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Companies have more than a 1 in 10 chance of having an employment charge filed against them, according to a new study.
The study by Hiscox, a global specialty insurer, found that companies based in New Mexico faced the greatest risk nationwide, with a 66% higher chance of facing an employee charge than the national average of 12%.
Other jurisdictions where employers are at the highest risk above the national average included Washington, D.C. (65%), Nevada (47%), Alabama (41%) and California (40%).
“Many of the higher-risk states observed in the study have laws that go beyond U.S. federal guidelines, creating additional obligations and risks for employers,” Bertrand Spunberg, Practice Leader – Executive Risks at Hiscox US, said in a news release. “It is important for companies, especially those operating in these high-risk markets, to be keenly attuned to any legal developments that may affect their exposures.”
Hiscox also analyzed claims data from businesses with fewer than 500 employees, finding the average cost to defend an employment charge was $125,000, including attorney’s fees and settlement costs.
To help lower the possibility of an employee lawsuit companies should take time to periodically review its policies for compliance with employment laws. Conducting HR policy audits along with wage and hour audits can help shed light on any inconsistencies. Additionally, employers should regularly provide anti-harassment training to employees and managers.
