Discrimination claims can be a major risk for small businesses, especially in California, where the state has some of the strongest anti-discrimination laws in the country. In this case study, we explore how a small business navigated a discrimination lawsuit and how consulting with an employment law expert helped them resolve the situation.
Jasper Technologies, a small IT firm in San Bernardino, faced a discrimination lawsuit filed by a former employee, Holly Walker, who claimed she was passed over for a promotion due to her gender. Walker had worked for the company for three years and was passed over for a senior role in favor of a male colleague, despite her similar qualifications.
The employee filed a complaint with the California Department of Fair Employment and Housing (DFEH), alleging that her male colleague was promoted solely because of his gender. This legal complaint threatened to tarnish the company's reputation and put the business at risk of expensive litigation.
Jasper Technologies immediately reached out to a third-party employment law consultant to address the situation and ensure compliance with California’s anti-discrimination laws.
Investigation and Documentation: The consultant helped conduct an internal investigation, reviewing the promotion process, emails, performance reviews, and other documentation. The investigation revealed that while the promotion decision seemed based on merit, there were some inconsistencies in the documentation.
Mediation and Settlement: The consultant recommended entering mediation with the former employee to settle the matter out of court, which helped preserve the company’s reputation and avoid the cost of litigation. The business agreed to provide Walker with a severance package and offered additional career development opportunities to employees to ensure fair treatment going forward.
Policy Updates: The consultant helped Jasper Technologies revise its internal policies to include clearer promotion guidelines and better anti-discrimination training for management and HR.
The case was resolved through mediation, and while the company had to pay a settlement, the overall costs were much lower than a prolonged legal battle. Moreover, the company’s reputation remained intact because they took swift and transparent action.
Lesson Learned: Even small businesses must have clear, well-documented promotion and hiring policies. Consulting with an employment law expert can help ensure compliance and mitigate the risks of discrimination lawsuits.
