What To Do When An Employment Lawsuit Appears Imminent

At CEDR, our daily focus is HR problem-solving, with compliance always playing the largest part, leading to litigation avoidance. As we all know, the best way to win an employment lawsuit is to avoid it altogether. However, we inevitably still have members who arrive on our doorstep with a demand letter from an employee’s lawyer. 

Then, we have other members with a current HR issue that needs addressing because they’ve heard what can happen when an employee sues. Often, in these instances, they have been referred to us to help clean things up and create a solid HR program that will help to prevent further legal action. Having a proper HR foundation, including a customized employee handbook put together by employment law experts, is a necessary place to start to help protect yourself against possible lawsuits. 

In the small to medium-business owner world, ultimately, there are certain situations where all roads lead to one or more employees suing the employer. Upon receiving a complaint, you may feel defeated and resigned to a prolonged fight. 

Common employment cases can run the gamut from federal law, state or local law; sexual harassment or workplace discrimination claims with the EEOC (Equal Employment Opportunity Commission); employment claims with the DOL (Department of Labor) about unpaid overtime or vacation time not being paid out; OSHA violations, retaliation, to many other potential issues. 

If you find yourself in the crosshairs of a lawsuit or a lawyer has decided to send a demand letter, we’re here to discuss a quick overview of what to do (and sometimes what not to do) when your employee, past or present, has found an employment lawyer to represent them.

What To Do

Call your insurance carrier and/or engage a local employment attorney

If you carry EPLI (Employment Practices Liability Insurance), they should be your first phone call. Often, they will assign you an attorney. Failing to report an issue to them in a timely fashion could result in loss of coverage, so be sure to call them as soon as you get presented with a possible lawsuit. If you would like to learn more about the pros and cons of EPLI and how it works, we’ve written more on the topic here.

If you do not carry EPLI, your first step is to find an attorney. Your state’s attorney bar association most likely has a lawyer referral service or a searchable database.

You want to look for an attorney in your area who regularly defends employers against the type of claim being alleged against you (bonus points if they’re familiar with your industry).

Ideally, before the employee can even file a lawsuit, the case settles or even goes away if you have an experienced attorney and good documentation.

Your documentation of interactions with the employee or employees involved will be essential in this situation (as it is in all of them!), as your attorney will more than likely ask for copies of all of it. Be sure, if you are not currently practicing good documentation, that you start immediately. Read more about proper documentation practices here.


Be responsive to deadlines and ask for extensions if needed

These often appear as a demand letter or a request for records. The worst thing you can do is ignore something when a former or current employee is filing a complaint or you receive a letter threatening to file an employment lawsuit. Remember, timeliness is key in these situations.

Even if you’re not fully prepared to answer by the deadline, reaching out to ask for an extension is almost always acceptable. Again, in the best-case scenario, you should research, find, and retain an attorney to represent you. Then, they can send a letter to request extra time on your behalf.

What Not To Do

Don’t talk about it

Do not continue to send texts, emails, letters, or chat openly about the issue. Professional communication that takes into account that everything is discoverable (i.e. going to show up in court later) should already be your policy. So, be sure that you and your other office leaders are not creating more liability by creating additional evidence or chatter that gets misconstrued or used against you.

The best policy is to communicate the issue only to your attorney and to allow them to ask for additional information, which the attorney-client privilege can protect.

If you receive a letter from an attorney or a federal or state entity such as the EEOC (Equal Employment Opportunity Commission) or DOL (Department of Labor), it is important to understand that both need a quick response and should trigger your search for an attorney. That attorney is the only person you should be discussing this situation with.

We can’t say this enough; you need to find an employment law attorney or contact your EPLI as soon as possible. Trying to handle these situations on your own can be very stressful, and stress can add to those unintentional quick decisions that can make things worse for you.


Don’t take adverse action

Is the employee who filed this claim still employed with you? Do not terminate or discipline them, as taking action against them can add a retaliation claim to the already existing lawsuit that has been presented against you.

No, this doesn’t mean they get a free pass to do whatever they want at work (or choose when they come to work). But you need to be careful not to do anything that is outside the norm of how you’d normally respond to any type of employee issue. If you feel like there’s an issue that must be addressed with this employee, talk to your lawyer about it first.

All of your actions need to be strategic. Even the way you manage your documentation needs to change when you face litigation. Again, this is why we first and foremost recommend consulting your EPLI or an employment law attorney straight away so you are fully equipped with all of the information on how to adjust what you’re doing when facing litigation.


Do not accidentally create other liability

Employment claims such as unpaid overtime, wrongful termination, unsafe working conditions, assault, wage theft, and national origin discrimination lawsuits are bad enough on their own. Because of this, it is extremely important to take a breath and avoid any knee-jerk reactions. When forced to make quick decisions about an already tense situation, it’s easy to make a mistake that can come back and hurt you later.

A common mistake people make when being threatened with legal action is to try to make the evidence disappear. Please do not try to do this, as you will get caught, and it will only make things look worse for you. Making a rash decision to delete an email or text could destroy your ability to make everything go away. Work with your attorney to preserve documents appropriately and compose your defense.


The best way to be ready is to know that you can demonstrate that you are aware of the various rules that apply to your workplace and that your management practices comply with those rules. This is where great policies written for you by professionals and on-demand HR support can pay for itself ten times over. When you show that you are compliant through practice and policies, you can flip the script and get federal and state officials to help you quickly close lawsuits down.

Feb 16, 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.

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