Have you ever sued your employer?

Just curious if anyone has ever sued or gone after their (former) employer legally? How did it turn out? What was the context?

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Comments (67)

  • Associate 3 in PE - LBOs
Sep 15, 2021 - 9:05pm

Not personally, but I know people who have.

Some settled early, depending on the state and claims one ended up with a passable settlement (~$500k), another ended up settling and paying the employer a low 6-figure amount (not sure how much), another dragged on for years, I'm not sure if they ever worked it out but I know they racked up a massive legal bill (like $1M or so), felt like they kept it going in the hopes they would get a judgment that awarded legal expenses if nothing else. 

From a personal perspective, we looked at hiring an exec who had sued their previous firm and it was a major point of contention at IC (some were adamantly opposed to hiring them on principle). 

All depends on what's at stake, but if it's a matter of pride I'd probably let it go due to outsized risk vs reward. If they fucked you out of real money then maybe it's worth pushing forward, but keep in mind the consequences could extend beyond this one employer

  • Associate 3 in PE - LBOs
Sep 17, 2021 - 1:12pm

Yep. Employer counter-sued him, which is not uncommon in these cases. I don't remember why, I think I was told it was a scare tactic or something like that, but either it worked or they actually had cause, because he ended up paying them to settle both suits. 
 

I don't know the exact amount or how they arrived at it, but I wouldn't be surprised if it was to cover the company's legal expenses

  • Associate 1 in S&T - Other
Sep 15, 2021 - 9:19pm

I pushed internally pretty hard on some pretty legit discrimination stuff that took a lot of money out of my pocket. Bank had to pay me roughly a year salary. Probably could've pursued it legally and recovered more, but, as mentioned, that type of move can follow you. Still may report it to some regulatory agencies though

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Sep 16, 2021 - 2:42am

I've had executives try to sue us before. One was kind of successful when terminated as it was cheaper to pay than waste our time fighting it. Another did it right as we were about to exit - and he knew it. He did it purely to force us to pay him as he knew he was on the verge of being fired. 

It's 100% a black mark and very short-sighted. We screen for it pretty aggressively and I know most firms do too. Immediate no-go for me when hiring. Not worth the potential headache.

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  • Principal in PE - Other
Sep 16, 2021 - 1:18pm

Interesting. When you say "screen for" you mean you see if there are any pending or past lawsuits with a candidate? I've seen circumstances where employers have terminated staff and simply said they quit so they couldn't get severance - in those cases, I would sue.

Sep 16, 2021 - 1:31pm

Yes. The reason employers say people quit is because it releases them from having to pay unemployment. When we move to terminate anyone senior, it starts by cranking pressure on them so we can see if we are right about their inability to deliver; 90% of the time they just quit - the other 10% of the it becomes so apparent that they need to be terminated that there's no way they would win an unemployment case. 

I'm about to terminate an executive this Friday and I expect him to try and sue us, although he won't get very far because I have all his failures documented and his salary is so high that I can comfortably spend $30k - $50k on legal and it would make more sense than some stupid severance package for burning our money.

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  • Principal in PE - Other
Sep 16, 2021 - 1:35pm

I think there a difference between firing someone for cause (i.e., they are documented to not be meeting expectations) vs. firing someone because you just don't need them or they aren't the right fit - the latter is really a restructuring. In the case of the latter, you're stating that you would purposefully break state employment law and tell them "they quit" instead of simply paying them severance? If so, you realize that's illegal.

Most Helpful
Sep 16, 2021 - 2:32pm

Where did I say that?

I said we simply apply pressure until they see why they aren't performing and then we terminate/they quit. It's really simple and extremely common. There is no "you aren't the right fit" bullshit. You're either able to perform according to the milestones and targets we lay out prior to employment or you aren't. If you can't, then our goal is to terminate and reduce legal liability + potential costs as much as possible.

I'm not some corporate whore playing with other people's money that thinks investing 10% of my net worth in my work is material. I have the extreme majority of my own capital invested in our deals and my investors are people that trust us enough to write checks with little to no DD in most cases. As a result, I guard my investor's capital religiously and take pride in how hard our firm fights to ensure every dollar is well spent. I don't pay myself a salary at all (100% performance driven comp) so when an executive being paid $300k a year can't perform, we move to terminate quickly. If we ever fail (we have not yet), then I want investors to be able to look at everything we have done and realize we fight viciously for every dollar. Nobody can look at any deal we've done and say we didn't try our best.

