"I did nothing wrong! Fight the battle to the end." That's the order an angry employer gives lawyers after being served notice of a wrongful discharge suit.
But there are good reasons for a less aggressive approach: Settling out of court. Three such reasons are cost of litigation, finality of out-of-court settlements and the need to get on with business.
Several years ago a study by the Rand Corporation revealed a company's average defense costs for a wrongful discharge suit were $81,000. The average payment to the employee who successfully pressed a wrongful discharge suit was $208,000. (These figures were based on California cases. Average costs for wrongful discharge suits will vary by state, and today will be higher.)
When you settle out of court, you know what you get for your money. For example, you know a lump sum payment of $14,000 closes the books. There's no admission of wrongdoing. In the future, you're still free to fight any other wrongful discharge suits.
In a legal action, you don't know whether your money buys you victory or defeat. Even in the best cases, when the facts weigh heavily in your favor, attorneys can't guarantee the verdict of a fickle jury. (In some cases, juries have awarded a wronged employee more money than he or she actually requested.)
You don't have enough time now to run your business. You have less time when you commit yourself to lengthy legal proceedings. Trials -- and the appeals which follow -- drag through the halls of justice for an eternity. But out-of-court settlements let you get on with business.
A wrongful discharge storm also clouds business decisions. For instance, Sally tells a judge after you fired her, you hired a 30-year-old man. She says this is proof you are guilty of age and sex discrimination. Every business decision you make may be viewed unfavorably in court.
Caution: Always consult with an attorney before reacting to or settling any employee-initiated legal action. Carefully assess the pros and cons of an extended courtroom battle. Your decision should take into account the cost and length of litigation, and the effects that a legal battle has on your business operations.
[NOTE: Information and guidance in this story is intended to provide accurate and helpful information on the subjects covered. It is not intended to provide a legal service for readers' individual needs. For legal guidance in your specific situations, always consult with an attorney who is familiar with employment law and labor issues.]
The Rand Corp. once did a study in which it examined jury verdicts in 120 wrongful discharge cases. Plaintiffs won 81 of those cases. The average compensation judgment was $388,500. But that's not all. In 40 of those cases, juries awarded punitive damages averaging $523,170.
To avoid a wrongful discharge lawsuit, here's what NOT to do.
"Caving in" and settling an employee-related legal action (like a wrongful discharge lawsuit) isn't always the best approach. Three reasons why an employer may want to defend against such legal actions are:
Before making decisions involving employee-related legal actions, always consult an attorney familiar with employment law.
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