Hiscox study identifies states with highest risk of employee lawsuits
NEW YORK, NY, Nov. 14, 2017 -- A new study of employment practices disputes and litigation by Hiscox, the global specialist insurer, found that businesses in Washington, D.C., Nevada, Delaware, New Mexico and California face the highest risk of being sued by their employees when compared to the national average. According to the study, US-based companies have just over a 10% chance of having an employment charge filed against them.
The 2017 Hiscox Guide to Employee Lawsuits™ identifies the total impact of employee administrative charges and litigation, and exposes the markets where employee lawsuits are most prevalent. The report was compiled using the latest data on employment charge activity from the Equal Employment Opportunity Commission (EEOC) and its state counterparts across the US.
“Recent public accusations of discrimination and harassment are a stark reminder of the importance of creating an army of vigilant employees who can recognize the warning signs of unlawful behavior,” said Patrick Mitchell, Management Liability Product Head at Hiscox USA. “It’s also critical to be acutely aware of your state’s laws. We found that many of the higher-risk states have laws in place that go beyond federal legislation. Varying state laws can impact the risk business owners face and play a role in the number of employee lawsuits in a given state. Business owners must stay aware as legislation evolves, and ensure that their businesses are compliant and that they have a plan in place should a lawsuit be filed.”
States with the Highest Risk
According to the study, businesses based in Washington, D.C., face the greatest risk of being sued by their employees, 81% higher than the national average. Other states where employers are at a high risk of facing employee charges when compared to the national average include Delaware and Nevada (+55%, respectively), New Mexico (+50%), California (+46%), Mississippi (+43%), Alabama (+39%), Illinois (+35%), and Connecticut and Georgia (+19%, respectively).
Claims against an employer can occur when an employee or job applicant feels they have been discriminated against in the workplace for reasons including, but not limited to, their age, disability, religion, race or color. Unlawful retaliation against job applicants or employees, who had alleged that they had been punished for asserting their rights to be free from employment discrimination, is the most common claim asserted in federal employment cases.
State laws can also have a significant impact on the risks businesses face from employee lawsuits and are drivers of increased employee charge activity.
The Cost of Employee Lawsuits
Discrimination can be perpetrated by management, another employee, or even someone outside the organization. Collectively, Hiscox claims data for small and mid-sized enterprises (under 500 employees) indicates that, on average, it will take businesses 318 days to resolve a claim. Without employment practices liability insurance, each of these companies would face an average $160,000 payment for defense and settlement charges. This payment can potentially be avoided by preventing the behavior that could cause a lawsuit through training or routine enforcement of employment policies, detecting discriminatory behavior even if it’s not reported, and mitigating the impact on your business in the event of a charge.
In the US, Hiscox provides Executive Risk insurance coverage, including Employment Practices Liability Insurance, along with a diverse portfolio of professional liability and other commercial insurance to US businesses. Hiscox has offices in New York, NY; Atlanta, GA; Chicago, IL; Dallas, TX; Los Angeles, CA; San Francisco, CA and White Plains, NY.
About the 2017 Hiscox Guide to Employee Lawsuits:
The 2017 Hiscox Guide to Employee Lawsuits analyzed recent employment discrimination charge receipts by state at the federal and state commission levels focusing on establishments with more than ten employees in each state or jurisdiction. Charge frequency was determined by the number of charges divided by the number of establishments with more than ten employees. To compare the states, Hiscox analyzed credibility-weighted frequency relativities and compared each state to the national average. The results are based on frequency of charge receipts, but the receipt of a claim is not limited to only those claims that result in a settlement or other meritorious resolution.
Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle. It’s a long-standing strategy which in 2016 helped generate gross premiums written of £2,402.6 million and a record profit before tax of £354.5 million.
The Hiscox Group employs over 2,300 people in 13 countries, and has customers worldwide. Through the retail businesses in the UK, Europe and the US, we offer a range of specialist insurance for professionals and business customers as well as homeowners. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re and ILS.
Our values define our business, with a focus on people, quality, courage and excellence in execution. We pride ourselves on being true to our word and our award-winning claims service is testament to that. This information is neither intended nor should be construed to be a solicitation for the purchase of insurance by any US person or entity. For further information visit www.hiscox.com.
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The content provided above is provided for general informational purposes, but is not intended, nor shall it be deemed, to be business, legal or insurance advice for any particular or specific person or entity.
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