Employers must constantly balance expenses with the needs of their business. But the costs of compliance with labor laws is essential.
According to a report released from Hiscox, the top five states where businesses more likely to be the subject of an employee lawsuit than the national average are New Mexico, the District of Columbia, Nevada, Alabama, and California.
Employers in these states face a substantially higher risk of being sued by their employees compared to the national average.
For example, employers in California have been calculated to be at a 40% higher chance being sued by employees (or former employees) than the most other states.
While the actual reasons for this disparity are complicated, the report indicates that the most likely cause of variances in the rate of employee lawsuits between states, is state laws that exceed federal guidelines. All five of these states, for example, have imposed anti-discrimination and fair employment practices restrictions on smaller-sized companies requiring them to comply with federal standards.
Labor Law Litigation is Costly
There are, of course, a number of factors that contribute to the high rate of employee litigation in these states. However, regardless of the reasons, the actual costs to businesses is easier to determine. The average legal dispute involving an employee claim lasts 275 days and, in almost 20 percent of cases, the defendants - employers - are subject to a defense and settlement payment.
Typically, most businesses can then expect to have an average of $125,000 in insurance claims an have to pay up to $35,000 in deductibles. This does not include all of the other costs involved not covered by their insurance.
California Labor Laws and Common Employee Lawsuits
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.
There are four most common employee claims made against employers nationwide. According to statistics from the U.S. Equal Employment Opportunity Commission (EEOC), a federal organization tasked with enforcing these laws, they are:
- Workplace Injury
- Wrongful Termination
There are some steps employers can take to treat their employees fairly and mitigate the risk of these lawsuits. These include:
- Implementing systems and procedures for accurately tracking employees’ time
- Developing, distributing, and reviewing and regularly updating an employee handbook
- Keeping detailed records of employee performance, disciplinary actions, and company communications
Although these actions cannot guarantee that employees won’t suffer illegal or unfair treatment, or that an employer won’t be sued, they can go a long way to prevent such problems.
The 10 Top Things California Employers Do That Lead to Lawsuits
California labor law is designed to protect the rights of employees to fair wages and proper working conditions. Employers who break these laws face stiff penalties and in most cases must compensate employees for these violations.
Oftentimes, however, the violations are not intentional. Maintaining diligence and awareness will contribute a great deal to avoiding employee lawsuits.
Here are the top ten things California employers tend to do that result in lawsuits:
Stay Informed and Stay Compliant With Expert Help
An updated and streamlined compliance strategy will help your organization meet its obligations, while providing accuracy and timeliness. So take time to understand the laws and prioritize employee and manager training, and maintain accurate record keeping. In this way, you will make compliance a sure thing.
Another key step in maintaining HR compliance and increasing your company's cost-effectiveness is to consider outsourcing. A professional agency such a Accuchex can provide much-needed help with Human Resources needs and questions.
Accuchex is a full spectrum Payroll Management Services provider offering expertise in Time Management, Insurance and Retirement issues, as well.