If you receive an employee claim letter from an attorney, do not panic

There is a group of law firms that are marketing to current and former employees of companies seeking to obtain individuals to act as a class representative to sue employers on behalf of the individual and all other employees of the company. This will include not only former employees but also employees that are employed and would not ever consider bringing such an action. Employers usually learn about such potential claim by the receipt of a letter from one of these firms, making demand for employee records for the particular employee, and a demand that the company preserve all records, including all employee files, written communications and emails.

When an employer receives the letter, normally there is a form of panic that ensues, especially if you have never received one in the past. These letters appear to be standard amongst these law firms, and they will normally offer to discuss settlement of the claim, for for outrageous sums of money.

We can only encourage employers who receive such a letter, not to panic. The first thing that the employer should do, is gather the information that is being requested, contact a qualified attorney who has experience working with wage and hour claims, who will assist in providing the information to the claimant’s attorney within the statutory period of time, to avoid any financial penalty. The attorney that you contact, should immediately determine if you have any type of insurance coverage that might be of help, and in most cases, there will not be coverage because it is a wage and hour claim. In some instances, the claims that are being made include wrongful termination claims, and if the company has ELPI insurance, then there may be insurance coverage for that portion of the claim, and the insurance company might pick up coverage for the wrongful termination action, but in all likelihood will not pay for any wage an hour portion of any claim, and the insurance company may also be seeking contribution when the matter is resolved. Once a qualified attorney has been engaged, they should do a full evaluation of the potential claim, and depending on your books and records, is fairly easy to do. Once this evaluation is done, you should consider your next actions, and what the risk of liability is.

The letter that is received will be seeking to recover damages, and sometimes double counting the damages, in order to make the employer think that they have a huge liability. Do not try to settle the matter, without the assistance of an attorney, as even though you may want to settle, you need to make sure that proper waivers are obtained as far as any claims against other people, including all officers and directors of the company. In addition, when you receive a letter, and the evaluation is completed, there may be steps that can be taken to avoid liability to other employees, and that should be discussed with the attorney.