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States where employee lawsuits are most likely to happen

Results from the 2017 Hiscox Guide to Employee Lawsuits

On average, 10.5% of U.S. businesses will face an employee lawsuit, but a new report from Hiscox USA shows some states are at signifcantly greater risk. (Photo: Shutterstock)
On average, 10.5% of U.S. businesses will face an employee lawsuit, but a new report from Hiscox USA shows some states are at signifcantly greater risk. (Photo: Shutterstock)

Hiscox USA recently released its 2017 Hiscox Guide to Employee Lawsuits, an annual report that analyzes employee litigations among U.S. businesses and identifies the states in which employee lawsuits are most prevalent.

The report also addresses what constitutes discrimination in the workplace, and offers guidance for employers on what businesses can do to detect, mitigate, and prevent such occurrences.

This study was compiled using data on employment charge activity from the Equal Employment Opportunity Commission (EEOC) and its state counterparts.

Related: Insurers now need to anticipate workplace diversity issues

Discrimination in the workplace


Claims against an employer can occur when an employee or job applicant feels they have been discriminated against in the workplace for reasons including, but not limited to, their age, disability, religion, race or color.

Unlawful retaliation against job applicants or employees, who had alleged that they had been punished for asserting their rights to be free from employment discrimination, is the most common claim asserted in federal employment cases.

According to the 2017 Hiscox Guide, the following represent the top causes for employee litigation. In many cases, however, more than one cause was cited:

          • Retaliation (46% of cases)
          • Race (35%)
          • Disability (31%)
          • Sex (29%)

Related: Culture is at the core of building a diverse and inclusive insurance industry

The cost of employee lawsuits


Hiscox research indicates that among small and mid-sized businesses, or those with 500 employees or less, 1 in 10 businesses will be involved in an employee lawsuit.

Among 1,214 closed claims reported by small and mid-sized businesses, 24% of employment charges resulted in defence and settlement costs averaging a total of $160,000. On average, those cases took 318 days to resolve.

Of these cases, 76% resulted in no payment by the insurance company. 

Related: Diversity in insurance: beyond the quotas

States with the highest risk


In 2016, U.S. companies faced at least a 10.5% chance of having an employment charge filed against them, according to the Hiscox Guide. However, Hiscox researchers note that some states are significantly riskier than others.

"It's critical to be acutely aware of your state's laws," Patrick Mitchell, Management Liability Product Head at Hiscox USA said. "We found that many of the higher-risk states have laws in place that go beyond federal legislation. Varying state laws can impact the risk business owners face and play a role in the number of employee lawsuits in a given state. Business owners must stay aware as legislation evolves, and ensure that their businesses are compliant and that they have a plan in place should a lawsuit be filed."

Here are the top 10 states with the highest employee lawsuit risk:

Georgia

(Photo: Shutterstock)

10. Georgia: +19%

 Connecticut

(Photo: Shutterstock)

9. Connecticut: +19%

Chicago, Illinois

(Photo: Shutterstock)

8. Illinois: +35%

Sweet Home Alabama sign

(Photo: Shutterstock)

7. Alabama: +39%

Welcome to Mississippi sign(Photo: Shutterstock)

6. Mississippi: +43%

Golden Gate Bridge(Photo: Shutterstock)

5. California: +46%

New Mexico

(Photo: Shutterstock)

4. New Mexico: +50%

Welcome to Las Vegas Nevada sign

(Photo: Shutterstock)

3. Nevada: +55%

Welcome to Delaware sign

(Photo: Shutterstock)

2. Delaware: +55%

Washington, D.C. monuments

(Photo: Shutterstock)

1. Washington, D.C.: +81%

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