A staffer raises an embarrassing claim. A probe follows. Deciding what to do next—and whether to offer a payout—gets tricky for employers.
An employee comes forward with embarrassing workplace allegations fraught with legal risks. For company bosses, it presents a thorny dilemma: Fight or pay?
It is a situation JPMorgan Chase found itself in weeks before a former banker filed a lawsuit filled with sensational accusations. It offered $1 million to settle his claims that a female colleague had sexually harassed and assaulted him and that co-workers had subjected him to discrimination, The Wall Street Journal reported. The bank has said it investigated the claims and doesn’t believe they have merit.
Though such deals rarely come to light, paying employees to make potential scandals go away isn’t an uncommon practice across corporate America. Companies have long offered settlements to head off litigation or avoid claims that could tarnish their reputations—even if executives conclude the allegations lack merit.
“The vast majority of settlements are business decisions,” said Bill Stein, a Los Angeles-based partner at employment law firm Fisher Phillips, who often works with companies on such matters. Some employers, wanting to avoid the time, expense and headaches of unwanted publicity and litigation, ask: “Can we just make this go away?”
The calculations over when and how much to negotiate have become more complicated now that artificial intelligence and social media can easily amplify such allegations. Often the decision-making involves external law firms, internal investigations and discussions with everyone from human-resources specialists to strategists in crisis public relations, executives and attorneys say.
Internal complaints—about anything from bullying and policy violations to performance issues and workplace violence—are surfacing with increasing frequency, data suggest. Allegations of discrimination, harassment and retaliation rose to 14.7 per 1,000 employees in 2024, up from 6.4 in 2021, according to HR Acuity, a company that helps employers track internal complaints and investigations.
“It happens every day of the week” at large companies, said Janine Yancey, an employment lawyer and founder of HR compliance firm Emtrain.
The decision on whether to offer a payout usually begins with a question: Is there truth to the claims?
Employers will often attempt to quickly investigate the matter, usually by interviewing those involved or pulling emails, texts and chat messages between colleagues on work devices. If companies find the allegations are at least partly substantiated, they are likely to offer a more generous settlement, lawyers and HR executives say.
In other cases, companies might feel the allegations are bunk—but still opt to settle. That can be for any number of reasons. Say a startup is trying to raise new funding, said Fisher Phillips’s Stein. The last thing they might want is to spook investors with a potential lawsuit.
Part of the calculation is the cost of the distraction, Yancey said. “For business executives, your time is money. These conflicts create friction and noise,” she said. The people at the center of the allegations lose sleep, stop eating and often can’t work productively. “It makes more economic sense to pay money and move on. Flat-out,” she said.
Often the employees lodging allegations prefer to settle quietly and move on too, lawyers say. If claims—especially salacious ones—become public, they can dog a person’s career, making it harder to find future jobs.
How much companies are willing to pay can vary widely. For many routine settlements, employers try to offer no more than two years’ compensation, said LeShanda Davis, a senior director of employee relations. But companies weigh many factors when determining amounts, including their degree of fault, the seniority of the people involved, the cost of litigation and the risk someone could generate significant attention with their claims.
“You’re paying for that individual to be an alum, not an adversary,” Davis said.
Some employers prefer to fight and be as public about it as they can. When a lawyer in billionaire Bill Ackman’s family office requested two years’ severance, instead of the three months offered, Ackman turned to social media for advice and affirmation, writing a 2,400-word post on X in April. The lawyer had cited an unsafe workplace, a description Ackman rejected, vowing to “fight this nonsense to the end of the earth.”
For employers, the other complicating factor is that even a settlement might not keep things quiet. A number of states, including California, now bar employers from using nondisclosure agreements to silence workers speaking out about workplace misconduct, including sexual assault, harassment and labor and safety violations.
JPMorgan’s offer to settle with the banker, Chirayu Rana, didn’t keep the claims from going viral. Rana didn’t take the $1 million—which was equivalent to less than two years of his compensation at the bank, the Journal previously reported. Instead, he ultimately went public.
After Rana filed the suit in a New York state court, AI-generated videos of Rana and the female banker quickly proliferated across the internet.
The lawyers for the female colleague, named in the lawsuit as Lorna Hajdini, have said they are entirely made up and that the two never had any sexual relations. An attorney for Rana didn’t respond to a request for comment but has said the truth would come to light in court proceedings. “Whether my client’s civil rights were violated will be determined in a court of law,” attorney Daniel Kaiser said last week.
Employment disputes rarely generate such attention or lurid claims, said Stewart Schwab, a professor at Cornell Law School. Still, the odds of a prelitigation dispute staying quiet are also likely going down in the AI and social-media era.
Now, “if it gets out,” Schwab said, “it really gets out.”
