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Risk to businesses of employee lawsuits high

New Jersey businesses may believe they have little chance of being sued by their employees, but a recent study indicates otherwise. The annual study was conducted by Hiscox, a specialty insurer that looked at employee lawsuit trends.

According to Hiscox, U.S. businesses of small- to medium-size have a risk of being sued by an employee of 11.7 percent. Some states show higher percentages of filed employee claims than do others. The jurisdictions with the highest rates of employee claims include California, Nevada, New Mexico, Alabama and Washington, D.C. Although New Jersey is not in the top five states for lawsuits, businesses there still face a strong risk of being sued by their employees.

Hiscox states that one in five businesses with fewer than 500 employees will be sued at least once by an employee. According to the company, the average cost to businesses for defending against these lawsuits can be as much as $125,000 per incident. Carrying insurance can help substantially, as the average deductible for the business is around $35,000. For cases that do not settle, the median verdict is around $200,000, with 25 percent resulting in jury awards of $500,000 or more.

It is advisable that businesses carry insurance to cover them in the event they are sued by an employee. They should also have strong policies and procedures in place to prevent and address sexual harassment and other forms of discrimination. Businesses should take care when they are terminating an employee to make certain it is for a legitimate purpose. Businesses should never fire an employee to retaliate against them for filing a complaint. Employees who believe they have suffered workplace discrimination, sexual harassment or have been wrongfully terminated may want to meet with an employment law attorney to determine their potential remedies.

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