Introducing the 2017 Hiscox Guide to Employee Lawsuits
As a business owner, you may think you’re not affected by high-profile harassment cases that you see in the news and that these issues are limited to Hollywood and Capitol Hill. But the fact is that many small to mid-sized businesses – as many as 10% or more – are likely to be on the receiving end of a a discrimination charge of some kind.
The 2017 Hiscox Guide to Employee Lawsuits shows that businesses in Washington, D.C., Delaware, Nevada, New Mexico, and California are the most likely to be sued by an employee. A business in the nation’s capital was 81% more likely than the national average to face a discrimination suit.
Employees can sue for discrimination that is based on sex, race, national origin, disability, age, religion, and more. A charge can also be filed by someone who feels they have been retaliated against because they made or corroborated a discrimination charge. Some states have enacted laws that are stricter than federal statutes. Charges can be filed with the Equal Employment Opportunity Commission (EEOC) or with the state employment fairness board.
Discrimination or harassment can be perpetrated by a business owner, a manager, an employee, or even someone outside the company such as a customer or vendor. If the business does nothing to stop the behavior they may be liable, and that liability can be expensive. The average time it takes to resolve a claim is 318 days. The average cost for a small business to defend and settle a claim is $160,000, according to Hiscox’s representative claims data.
You can protect your business from these kinds of claims by following these three steps.
- Prevent discriminatory and harassing behavior by educating your employees on what constitutes such behavior. Put your anti-discrimination policies in writing and make them accessible to all employees. Make your employees aware that discrimination will not be tolerated in your company.
- Detect any discrimination by observing employee interactions and carefully reviewing hiring and promotion decisions. Address any questionable behavior immediately. Ensure that employees feel comfortable bringing their concerns to management.
- Mitigate the impact on your bottom line by insuring your company against employee lawsuits. The right insurance will cover defense costs as well as any settlement or judgment. If you are sued, consider settling the case to reduce distractions and potential damage to your company’s image.
Even if your business isn’t located in one of the riskiest states, you need to be aware and vigilant. An employee charge or lawsuit for discrimination can damage your company culture, your reputation, and your bottom line. Stay protected by finding the right type of business coverage.
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.