The average American business with at least 10 employees has a 12.5% chance of a charge being filed against them. But for those in Illinois and the south, their chances are significantly increased.
- California: 42% increased risk
- District of Columbia: 32%
- Illinois: 26%
- Alabama: 25%
- Mississippi: 19%
- Arizona: 19%
- Georgia: 18%
- Washington: 30% decreased risk
- Kentucky: 23%
- Michigan: 21%
- Massachusetts: 19%
- West Virginia: 15%
The reason for the discrepancies can largely be attributed to state-specific regulations, says Bert Spunberg, a senior vice president at Hiscox, the insurance company that studied the issue.
“Federal level information on employee charges is generally available, but state specific information is more difficult to aggregate,” he explains. “Understanding employee litigation risk at a state level is a crucial step for an organization to establish the processes and protections to effectively manage their risk.”
California’s notorious trove of employee-friendly laws is the major reason that state sees so many lawsuits, especially because the laws apply to businesses with five employees – a much broader standard than the federal 15-employee minimum of the Civil Rights Act.
States with stricter laws also tend to see more expensive litigation, another reason for concern.
“Not only are employment lawsuits more likely in those states, but the likelihood of catastrophic verdicts is also significantly higher,” noted Mark Ogden, a managing partner at employment law firm Littler Mendelson. “Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000.00, most state employment statutes impose no damages ceilings.”
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Companies with employees in California are most likely to see an employment liability charge against them, a new study of employment litigation has found.