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Your call: Pay lawyer a little now… or a lot later

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in Employment Law,Human Resources

Sometimes, it pays to take the time and spend the money to have legal experts carefully review your proposed actions. That’s especially true if your company is fundamentally changing the way it does business and wants employees to sign off on changes that dramatically affect how they are paid or whether they remain employees.

Here’s why: Getting it wrong can mean years of litigation, negating any potential savings.

Case in point: Way back in 2000, Allstate Insurance began a transition from an employee-agent program to an independent-contractor program. Employee agents were given several options, including becoming independent contractors or leaving entirely and receiving a full year’s salary as severance pay. Each option required the agents to sign a release of all their rights to sue. Several agents signed and then sued, alleging that they had been misled and that the releases were invalid. The court certified the case as a class action. It then dismissed the case, and the former agents appealed.

The 3rd Circuit Court of Appeals sent the case back to the trial court. Then it went back to the appeals court, which sent it down again. It was appealed once more, and the 3rd Circuit finally, mercifully, put the matter to bed, granting the win to Allstate.

The case took 15 years to adjudicate and multimillions of dollars in legal fees for Allstate—far more than it would have had to pay its lawyers to write tighter employee releases in the first place.

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