What Is Employment Litigation?

Employment litigation is fancy terminology for when an employee sues their employer for something related to work or work-based activities, which can include extracurricular activities like work parties. According to the Oxford Dictionary, litigation means “the process of making or defending a claim in court.”

Employment litigation is most commonly seen through the Equal Employment Opportunity Commission (EEOC). Most charges don’t make it to trial as many companies prefer to settle outside of court to save time, money and negative publicity. To read more about the EEOC, check out the HR Encyclopedia article here.

There is a lot to employment litigation. In this article, you will find links to other HR Maverick Encyclopedia entries to read later. Come back as often as you need to!

Also a big thank you to employment law attornies Mark Tolman, co-chair of the employment department at Parsons, Behle, & Latimer; and Bob Coursey of Modern Age Employment Law LLC for their expertise and guidance on this topic.

Reasons for Employment Litigation

Anyone can bring a charge against an employer, even if they only applied to work at the company. The number of charges received varies by state and reason. The EEOC updates their enforcement data every spring, which shows the numbers and reasons for discrimination charges that are filed nationally and by state each year. You can look up these statistics as well as the EEOC litigation statistics (where the EEOC files a lawsuit on behalf of an individual person or a group of people) here.

According to the EEOC, in 2021, charges ranged from Vermont with only 39 to Texas with 6,508 charges. 2022 data will be updated in the spring of 2023.

Here are some of the most common reasons that result in employment litigation.

EEO Laws: Harassment, Discrimination, Retaliation, etc.

EEO stands for Equal Employment Opportunity. These laws prohibit specific types of job discrimination in certain workplaces. It’s critical that all HR professionals become familiar with these laws. The Department of Labor (DOL) has two agencies that monitor and enforce EEO Laws. You can read more about them here.

The most common claims filed on EEO laws are discrimination, harassment, and retaliation.

Workplace or Employment Discrimination

Workplace discrimination occurs when an individual is treated differently or less favorably because of a protected class. Protected classes are covered under the Civil Rights Act, Title VII. These are: race, color, national origin, age, disability, gender reassignment, religion or belief, sex, sexual orientation, marriage and civil partnership, pregnancy and maternity. All HR professionals need to be aware of these protected classes, what discrimination against them looks like, and how to prevent that discrimination from happening.

Disability discrimination is not just about visible, physical disabilities, but invisible ones too. The most frequently filed disability discrimination claim is for mental health. It’s important to remember that mental health is protected as much as physical health. You can check out the different types of discrimination here.

The HR Mavericks have also written several articles about discrimination. You can check out these must-reads here.

Harassment

Harassment, according to the EEOC,  is a form of employment discrimination that violates Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 (ADEA) and the Americans with Disabilities Act of 1990 (ADA). If you aren’t familiar with these laws you can read more about them here, here and here.

Harassment is when some unwanted action or behavior, usually negative, is performed toward an individual beyond what the average person should have to endure. If the employer doesn’t step in to stop it from happening, they could face legal action.

Harassment can occur verbally, physically, or visually. A good relationship with co-workers is always encouraged, but if the atmosphere gets too relaxed, jokes or even pranks may be taken too far and may be considered harassment. Keep your eyes and ears open for signs that employees may be uncomfortable. Is it severe and frequent enough that the workplace is now intolerable? If a reasonable person would consider the actions to be intimidating, antagonistic or unwelcome, it’s harassment.

On average, harassment lawsuits settle for around $50,000, but every case is different depending on the severity, circumstances, and how it was handled.

Retaliation

This occurs when an employer fires, takes a negative approach, or performs any type of adverse action against an employee for engaging in protected activity.

What is adverse action? Adverse action causes a reasonable employee to feel like they could not raise a concern about a violation or engage in protected activity without getting into trouble.

What is protected activity? Protected activity falls into two basic categories: opposition and participation.

Opposition is opposing anything you believe to be discriminatory or harassment and reporting it to the appropriate authority. This includes filing a complaint on discrimination or harassment, or participating in an investigation. These include filing complaints with a supervisor, manager, HR, or the EEOC, not complaining to a fellow co-worker.

