Last Friday, a group of California franchise owners filed a lawsuit against 7-Eleven. According to an article in the LA Times, the franchise owners claim the convenience store company is responsible for “racial discrimination, invasion of privacy, illegal surveillance, and mistreatment,” all of which violate federal and state employment laws.
The LA Times notes that this isn’t the first time franchise owners have sued 7-Eleven. In the last two years, more than 12 franchise owners have filed lawsuits against 7-Eleven after the company took over their stores. However, this is the first lawsuit accusing 7-Eleven of racial discrimination. South Asian franchise owners claim their stores were taken away from them because of their “cultural and work habits.”
Corporate 7-Eleven claims this is a “frivolous lawsuit” and that it took over the stores because the owners were stealing. Frivolous or not, this lawsuit is going to cost 7-Eleven money. Here’s why.
Employment Lawsuits Can Cost Small Businesses Big Money
Employment lawsuits are among the most expensive lawsuits a business can face. They allege that an employer has violated employee civil rights that are protected under federal and state employment laws. These laws enforce the rights of “protected classes” and make it illegal for employers to discriminate based on…
- Genetic information.
- National origin.
- Pregnancy status.
- Race or skin color.
Attorney Jon Hyman estimates that defending one of these cases can cost a business between $75,000 and $250,000. An attorney must work to build your case, and it can be a long, difficult process. Even if the lawsuit is frivolous, an employer is forced to hire an attorney just to prove the fraudulent claim isn’t worth a trial.
It’s also important to remember that the above numbers don’t include the cost of a verdict. The franchise owners in the 7-Eleven case aren’t even seeking monetary damages, but most of the time, the plaintiff (i.e., the person suing your business) will ask for monetary compensation.
Most small businesses don’t have the extra cash on hand to protect themselves against these claims. So what can you do?
How to Protect Your Small Business from a Pricey Employment Lawsuit
The first thing small-business owners should do is read and understand employment laws. That way, you can enforce protocol that reduces the risk of violations. (For some tips, check out our other posts on employment discrimination and harassment risks.)
But you can’t always prevent a lawsuit from happening. That’s why you can purchase Employment Practices Liability Insurance, a policy that helps you pay for legal defense costs, court fees, judgments, and settlements when you’re sued for discrimination and other employment issues.