Most Pressing Human Resources Risks for 2014 and Beyond

Synthesis of the federal litigation statistics, EEOC charge data, ethics hotline statistics, and employer surveys shows that the following areas are the greatest employer litigation fears in 2014 and going forward:

  • Discrimination and harassment (including retaliation)
  • Wage and hour issues
  • Wrongful termination claims
  • Leaves of absence
  • Accommodation of disabilities

Lawsuits and administrative charges often contain allegations of varying types, which add up to an expensive and time consuming mess for employers. Again, risk reduction is possible through the implementation of a proper compliance program including training for managers and employees.

As bad as the statistics in the federal courts and EEOC are, they only tell half the story. This is because many states have enacted employee-friendly laws with respect to discrimination and harassment, wrongful termination, and wage and hour issues. These state laws reach far beyond the umbrella of the corresponding federal laws, and can be troubling for employers.

As you will see, certain states are greater hotbeds for employment-related litigation and therefore require even further specific management training to reduce the likelihood that your company will be sued.

Top Five Riskiest US Geographic Territories for Employee Litigation

Hiscox Insurance recently conducted a study into the states with the largest number of employment litigation related insurance claims. While some of the locales were somewhat obvious, other locations in the traditionally employer-friendly south have become litigation hotbeds.

The following states rank well above average in terms of employer claims against Employment Practices Liability Insurance Policies:

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According to the Hiscox study, on average, a U.S.-based business with at least 10 employees has a 12.5 percent chance of having an employment liability charge filed against it. This is an incredibly high number that is only growing, and is significantly larger in the states enumerated above. For example, California employers are 42 percent more likely to be sued for an employment-related charge. What it means is that at some point in the future your business is very likely to get sued, even if it is located outside one of the five “hot zones.”

State laws have a significant impact on risk. Simply stated, some states have laws that are more favorable to employees than others. For example, the employee-friendly nature of California law in the area employment discrimination may contribute to the high charge frequency in the state. Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA), which covers any company with five employees, versus a 15-employee minimum for cases brought under Title VII of the Civil Rights Act of 1964.

Damages Can Be Higher in State Court

Compensatory and punitive damages under federal law have statutory caps in many circumstances. Conversely, many state employment laws impose no damage ceilings, which makes an adverse verdict a potentially catastrophic situation for a business. Moreover, plaintiff’s attorneys are well schooled in damages laws, and will use them to their advantage when negotiating a settlement. Therefore, employers in high-risk states must pay even greater attention to the compliance training practices implemented within their workforces to ensure that managers and employees are adequately trained regarding discrimination, harassment and retaliation. Employers also must formulate and implement policies to prevent unlawful workplace practices.

Syntrio, Inc. specializes in providing Ethics and HR compliance training. Contact us today at 888-289-6670 for a discussion on how we can help you and your business.

 

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