Attorneys say employment-related litigation is booming.
The median award in an employment case was $276,711 in 2005, up from $150,000 in 1999, according to Jury Verdict Research of Palm Beach Gardens, FL. Attorneys' fees can add $95,000 for employment suits that settle just before trial or for cases that make it to trial: $250,000 and up.
To protect your company, make sure you know the federal, state and local laws. Then put together a policy that includes a process for handling employee complaints. Designate at least two people, a man and a woman, to be available to employees who need to report a problem. Include this policy in your company handbook and instruct employees annually about it. If you employ many people who speak another language, make sure to translate the policy for them. Document everything. Have employees state, in writing, that they understand the policy. Record any problems reported, as well as the actions taken to resolve the problem.
Employers in most states are legally obligated to have safe work environments, so they can confront and dismiss employees who assault or harass others. Good managers must be acute observers and empathetic listeners. When they sense an employee is distressed, they don't ignore him or her. "They understand that people are messy, and when someone is in fight-or-flight mode, they talk to them, push them to get help and don't let them remain isolated," says James Harter, chief scientist of the Gallup Organization's international management practice.
Insurance to cover your company in employee suits should be investigated. Standard liability policies don't cover employee-related litigation. Employee practices liability insurance (EPLI) can help pay for damages incurred as part of a lawsuit. EPLI covers companies for legal costs and damages associated with harassment, discrimination or wrongful termination cases brought by current or former employees. This can be important if you operate in plaintiff-friendly states or if you're covered by state or local anti-discrimination laws.
Source: BusinessWeek SmallBiz, April 2007, and The Wall Street Journal, April 23, 2007