What Do Employee Lawsuits Cost?

Workplace lawsuits aren’t a rare occurrence. A study published by Hiscox found 10% of small to mid-sized businesses face some form of employment discrimination charge and they are often very expensive.

What Circumstances Can Lead To A Lawsuit?

A potential employee might sue if they feel they’ve been mistreated during hiring and training. Current employees may file for discrimination due to promotion, wage, or benefit issues.

Other times lawsuits occur due to changes in legislation, such as new exemptions and salary thresholds for overtime. Transgender employees may have rights under the ADA, too.

In a groundbreaking case in Massachusetts, an applicant filed a lawsuit when the employer revoked her employment, because she tested positive for marijuana. She’d disclosed she used medical marijuana and the courts maintained she shouldn’t be penalized for her use of or possession of medical marijuana. They found the employer did not provide reasonable accommodation.

Employees can file charges against your company if anyone within your company or someone you deal with discriminates against them if you do nothing to stop it. This includes customers or vendors.

Who Can File?

Any company with 15 or more employees may be subject to federal employee discrimination laws. However, Florida employers are also subject to citizenship status discrimination laws if they have four or more employees. All employers are subject to state equal pay laws for men and women.

Basically, any worker who feels they have been discriminated against, or fears retaliation from an employer when they support a discriminated worker, can file charges either through the US Equal Employment Opportunity Commission (EEOC) or Florida’s Commission on Human Relations.

Your business may also need to deal with a discrimination lawsuit from other people such as a customer, supplier, contractor, or outside business associate.

How Much Does A Lawsuit Cost?

According to the same Hiscox study, almost a quarter of charges lead to defense and settlement costs averaging $160,000. The average employer’s self-insured retention deductible was only $50,000. This leaves most companies paying out-of-pocket for the additional $110,000.

These lawsuits are also very time-consuming with an average resolution time of 318 days. Retaliation accounts for almost half of all charges, followed by race, disability, sexual discrimination, and more.

Measures to Prevent Discrimination Lawsuits

Obviously, the best way to prevent lawsuits is to prevent the behavior. However, your company also needs to stay on top of changes to employment laws. Ongoing training on employment practices is also vital for all levels of your organization.

Since it is the employer’s responsibility to act if someone’s actions could be interpreted as discriminatory, always respond immediately whether the action leads to a claim, or not. Stay vigilant and take every complaint very seriously.

Employees need to know that your company thoroughly investigates any accusations of discrimination and that you will not retaliate if they do file a claim. Interview the person making the accusation to determine whether discrimination took place. If it did, you need to take measures to rectify the situation immediately.

Despite best efforts, you may face claims. That is why it is very important you mitigate the impact on your company. Insuring your company against employee lawsuits is a reasonable and affordable precaution most companies can’t afford to ignore. Proper coverage pays for a defense and a settlement or judgment if you lose the case.

Your general liability insurance policy will not pay for these costs. Discuss employment practices liability coverage with us to ensure you’re well-protected. It’s an affordable precaution in a very litigious business environment.

Would You Like Us To Review Your Policies?

  • Drop files here or
    Max. file size: 39 MB.

    Request Your Proposal Here

    Are you ready to save time, aggravation, and money? The team at ReNu Insurance is here and ready to make the process as painless as possible. We look forward to meeting you!

    Call Email Claims Changes
    Skip to content