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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