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California is known to be a litigious state where a single lawsuit filed by an unhappy worker can cost a business millions. Here's how Alden Parker, an attorney with Fisher Phillips in Sacramento, says HR can help minimize the impact of litigation on an employer.
"A lawsuit is made up of two parts: time and money," Parker said at the California State Council of the Society for Human Resource Management's 2017 California State Legislative and HR Conference on April 21.
There is a litigation process, he said, but it's not as dramatic as it is on television.
"It's going to be about two to five years of your life, if you're going to see it all the way through," he said. That's a long time to be thinking about an employee who was fired or quit and isn't contributing to the business anymore.
[SHRM members-only toolkit: Managing Involuntary Employment Termination in California]
Litigation Costs Add Up
Lawsuits are expensive even if the employer ultimately wins, he added. A victory for the employer could still cost between $200,000 and $450,000, depending on whether the case is decided on summary judgment or if it goes to trial.
If employees win, they can recover their costs from the employer. For the employer to recoup its costs, however, it would have to show that the claim was frivolous—which is a pretty high standard.
Parker noted that some plaintiffs' attorneys will settle a claim quickly for a relatively low dollar amount, but others will take a claim to trial or settle it just before the trial to try and maximize their client's award.
If the employer loses, can a jury award really cost more than $10 million? Parker said that's very realistic in California, and he provided the following examples of single-plaintiff lawsuit results in the state:
"Most juries are not made up of our peers," Parker said. Jury members may be unemployed, retired or full-time students.
Some may have recently quit or been fired from a job and they want to punish someone, he noted. They will likely be more sympathetic to the employee than to the employer.
The employee's attorneys may add to this by painting the company as unfair, uncaring and in need of punishment, he said. They might make the trial all about the "little guy" versus "big business"—about "good" versus "evil." They'll want to show that the employee is merely the victim of a faceless business.
HR professionals can fight this depiction of the employer by:
In the case of a fired employee, the worker's attorneys might claim that the employer was angry and irrational when it made the termination decision. The attorneys might try to make the jury angry about the employer's conduct to motivate the jury to award more money to the plaintiff.
This means HR professionals must show that the decision was made calmly and rationally. They should think about who the best witnesses will be and who will be the best storytellers to represent the employer during the trial.
But Parker cautioned that employers shouldn't try to look perfect—no one is perfect, and juries know that. Instead, they should own up to their weaknesses and show the decision-making process that people follow in everyday situations.
Focus on Fairness
Plaintiffs' attorneys will also try to get the big-money verdicts by focusing on perceived fairness instead of the law, Parker said. HR professionals can combat this by:
An employer can show, for example, that it treated an employee fairly by providing notice of a policy, explaining to the employee that everyone must follow the policy and showing that there was never any deviation from the policy. If that person didn't follow the policy, was given a warning and a second chance, and was fired after failing to follow the policy again, that will probably sound fair.
It's important to show that the employer followed its own rules time after time, Parker said. HR professionals have to hold the line on that, which can sometimes be a challenge but is necessary.
"We have to have our managers articulate the business reason for the decision," he added.
Instead of saying that you just fired the person at will, show that the appropriate decision-makers met to discuss the situation and decided they were left with no option other than to terminate employment.
In a wage and hour lawsuit, the employer will need to explain the reasons for classifying someone as exempt from overtime pay, if that's what is disputed.
HR professionals need to put some thought into the company's policies. "You have to know the policies—and the reasons for them—and you have to follow them consistently."
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