Posted on September 18th, 2025
The Real Cost of Employment Litigation in California
Running a business in California is already challenging — strict labor laws, rising wages, and constant regulatory updates keep business owners on their toes. But one thing that can completely disrupt your operations (and your bottom line) is employment litigation.
Whether it’s a wage-and-hour claim, wrongful termination lawsuit, or a PAGA action, litigation is expensive — not just financially, but also in time, energy, and focus.
So, what does it really cost to go through employment litigation in California, and how can you protect your business? Let’s break it down.
The Financial Cost of Litigation
When we say litigation is expensive, we mean it. California has some of the strictest employment laws in the nation, and employees often have the upper hand in court. Here’s what business owners typically face:
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Attorney’s Fees: Even for a smaller case, you could be looking at tens of thousands of dollars in legal fees. Complex wage-and-hour cases can easily exceed six figures.
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Settlement Costs: Most cases settle before trial, but settlements can still be costly — anywhere from $10,000 to $250,000+, depending on the size of the claim.
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Court Costs & Expert Witnesses: Filing fees, depositions, and expert witness expenses can add up quickly.
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Lost Productivity: Every hour spent gathering documents, sitting in depositions, or preparing for hearings is an hour not spent running your business.
The Hidden Costs You Don’t See
Beyond the financials, litigation impacts your company culture and reputation. Your team might feel stressed or distracted, and you may find it harder to focus on growth opportunities while managing a lawsuit.
How to Protect Your Business Before Litigation Happens
The good news? There are proactive steps you can take to minimize your risk:
✅ Update Your Employee Handbook Annually – California labor laws change constantly. Keeping your handbook up-to-date ensures your policies are compliant.
✅ Train Your Managers – Most lawsuits stem from poor communication or mismanagement. Training your supervisors on proper workplace practices can prevent costly mistakes.
✅ Conduct Regular HR Audits – Have your timekeeping, payroll, and HR practices reviewed regularly to catch potential violations before they become lawsuits.
✅ Have an Employment Lawyer on Call – A trusted employment law attorney can guide you through tricky situations before they escalate into litigation.
Bottom Line
Litigation is expensive, stressful, and disruptive — but it’s not unavoidable. By staying proactive with your policies, training, and compliance efforts, you can significantly reduce your risk.
