Episode 309: Employment Lawsuits… What Do You Do?

On today’s episode of What The Hell Just Happened?!, Paul Edwards and Senior Solution Center expert Halisi Tambuzi are here to discuss an employer’s worst-case scenario:  An imminent HR-related lawsuit. Listen now to learn what the first steps you should take are, what things you should avoid doing at all costs, and learn about some of the little tricks employment law attorneys can use to make you panic and possibly make a mistake.


Voice Over: You’re about to listen to another episode of What The Hell Just Happened?! Join Paul Edwards and his guests as they discuss and sometimes even solve some interesting HR problems. 

Paul: And… I’m gonna go off the rails sometimes and talk about whatever I want. 

Paul: Halisi!

Halisi: Hi, Paul. 

Paul: Welcome to the podcasting room and another episode of What the heck just happened in H.R.. So what’s our topic going to be for today?

Halisi: Are you prepared for a lawsuit?

Paul: Are you prepared for a lawsuit? 

Halisi: [laughing]

Paul: So what to do? Like if a lawsuit and because it’s us, that’s an H.R. lawsuit. Something to do with, you know, something to do with something to do with H.R. Yeah. Are you prepared for that lawsuit? So normally when we do this, I’m ambushed, but I’m just, I just want to say we’ve written an article about this, and so I’ve kind of had my head in this game. And then Halisi walks in my office yesterday, and he’s like, I’ve got an idea. And I’m like, Halisi, we’ve been working on this in the background. So the first thing I want to say is, you know, as the podcast, What The Hell Just Happened?! We were, you know, we were born out of CEDR HR Solutions, which I’m founder of and that’s a company that’s always solving HR problems and our job is actually to help what, Halisi?

Halisi: Provide risk assessments to our members, to provide guidance.

Paul: And keep them out of trouble!

Halisi: And keep them out of trouble.

Paul: Yeah. Yeah. So, you know, if you find yourself in the crosshairs of a of a lawsuit or a lawyer’s issued a letter or as we write in the article, you’ve gotten a letter of inquiry from the Department of Labor, you know, somebody like that, which can be actually a required precursor in some states. A lawyer can’t just come sue you. They have to kind of go to them, file the complaint and have the inquiry come to you. 

Halisi: Yeah.

Paul: If you find yourself in the crosshairs of something like this, that’s what we’re going to talk about today, like these are the best practices of what to do. So we start with what documentation? What have you got?

Halisi: Start with what do you got. 

Paul: Yeah. 

Halisi: We start with what do you got. 

Paul: Yeah. 

Halisi: So we like to say, you know, do you have a handbook in place as far as just starting off.

Paul: And not just a handbook, but a handbook that’s in compliance. And so let me put this out there real quick. If you’re in California and you have a handbook in place, not the proper policies when it comes to things like wage and hour, which is where a lot of these lawsuits kind of start. If you’re in California, and you don’t have a California compliant handbook, especially around wage and hour, and you borrowed something from Oregon or Washington which are close, but they’re not exactly the same, or Texas or from your buddy out in South Carolina, then you are already in trouble because what you have is not policies. You have a list of evidence that could be used against you.

Halisi: Exactly. Exactly. So you could have, so the question like, do you have a handbook? If you don’t have a handbook, that’s that’s,

Paul: One thing.

Halisi: One thing. 

Paul: Yeah. 

Halisi: If you have a handbook that is not in compliance –

Paul: Yeah.

Halisi: That’s, that’s another thing.

Paul: That’s a whole that’s a whole nother animal. So the purpose of good policy is to protect you and as Halisi and I will get into when you have good policy in place, hopefully you’ve been trained. So that’s the other thing. Do you have a handbook? And did someone sit down with you like they do at CEDR and spend a couple of hours answering your questions and really training you on some of these key issues that you have to follow? Do you have all those things in place? Then the, and it’s an HR term, when you get the demand letter “the butt pucker” that’s the HR term –

Halisi: [laughing]

Paul: It can be a little less. Right?

Halisi: Right. Yeah.

Paul: Halisi is like I can’t. I can’t believe you just used


Paul:  “Butt pucker” in the middle of our podcast. Okay Halisi. Let’s say that you have the handbook, you have training, you have documentation. And I’m going to just kind of put a I’m going to put a pin in that part, which we’re just going to say means that you kind of know what you’re doing. You’re doing your best.

