California, Illinois, Alabama and Mississippi and Washington D.C. are ranked as the top five worst places in the country for employee lawsuits.

According to San Francisco-based specialist insurer Hiscox, this is because businesses there face a substantially higher risk of being sued by their employees compared to the national average.

This is another reason why employer compliance with California labor laws is an increasingly critical issue.

Based on the studyfrom Hiscox, businesses with at least 10 employees have a 12.5 percent chance, on average, of having an employmentlawsuit filed against them.

But in the states mentioned above, businesses face a much higher level of possible litigation.

California Labor Law Compliance and Employee Lawsuits

California has the most frequent cases of Employment Practices Liability (EPL) charges in the country. In fact, employers in California with at least 10 employees face a 42 percent higher chance of being sued by an employee over the national average.

A recent case involving California-based Uber illustrates the fact. 

Uber has reached a landmark settlement in two class action lawsuits that will see it pay as much as $100 million to the drivers represented in the cases, but will allow it to keep categorizing them as independent contractors, rather than employees. As part of the settlement, Uber will also give drivers more information about their quality rating, will allow them to judge it against fellow drivers, and will lay out specifically the conditions under which it will deactivate drivers.

 

Under the two suits brought in California, Uber must pay $84 million to roughly 385,000 drivers, with a second payment of $16 million due if Uber goes public and its valuation increases one-and-a-half times from its December 2015 valuation inside a year.

State Labor Laws: California Labor & Workforce Development Agency

State laws can increase the risk of litigation, as well. In California, for example, the nature of California disability discrimination law may be a contributor to the higher frequency of charges in the state.

Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA).

This is significant in that FEHA applies to a broader range of businesses by covering any company with at least five employees, compared to cases brought under federal law as outlined in Title VII of the Civil Rights Act, which apply to companies with a 15-employee minimum.

“Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000.00, most state employment statutes impose no damages ceilings,” said Mark Ogden, a managing partner of Littler Mendelson, a California-based employment and labor law firm.

“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.”

The 10 Top Employer Actions That Can 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.

Sometimes, however, the violations are not intentional. Employer diligence and awareness contribute a great deal to avoiding employee lawsuits.

Getting Expert Help to Stay Informed and Stay Compliant

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.