits.

• If the employee still works for you, don’t cut their hours, demote them, or change their job responsibilities in any way that could be seen as punitive.
• Maintain professionalism in all communications, and document every interaction.
• If you’re considering termination, consult your attorney first. Firing an employee mid-lawsuit can escalate the situation dramatically.

Review and Strengthen Your Policies

While your immediate focus will be on the lawsuit, it’s also an opportunity to take a hard look at your company’s policies and procedures.

• Review your employee handbook to ensure policies on discrimination, harassment, and workplace conduct are up to date.
• Consider additional training for management on proper hiring, firing, and disciplinary practices.
• Strengthen your documentation practices moving forward. Proper documentation of performance issues and disciplinary actions can be your best defense in future disputes.

What to Expect as the Case Progresses

The Discovery Process

Once the lawsuit is underway, both sides will enter the discovery phase. This is where information is exchanged, and it’s a critical part of building your defense.

• Expect to provide documents related to the case, including emails, performance reviews, and HR files.
• Be prepared for depositions, where you and other key staff may be asked to give sworn statements.
• Work closely with your attorney to ensure you’re fully prepared and that your responses are consistent and accurate.

Consider Settlement Options with the Employees

While the idea of settling might feel like admitting guilt, many employment lawsuits are resolved through settlement.

• Weigh the costs. Even if you believe you’d win at trial, the legal fees, time, and stress involved might not be worth it.
• Protect your reputation. Settling out of court can prevent negative publicity that might come with a public trial.
• Ensure confidentiality agreements are part of any settlement to protect your business from future issues.

Your attorney will help you decide if a settlement makes sense or if it’s better to fight the case in court.

Prepare for the Possibility of Trial

If the case doesn’t settle, you’ll head to trial. While this isn’t the most common outcome, it’s important to be prepared.

• Trials can be unpredictable, even if you believe the facts are on your side.
• Stay involved in your defense, but trust your legal team to guide you through the process.
• Keep your business running smoothly during the trial. Employees and customers will look to you for stability during this time.

Contact Pearlman, Brown & Wax, LLP Today if an Employee Wants to Sue Your Business

Facing an employee lawsuit can feel overwhelming, but you don’t have to go through it alone. The right legal guidance can help you navigate the process, protect your business, and reduce your risk moving forward.

At Pearlman, Brown & Wax, LLP, we’ve helped countless businesses handle employee lawsuits with professionalism and care. Whether you’re facing a new lawsuit, heard that an employee is filing, or want to strengthen your policies to prevent future claims, we’re here to help. Contact us today to discuss your situation and protect your business.