2016-12-09 00:00:00 Running a Business English Discover different ways lawsuits against small businesses can be resolved so you can choose the option that fits your needs. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/employment-attorney-prepares-for-lawsuit-meeting.jpg https://quickbooks.intuit.com/ca/resources/business/4-ways-employers-can-resolve-employee-lawsuits/ 4 Ways Employers Can Resolve Employee Lawsuits

4 Ways Employers Can Resolve Employee Lawsuits

4 min read

Employees and ex-employees have the right to sue a business to resolve various types of disputes. If you receive notification that an employee or former employee is suing your company, you need to act fast. Pending lawsuits could tarnish your company’s reputation, cost money that you may not have, and drive a wedge between you and your employees. Fortunately, there are several ways to employers can resolve employee lawsuits.

Potential Employee Lawsuits

Some types of employee lawsuits include:

  • Wrongful termination lawsuits are filed if an employee feels like he or she has been fired without reason.
  • Harassment lawsuits are typically filed if an employee feels he or she is the victim of sexual, physical, or emotional harassment.
  • Personal injury lawsuits are normally filed after an employee is injured at work.
  • Discrimination lawsuits are filed when an employee feels he or she has been discriminated against due to gender, race, or age.

Settling the Lawsuit

Negotiating a settlement is one of the fastest ways to resolve a lawsuit. During negotiations, your lawyer negotiates with your employee’s lawyer in attempt to reach a fair settlement amount. Once settlement amount is agreed on, the paperwork is signed. Once the settlement is paid, the issue is considered resolved.

It’s common for small business owners to jump into the negotiation process in hopes of closing the case quickly. However, you shouldn’t be too quick to settle. Before you decide that settling is your best option, you need to review the case information to determine whether your business actually made a mistake. For example, if you’re being sued for wrongful termination, and you have documentation justifying the termination, you might not want to settle. If your company isn’t guilty of the implications in the lawsuit, compare the cost of going to trial with the cost of settling the lawsuit to determine the best option. Remember, settling a lawsuit appears as an admission of guilt to outsiders, so you need to consider how settling will affect the reputation of your business.


Mediation is similar to negotiation in that the goal is to get both parties to agree on a settlement offer. However, instead of the involved lawyers negotiating directly, a mediator acts as a go between. This helps shift the focus of the settlement from right and wrong to how the details of the settlement benefit each party.

Mediation can be entered into willingly or a case can be referred to mediation by the court in hopes of avoiding a trial. Mediation is a good option if there is a lot of tension between you and your employee. It helps keep negotiations on track so they don’t become unproductive finger-pointing sessions. Mediation is just another way to settle the lawsuit. So before you agree to a settlement consider:

  • Whether a mistake was made by your business
  • The cost of settling versus the cost of going to trial
  • The impact settling will have on your business’s reputation


If your lawsuit can’t be settled — with or without the use of a mediator — you should consider putting the case into arbitration. Arbitration is similar to presenting the case in open court, but instead of a judge, an arbitrator or a panel of arbitrators decide the outcome of the case. The arbitrator(s) is selected by the lawyers of the involved parties with the help of the Canadian Arbitration Association. Arbitrator(s) are required to be completely neutral and have to be approved by both parties before the arbitration process begins.

Like a trial, arbitration follows a clear, organized process to ensure a fair outcome. While the process is less formal than a trial, each party is allowed to have a representative, such as a lawyer, present their side of the case to the arbitrator(s). Arbitration is a good option for cases that can’t be settled outside of court, because it’s less costly and quicker than a trial. In fact, expedited arbitration is available for parties who want to resolve a lawsuit as quickly as possible.

Take It to Court

Disputes that are heard in formal court are typically lawsuits that can’t be resolved using any other dispute resolution method. In fact, in many cases, if a different dispute resolution method hasn’t been tried, the court will order the case into mediation or arbitration before proceeding in open court. During court, your lawyer and your employee’s lawyer will present the case to a judge. Any evidence either side has is also given to the judge to review. Once the judge has heard both sides of the argument and reviewed all of the evidence, he or she will rule on the case. The judge’s ruling is the final verdict for your lawsuit. However, an appeal can typically be filed to try to get the decision overturned. Remember, initiating an appeal will cost more money, so you need to weigh all of your options before starting the process.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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