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Business Tips

What Should you do if an Employee Sues your Company?

As a business owner, it is your job to be prepared for all kinds of setbacks. You might lose clients, suffer a major technology malfunction, have your office broken into, or be the subject of a cybersecurity attack. You no doubt have measures in place to reduce the risk of these eventualities, and a crisis management plan to get back on track if they do occur. But one thing employers rarely expect is to be sued by an employee of their company. 

There are several reasons an employee might consider suing you or your business. Perhaps they feel they were a victim of wrongful termination. They may have been discriminated against or harassed. Alternatively, you could have violated the terms of their contract or caused them to suffer an injury due to negligence. In some cases, the employee is in the right and is justified in filing a lawsuit. However, there are situations when workers are in the wrong yet feel they can make some money by suing.

Whatever the reasons for the legal action, you need to act fast. A court case could cost your business a lot of money in legal fees, even if you are not found to be guilty. It will certainly cause a great deal of stress and disruption while potentially damaging the reputation of your brand. By following the correct procedure you can protect yourself and your company from financial ruin and continue with business as best you can. If you are in a situation where an employee is threatening legal action, here are some of the steps you’ll need to take.

Seek legal help

lawyer gesture

Even if the employee has only spoken to you verbally and has not formally filed a lawsuit yet, you should seek guidance from a legal professional as soon as possible. Depending on the size and nature of your business, you may have a lawyer already or you may need to hire one. Legal professionals usually focus on a particular area of law so make sure you pick the right one for the job. If your employee has injured themselves in the workplace you might want an injury lawyer, whereas disputes over wages or termination might require someone experienced in contract law. Your lawyer will be able to talk you through your options and how you should act until the case goes to court.

Don’t contact the employee

It may be tempting to get in touch with the plaintiff and try to talk them out of their decision but you should absolutely refrain from any contact whatsoever. Anything you say to them can be used against you as evidence in court. There’s a chance you might let your emotions get the better of you and say something you shouldn’t. It is illegal to fire an employee for bringing a claim against you, even if you feel it is unjustified, so they may still be working for your company. If this is the case, try to limit your contact to no more than is necessary and be professional and polite at all times.

Get insured

If you’re a smart, forward-thinking business owner, you will already be insured against such an eventuality. Liability insurance usually covers organizations from potential claims. Even so, it would be a wise move to contact your insurance provider to confirm whether you are covered in this scenario. 

Keep up morale


An impending lawsuit can create tension in any workplace. It may be that some of your employees are taking the side of the plaintiff, causing a frosty atmosphere whenever you’re around. Conversely, they might resent their colleague for taking legal action, leading to office disputes. The mood of your team is directly related to productivity and wellbeing so do your best to keep up morale amongst your team. It might be a good idea to talk to them about the current situation, rather than trying to suppress it. This way everyone can share their opinion and feel heard. If possible try to organize social events to raise the level of happiness. Arrange team lunches or after-work drinks every now and then.

Prevent future lawsuits

Whether or not the subject of the lawsuit was your own fault, you still need to ensure this doesn’t happen again in the future. If the employee was injured, then remove any potential risk from the office. If they disputed the terms of their contract, then get a lawyer to help you draft clearer documents in the future. By being proactive you can safeguard your company going forward and reduce the risk of disruption and financial loss. 

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