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Small amount at stake in employee suit? Know when it’s best to consider settling

by on
in Human Resources,Overtime Labor Laws

Sometimes, it’s better to settle than to fight. If a case is pretty clear and the potential liability small, it makes sense to pony up the settlement money.

Otherwise, a court may punish bullheadedness with a large award for attorneys’ fees.

Recent case: Robert Johnson claimed he was fired from his job for complaining about wage-and-hour violations. Johnson had worked at a Domino’s Pizza store.

During pretrial procedures, it became clear that the most Johnson was owed was a few thousand dollars. That was because he had quickly landed another job, cutting off back pay. In addition, it turned out that he had lied to Domino’s about his criminal record, which cut off future liability.

Johnson’s attorney wanted to settle, but Domino’s insisted on a three-day jury trial. It lost and Johnson was awarded $1,000 in back pay, plus $4,000 in punitive damages, doubled for a total of $10,000.

Domino’s appealed and lost. And Johnson’s attorney became entitled to attorneys’ fees for all the work he had done on the case, which he claimed was worth more than $100,000.

The 7th Circuit said that because Domino’s persisted in demanding a trial and appeal, it had only itself to blame. Once it understood its liability was around $1,000, it should have offered to settle. The case was remanded for a calculation of how much the attorneys’ fees should be. (Johnson v. GDF, Inc., No. 11-1934, 7th Cir., 2012)

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