What Should a Business Do When It is Sued by an Employee

According to a study conducted by Hiscox, U.S., most employers have a 12% chance of being sued by their employees and San Diego business owners are no exceptions to this. Employees that believe they were treated unfairly will most likely pursue retribution so they can make up the lost revenue for any number of reasons. The most common reasons are:

  • Wrongful Termination
  • Wage and Salary Violations
  • Injury from Employer Negligence
  • Immigration and Nationality Act (INA) Violation
  • Discrimination Law Violation
  • Harassment or Uncomfortable Working Conditions
  • Bad Performance after being praised for Good Performance

If your business is being sued for any of these reasons, you will need to take immediate action.


  1. Prepare for the Lawsuit
  2. Before a former employee can file a business lawsuit, they will send you a legal demand letter that will be written by the person in question, their San Diego attorney, or a separate San Diego entity. This letter will demand that you take corrective action or the former employee will pursue legal matters. Forward a copy to a business employment  lawer so they can review its credibility.

    >Cut Off Direct Contact with the Former Employee

    If the former employee wants to talk to you or anyone involved with your business, they will need to go through their attorney to do so. You need to take this stance so you can protect yourself and your business just in case you say something incriminating.

  3. Contact or Pursue Legal Counsel
  4. As a busy San Diego entrepreneur, you will need someone that can competently handle your case. Not all cases are the same, so make sure the business employment attorney you are contacting is knowledgeable about the three types of law that could be involved with your case – criminal, civil, or employment. An employee lawsuit can become deeply complicated, so you will need a counsel that can quickly navigate through the information so you can respond promptly. This will also prevent you from attracting more legal issues to your company.

  5. Safeguard Your Finances
  6. Once you have contacted or hired a lawyer, you will now have to protect your finances – both in your pocket and in your company’s vault. If there is a trial, you will need to protect your finances from being claimed in the case. To prevent that from happening, you can get business insurance to protect your finances and/or liability insurance to protect your business from any claims that are laid against it.

  7. Call Your Insurance Provider
  8. Your Insurance Provider will need to know about this lawsuit because there are policies that are designed to protect you in this situation. But don’t assume that your insurance will cover this situation! Some policies will not cover all types of employee lawsuits.

While this is an unpleasant situation, this does not mean that your business will suffer an insurmountable loss. To remain on top of this situation, you need to make sure your business is responding in a timely and strategic manner. With the help of an established and knowledgeable lawyer, you will not draw any more legal problems to your business while navigating through the complications of this lawsuit. Your business will survive at the end of the day.