Monday, 02 June 2014 23:12

Riskiest States for Employee Lawsuits

A new study by Hiscox revealed that, on average, a United States-based business with at least 10 employees has a 12.5 percent chance of having an employment liability charge filed against them. Businesses in some states, though, face higher levels of exposure to litigation than others.

“Federal level information on employee charges is generally available, but state-specific information is more difficult to aggregate,” said Hiscox senior vice president Bert Spunberg. Some states have laws that significantly impact risk, and in the states that have more employee lawsuits, the verdicts can be harder on business owners.

“Not only are employment lawsuits more likely in those states, but the likelihood of catastrophic verdicts is also significantly higher. Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000, most state employment statutes impose no damages ceilings,” noted Mark Ogden, a managing partner of Littler Mendelson. “Consequently, employers in high-risk states must ensure that their workforces are adequately trained regarding workplace discrimination, harassment, and retaliation, and that policies forbidding such conduct are strictly enforced.”

  • Georgia incidences of EPL charges are 18 percent higher than the national average for businesses with at least 10 employees.
  • Arizona and Mississippi tie in the top five states for employee liability risk, with the risk of being sued by an employee being 19 percent higher than the national average.
  • Alabama businesses face a substantially higher risk of being sued by their employees, coming in at 25 percent above average.
  • Illinois is one of the top two states for employee liability risk, edging out Alabama with a 26 percent higher chance of EPL charges than the national average.
  • California has the most frequent incidences of EPL charges in the country. Businesses have a 42 percent higher chance of being sued by an employee than the national average. In California, the employee-friendly nature of state laws regarding disability discrimination, for example, may be a contributing factor in the high charge frequency in the state. In California, discrimination cases are filed at the state level and are brought under the Fair Employment and Housing Act (FEHA).
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