How Business Owners Should Tackle a Lawsuit by an Employee

The life of an entrepreneur is full of excitement and risk. While it’s not for everyone, focused and creative individuals are particularly drawn to the freedom that entrepreneurship provides for them to apply their talents without the restraints of a rigid professional environment. Anyone who dreams of leaving their 9-5 routine in a gloomy cubicle might consider starting a business as their best path forward, and many who do take the risk achieve moderate success.

Taking that first step away from a stable career can be both nerve-wracking and exhilarating. Finally, you’re pursuing your own adventure rather than working as a tool in someone else’s. You eventually reach a point where life is chaotic but satisfactory, and you feel confident you made the right choice in your professional path. Yet, one day, you find out that an employee is suing you for one reason or another, and it all seems to come tumbling down. 

No matter what your company’s reputation is — whether your employees have voted you one of the top 5 places to work or you’re ranked one of the most innovative by an influential magazine — you’re always at risk for a lawsuit by an employee. Companies of all sizes grapple with the inconvenience of lawsuits. You should prepare for the possibility of it happening to you someday.

Why Should I Be Concerned About a Lawsuit by an Employee?

As a business owner, one of your top priorities is establishing a positive reputation for your company to foster its growth. This can come to a screeching halt if an employee sues you, and that lawsuit gains publicity. Lawsuits can cost copious amounts of time and money, plus other resources. And if you lose, your costs could go through the roof as you may be ordered to pay the plaintiff’s (the opposing party’s) legal fees and restitution.

Consider this: business litigation costs can land in the tens of thousands of dollars, and some may exceed $100,000 before the court issues a judgment. That’s a lot of money that could be invested back into your company.

If you’re a business owner who suspects a lawsuit might be brewing, here are some tips for responding to it.

Remain Calm and React Appropriately to a Lawsuit

At this point in your life, you might have already learned that decisions made while angry or scared don’t produce the best outcomes. News of a lawsuit can be incredibly disheartening, particularly if it’s your first lawsuit as an entrepreneur. Take the time you need to digest the information and consider how you’ll respond. When in doubt about how the lawsuit can ultimately affect your company’s success, contact an employment lawyer.

Understand Why You’re Being Sued

Read and comprehend the complaint against you to the best of your ability. If necessary, hire a lawyer to review it and explain it to you. Seek answers to the following questions and use this information to respond to the complaint intelligently:

• Who is suing you? Is it someone you know who works for you? Ask your team if anyone has contacted this person.
• In which state are you being sued? Knowing the state and city you’re being sued in and the type of court it was filed in will make it easier to find a proper attorney to represent you in court.
• Are there any deadlines listed in the complaint? If the document you receive states that you must reply by a certain date, be sure to do so. 

Don’t Ignore a Lawsuit, No Matter How Baseless it May Seem

Some lawyers will litigate almost any case despite there being scant evidence of wrongdoing by one or more parties. While the reason for the lawsuit against your organization may sound ludicrous to you, the last thing you want to do is ignore it. Ignoring a problem rarely makes it go away, yet in the case of a lawsuit, it could make things much worse.

Letting a lawsuit go unchallenged can lead to a default judgment in your employee’s favor. The judge may decide the matter based on the plaintiff’s documents and could impose anything from monetary damages that could further hurt you financially to injunctions that could limit the availability of your product or service, hurting your business’s long-term prospects. 

Don’t Delete Unfavorable Evidence or Create Favorable Evidence

You might be tempted to get rid of evidence that you think will help the other party, but this is illegal, unethical and impractical. So is creating new evidence to put you in a favorable light. Allow a skilled and seasoned employment lawyer to gather real evidence that works for you and challenges that of the plaintiff. The sooner you get an attorney involved, the better the outcome of the lawsuit may be. 

Seek Quality Representation from a Colorado Employment Attorney

Attorney Nathan Davidovich of The Davidovich Law Firm, LLC, has represented employers and employees in business disputes with many successful results for more than 55 years. As a Colorado-based lawyer, he understands the complexities of the state’s employment laws and can help you understand how they may impact your case. Nathan is well-regarded for his personal, attentive, and professional service. A sole practitioner of employment law, he can give your case the attention it deserves while informing you of its progress at every step.

Nathan is a member of the National Employment Lawyers Association and the Colorado Plaintiff’s Employment Association. His vast knowledge of Colorado’s employment laws is sure to benefit your case. Find out how Nathan can protect you from an employee’s lawsuit by calling (303) 825-5529 or complete our contact form to hear from us.