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Sued for wrongful termination? Riskiest states for employee lawsuits in 2015

October 27, 2015

Small business owners face a lot of challenges on their road to success, and it’s not just competitors that can derail their business.  Ask any entrepreneur and they’ll tell you all about the different regulations, notifications and other red tape they deal with regularly just to keep the doors open.  A major issue for US small businesses is the on-going threat of employee lawsuits.  Wrongful termination, harassment in the workplace and hostile work environment are just some of the reasons for these lawsuits. Companies of all sizes face these suits, but small businesses have the least resources to effectively defend themselves while they try to keep their business running.  The 2015 Hiscox Employee Lawsuit Handbook examined the landscape across the US at both the state and local level and found some major variations across the country.

It’s going to cost you

Small to mid-sized businesses faced at least an 11.7% chance of an employee legal action in the US in 2014 according to Hiscox research.  Even if the charges don’t end up in court, they still carry costs to defend and can cause havoc with your everyday businesses.  And those costs can be big – an average employee legal case against a mid-sized employer (under 500 employees) takes 275 days to resolve and carries a cost of $125,0001. That’s why liability insurance covers you when you’re sued even if you did not make a mistake.

A dangerous state of business

While businesses across the US have a nearly 12% chance of an employee legal action, but businesses in New Mexico, California and many other states have much higher rates than others.  State level laws that go beyond the federal regulations are one of the many factors that can influence the rates of employee lawsuits.

Find out how much risk there is in your state.

1Hiscox analysis of 446 representative claims against organizations with less than 500 employees

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  • JD

    One person was employed at a startup biotech company for 3 years. When offer of employment was made, he rejected it because of low salary offer. As a counter offer, company offered twice a year OPPORTUNITY to earn 20% bonus, i.e. every six month. Whenever he asked for bonus, the employer did not give a clear answer. Since employer were tight on funding, employee showed a gentleman gesture and said pay me when funding comes in. He never waived his rights to bonus. One day unexpected, company terminated his employment and claimed that bonus was an opportunity not a commitment. Employee said that he asked for it a few times and it was company fault not to discuss it, decide conditions and pay it. It seems that it was never employer intention to pay bonus which they mentioned in the employment contract. The bonus could total to $160,000.00. Company offered $5000 as severance and asked employee to sign a termination letter to wave all the rights. Employee refused and claimed that it was never intention of the employer to pay promised bonus and it was used as bargain trick to get employee sign the employment contract.