Do Companies Usually Try to Settle Harassment Claims Outside of Court?

Although there is greater awareness of the problem of sexual harassment in the workplace, many employees from all walks of life continue to report it across all industries. The Equal Employment Opportunity Commission reported 26,699 charges of sexual harassment in 2018. Of these claims, just 7% settled, with $14 million recovered by accusers. A considerable fraction of these claims settled outside of court.

As a business owner, you may have taken all the appropriate steps to curb instances of harassment. You included policies for recognizing and reporting sexual harassment in your employee handbook, and you may have required employees to complete sexual harassment training sessions. Unfortunately, you can’t control your employee’s individual actions, and the risk of receiving a harassment claim still exists.

There are many ways to resolve sexual harassment claims. Ideally, measures would be taken internally to put a stop to the harassment; however, an employee alleging harassment may still file a formal complaint. This is more likely to occur if the alleged harasser is allowed to keep his position, or if the employee must continue to interact with their harasser. Ultimately, most companies attempt to settle sexual harassment claims outside of court because of the advantages of avoiding a trial. Could this be the right path for you?

Potential Benefits of Settling a Sexual Harassment Claim

If your company is facing a sexual harassment lawsuit, you’re put in the uncomfortable position of showing consideration to the employee alleging harassment while also protecting your company’s image and reputation, and the unplanned expense of a possible settlement or litigation. 

Executives and employees alleging harassment can often benefit from settling delicate matters like this outside of court. If your human resources department, consultant, or attorney launches an investigation into the employee’s sexual harassment complaint and finds proof of workplace harassment, you may discuss a settlement as a possible resolution. Both parties in a claim can benefit by:

• Reducing legal costs. Settling a claim is far less expensive than bringing a claim to court and getting a jury involved.
• Reducing stress. Preparing for court takes considerable time and effort that may add on to your losses in the event of losing at trial. 
• Increasing your control over the outcome of the claim. Trials, by nature, are unpredictable. If the jury is sympathetic toward your employee, you could lose much more than you anticipated in the form of punitive damages.
• Keeping the matter private. When a legal issue is taken to court, it becomes part of the public record. In a settlement, the only information that is made public would be the terms of the settlement. 
• Resolving the matter quickly. It can take several weeks to months for the court to have an available slot for your case, and the trial itself can take several days to complete. Waiting for a trial to get resolved can cause the case to drag on for much longer than if you were to settle. Accusers may be inclined to settle because they’d receive payment much sooner than if they went to trial. Also, accusers can avoid the risk of receiving nothing at all if the jury doesn’t find in their favor.

It’s not uncommon for companies to try to settle sexual harassment complaints before reaching the court system. Also, companies often insist on non-disclosure agreements. A non-disclosure agreement is a legally-enforceable contract that establishes a confidential relationship between two or more parties. Such an agreement may benefit your company by keeping sensitive corporate information private. 

How to Calculate a Settlement Amount for Sexual Harassment

Sexual harassment claim settlements vary widely. Typically, you would want to calculate and include the following losses in the payment:

• Lost wages. If the employee quit over the harassment, this may equal her salary. If she was out of work for a year due to the harassment, she may ask for two year’s salary.
• Pain and suffering. This is usually an additional amount that may be equal to the employee’s annual salary.
• Cost of treatment. If the employee sought medical care such as therapy, the settlement should take these costs into consideration.

How a Non-Disclosure Agreement Can Fortify a Settlement

A non-disclosure agreement (NDA) aims to limit what parties say in the future about a dispute. In a case of sexual harassment in the workplace, an NDA may require the employee bringing the claim to agree to give up any legal claims they have against your company. In many of these agreements, employees also agree to stay quiet about the harassment claim or else face legal action by their employer.

Resolving Employee Sexual Harassment Claims in Colorado

Denver-based employment lawyer Nathan Davidovich of Davidovich Law Firm, LLC, is a Colorado labor and employment lawyer who has resolved many sexual harassment claims throughout his career of more than 55 years. If you’ve experienced sexual harassment at work or require guidance on settling a harassment claim outside of court, Nathan can help you make the best choices possible at this difficult time. Contact Davidovich Law Firm at (303) 825-5529 or complete our contact form to get started.