Harassment lawsuits are costly, so out-of-court settlements save employers the time and expense of defending their employment practices. The U.S. Equal Employment Opportunity Commission, the agency that enforces employment laws, reports 26,699 charges of workplace harassment during fiscal year 2018. Approximately 7 percent of those claims were settled, and the EEOC recovered more than $134 million in damages, much of it through out-of-court settlements on behalf of employees who filed harassment claims. Out-of-court settlements often are more attractive to employers than gambling with a potentially sympathetic jury.
When an employee files an initial complaint about workplace harassment, it’s rare that the company is thinking about settlement at this point, unless there have been similar incidents in which the company has been cited or sued for harassment claims found to have merit. At this point, in addition to considering settling claims, the company should also consider organizational changes and mandatory leadership and employee training to eliminate unlawful workplace behavior and unfair employment practices.
Workplace Harassment Investigations
A human resources department staffer, outside consultant or a lawyer typically investigates workplace harassment claims. The person assigned to the investigation must know what constitutes workplace harassment vis-à-vis a thorough understanding of employment laws, such as Title VII of the Civil Rights Act, the Americans with Disabilities Act, the National Labor Relations Act and the Taft-Hartley Act. Throughout the fact-finding process, with correct application of statutory law and knowledge of past practices, settlement may be part of the discussion among decision makers in the company.
Investigative Process and Goals
The goal of every workplace investigation is to determine whether the harassment occurred, and if so, to what extent the employer is liable. During the course of an investigation, it might become clear that settling the harassment claim is a wise move – particularly if the investigator discovers evidence of egregious conduct that would make any jury decide in the employee’s favor. But if the investigation reveals that the company’s employment practices are defensible, the organization may decide that settlement is premature.
Impending Litigation Outside of EEOC Activity
Some harassment claims that the EEOC investigates are found to have merit, and even though an employee files a charge of discrimination with the EEOC, she can move forward with legal representation and seek redress through the courts. An employee has to file a charge of discrimination with the EEOC first, but she doesn’t have to wait until the agency completes its investigation to file a lawsuit – she can request a right-to-sue letter from the EEOC if she wants to move forward with litigation. In some instances, employees immediately retain legal counsel with the desire to press forward with litigation as quickly as possible.
The decision concerning whether to file a lawsuit before the EEOC has finished investigating the claim is up to the employee and her legal counsel, if any, and in some cases, whether the employer’s actions were especially egregious. Once a formal lawsuit is filed and the discovery process is underway to uncover details about the employee’s claim, the company’s investigative approach and past practices, the cost of litigation compels some employers to consider out-of-court settlement before the trial begins.
Costs to Settle a Claim
The cost to settle a harassment claim out of court can be far lower than damages that a court might award. Small businesses that lose harassment lawsuits could be liable for upwards of $50,000 in damages – and larger organizations, up to $300,000. In addition, depending on how the employer postures its case, a jury could award much higher amounts for punitive damages – some headlines report jury awards in the millions of dollars. In addition, employers consider the intangible costs of fighting a harassment suit instead of settling it.
Settling harassment claims can save the organization from bad publicity, which can lead to business losses, plummeting employee morale and a sullied reputation in the business community.