Steps for Employers to Avoid Employment Litigation

Effectively handling employee lawsuits

By Canaan Suitt, J.D. | Last updated on January 24, 2023

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As a business owner or employer, you want to do everything you can to avoid employee lawsuits, which can be expensive, time-consuming, and bad for business and workplace morale. Some of the most common lawsuits that employees bring include: 

Read this article to learn more about common types of employment lawsuits.  

This article will cover steps employers can take to reduce the risk of employee lawsuits. Although litigation may arise even with the best practices in place, employers may be able to avoid many lawsuits with strong workplace policies and enforcement. And if a lawsuit does arise, employers can be confident that they have done everything in their power to position themselves well for legal action. 

Whether you are facing legal action or want to be proactive in avoiding future lawsuits, it’s essential to speak with an attorney who understands the employment laws in your state and is experienced with litigation. 

What Are Employment Best Practices to Reduce the Risk of Litigation? 

“My best advice to employers is always to have policies in place, to make them real policies that people understand, and that will give employees confidence that they will be treated equally and fairly when matters arise,” says New Jersey employment litigation attorney Wayne J. Positan

Three things are essential for reducing the risk of litigation: 

  • Policies 
  • Enforcement 
  • Documentation 

Fair Company Policies 

“I think, at the outset, it’s important that all employers understand that the goal is to have a fair and efficient workforce for everyone who is part of the entity,” says Positan.  

To have a fair and efficient workplace, employers must have “solid and clear human resources policies, including anti-discrimination policies.” 

Company policies should be clearly stated in an employee handbook. 

Equal Enforcement 

Having good policies isn’t enough. Employers must enforce those policies in a fair and equal way. 

“Employers can’t play favorites,” says Positan. For example, they “can’t look the other way just because a top salesperson is involved” in unacceptable behavior. Such preferential treatment is unfair and will be noticed by co-workers.  

“Administration of HR policy that is fair and comprehensive will get ahead instead of behind the curve in avoiding litigation,” Positan says. 


“I think the biggest mistakes employers make are failing to document less-than-acceptable performance and failing to ensure that employee evaluations are done fairly and accurately,” says Positan. “The failure to document is probably the most common problem I see with employers. You can’t just decide one day that you’re going to take an employment action without having the background to show what you’re talking about.” 

Adds Positan: “If an employer says, ‘this person is always late or has always been a poor performer or isn’t doing their job,’ then I, as a lawyer, want to know what’s in the file that shows the employer has been talking about these issues with that person.” 

Ultimately, “juries expect that employees should be treated fairly. And if you can show, as an employer, that someone has been treated fairly but that they’re still a poor employee, you’re in a much better position to prevail in litigation,” he says. 

Are There Alternatives to Lawsuits? 

The vast majority of employment lawsuits are settled before going to trial. Settlement is often achieved through some form of alternative dispute resolution (ADR), such as mediation or arbitration.  

“Any time entities or persons have a dispute, they can always mediate it,” says Postian. “Typically, mediation doesn’t occur until an employer gets a claim from an attorney representing a plaintiff with a legal problem, which the attorney usually outlines in the letter. Often, the plaintiff’s attorney will ask in their letter if the employer wants to talk before litigating.” 

If the employer agrees to talk, says Positan, they will engage in a comprehensive review “to determine what the situation with the employee is. At that point, the parties could agree to voluntarily mediate the matter, using an experienced mediator or a retired judge.” 

If the parties choose to litigate, “a judge will usually refer [the parties] to mediation at some point in the litigation process, usually early on,” says Positan. For example, “In the federal courts in New Jersey, there are both mediation and arbitration programs with panels of mediators, to which the federal judge will assign mediation.” 

Why is mediation important? “It’s a way for the parties to at least talk to one another,” he explains. “Even if the case doesn’t settle in mediation, many cases settle soon thereafter. Mediation serves the purpose of getting the parties into a room with somebody who doesn’t have a stake in the action and getting them to talk to each other.” 

Additionally, mediation can be cheaper and less time-intensive. “From an employer’s perspective, if you can resolve a case before attorney’s fees and other costs start settling in, it’s worth a look at least,” says Positan.  

“And if mediation doesn’t reach a settlement, then it’s a confidential process, so it won’t be admissible in a trial proceeding. At the end of the day, you’ve at least made an effort to settle the case. You get an idea of the other side’s position and whether there is a chance to work something out.” 

The short answer to this question is: as soon as possible.  

“I find that employers who seek counsel early are able to avoid litigation, or at least put themselves in a posture where they’re better able to defend themselves against litigation,” says Positan.  

“For smaller and midsized employers, I would recommend that they have knowledgeable employment HR counsel and utilize them early on before making decisions,” he says.  

Issues for which employers should seek legal counsel include:  

  • Reorganization of an entity 
  • Reduction in workforce or layoffs 
  • Workplace performance issues or whether someone’s employment should be terminated 
  • Anti-harassment complaints and whether there should be an investigation  

“These are all matters on which employers should consult their employment counsel before making decisions so that they can avoid making a bad decision or one that will be subject to litigation,” says Positan. “If you’re an employer or business owner who doesn’t have employment counsel, and you’re in a position to make adverse employment decisions, then maybe it’s time you got counsel.” 

Questions for an Employment Litigation Attorney 

Many employment attorneys provide free initial consultations for potential clients, letting you get legal advice about your claim without initial costs. 

To get the most out of a consultation, ask informed questions such as: 

  • What are your attorney’s fees and billing options? 
  • What is your experience with employment litigation and risk management? 
  • Are my employment policies in line with federal and state laws? 
  • What should be considered before taking disciplinary action against an employee? 
  • What is the timeframe of an employment lawsuit? 

Once you have met with a lawyer and gotten your questions answered, you can begin an attorney-client relationship. 

Look for an employment litigation attorney in the Super Lawyers directory. 

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