No matter how well HR does its job of lawsuit-proofing the organization, the day will likely come when some employee, current or ex-, sues anyway.

So how do you advise your employer to proceed? Fight the battle through the legal process, or find a negotiated way to take care of it?

First thing to remember: Before they can go to court, many employee complaints have to pass through the EEOC and/or state equal employment opportunity agencies.

Mediation, conciliation
The EEOC offers employers three ways of handling employee complaints of discrimination and/or retaliation, short of a full-fledged court battle:

  • Mediation. Before the EEOC investigates a complaint – called a “charge” in EEOC parlance – it will ask if you want to take part in mediation. Pros: It’s free and confidential. Con: EEOC mediators, supposedly neutral, may in fact lean toward the employee.
  • Settlement. You can settle an EEOC charge, usually by negotiating a sum the employee will accept to drop it. Pro: The monetary settlement may be minimal; many EEOC charges are settled for $20,000 or less. You don’t admit guilt. Con: You will be paying some amount to dispose of a complaint you may consider bogus.
  • Conciliation. If the EEOC finds reasonable cause to believe you broke the law, it will invite you and the employee to work out a remedy. Pro: This is your last chance to end the matter out of court. Cons: The EEOC may demand not only money, but also difficult structural changes in your organization and a commitment to training that may be costly.

For and against settling
But the majority of the time when employees take a discrimination or retaliation complaint to the EEOC or a state EEO agency, the agency dismisses it, either before or after investigation.

In those cases, the employee can then take the complaint to a federal court. If that happens, the question for you becomes: Do we fight this or settle?

You won’t be surprised to hear that the answer is: It depends.

Here are a couple of reasons to settle the lawsuit out of court:

  • A court case will drain your organization’s time and money. Depending on how far the case goes, it can cost you (and/or your insurer) anywhere from $75,000 to $250,000 to defend yourself. And cases can take many years to resolve.
  • Litigation in open court may make you look bad. It’s so easy these days for people to tweet about anything under the sun; there doesn’t have to be a newspaper reporter in court for your reputation to be harmed.

But there are also reasons to fight the plaintiff in court:

  • You want to prove a point. You’re not a sucker for any ole employee with any frivolous allegation that they might want to cash in on.
  • There’s already been bad press. In this case, a settlement might look like an admission of guilt.
  • You’re convinced the complaint is unfounded. Remember, the EEOC already refused to take it any farther.

Key questions
While the details of each case are different, all employers can ask themselves, and/or their lawyer, certain questions to help determine whether settling or fighting is the better option.

Here are nine such questions from Jon Hyman, an employment law attorney who blogs as The Practical Employer:

  1. Is the plaintiff a current employee or rather a former employee? Think of the morale damage and disruption if you fight an employee in court.
  2. How much can you afford to spend, and will litigation now impede your ability to fund a settlement later?
  3. Do you have employment practices liability insurance coverage?
  4. Will a settlement give other employees an incentive to bring claims? Conversely, will long, protracted litigation deter copycat claims?
  5. Can you tolerate the distractions of litigation? You’ll have to respond to document requests (paper and electronic), gather the documents, and attend depositions and court dates.
  6. Do you want to subject some of your employees to depositions?
  7. What is the reputation of the plaintiff’s attorney – will s/he make the case extra-difficult and expensive?
  8. How likely is it the assigned judge will grant a summary judgment motion and dismiss the case?
  9. How pro- or anti-employer are juries in your jurisdiction? Many juries tend to sympathize with plaintiffs in employment cases; their members are the employee’s peers, not yours.

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