CEO Confidential: An Ex-employee’s $1,000 Lie

Settling — not fighting — a frivolous lawsuit proves frustrating but efficient.

About two years ago, we gave one of our employees a written notice of poor attendance. The next day she came in and quit, saying that she felt singled out.

She applied for unemployment benefits, but the Employment Security Commission (ESC) turned her down. A few weeks later, we got a call from their office telling us she had appealed, and they asked us to show up at a meeting.

I took my operations manager with me, and about five minutes before the meeting began, we learned that she was charging the company with sexual harassment — which was a baldfaced lie. But she was desperate to collect those unemployment benefits.

We won that appeal, but our success was short-lived — she went to the Equal Employment Opportunity Commission (EEOC) and filed a suit. Again, I presented my case and won. Then she filed a civil lawsuit, asking for $60,000 as an award.

I consulted my lawyer. In the ESC and EEOC cases, the burden of proof falls on the person bringing the complaint. In a civil lawsuit, however, the burden falls on the company. It would have cost me at least $4,000 to get my lawyer involved, so I offered to settle for $1,000, which the other side quickly accepted.

This was in no way an admission of guilt; however, I wanted to move on. If we went to court, I’d have had to pay attorney’s fees — and lose more time. I had already wasted three or four full days on this former employee — in addition to plenty of mental frustration.

Looking back, I wouldn’t have changed anything. We did everything right — especially when it came to documentation. Our employee manual spelled out what sexual harassment was, along with the procedure for handling accusations. (Language is very important in employee manuals, and before we introduced ours, I made sure our attorney reviewed it.)

We’d also asked employees to sign a paper stating that they had received the manual and understood it. So we had this employee’s signature on file.

In addition, I had several signed affidavits from my other employees saying that the alleged sexual harassment hadn’t happened. In her written complaint to the ESC and EEOC, the employee named other women in the company who she said had witnessed the alleged sexual harassment. I suppose she didn’t realize that these affidavits would disprove her allegations.

Still, the incident was pretty unpleasant. What I found most frustrating was that there’s no way to guard against someone lying.