Sorry if that's long-winded, I just think it's critical to know where I am coming from as context is important.

I am absolutely never letting some worthless executive fleece us when it's avoidable and the math that I laid out above exists. If you had ex-business partners, friends and investors who you've worked with before invest with you and trust you with their life savings, would you lay on the ground and let an executive fuck you? Or? 

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  • PM in HF - Other
Sep 16, 2021 - 5:19pm

Debated it super hard cause they were trying to force me to quit and make a fake HR case. So when it came time for changes put up my hand in hope they do a fair deal. Original offer was a joke did not sign actually just looked at them and said great walked out. Met with lawyer said you "have limited upside…cuz young, can find new gig etc…" but they owe some reasonable minimum. We slow played them for 3 months and got a more reasonable offer and some assurance in writing at last on deferred comp. 

One other guy much older sued, not sure wtf happened. But they dragged him in court delays for 2 years. Another person same.

One person paid 5k to a lawyer to send a "strong worded letter" to up their offer and they stood flat (that said he got a better offer than me originally).

Goal is to never sue, just get what is fair. If I got a shit offer I wouldnt sign and take the following week off to myself and chill. The firm/HR will be sweating way more bullets than you, if that severance offer goes unsigned/silent for a week.

Lastly, still slight ptsd/anger when think how they played me. But whatever, unless its crazy harassment sadly stupid firm will win not pay you for pain they cause.

  • Principal in PE - Other
Sep 16, 2021 - 5:38pm

Thanks a lot for sharing. That must have been a tough time in your life but I'm glad you pulled through it okay. If you don't mind me asking, what were the circumstances with your employer trying to push you out? Did they simply owe you $ and not want to pay? It surprises me that a lot of employers take this tact as it can really soil their name in the industry...not to mention it's illegal to fire someone and say they "Quit" just to avoid paying severance and any money due.

  • PM in HF - Other
Sep 16, 2021 - 6:22pm

Sure, will try my best to explain. Though this is a dickhead move by dickhead firms.

Basically as we know "deferred comp" is major tool in our industry to retain people but also used to keep performers around over time. Some firms though have a track record and overall team to outlast rep/rumors etc...So truly more "deferred comp" you get tied into the firm most likely the more political power you need to have as you move along. So lets say the firm has a a pool of 5-7 performers but really only 5 of them are politically powerful enough. Let's say the 2 outlying parties are actually maybe #3 and #4 performers and possibly a chance to be the top performer some day. Unfortunately the firm can still run without them so the politics game starts really play its hand.

So just like the poster said he uses a "PIP process" to oust executives not making the cut. You cannot use a PIP on a high performer instead you have to create/document a paper trail or whatever to pull the trigger one day but instead just making life so tough for said people so they just start interviewing elsewhere. Its pretty obvious when a firm tries to go this route, and the employee will just go silent/play safe. So politics/jealously kicks in as others want this person gone either go get bigger % of pie, or knowing their "deferred comp" will just keep growing over time. So yes essentially its to stop paying out the deferred comp or scare/annoy the person so much that they are no longer in a process to become the top performer. 

To your last point after finding out the plan and understanding one would have thought a fair deal is okay there is not a personality match here give everyone their due and let's go their way...nope that would show weakness and HR would worry sets a precedent anyone can do this. So I think that is another reason they try to avoid to pay up front.

Sep 16, 2021 - 11:13pm

Nice try compliance!

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Sep 17, 2021 - 8:22pm

I threatened a lawsuit.

At my last company, I was being actively harassed by my new boss for close to a year, it was appalling.

This was not my first rodeo, so I documented *everything* - I recorded phone calls (legal where I reside), I forwarded emails to my personal account, I took pictures of calendars to show who was where on what dates, I made copies of every expense report, I saved happy letters from clients, etc. etc. etc. the whole nine yards.

Finally the prick has the nerve to send a final warning letter to me, which he CC's his SVP AND the local head of HR on.

I take a sick day and when I get back, I send the SVP and local head of HR a 12 page letter outlining everything that had transpired.

The Global Head of HR calls me an hour later and offers a 6 months severance package (with benefits!) and I'm gone by week end.

Fuck that guy.