Halisi: You’re doing your best. RIght.

Paul: And you might even be doing it actually right.

Halisi: Uh huh.

Paul: You know, you got it right. But you can show that you understand the rules, that you are attempting to follow them. And that is a really good thing. That’s a great position.

Halisi: It’s a great position to be because you have to understand that it’s going to change from the intent,

Paul: Yeah.

Halisi: The intent aspect, which attorneys might, they might harp on. 

Paul: Right. 

Halisi: That you intentionally did not provide your employee with the wages versus you just messed up. 

Paul: Right. 

Halisi: So having that in place, I think it does provide some type of information about your entire, you know, situation.

Paul: And if you’re in one of those states, which is many where the DOL has to file the first inquiry and ask for records and stuff, you can actually help them help you.

Halisi: Uh huh.

Paul: Because they get the records back from you and you’re keeping time like you’re supposed to, you’re paying overtime. I mean, they look in and they look into the first four months and look at all your payroll and they don’t find any mistakes, they’re going to kind of stop right there, like, okay, that’s enough. And they’re not going to, they’re not going to be against you, I guess is a good way to put that.

Halisi: They might say, “I got some other fish to fry.”

Paul: Yeah. Exactly. Okay, so we have handbook and documents in place. What’s the next thing that we might have? 

Halisi: Might? Um, EPLI. 

Paul: Okay.

Halisi: The professional liability insurance. 

Paul: Okay.

Halisi: That’s there. And so just making, noting that, right? What is that for? Is there enough liability to cover even the cost,

Paul: Right.

Halisi: Of a potential claim.

Paul: Okay. And so what’s the first thing you’re supposed to do, if you do have EPLI? And I’m going to just tell everybody we’re not going to go into this too deep, but we have in the article that we’ve written, which you can refer to in the footnotes or in the, you know, posted underneath this podcast. We also have a link over to EPLI, which is ‘what does EPLI cover and what doesn’t it cover?’ Because it doesn’t cover a lot of things. Like most insurance companies, it excludes itself, but a bona fide wage and hour mistake I believe the EPLI coverage will kick in.

Halisi: Yeah, it might cover those as far as the wage and hour.

Paul: Yup.

Halisi: Or it’s going to those things that are kind of related to agencies, worker’s comp, 

Paul: Right.

Halisi: Unemployment. Those are going to be left out of that left out of those.

Paul: Of course. 

Halisi: But what you’re really kind of looking at are, you know, those Title Seven, those kind of major discrimination claims.

Paul: So, everybody now we’re moving outside of a wage and hour claim, which is where we see a lot of demand letters or inquiry letters come from,

Halisi: Uh huh.

Paul: And now we’re moving to just about anything else that could occur.

Halisi: Yeah.

Paul: Yeah. So EPLI, the body of it, can cover quite a varying wide swath of threats that might come to you. So first thing is if you get a letter, you’ve got to call your EPLI.

Halisi: Yeah, call them. And also just review your policy to make sure you see what it covers that’s there with the wage and hour. It may or may not be covered. 

Paul:  Right.

Halisi: But you do want to make sure that it, see what’s there. So see what you’re up against. You want to check your amounts that you’re going to have. We understand that the if a claim, if you if you’re getting sued that range of how much that could cost you, whether you have to pay the attorneys, whether you end up paying out one of your employees, you know that, that’s a large range.

Paul: And they will if they’re going to cover they will assign an attorney and there’s a process there. So again, I’m not going to go all the way into it. But if you’re paying for EPLI and they’re going to cover, part of their job is to negotiate, settle and/or fight the case depending on where this is going to go.

Halisi: Uh huh.

Paul: Yeah. I do want to say that in a lot of instances, that having the right paperwork and everything in place can run off attorneys. 

Halisi: [laughing]

Paul: You know, if you’ve got good documentation, you know, an employee feels like they haven’t been treated fairly and they go to an attorney and they give the attorney their story and they convince the attorney to generally take a case on a contingency fee. The attorney sends out that first letter. It’s kind of a shot across your bow. It could be pretty direct, like lawsuits imminent. 

