Even businesses with the most effective Human Resources Departments and the happiest of employees are vulnerable to lawsuits. Unforeseen situations can quickly escalate, positive working relationships can turn sour, and employees can become litigious, sometimes without valid reason. Unfortunately, even the most bogus claims must be addressed in court, and legal fees associated with winning a lawsuit can exceed $250,000, which hardly feels like a victory.
What Goes Wrong?
Claim scenarios vary, but they are almost always exceedingly costly to the business involved. Some examples include:
- An employee sued a company for National Origin Discrimination and alleged he was wrongly terminated after he complained to a superior that coworkers made disparaging remarks about his ethnic background. He was awarded $250,000 in damages.
- When two employees of a company made inappropriate remarks about a contractor's physique, she sued for third-party sexual harassment and was awarded $100,000.
- An employee sued his employer, alleging he was discriminated against due to his age and disability. He also alleged that he was fired in retaliation for filing a worker's compensation claim and for complaining about discrimination. The business spent more than $175,000 defending the case and paid $142,000 in settlement costs.
- A job applicant sued a business, alleging she was sexually harassed by employees after she submitted her application for employment. Although the business won the suit, defense costs exceeded $350,000.
Employment litigation can be totally devastating to a business. And, because people can be unpredictable, employment lawsuits can be sudden, throwing a business into a state of financial insecurity from which it may never recover.
Preparation and Protection:
The most common targets for federal discrimination claims are not giant corporations, but small businesses having between 15 and 100 employees.
This is why all businesses, no matter how humble in scope or size, should be prepared for employment claims. Businesses must obtain insurance, which can protect companies from the potentially devastating costs of mounting a defense in the event of an employee lawsuit.
In addition to providing financial protection for your business during employment claims, some insurance providers offer additional services at no extra cost, such as:
- Tools for evaluating your company's current approach to employee issues
- Interactive sexual harassment training for employees
- Strategies for limiting your company's exposure to potential lawsuits
For any insurance question, call or contact InSouth Insurance Services today.