My question involves labor and employment law for the state of: Sacramento, CA
A former employee of our small business is trying to sue us for "hostile work environment" There are two owners to this business, and the lawsuit is against one of the owners and the corporation. The ex-employee claims that there were things said by one of the owners in the workplace. It is completely untrue and fabricated, and we are sure that this employee is just trying to get money from us. (She filed for sexual harassment at another business in the past). We did not fire her, she left on her own. We are still only a small clothing business and just starting out with not a lot of profit yet, and we cannot afford to pay lawyers at this moment, nor does our insurance cover this. This employee never complained to any other supervisors about this issue, and there was no indication that any behavior in the workplace was unwelcome. In fact, she was at times inappropriate herself by telling dirty jokes.
So my question is, since she is suing both the other owner and the corporation, what can be done to limit the damage in our case? It doesn't seem fair that we should have to pay thousands in lawyer fees to protect us from something that we did not do because this employee is trying to get money for herself and spite us.