Posted on July 25th, 2018
Do you have a class action lawsuit from an employee(s)? Scary situation! But you cannot just hope it goes away. It’s very important to know what actions to take next.
Start by reading this guide to handling class action lawsuits from employees.
A class action lawsuit is one of the toughest types of cases for employers. These types of lawsuits can be a scary, stressful, and overwhelming experience that can cost your company a lot of money, whether you win or lose. The key to navigating it in the best way possible is educating yourself on the ins-and-outs and unique aspects of class actions.
If you find yourself embroiled in one of these and want to keep your business (and professional reputation) in tact you need to have all the resources you can at your disposal.
In this article, we’ll give you an easy breakdown of class action lawsuits, so you have at least a basic handle on what they are an dhow they work.
What is an Employee Class Action Lawsuit?
A class action lawsuit is a lawsuit in which numerous plaintiffs with an identical claim file a single lawsuit.
In this type of lawsuit, damages are sought for the entire group rather than individuals in different lawsuits. While there is technically no minimum for how many people you need for an employee class action lawsuit, there are generally at least 40 individuals participating in the legal process.
Here are the two main components of a class action lawsuit:
An Adequate Number of People
In order for an employee class action lawsuit, the employer’s actions will need to have affected so many employees that an individual lawsuit would be insufficient.
A class action lawsuit means many plaintiffs, up to hundreds or thousands, can be represented in a legal battle.
Common Claims
In order for something to qualify for a class action lawsuit, all the plaintiffs must be raising similar claims. This is also true for any plaintiffs that are representing other affected parties in the lawsuit.
An employee class action lawsuit can be brought to court for several different types of claims. An employee class action lawsuit can occur if a group have employees have experienced the same issue, such as one of the following:
- The employees have not been paid their commissions
- The employees not been compensated for the full hours they’ve worked
- The employees have been forced to work ‘off-the-clock’ hours
- The employees have not been paid minimum wage
- The employees did not receive unpaid lunch or meal breaks
- The employees have not been paid overtime because they were wrongfully classified as exempt
You should note that these aren’t the only reasons a class action lawsuit may occur.
How to Approach an Employee Class Action Lawsuit
Are you handling an employee class action lawsuit?
Here are the steps you should take.
Hire a Lawyer
If you receive lawsuit papers, the first thing you should do is meet with an employer defense lawyer. They’ll help you review the allegations and put a litigation hold or preservation order in place. Hold onto any important documents such as emails, photos, videos, and voicemails, as these will all be important to your suit.
Once the lawsuit has been filed, make sure not to communicate with the plaintiff. All communication should be handled between the two legal teams. If the plaintiff is a current employee or from a company you work regularly with, state that you will not discuss the lawsuit with them.
Tell Your Insurance Provider About the Complaint
The next thing you should do is tell your insurance provider to see if they’d cover this kind of lawsuit. Sometimes, general liability insurance is enough to cover things like third-party injury claims.
If the lawsuit has insurance coverage, they’ll most likely cover your attorneys’ fees, court costs, and any payments associated with your end settlement or judgment.
It’s important to know that certain circumstances may exclude you from insurance coverage. So, make sure to consult with your insurance provider to confirm if they can cover your case or not.
Choose How You’ll Proceed
With class action lawsuits, you are generally required to submit a written response to your lawsuit within 30 days, but this requirement does differ by state. When you reply, make sure you include the following things in your response:
- Your admittance or denial of the plaintiff allegation
- Any defense or counterclaims against the plaintiffs
- If you want a jury trial or an out-of-court settlement
Prior to responding, make sure you understand the claims against you and the potential consequences of the lawsuit. This will inform your overall response.
If the claim is for only a little money or if there are other ways to settle the dispute, you may want to consider accepting a settlement to avoid a costly and unnecessary legal battle. Talk to your lawyer about what option would be best for your situation and weight the pros and cons of proceeding with the lawsuit.
Act With Care During the Case
During the lawsuit, do your best to be as honest as possible with your lawyer and let them know all the details up front. And don’t lose sight of the fact that this lawsuit is about your business and not you as an individual, and let that drive your decision to either go to trial or accept a settlement.
Most importantly, stay calm and don’t let this lawsuit impact your ability to run your business.
Protect Yourself from Similar Lawsuits
The next thing you should do is put policies and procedures in place to avoid these types of lawsuits in the future.
If the policy is harassment or discrimination based, update your handbook regarding these issues and implement training policies for employees and management. You should also create a complaint procedure that is available to all employees, so that employee grievances can be handled before they turn into lawsuits.
Not only will this make you look good in your current class action lawsuit, but it can prevent accusers from trying similar lawsuits in the future.
Final Thoughts on Employee Class Action Lawsuits
Employee lawsuits can be stressful, and if dealt with improperly, they can put your business and professional reputation in jeopardy.
By educating yourself on the ins-and-outs of class action lawsuits, you can navigate this tricky issue as smoothly as possible if it ever arises.
Are you dealing with an employee lawsuit? Need legal assistance? Contact us to schedule a free consultation!
