Posted on April 4th, 2019
Bellow is a complete transcript of this video.
What’s going on, fellow entrepreneurs? It’s John Fagerholm again from Defend My Biz, and today I want to talk about an insurance policy that people never think of, well, employers never think of when they’re terminating an employee.
So the unfortunate part of California law is … well, in American jurisprudence, anybody can sue anybody for anything.
Okay, there’s that, but the unfortunate part in California law is that when an employee sues an employer, it’s guilty until proven innocent basically for the employer, so how much money are you willing to spend to prove you didn’t do anything wrong if you actually didn’t do anything wrong?
Well, sometimes that can mean quite a bit of money.
I mean, just to hire an attorney to defend you, that’s however many thousands, and then however far you go into litigation, and then if you settle, that’s going to cost you some dollar amount, and if you don’t settle, there’s that risk because what are juries made up of? Employees.
So all that being said, there are all kinds of insurance that you buy for your business. There are workers comp insurance. There’s EPLI insurance in some cases.
There’s, I don’t know, property insurance, whatever, right?
So when you terminate an employee, I believe it’s best to offer a severance agreement in exchange for a waiver of all claims, even if you don’t think you’ve done anything wrong.
Now, I don’t mean employees that move on their own or employees that weren’t a problem or whatever else.
I’m talking about people that you terminated because they were a problem, and I’m talking about people, even if they move on, you just have a feeling that there might be something there.
With those employees, we typically offer a week, two weeks severance in exchange for releasing all claims whether they exist or not.
What that does is it creates, I mean, not a real insurance policy, but it’s an insurance policy, so now you know that you’re not going to have a lawsuit coming, not anything from the labor board, not anything class action related, not anything in the Superior Court, not anything in Federal Court.
You can’t in those severance agreements waive things that they have the absolute right to, for example like workers comp or unemployment or things like that, but you certainly can waive claims for any type of harassment that they might say happened or any type of wage claim that they might say happened, and those are the biggies, right, especially sexual harassment in this environment.
So my advice, if you even have a question about whether this person could potentially sue you, then I would say on termination or resignation, offer a severance agreement.
If they don’t take it, they’re likely going to sue you anyway, so then you’re prepared, at least you know.
If they do take it, you’ve spent a couple of thousand dollars, depending on the average wages here, and then for that $2,000, you know you’re not going to have to spend 50, 60 on a lawyer, another 50, 60 to settle, and then if you went to trial, of course, an exponential amount of money.
So anyway, that’s my advice.
Get yourself an insurance policy which is a severance agreement in exchange for a release of all claims.
Thank you very much. Good being here again, and until next time.
Thank you.
