Does it seem like everywhere you turn there’s another story about employee litigation? That’s because it’s disturbingly common. According to a 2015 study conducted by specialty insurance firm Hiscox, U.S. employers face about a 12% chance of employee litigation. For businesses with fewer than 500 employees, that percentage is higher—around 20%. The average cost to defend against these suits runs into six figures including lawyer’s fees and settlement costs. Of those cases that go to trial, 25% result in a judgment for half a million dollars or more! But, why do employees sue their employer?
Are Employers Really Doing Things That Should Get Them Sued?
Certainly some are, whether intentionally or because they just haven’t kept up with the complex and ever changing area of employment law. But many employers settle employee lawsuits regardless of whether they are in the wrong just to keep the cost of litigation to a minimum. While it’s possible to carry insurance against such lawsuits, it’s also very important to understand why employee litigation happens in the first place.
Common Types of Employee Lawsuits
● Wage and hour violations (overtime, minimum wage, etc.)
● Harassment, hostile work environments, bullying
● Discrimination on the basis of gender, disability, nationality, sexual orientation, etc.
● On the job injury due to employer negligence
● Immigration issues
● Wrongful termination
While these may be the legal grounds for bringing suit, there’s usually something else going on under the surface.
Why Do Employees Sue Their Employer?
Sure, some people are just looking for a quick payday. But it’s not actually that easy to bring a successful lawsuit against an employer. Most workers or former employees who hire an attorney are motivated by more than money. They feel that they have been wronged in some way. In fact, they often don’t know what law their employer may have violated when they seek legal advice. They just know they feel devalued—and they want that to be made right.
Common reasons people sue are:
● Being terminated shortly after complaining about something unfair or illegal that they witnessed or experienced at work (they will naturally assume they were fired for being whistleblower even if the firing was unrelated and due to performance)
● Being bullied by a direct supervisor or manager (the “Bad Boss” problem is also the #1 reason people quit)
● Seeing rules enforced haphazardly (especially if they are punished for something another person “got away with”)
● Working in a culture with extremely lopsided compensation (e.g., the executives are given huge bonuses while no one else gets a raise that year due to cost-cutting measures)
Understanding Why Is the First Step to Preventing Lawsuits
From a legal standpoint, you do want to make sure your Human Resources, Payroll, IT, and Legal Departments are up to speed with all aspects of employment law that could impact your business. It’s also critical to document employee performance and any warnings that are issued so that terminations can be tracked back to employee behavior and not discrimination. But being in compliance won’t always protect you from being sued.
Perhaps the best protection is creating a company culture where employees feel welcome, nurtured, and protected. It’s not enough to say that your company values its employees. You have to show it by treating them with fairness and respect. As a starting place, a good 360 degree feedback program can help you identify managers and other leaders who need to work on their communication skills. When you pay attention to how your workers feel about your company, it’s much easier to stop lawsuits before they start. When you don’t put in the effort to create an equitable workplace culture, every worker you hire is another potential plaintiff.