In 2014, U.S. companies had almost a 12% chance of an employment lawsuit being filed against them.
However, in a number of states - including California - the percentage is much higher. These particular states have discrimination laws that go beyond federal guidelines, and these create additional obligations for employers and greater risks for insurers.
According to the New York-based specialist insurer Hiscox. these suits are costly:
The average total costs of claims that resulted in a defense and settlement payout is $125,000, Hiscox says. The average self-insured retention (deducible) for these charges was $35,000. Without Employment Practices Liability insurance, these companies would have had to pay an additional $90,000. In addition, 81% of charges resulted in no payment by the insurance company — which highlights the “nuisance potential” of employment charges, such as a loss of goodwill or reputational damage.
There are also many California labor laws regarding employment discrimination. Although some are similar to federal laws, they are intended to afford additional protections for employees. While this a good thing for employees, it complicates the compliance burden for their employers.
Despite the best efforts and intentions of employers in California, avoiding employee lawsuits can be challenging. And while there are multitudes of employer violations that can be committed - knowingly and otherwise - there are a few common ones that make up the bulk of legal cases:
These include additional protected classes or impose restrictions on smaller-size companies that need to comply.
Employers are prohibited from taking employment actions related to the credit history or credit report of an employee or job applicant.
Employers are restricted inquiring about — or requiring disclosure of — a job applicant’s criminal record or criminal history.
Since they have to follow both federal and state labor law, California employers must be especially diligent in their HR practices. But there are steps you can take to ensure that your organization doesn't Unintentionally break these laws. You can take specific steps, for example, to eliminate unlawful bias in decisions and processes and eliminate harassment.
Here are some specific tips:
If your organization would like to learn more about its obligations, or acquire resources to deal with these types of situations, Accuchex recently partnered with HR Solutions Partners to offer its customers the most up-to-date and professional human resources management solutions available. To learn more about the different levels of Human Resource Management services available, please follow this link.
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