Want to avoid being sued by your employees in the coming year? We have some tips.

Here’s a good New Year’s resolution for all employers: Bolster your defenses against the chance of being sued by your employees, which can happen to any employer, regardless of size or industry. Employee lawsuits can be costly: The biannual report from Hiscox put the latest toll at an average of $160,000 for claims that resulted in defense; 24% of employment charges resulted in defense and settlement costs. Employee lawsuits can also be costly in terms of management time needed to defend against such claims: in 2015, the average time to settle a claim was 318 days.

Risk and Insurance recently featured an article discussing 4 trends that are making the risks or employee lawsuits more severe. They note that:

Employee Lawsuits Are Costly – Win or Lose. These 4 Trends Are Making the Risks More Severe

“The probability that a company will get sued for an alleged employment practices violation has increased dramatically; aggrieved employees drive some litigation, and, in other cases, plaintiffs’ lawyers encourage this type of claim,” said Beth Goldberg, chief underwriting officer, Financial Lines Division, Starr Insurance Companies. “These claims can be expensive just to defend, even if they are groundless.”

According to Westlaw, a legal research service by Thomson Reuters, plaintiffs win 51 percent of the time when employment practices liability (EPL) claims go to trial.

We’ve summarized these four trends below – click the article for more detail.

1. It’s not just about lost wages and compensation; juries are increasingly focused on emotional damages.
2. Social media and movements like #MeToo intensify reputational risk.
3. Plaintiffs’ attorneys drive class action disability discrimination cases.
4. Varying state regulations add complexity to compliance.

Minimizing your risk of getting sued by your employees is not a once and done thing – it is a continual process and requires attention on several fronts. A new year is a good time to audit your practices and take steps to minimize your risk. Some strategies to minimize your risk include:

  • Up-to-date employee handbooks that complies with federal and state laws.
  • Policies and procedures around hiring and firing. Specify any behaviors that would result in immediate termination.
  • Accurate job descriptions outlining essential functions
  • Safety and on-the-job injury prevention program
  • Performance feedback process
  • Supervisory training for hiring & firing
  • Organization-wide policies, training and enforcement geared to discrimination and harassment prevention
  • Employment practices liability insurance coverage

Related resources

Termination for cause
Employee handbook legal blunders
State employment law updates
Best Practices for downsizing, layoffs, and firings


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