NFIB

The Cost of Defense Against a Discrimination Lawsuit
03/ 12/ 2002


If all lawsuits were frivolous, it would be easy to defend against them. Unfortunately, that is not the case. Discrimination laws are very demanding, and employers are often chagrined to learn that they were not in full compliance with the laws. In Today's Workshop, Edith Helmich shares what you need to know about discrimination laws.

Chagrin is secondary to the shock of the cost of legal defense fees, particularly when the employer faces compensatory damages, and possibly punitive damages to the employee. The final blow is that the court typically requires employers to pay the employee's lawyers if the employee wins, but seldom requires the employee to pay the employer's legal costs if the employer wins.

Another monetary cost may be lost business revenues. Customers or clients who sympathize or identify with an employee who files a lawsuit are likely to take their business elsewhere. If the suit makes its way into local newspapers or into the courtroom, publicity compounds the problems of an appearance of discrimination. A certain percentage of the public will believe the charge even if the court rules in the employer's favor. The publicity is not good for business.

Employee and management time will be consumed in depositions, hearings, and courtroom time. This time is usually billed to the employer since employees cannot be compelled to volunteer leisure time to help the employer defend against a lawsuit. Time spent in defense preparation is time that is not being used for business productivity.

Emotional stress can add another dimension to a lawsuit. The level of stress is high for the duration of the legal proceedings. Physical reactions in the form of fatigue, headaches and insomnia carry over into the workday. Mental consequences can manifest in the form of irritability, suspicion, and anxiety. For most people, a lawsuit is an unpleasant experience.

Does this mean that employers should cave in to a frivolous lawsuit? No, but . . . These realities do mean that employers should seek to settle and resolve the issues that prompted a lawsuit. Most employees who sue feel that they have no other recourse. If an employer is unable to convince the employee of their good intent at resolution, an impartial arbitrator can often workout a fair resolution without the necessity of a court trial.

The bottom line is, be very sure that your company practices are fair and consistent, and that the employee is dead wrong before trying to defend against a discrimination lawsuit. Let an impartial third party come to the same conclusion before deciding to defend against the lawsuit in open court. Remember that -- in court -- discriminating a little is like being a little pregnant!

Note: All companies should review company personnel policies and practices with an attorney to insure compliance with both State and Federal laws.

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