Participation is being part of any investigation or exercising your rights under any of the employment laws such as the FLSA and FMLA (see below), filing a workers compensation claim, etc.

Protected activity also includes safety. The whistleblower protections cover five other government agencies: OSHA (Occupational Safety and Health Administration), MSHA (Mine Safety and Health Administration), OFCCP (Office of Federal Contract Compliance Programs), WHD (Wage and Hour Division) and VETS (Veterans Employment and Training Services).

Read more about whistleblower protections here.

According to EEOC statistics, retaliation claims are the most frequently filed claim, accounting for over 60% of claims filed from 2017 to 2020.

You can read more about retaliation in this HR Mavericks article.

FLSA

FLSA stands for Federal Labor Standards Act. Under this act, you will find policies for minimum wage, overtime pay, child labor restrictions, and record keeping laws. Employers are required to post their employee rights.

The 7 most costly FLSA mistakes to avoid are:

  1. Misclassifying non-exempt employees as exempt. The most commonly filed claim with the courts is for the classification of employees. Are they a W-2 or a 1099 employee? Is the employee exempt or non-exempt? Depending on how they are classified will determine if they are subject to overtime laws. Regular audits are recommended to make sure you have your employees classified correctly so you’re paying them correctly.  Here are some HR Encyclopedia articles to help you determine correct classifications.
  2. Improperly calculating the overtime rate of pay. Don’t fall in the trap of thinking overtime pay is just a basic math formula. There is much more to it! Check out this article on overtime pay for more information.
  3. Not paying for all hours worked. This can be tricky in less obvious ways. Do your employees travel as part of their duties? Do they work from home and have to start their computers in order to work? What about breaks under 20 min? Do you have on-call employees? Knowing what is considered compensable time is important. Read here for more information on this topic.
  4. Allowing non-exempt employees to work “off the clock.” This comes back to not paying for all hours worked. You are at risk of violating overtime laws if time is not being counted towards total hours for the week. Make sure you set firm boundaries: if they are not on the clock, they cannot even answer an email!
  5. Not paying non-exempt employees who work through their meal breaks. Breaks that are more than 20 minutes long should be done off the clock, but that means not working as well. Encourage your employees to take breaks away from their working areas if possible.
  6. Poor recordkeeping. Know how long you need to keep up on your documentation. This includes employee files both current and separated, payroll files, I-9 forms, OSHA logs, FMLA logs, etc. To read more about payroll files to keep and for how long, click here.
  7. Ignoring state laws. Many states have laws that differ from federal laws pertaining to wage and hour. Check your state laws to make sure you know yours.

You can read more about the FLSA in this HR Encyclopedia article.

FMLA

FMLA stands for the Family Medical Leave Act. Every HR professional should be familiar with this law. First, determine if your company falls under the law. Are you a government agency or a school? You’re covered. For private employers, do you have at least 50 employees? If the answer is yes, you are covered.

FMLA has some very strict requirements that need to be observed. FMLA is a right that every eligible employee has, whether they know about it or not. This act guarantees protected leave, which means an employer CANNOT terminate an employee out on leave and they must return the employee to the same or similar position at the same pay rate. Employers cannot force employees to come back earlier from their approved leave.

Employees need to be notified if they meet the requirements for FMLA eligibility within 5 days. Any FMLA time taken before they are notified of their eligibility cannot count towards their FMLA time, but is still considered protected time. Be sure to follow the process and provide the correct forms and communicate it to the employee.

The Department of Labor takes FMLA violations extremely seriously and violations can start with $10,000 in fines. In FMLA litigation cases, the courts have also awarded:

  • Reinstatement. If the employee was terminated incorrectly because of FMLA, the court can order a full reinstatement of their position, pay, benefits, etc.
  • Leave. If a leave was denied and the employee was eligible, a court can order the company to give the employee their leave.
  • Compensation. Monetarily, courts are ordering employers to “make the employee whole,” which means paying back pay for missed wages, or the difference in wages if they were demoted.
  • Out of pocket costs. Courts can order an organization to pay the employee costs that were caused because of the FMLA violation.
  • Front pay. This is the amount the employee would lose because of the violation, such as when an employee was terminated and the court didn’t order a reinstatement, but they still need to find a new job.