Halisi: Uh huh.

Paul: It could be I want these records or whatever it is, the better your documentation and records. Also, when it comes to the attorney on the other side who might be wanting to sue you, the better all of those things are on your side that you provide, it can run them off, too, because they’re like, oh, I didn’t get the full story. Now I have the full story of the documentation and the employee kind of left out a few things. And this is not a case that they want to take.

Halisi: Yeah, that is correct. And I think like when those demand letters come over – 

Paul: Right.

Halisi: That’s going to change your whole day, whatever you had planned for the day –

Paul: Oh, it’s a terrible feeling.

Halisi: [laughing] That whenever you get to the end of the day, all of a sudden is not going to seem as important.

Paul: But look, everybody, as bad as it is, you know, you put down your Chick-Fil-A sandwich, you know, because you’re sitting in lunch, you’re opening mail and you’ve had about two waffle fries and you’re halfway into your Chick-Fil-A sandwich and you open up this letter and you read it. I just want you to just relax and kind of,  it’s not the end of the world. If you don’t have EPLI, then the next thing is that you still need an attorney. So that’s your next thing. If you’re a member with CEDR, you can give them a call, give us a call and we’ll generally help you point you in the direction of who, you know, we might recommend or how you would find someone for everyone’s benefit out there. Most of the bar associations now have websites that have specialized attorneys and that you can access, you know, so it’s like, you know, I’m looking for this kind of person.

Halisi:  Uh huh.

Paul: Okay. So you got the letter, they’re asking for whatever or they’re threatening whatever. You need it. You need to lawyer up as quickly as possible.

Halisi: You need a lawyer up and just like basically collect your documents. Like one good thing is to make sure, hey, I have my personnel folder. I can just go to my personnel folder. 

Paul: Yeah. 

Halisi: Already grab the folder. This is what I’m ultimately going to, this is what I’m ultimately going to provide to my attorney. 

Paul: Right. 

Halisi: So, so that they can see it. So just having that little bit of organization.

Paul: And the other good thing about having an attorney in place is that you get attorney-client privilege.

Halisi: Uh huh.

Paul: And they can ask a lot of questions that you can answer honestly that then nobody else can discover. Like those emails don’t end up somewhere. But let’s talk about chatter, okay? 

Halisi: [laughing]

Paul: So you get the letter and you’re like [frustrated grunting noises]. You can’t eat the rest of your Chick-Fil-A sandwich and now your managers are involved or you’re asking questions. You start texting. And there’s always a lot of drama around this. What is our guidance around that Halisi?

Halisi: Don’t talk at this point.

Paul: Don’t talk about it.

Halisi: Don’t talk at this point. You don’t want to lose that privilege. 

Paul: Yeah.

Halisi: And I don’t know if people understand how, like how key and how and how much you want to actually protect that privilege.

Paul: I mean, how many times do you hear in the news? We got their emails and this is what they said, but this is what they did. So that stuff is discoverable, that’s a, you know, legal term, it’s discoverable. But once you’re under the umbrella of an attorney, the attorney can say, yeah, they were talking about it, but they were talking about it, we were investigating. And all of that has attorney-client privilege. 

Halisi: Right.

Paul: For the most part.

Halisi: Right. Right.

Paul: So the sooner you retain someone and the less you say in the text and amongst the team, the better. At least in the beginning, everyone who’s listening. 

Halisi: Exactly. 

Paul: So just take a breath and you’re going to get in touch with an attorney who’s an expert in employment law. So your wife’s brother-in-law, who’s a real estate attorney who used to work for an employment law firm when he got out of law school should be able to tell you who you should go talk to. [laughing] You know.

Halisi: [laughing] That’s exactly what that person is used for.

Paul: They’re not the one. [laughing] They’re not the one.  And just know that a lot of times you make your first or second call. Attorneys want to help each other out and they’re referring people back and forth. And they’ll get a little bit of information to say, oh, I know who you need to talk to, my buddy, you know, Mary Beth, over there she’s awesome.

Halisi: And she handles those kinds of cases.

