Does it seem like everywhere you turn there’s another story about employee litigation? That’s because it’s disturbingly common. According to a study the specialty insurance firm Hiscox, U.S. conducted, employers face about a 12% chance of employee litigation. For businesses with fewer than 500 employees, that percentage climbs higher—to around 20%. The average cost to defend against these suits runs into six figures. That includes 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?
Do Employers Really Do Things Worthy of a Lawsuit?
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. It’s possible to carry insurance against such lawsuits. However, 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
These may be the legal grounds for bringing suit. However, there’s usually something else going on under the surface.
Why Do Employees Sue Their Employer?
Sure, some people seek nothing more than 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 want 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:
● Termination 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.)
● Bullying 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. (For example, 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 and compliance that could impact your business. It’s also critical to document employee performance. Plus, note any warnings issued so that terminations connect to employee behavior and not discrimination. Even perfect compliance won’t always protect you from lawsuits.
Perhaps the best protection is creating a great company culture. Make one 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 can 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.