Financial Risk of Retaliation: What a $3.2M Mistake Looks Like

A recent $3 million jury verdict shows how costly retaliation can be when employee concerns aren’t handled properly.

For finance leaders, the case reinforces the need for audit-ready escalation channels and coordinated risk oversight. Learning from these missteps can help prevent similar issues and safeguard the company’s financial health.

Seven-Figure Verdict Highlights Financial Risk of Retaliation

This case reflects a breakdown in internal controls rather than just a personnel dispute. The failure to escalate compliance concerns, document decision-making or involve legal and risk functions contributed directly to the firm’s financial exposure.

It underscores the importance of treating HR-related complaints as enterprise risk events that require structured, auditable handling.

In May 2022, Reaves Law Firm hired labor and employment attorney Andrea Jaye Mosby as the firm’s Chief People Officer.

Within her first month, Mosby questioned the firm’s pay practices – specifically, a gender-based pay disparity – and raised a potential misclassification issue under the Fair Labor Standards Act.

According to court records, the firm’s CEO dismissed the concerns and allegedly accused Mosby of being disloyal.

Moreover, these internal compliance discussions were not escalated or resolved. Instead, they set the stage for a sequence of actions that would later be evaluated as retaliatory.

Breakdown in Internal Handling of Concerns: Was It Retaliation?

Soon after voicing her concerns, Mosby was removed from her role and reassigned to a non-strategic “rotation program.”

She was told to document all of her responsibilities and was informally cut off from HR-related work. Days later, following a brief leave to attend a family funeral, she was let go.

Legal Outcome: High Exposure and Lasting Impact of Retaliation Lawsuit

Mosby filed a retaliation lawsuit against the firm, alleging violations of Title VII, the FLSA and the Equal Pay Act.

The firm’s defense – that her termination was due to poor performance and insubordination – was rejected by the court. After a trial, a jury awarded Mosby:

• $258,000 in back pay
• $516,000 in compensatory damages, and
• $2.5 million in punitive damages.

Total exposure: $3.2 million, excluding legal fees and any reputational fallout.

Implications for Finance Leaders

This case illustrates how internal compliance concerns, if mishandled, can evolve into costly litigation. While HR teams often manage these issues directly, the financial liability falls squarely within finance’s scope of responsibility.

The $3.2 million verdict highlights the outsized cost of inaction. In comparison, the expense of implementing preventive controls such as periodic pay equity audits, employment practices liability insurance, or third-party compliance training is significantly lower.

Finance teams should treat these as risk mitigation investments with measurable ROI, especially as regulatory scrutiny and internal reporting increase.

Moreover, pay equity and internal reporting practices are increasingly scrutinized under ESG frameworks. Failures in these areas can create not only financial exposure but reputational and reporting risks as well.

Key considerations for finance and risk functions:

• Internal concerns about pay practices or legal compliance require formal review and documentation.
• Any adverse action taken shortly after concerns are raised should be evaluated for legal exposure.
• Clear audit trails around compensation decisions and employee classification help mitigate risk.
• Finance should coordinate with legal and compliance functions when employment practices carry material risk.
• Regularly review and update policies and controls to reflect evolving regulations and best practices in employment compliance.

Key Takeaway for Finance

Retaliation risk poses a significant financial exposure linked to gaps in governance and compliance.

Finance leaders play a key role by supporting clear, auditable reporting processes aligned with legal and compliance teams. Investing in these controls helps lower the risk of costly litigation and reputational harm while strengthening financial resilience.

Building strong cross-functional relationships enables earlier risk detection and more effective response. Treating retaliation as a financial risk fosters accountability and transparency across the organization.