Hiscox USA recently released its 2017 Hiscox Guide to EmployeeLawsuits, an annual report that analyzes employee litigations amongU.S. businesses and identifies the states in which employeelawsuits are most prevalent.

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

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This study was compiled using data on employment charge activityfrom the Equal Employment Opportunity Commission (EEOC) and itsstate counterparts.

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Related: Insurers now need to anticipate workplace diversityissues

Discrimination in the workplace

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

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Unlawful retaliation against job applicants or employees, whohad alleged that they had been punished for asserting their rightsto be free from employment discrimination, is the most common claimasserted in federal employment cases.

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

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

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

The cost of employee lawsuits

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

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

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

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Related: Diversity in insurance: beyond thequotas

States with the highest risk

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

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“It's critical to be acutely aware of your state's laws,”Patrick Mitchell, Management Liability Product Head at Hiscox USAsaid. “We found that many of the higher-risk states have laws inplace that go beyond federal legislation. Varying state laws canimpact the risk business owners face and play a role in the numberof employee lawsuits in a given state. Business owners must stayaware as legislation evolves, and ensure that their businesses arecompliant and that they have a plan in place should a lawsuit befiled.”

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Above are the top 10 states with the highest employee lawsuitrisk.

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Danielle Ling

Danielle Ling is an experienced video journalist and business reporter. As associate editor, Danielle manages all multimedia and reports on industry news and risk-related coverage, managing all weather-related content. A University of Maryland and Philip Merrill College of Journalism alum, Danielle previously served as a video journalist for Verizon FiOS 1 News NJ, Push Pause. Connect with Danielle on LinkedIn or email her at [email protected].