How To Lose Your Small Business in 10 Days – Day 8

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Day Eight – EEOC Investigations

After the loss of the Donkey Kong contract, many employees of Plumbing & Pizza Delivery were laid off. While some simply sought other employment, others believed that there must be a legal claim and began the litigation process by filing a Charge of Discrimination with the Equal Employment Opportunity Commission (EEOC).

In addition to some laid-off workers filing with the EEOC, a pregnant woman who was not offered a job also filed a Charge for pregnancy discrimination. She was advised by her counsel that Yoshi’s interview questions were in violation of the law and she should pursue an action, even though she was never an employee. Had Yoshi been properly trained on how to interview potential new hires, this legal exposure could have been avoided entirely.

Luigi and Peach are notified of these Charges and ignore most of them. After all, in an “at-will” employment state, they believe they can fire an employee for any reason at all at any time. They respond to a few that they find particularly troublesome, without the advice of an attorney and miss vital points that could have helped with future settlement negotiations, as well as bound themselves to certain statements that will haunt them later on in litigation.

Regardless of the validity of these employees’ claims, defending litigation can be extremely expensive. By believing that these Charges “will just go away” and ignoring them, the EEOC issued “Right to Sue” letters to the employees, who proceed to file lawsuits. Now Luigi and Peach feel they are in over their heads and seek counsel. They are advised that many of the claims could have been settled for very little money, but now that litigation has commenced, the costs, even to be right and defeat the suits, will skyrocket.