Evaluating the defendant company in an employment case

The case evaluation considers the defendant employer

One of the things a lawyer does while evaluating an employment case is to learn as much as possible about the potential defendants.

The two most important inquiries are the size and financial resources of the potential defendants. A final consideration is the employer’s litigation philosophy.

The size of the employer

Size is important for two reasons.

First, Title VII and most state statutes outlawing discrimination do not apply unless the employer employs more than a certain number of employees. For example, Title VII defines an employer as a “person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such person.” Thus, unless the employer has a sufficient number of employees to satisfy these statutes, the attorney will have to explore other potential claims.

Second, as a general rule, smaller, privately-held employers tend to view litigation as a personal affront, as opposed to large, publicly-traded employers which see litigation as a cost of doing business. As a consequence, smaller employers are, at least initially, less amenable to settlement. Smaller employers also seem to retain smaller law firms with no particular expertise in employment litigation, but with a fervent belief that every case should be litigated in an aggressive “slash and burn” style.

The employer’s financial resources

If an employer is not financially viable, the merits of the employee’s case may be irrelevant because there will be no money to satisfy any judgment. Employers that are not viable financially will often file for bankruptcy, thus potentially rendering the case worth merely a fraction of its true value.

However, a determination that the prospective defendant is not financially viable should not end the inquiry. Often, employers have Employment Practices Liability Insurance policies that may cover your claims.

The employer’s financial resources are also important if punitive damages are possible. One component in any punitive damages determination is the employer’s wealth. Therefore, the greater the employer’s financial resources, the greater the potential punitive damages award.

The employer’s litigation philosophy

Another area of inquiry is the employer’s philosophy regarding litigation and settlement.

Some employers have reputations for not settling any cases. With these employers, if an employee has a weak case, a lawyer may not want to accept the case. And if the employee has a strong case, the employee and his or her lawyer need to look forward to and prepare for a trial.