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Employee Lawsuits: A Closer Look at Their Likelihood and Average Cost

It’s a well-known fact that businesses sometimes face lawsuits from competitors and customers. But what about when your own employees sue? There are a number of reasons this may occur. For example, a staffer or job applicant may allege discrimination. Or an employee may sue you for occupational injuries if you lack workers’ compensation insurance to cover medical bills.

According to the Hiscox Guide to Employee Lawsuits, U.S. companies faced a 10.5 percent chance of an employee lawsuit in 2016. This figure pertains to lawsuits brought on the basis of discrimination. The primary solution is to make sure you avoid discriminating against current and prospective employees based on:

The responsibility of upholding non-discriminatory practices often falls on leadership and HR teams. Make sure these departments know discrimination rules inside and out to avoid a misstep. You’ll also want to actively foster a company culture known for inclusion, boundaries, and fairness. Employee lawsuits have the capacity to damage your reputation. Plus, they’re often time-consuming and expensive.

As the Insurance Journal reports, these claims typically take 318 days to resolve. Furthermore, without the proper business insurance behind them, companies pay an average of $160k to defend themselves and reach a settlement.

Employment practices disputes are not the only form of potential employee lawsuits. Companies lacking workers’ compensation may face lawsuits over workplace conditions in the aftermath of an employee injury or illness. As Nolo advises, “If your employer does not carry workers’ compensation insurance, you might be able to sue your employer in civil court.” Furthermore, employees can typically sue employers for personal injury if they’re injured as a result of deliberate conduct.

It’s in your best interest as an employer to ensure safe workplace conditions for your team. This means eliminating hazards, conducting training, and accommodating employees’ needs. Something as simple as poor housekeeping can lead to an unfortunate injury, which opens up your business to lawsuits. Make sure your commercial space is uncluttered, sanitary, and free of tripping hazards. If liquid spills, clean it up immediately. Put a slip-proof mat down inside the door for snowy and rainy days. Store supplies on stable shelving. Reducing hazards ahead of time can eliminate workplace accidents.

Why is it so important to have adequate workers’ compensation insurance? Because if an employee does sustain an injury on the job , it covers medical bills, rehabilitation costs, and lost wages. In the same turn, it also protects your company from facing a lawsuit over workplace conditions. Without this vital coverage, you could pay out of pocket for any incidents that occur.

Plus, most states require some level of coverage. Even small business owners should understand state requirements so they operate in compliance.

Employee lawsuits tend to be expensive, time-consuming, and bad for morale. Minimize your risk of facing one by engaging in non-discriminatory practices and carrying workers’ compensation coverage.

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