Employment claims against a business are no rare occurrence, and in an employee-friendly state like California, settlements and judgments are seeing higher numbers than ever. In one of the most recent cases, the class-action suit Hamilton et al. v. Wal-Mart Stores Inc. et al., a California federal court awarded the plaintiffs over $6 million in damages for missed meal breaks. It’s not just big corporations making big settlements, either. In January, a small Bay Area restaurant chain settled a Labor Commissioner claim involving only 300 employees for $4 million to avoid going to court and taking the claim further.
Single plaintiff cases in the state have also seen some staggeringly high judgements. In May of 2018, the San Diego Superior Court awarded a former 30-year Allstate Insurance employee $18.6 million in a wrongful termination and defamation claim. While the bulk of the judgement was for defamation and punitive damages, the wrongful termination claim alone resulted in a nearly $1 million judgement.
According to the most recent Hiscox guide to employee lawsuits, the average total cost of defense and settlements nationally is $160,000 for small-to-medium enterprises. The report also notes that while the average US company had a 10.5% chance of having an employment charge filed against them, California employers have a 46% higher chance of litigation above that rate. Smaller employers are often less cautious in this area because they believe their employees would never sue them. Unfortunately, regardless of how close-knit a company may be, if an employee feels they have experienced unfair or inappropriate treatment, they have the right to sue their employer and will likely have no problem finding legal support to do so.
With the rising cost of employment-related lawsuits in California, employers need to try to avoid these types of claims as much as possible. An employment claim can not only be incredibly costly for any business, but it also puts a substantial amount of strain on the company’s productivity. If the plaintiff is still be employed by the company, which is likely, it can make it difficult for the employee, their colleagues and the employer to stay focused on the business. There is also a lot of time lost from work for meetings with attorneys, depositions and other matters related to the lawsuit. Additionally, once an employee files a claim with the Equal Employment Opportunity Commission or files a civil lawsuit, the charge can be exposed to the public, significantly affecting the business’s reputation. These types of damages can’t always be assigned a monetary value but can be equally as devastating as a million dollar settlement.
Partnering with a Professional Employer Organization (PEO) is a great way for employers to get help navigating through the minefield of labor regulations and creating policies and procedures to reduce their potential exposure. With the expertise of a PEO guiding you along partnered with proper education and training for all managerial staff, you can help reduce your chances of being the next California business settling a million dollar employment lawsuit.
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Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.
NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.