  • Associate 2 in IB - Cov
Sep 18, 2021 - 2:21am

Thinking about this. I'm a pretty anti-litigious guy but I'm a minority and my old team used to call me gorilla. 

Sep 19, 2021 - 3:38pm

OP, I think you said in one of the treaded responses above how you may use this contention around your deferred as a chip to loosen up your non-compete. I am surprised they are interrelated and was wondering how you plan on going about that.  There's been people at my shop who've gotten pushed out or quit and had their vested deferred evaporate while still being forced to sit out due to the non-compete. How does your counsel think about the enforceability of non-competes in general that is longer than say 3-months? 

  • Principal in PE - Other
Sep 19, 2021 - 3:46pm

Great question. Fortunately my non-compete is, according to my lawyer, the worst he has ever seen drafted. For a non-compete to be enforceable it really needs to check the following boxes:

1. Are the job duty restrictions clearly identified and specific? My contract simply stated "any work in private markets", which is frankly absurd. It would mean I'm banned from being a junior analyst at a hedge fund as opposed to a principal at a niche private equity firm.

2. Is the location of restriction clearly identified and reasonable? My contract doesn't mention any location at all, so they can't assume I can't work anywhere in the world. Usually these are extremely specific like not within the same city, like island of Manhattan.

3. Is the time frame of restriction reasonable? My contract states two years, which is also absurd. The company would need to get in expert testimony to state why I shouldn't be able to earn an income globally in private markets investing for as much as two years.

My lawyer said that if it ever went to court it would be thrown out and I could counter sue for legal costs and damages. However, my company would still have grounds to sue me in the first place, regardless of how poorly drafted the non-compete is. In other words, this isn't about not being able to work somewhere else but rather wanting to deal with this for a prolonged period. Some companies will refuse to take you on if you have a restrictive covenant, even if it is unenforceable as they don't want to get tangled up in the mix.

As far as strategy goes, I'm waiting to first hear if my company has a real offer to cash me out and then I plan on discussing with them swapping some $ for working elsewhere. We shall see if a requested competitor hearing about their actions makes them crumble or dig in harder.

Keep in mind, a non-compete is there to protect for UNFAIR competition, not competition altogether. Most companies use this completely unfairly and it does nothing but create headaches for employees.

Sep 19, 2021 - 4:06pm

Thanks for that response. I really feel for your situation and frankly am appalled. Your story is similar to, but frankly a lot worse than, what I've witnessed a few ex-coworkers go through at my current employer. I'm frankly a little terrified of having to go through this battle the day that I part ways, voluntarily or involuntarily.

Are you working in secondary investing or placement now? Either way, I hope this passage in your life goes by quickly and wish you the best. There is truly no shortage of dikheads who grew up with daddy issues working in this industry. 

Sep 21, 2021 - 8:25am

Give up nothing, tell them to go fuck  themselves, absolutely do not sign a post agreement NDA or non disparagement.  Employment contracts are a two way street.  Even though contracts say "blah blah blah if some part of this is deemed unenforceable the rest remains enforce blah blah blah" if one side violates stated parts of the employment contract it usually frees the other side from having to be bound by it.  Otherwise there would be almost no reason to stay bound by an agreement.

Sep 21, 2021 - 8:21am

Non competes are mostly unenforceable in many states.  It relies on an honor system.  Hell look at Bumble, that might be the most famous case of breaking a non compete in modern history.  

However non solicitations of existing customers, those can be enforced much easier because there is a way to calculate damages relatively easily.  Even if I would argue that it is dubious at best.  In the OPs case I say fuck it, immediately start a competiting shop and steal their LPs. Blatantly refuse to sign a non disparagement agreement, and drag their dirty laundry all over town.  I would have the OP check with their legal counsel but even if they signed an NDA and non disparagement agreement going in to the position this clear violation of employment contract should void any responsibilities on the OPs end. 

  • Principal in PE - Other
Sep 22, 2021 - 2:43am

I thought about it after my last fund over unpaid comp that I was offered/promised in order to get me to stay when the fund was going downhill. When it came time to pay at bonus season I was handed a termination letter with a severance agreement that said my "bonus" was to be considered severance and I could only get it if I signed the agreement.

Spoke to a labor lawyer at the time. They said there was something there, however dollars spent vs dollars gained + time didn't really make sense.

Sep 27, 2021 - 11:32am

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