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Why Your Company Could be Sued by an Employee

Why Your Company Could be Sued by an Employee

Employment practices liability claims have been on the upswing for a long time and even the best of companies can end up being sued for issues such as wrongful termination, discrimination, or sexual harassment. Over the past 20 years, employment-related claims have risen 400%, with wrongful termination suits comprising over half. These types of lawsuits have become so common that most businesses will face one or more at some point in time, with the only questions relating to when, how much will it cost, and how much damage will it do to the company’s reputation.

Reasons for Increase in Lawsuits

In part, due to federal and state legislative efforts to ensure a more diverse workplace, the three original classes of employment lawsuits have expanded to include the following:

  • Wrongful demotion
  • Failure to hire
  • Retaliation

According to industry experts, the four most common types of employment practices claims are:

  1. Pregnancy discrimination claims
  2. Claims related to unpaid interns – are they employees or not?
  3. Allegations of illegal background checks
  4. Using or requesting genetic information from employees or applicants

The size of awards has escalated over time, too, along with the increase in the number of claims.

How You Can Protect Your Company

To reduce costs, smaller or private companies will sometimes forego purchasing insurance. This decision could lead to devastating consequences. Your single biggest line of defense is to carry adequate employment practices liability insurance.

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