Several key statutes, both state and federal, that employees file under against their current or former employers have a costly surprise for unwary employers: they’re fee-shifting.
If an employee sues his or her employer due to unpaid wages, discrimination, sexual harassment, or ERISA violations and wins, the judge may award the employee his or her attorneys’ fees at their regular rate. What exactly does that mean? I’ll explain.
Most employment lawyers that represent employees will work on a contingency basis. That means that they don’t charge the employee for their work by the hour. Instead, they front the employee the costs of litigation and will either take a percentage (and reimbursement of expenses) if the case settles, or they’ll try the case in hopes they’ll be awarded their attorneys’ fees for all the hours they worked on the case at their regular rate. Lawsuits filed in federal court could be assigned a trial date anywhere from 9 months to 3 years later. State court filings, in the Houston area at least, could have an original trial setting 18 months after the date the lawsuit was filed but due to the large case load of Texas courts could not go to trial for three to four years (or more) after their lawsuit was filed.
As you can imagine, an attorney may work hundreds of hours over the course of a two or more year period. Employment law is also a specialty niche of the law and not many lawyers in the Houston area consistently include this work in their practice. As such, employment lawyers can charge higher hourly rates, the average depending on where the attorney is practicing.
If an employer wins in a case where a current or former employee has sued them, then the only attorneys it has to pay are the ones it hired. However, if the employee wins, the fee shifting aspect of these claims create a risk that the employer will have to pay the employee’s lawyers’ fees too, not to mention the underlying judgment awarded against the employer. This could make a $30,000 judgment cost an employer $530,000 or more (if both attorneys’ billed $250,000 in attorneys’ fees over the course of two years of litigation).
If you suspect you’re about to be sued by an employee, you’ve received notice of a Charge of Discrimination or a demand letter prior to claims being filed, or you simply want to learn more about how to mitigate risks of employee-instigated litigation, contact your local employment lawyer today.