You can read more about the FMLA requirements in this HR Encyclopedia article.

Other Laws to Know:

Other laws about litigation include those on benefits, such as the Employee Retirement Income and Security Act (ERISA) and Consolidated Omnibus Budget Reconciliation Act (COBRA). You can read more on those in these articles here and here.

If your company has contracts, such as non-compete agreements or compensation agreements, familiarize yourself with those. If you need more information on non-competes, check out this article here.

Less commonly known are workplace torts, or civil wrongs committed within the workplace that give rise to an employee’s action against an employer. These include discrimination and sexual harassment, as well as negligence, infliction of emotional distress, invasion of privacy claims (watch out, social media), and wrongful termination.

Here’s an amazing article on wrongful termination.

Best Practices for Companies to Avoid Employment Litigation

Now that we know what can cause litigation, how do we avoid it? Not every employee complaint turns into litigation. How the employer and HR responds to complaints can be the deciding factor.

Talk to an Employment Law Attorney

Be prepared! Talking to an employment law attorney before something happens is very important. Find an attorney that fits your company’s needs. Have them help you go over best practices, your policies, and procedures and identify areas for improvement to lessen risk.

Building that relationship is important, especially in the event that you do end up in litigation. Litigation has deadlines and time frames, and if not handled correctly, the courts won’t wait. Getting stuck on the waitlist for an attorney when you need one now can cause severe damages. It’s a lot cheaper to have check ins and conversations to make sure you’re keeping on the right track.

Policies and Training

Have an anti-harassment policy in place. Make sure that you train regularly on these policies and enforce them. You want to respond to complaints immediately and make sure you correct any action or provide any needed training immediately.

Make sure there is adequate and regular training on FMLA, such as what to do with time cards, etc. This includes HR employees. Train managers on policies and procedures, when to notify HR, what forms they need to fill out, etc.

Regular Audits

It’s a lot cheaper to manage issues internally. Create a list of regular audits to help keep your company in compliance with the law. When you see an issue, get it corrected as quickly as possible.

Be Informed

Laws are always changing and evolving. Watch out for updates and new laws that may affect your company so you can be prepared for the changes.

How Companies Should Handle Employment Litigation

Even if you’ve done all you can to avoid it, sometimes litigation still happens. You get served papers or you’re notified there is a charge filed. What do you do?

Step 1: Read the Paperwork.

You need to know what you’re dealing with. Are they taking you to court? Are you being sued? Is it an administrative charge? What are you being accused of? You need to know exactly what to look for. If there are deadlines associated, make sure you get them on the calendar and give yourself plenty of time to respond. Failure to meet the deadlines or follow the instructions will cause the court to move forward without your input.

Step 2: Enact a Litigation Hold

A litigation hold is when you make sure nothing gets thrown away. Call your IT department to stop any auto deletion for anyone who may be involved. Contact anyone who may have information or documentation and tell them to not delete anything and start to gather what they have, even if they think it’s not important.

Step 3: Call Your Employment Law Attorney

Notify them immediately, even if it’s just to give notice. They can help you work through the process or at least be aware in the event that it does go to court.

Step 4: Call Your Employment Practices Liability Insurance

Does your company have an employment practices liability insurance (EPLI) plan? This includes coverage for defense costs and damages related to the various employment-related claims. This includes claims of discrimination, harassment, retaliation and wrongful termination. If you don’t have an EPLI, it’s not a bad idea to look into getting one. Make sure you put them on notice.

Step 5: Mediation

If you are given a notice of administrative charge from the EEOC, still follow step 1 and respond that you will be at the mediation and make sure you go. 90% of administrative charges are settled in mediation. Make sure you go with a decision maker in the company and take all of your notes and documentation.