3 Ways to Save Money If an Employee Is Suing You

Being in a lawsuit can create stress and tension in the workplace. If you’re a small business and you’re being sued, it can create some financial burdens for you and your company. “This can be an unnerving and overwhelming time for a person,” states Thomas C. Grajek, Attorney At Law

If you think you’ll never be sued as a business owner, think again. Forbes reported that 36% to 53% of all small businesses get involved in a lawsuit, and overall, 90% of all companies, big or small, will have some litigation at some point. 

Employees can sue you for a variety of different reasons. The most common are for firing them without cause, not following policies you put into place, or for worker’s compensation. We’re going to go over ways to save money if you find yourself in a lawsuit as an employer. 

Prevent It 

The best way to save money from being sued is not having it happen in the first part. As an employer, it’s crucial to create a work environment that meets yours and your employees’ needs. 

Don’t have pointless or unattainable rules for your employees. It would be best if you didn’t change or decrease employees’ pay for no reason. Also, avoid firing people when you’re upset or angry. You could fire them for something minor, which can create legal problems down the road. 

You’ll also want to make sure that your building and equipment are all up to safety standards. Spend time training your employees to do things properly and have consequences for those who don’t follow the safety instructions correctly. Don’t ignore problems that have been brought to your attention regarding safety or other issues. 

This will reduce the risk of people getting hurt while working or when in your building, which then means you won’t have to deal with being sued for worker’s compensation. 

Have Insurance

All employers should have insurance of some kind because you never know what will happen. Business insurance should cover liability, worker’s compensation, employment practices, liability, and auto insurance if you have commercial vehicles. 

When you have protection from insurance, the out of pocket expenses when you’re sued are minimum. Most insurance companies will cover you and even represent you in a lawsuit. The average cost of a worker’s compensation claim for a slip or fall is $46,592, and from a car accident is $78,293. This is a lot of money, even for a more prominent company, to pay without insurance. 

Liability coverage protects you when a claim is made on your business regarding something that went wrong that’s your fault. Injured employees may hire a workers compensation attorney to sue their employers if they don’t receive the compensation they’re entitled to. Worker’s compensation coverage helps with paying for employees’ medical bills and time off when they’re injured at work. 

Employment practices liability is designed to cover you when an employee sues you for wrongful termination, harassment, or discrimination. Auto insurance protects you when you let employees use vehicles that belong to the business, and there’s an accident. 

Having proper business insurance can save you a lot of money if you’re found in a situation where your employee is suing you.

Offer a Settlement 

In some cases, it might be a good idea to offer a settlement to your employee that’s suing you. You’ll save money on attorney expenses and save time by not having to go into court. Settlements work in favor of both parties in many cases. 

An average cost of an attorney is $100 to $300 an hour. This can add up quickly if your lawsuit takes a long time. 

The employee will get a lump sum of money, and all problems will be resolved. For you, you’ll pay off the settlement and then be able to go back to work as usual. This is a smart move for you if you think you’re going to lose. 

If you lose the lawsuit, you’ll have to pay all the fees for being in court and be responsible for paying whatever is owed to the employee. This could cost you double the amount of just offering a settlement. Also, if you lose, it could create a bad business’s reputation, making you lose out on sales in the future. 

The Bottom Line 

Nothing will ever be perfect when you own a business, and when it isn’t, it’s your responsibility. When something happens with an employee that makes them want to sue you, it can be very stressful financially. 

You should always try to avoid being sued in the first place. If it does happen, the best way to save money is to always have the right business insurance and to offer a settlement to save on costs. 

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