The Impact of Employment Charges & Lawsuits on Business

Webinar Series

Employment charge & lawsuit frequency Business impact Protection & prevention best practices BPS services

Topics

Between 1980 and 2000, the number of U.S. employment-related laws and regulations grew by about 60%, from 38 to 60. There have been 17 in 2009 alone.

Laws & regulations

Wrongful termination - discharge of an employee for invalid reasons

Discrimination - denial of equal treatment of employees for prejudicial reasons

Sexual harassment - subjecting employees to unwelcome advances, lewd behavior, offensive remarks; or the failure to stop such behavior

Employment Charge types

How many wrongful termination lawsuits?◦ No one knows because state and federal courts

don’t compile statistics on the specific types of cases filed (such as wrongful termination or discrimination)

- Public Law Research Institute, University of California

Frequency

In 2002, the EEOC received 85,000 charges for discrimination and sexual harassment (approximately 2.0 charges annually per 1,000 employees) ◦ Doesn’t include charges filed at the state level

How many discrimination and sexual harassment lawsuits?

The most common targets for federal discrimination claims? ◦ Private employers with

between 15 and 100 employees (41.5%)

◦ Private companies with between 100 and 500 employees (18%)

◦ Private companies with an excess of 500 employees (23.9%)

- EPLI: Understanding the exposure and preventing claims, 2001 (www.lawthatworks.com\s Employment Practice

Liability: Average Jury Award - Jury Verdict Research, 2004

Targets

1997 1998 1999 2000 2001 2002 2003$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$133,691$154,625$150,000

$190,000$168,000

$212,500$250,000

Average Employment Liability Jury Award - includes discrimination and

wrongful termination claims

1997 1998 1999 2000 2001 2002 2003$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$150,000

$175,000

$145,400

$200,000

$176,500

$236,500 $232,300

Average Discrimination Liability Jury Award

Discrimination Liability: Average Jury Award - Jury Verdict Research, 2004

Dis

crim

inat

ion,

O...

Rac

e

Sex

Dsc

rimin

atio

n, O

v...

Dis

abilit

y

Age

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$125,000$150,000 $151,600

$178,500

$210,000

$255,100

Average Discrimination Award, By Type (1997-2003)

Discrimination Liability: Type of Case - Jury Verdict Research, 2004

Will an allegation or actual case of wrongful termination, discrimination or sexual harassment cause serious financial harm to their firm?◦ 32% of private companies said it would◦ 55% of these said it would probably cost more

than $100,000 to settle such a case, and 19% indicated it could cost at least $500,000

- Pittsburgh Business Journal, January 21, 2005

Business impact

60% of privately held companies don't carry Employment Practices Liability Insurance (EPLI)◦ Among large firms (those with more than $100

million in annual revenue), 45% carry no EPLI protection

◦ Among small firms (those with less than $10 million in annual revenue), 75% carry no EPLI, making those that can least afford an EPL suit especially vulnerable

- Pittsburgh Business Journal, January 21, 2005

Business impact

Written policies barring unfair treatment Consistent application of policies Promptly address all employee complaints All layoffs and disciplinary actions fully

documented Develop and implement anti-harassment

and anti-discrimination policies

Protection & Prevention Best Practices

Train supervisors and employees Conduct periodic audits of employment-

related policies and procedures Implement procedures for employees to

report incidents without retaliation Exhibit a balance of employees by race

and gender at all company levels Develop and implement an employee

handbook

Protection & Prevention Best Practices

25 years, the number of U.S. employment-related laws and regulations has grown by about 60%

The average employment practices liability award is approximately $250,000

The most common target for federal discrimination claims are small employers - those least likely to be using professional HR practices

75% of small employers don’t carry EPLI coverage BPS offers workforce alignment and business

protection services that help businesses lower their employment practices liability exposure

Summary