How Employers Can Protect Themselves Against Meritless Employee Lawsuits

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The author discusses how some employees try to extort money by threatening to make false claims.

As a San Diego, Orange County and Palm Desert employment attorney, even with all the advice given to employers about being politically correct with their employee relations, news stories, legal verdicts and comedy routines on the television, we still see employers on occasion do the most improper things in connection with their employees. At the same time, there are now employees out there
who are attempting to use the law to their advantage to extort money from their employers.

This type of extortion can happen whether your place of business is in Palm Springs or Palm Desert, La Jolla, Del Mar, Carlsbad, San Marcos or anywhere else in San Diego, in Newport Beach, Anaheim, Santa Ana, Garden Grove, Laguna Beach, Huntington Beach or anywhere else in Orange County and even in cities such as Ontario, Rancho Cucamonga, Riverside, San Bernardino, Fontana, Fullerton, Yorba Linda, Temecula and not just in major cities like Los Angeles, Long Beach or Santa Barbara.

The scenario goes something like this. The employer is threatened by an employee that unless he pays a certain sum of money, the employee will go to the police and to a lawyer telling them that the employer demanded sex in return for either continued employment, a better job, or some other advancement.

Unless the employer pays, he will be faced with certain embarrassment, damage to reputation and business, horrendous legal fees that he is almost certainly not insured against, and perhaps damage to a relationship at home. Extortion, plain and simple.

Add these facts and it becomes even worse. The employee has been a model employee for years. The employer has never had to issue the employee with a warning letter. The employee has consistently received raises and bonuses. If the employer attempts to now construct a different picture of the employee as a conniving extortionist, it will not be believed.

Is there anything an employer can do to protect himself against this scenario? Yes.

Employers can purchase Employment Practices Liability Insurance. It is available through most insurance agents yet few employers are either told about it or purchase the coverage.

What EPLI does, is insure the employer against claims of sexual harassment, sexual, racial, age, and other types of discrimination, wrongful termination and any number of other employment claims such as the “hostile environment” claim that forces an employee to quit. And then sue.

Having such insurance also provides for legal defense of the employer. Legal fees in an employment discrimination case can easily reach $50,000 within months, and well over $100,000 in litigation that lasts years as it often does.

While employment lawsuits often settle either prior to or in the course of litigation, it only takes one lawsuit for an employer to realize how much better it would have been had he purchased Employment Practices Liability Insurance at a premium cost of a few thousand dollars a year.

If you don’t have this type of insurance when this type of scenario plays out, or haven’t been able to buy it, the damage to your reputation can still be limited with a strong and vigorous defense by an employment attorney. Just because this type of allegation is being made against an employer doesn’t mean that the media will automatically run with the story, especially when you have an attorney stating that the allegations are without any basis in fact (if that is indeed the case).

If someone has made a threat to sue you for an employment related claim, don’t wait until you’ve been sued to contact an employment lawyer.

ABOUT THE AUTHOR: R. Sebastian Gibson
Sebastian Gibson is an attorney with nearly 30 years of experience in the U.S. and internationally. He practices in a wide number or areas of law, including employment law, harassment, discrimination, business law and litigation defense, throughout Southern California from El Cajon to La Jolla, Carlsbad, Oceanside and Escondido in San Diego, from Laguna Beach and Garden Grove in Orange County to Santa Barbara and Ventura, from Newport Beach, Santa Ana, Irvine and Anaheim to Rancho Cucamonga, Ontario, Temecula, Palm Springs and Palm Desert.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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