How Can I Protect My Company After An Employee Files a Frivolous Lawsuit?

Sadly, it's not uncommon for unhappy employees to file meritless lawsuits against their companies. In most instances, it is to avoid a planned termination. If an employee has brought a frivolous claim against your company, after a reasonable investigation of the facts and law, and the purported claims do not state a viable cause of action, we can filed motions to hold attorneys, and their clients, jointly liable for pursuing frivolous claims. 

However, we only can file these motions in limited circumstances, and our clients have always used the award to resolve the lawsuits.  The most commonly pled employment claims either do not allow an employer to recover at all, or only limited recovery, and only against the employees themselves, not their counsel. Because the employees often times cannot satisfy any such judgment, the award is only as good as the paper it was written on. 

What Should You Do?

Your options will change based on a variety of issues that are likely to change the course of how you wish to proceed. The options available will depend on a variety of factors, such as:

  • the notice of claims, whether oral or written, directly or indirectly, if it is a lawyer letter, an administrative charge, or a lawsuit, and the stage of proceedings,
  • the forum in which you will be adjudicating the issues are critical,
  • the potential legal claims raised or anticipated, including:
    •  the potential legal exposure that exists beyond the employee at issue for unknown and often unrelated violations by the employer.  For example, even if this employee’s claims are bogus, if we find that the employee has been misclassified under wage and hour laws either as an independent contractor or exempt employee, this will have significant repercussions for the employer because it typically effects all of the other potentially misclassified employees who are performing the same or similar functions. 

In all these situations, we analyze the forum, the notice, the issues, timing, and propose options that are best suited for the employer after conducting an upfront investigation of known facts and current law.

What Happens If The Complaint is Filed Right Before We Terminate Them?

Occasionally,  the day before a previously scheduled meeting to terminate an employee, that employee will send an email claiming that their supervisor has been harassing and retaliating against them.  The company knows this is a frivolous accusation and made solely to avoid termination. But what should the employer do next?

You should expect to enter a lawsuit claiming, at the very least, unlawful harassment, retaliation, wrongful termination, and failure to prevent harassment and retaliation, in violation of the California Fair Employment and Housing Act.  Even if you are correct that the employee’s claim is frivolous to avoid termination, the mere timing of the complaint and termination decision will raise legally viable claims.

In these situations, an immediate investigation of the employee’s allegations by a qualified investigator who has no affiliation with the parties or issues is required with the decision to terminate held in abeyance. The outcome of the investigation will dictate how the employer will proceed to minimize liability.

Speak With a California Labor and Employment Lawyer

When the facts support a cross-complaint that has caused damages to the employer, we strongly recommend pursuing all such claims, especially as it can offset any damages awarded to the employee, and regardless of collection, a strong cross-complaint is effective in defending frivolous cases and sends a strong message to your workforce. If you need helping defending against a frivolous California employment lawsuit, contact Lisa Sherman to schedule a free intial consultation at 213-341-4417. Not ready to chat just yet? Consider downloading one of our employee termination legal guides.