Paul: And she handles these cases, she knows the people at the DOL. Well, this is the person I should refer you to, okay? So the other thing is, this goes without saying, there can be deadlines, both real and false. False deadlines are things that attorneys put on you to put pressure on. There can be real, real deadlines are you know, the Department of Labor said we need an answer by next Friday. Just know that if you go ahead and get an attorney, they can get into there and ask for extensions. And everybody’s going to, everybody’s pretty much going to work with you. 

Halisi: Yeah.

Paul: But just know that the first, if it comes from a lawyer, the first letter is going to be really ugly. It just is.

Halisi: And maybe exaggerate it a little bit.

Paul: And possibly it may contain extra information that is not factual.

Halisi: [laughing]

Paul: The next thing oh, we said gather the documents, kind of look at your policies and stuff like that.

Halisi: Uh huh.

Paul:  Of course, the attorney is going to help you with that. And if you’re a member, you’re going to call us. We’re going to get you settled down. You know, we’ll talk to you about, you know, how things are going to go.

Halisi: One thing about documents, I think the attorneys are going to want to know the situation regarding that employee. 

Paul: Uh huh.

Halisi: And they might ask for a timeline. 

Paul: Right. 

Halisi: One thing I want to kind of stress is that the timeline is not the same as our documentation for that particular incident. 

Paul: Right. Gotcha. 

Halisi: That took place. A lot of times we can be talking, you know, speaking with our members and whatnot. And, you know, the question of should I go back in and create documents?

Paul: Oh, should I create stuff out of thin air? Would it help me? Or on the other side of that, I found something that I think might not be good. Should I get rid of that? 

Halisi: Right. Right.

Paul: And the answer is, please don’t destroy anything. 

Halisi: Yeah, yeah. 

Paul: Don’t, don’t don’t get rid of anything. Don’t, don’t, don’t, don’t create anything new. Go speak with your attorney and they’re going to then go through your documentation. But please resist the temptation to mess with anything.

Halisi: Exactly. 

Paul: Okay, I think next on our list would be don’t take adverse action if the employee is working with you. It’s hurtful to, and it’s really hard to like get a letter from an attorney who represents an employee who’s working with you. But some of our larger employers, it happens. Don’t take any adverse action. And if you feel like somebody else is helping them or may be a part of this or instigated it and they’re working for you, don’t take adverse action against them either.

Halisi: Right. And someone else might be helping them.

Paul: Oh!

Halisi: Someone else,  someone else might be helping –

Paul:  Oh, okay.

Halisi: Helping them with language. And I think that even if someone is particularly helping them, it’s important not to take not to take adverse employment action. 

Paul: Yeah.

Halisi:  And you’re still going to want to treat them consistently as you would any other employee –

Paul: Right.

Halisi: Even though it’s going to be hard, because you’re saying –

Paul: Because even though you feel like you might have an enemy inside your defenses. But again, this is all part of the ‘it’ll be better a week from now once you’ve kind of gathered everything and you find out whether this is really an issue’. The last thing that I want to say before we let everybody go, because this has been a very HR nerdy kind of focused thing, is that it always looks bad in the beginning, but once you run the numbers, pull the documents to get all the records, a lot of times, in my experience, Halisi, now for like 18 years, doctors all freaked out and I’m freaked out, letters terrible and everything and we find out what is owed is $2,100 to two employees and it’s an isolated error and it’s not something that’s going to blow up any bigger than that. So just go through the process and to recap, go to your EPLI if you have it, don’t destroy the evidence, don’t freak out, stop talking about it internally until you find an attorney who you can be underneath their umbrella and then you just methodically move forward to this and the best thing you have in any kind of lawsuit is to have good documentation, the right policies in place, and that can really be very, very helpful in so many different things. Right?

Halisi: Correct.

Paul: Okay. Don’t panic. It’s going to be alright. Thanks Halisi.

Halisi: Thank you.

Voice Over: Thanks for joining us for this week’s episode of What The Hell Just Happened? do Paul a favor; share this with your network. If you have an HR issue or a question, and you’d like us to discuss it on this show, send it to podcast@WTHjusthappened.com. For more HR advice and insights from Paul and his team of experts, you can also join the private Facebook group, HR Base Camp, or visit HRbasecamp.com. Make sure you tune in next week. And remember: better workplaces make better lives.

Mar 21, 2023

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance based on applicable local, state and/or federal U.S. employment law that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.