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More Law Suits

DISCRIMINATION LAW SUITS

Why They Are On The Rise? 

Many of the lawsuits filed against businesses every year are based on allegations of discrimination. Businesses can be sued by employees, customers, contractors, and other third parties. Most businesses are insured for liability under a general liability policy. As the following example demonstrates, however, general liability insurance isn't likely to cover a discrimination claim.

All businesses face a risk of accidental losses. While large businesses may have the financial wherewithal to absorb a big loss, small businesses do not. One large loss may put a small company out of business. Thus, small business owners must ensure their company is adequately insured.

1. Employment Discrimination and Wrongful Termination

Many lawsuits filed against businesses are based on allegations of discrimination (Note:  general liability insurance isn't likely to cover a discrimination claim), harassment, retaliation, or wrongful termination. Most workers are protected from these acts by federal anti-discrimination laws. Some of the key acts are as follows:

  • Title VII of the Civil Rights Act:  Bars employers from discriminating against workers based on sex, race, religion, color, or national origin.
  • Pregnancy Discrimination Act:  Prevents employers from discriminating against a woman because of pregnancy or a related condition.
  • Equal Pay Act:  Requires employers to pay men and women the same wages if they perform equal work in the same workplace.
  • Age Discrimination in Employment Act:  Prohibits employers from discriminating against employees ages 40 or older based on their age.
  • Title I of Americans With Disabilities Act (ADA):  Prohibits discrimination against qualified employees who have a disability.

Many states have enacted their own anti-discrimination laws that protect workers. It’s important to remember that state and federal laws apply to applicants for employment as well as employees.  As far as applicants are concerned small business owners need to be careful even when interviewing prospective employees.  In other words, if you turn someone down, you should state why  you did not hire them and file it with their application and keep their application on file.

Terminology

In order to protect themselves from employment-related suits, employers need to understand some basic concepts. Harassment and retaliation are types of discrimination. Federal law defines harassment as unwelcome conduct based on race, color, religion, sex (including pregnancy), national origin, age, disability, or genetic information. In a harassment claim, the alleged perpetrator is often a manager or co-worker. The plaintiff claims that he or she reported the harassment to the employer, but the employer failed to stop it.

Retaliation basically means the firing, demotion, harassment, or similar acts committed by an employer to punish an employee who has filed a discrimination complaint or lawsuit.  For example, an employee files a discrimination complaint and then is fired by the employer. The worker sues the employer, alleging that the firing took place in retaliation for the discrimination complaint.

Wrongful termination means firing an employee in violation of the law. Many wrongful termination claims against employers are based on allegations of discrimination. For example, a 60-year-old worker is terminated, he then files a law suit alleging the he was terminated solely because of  his age.

Small Businesses Vulnerable

Generally speaking, small businesses or usually more vulnerable to employment-related lawsuits than their owners think. Most small companies do not employ a human resources professional. And often times owners are unable to take steps to ensure the company is complying with federal and state laws, lawsuits because of time alone may result. 

Claims alleging discrimination and other employment-related acts may be insured under an employment practices liability (EPL) policy.  But remember, once you file a claim you can almost always expect an increase in your insurance protection rates.  

Other Types of Discrimination Suits 

When businesses are sued for discrimination, the plaintiffs aren't always employees.  Law suits may be filed by customers, vendors, suppliers, patients, and other individuals who have a connection to the business.

For example, a customer sues a restaurant for discrimination based on her national origin. Her suit alleges that staff personnel made derogatory remarks about her native country and then refused to serve her. Some insurance policies may cover discrimination claims filed by individuals who aren't employees.

Wage Law Violations

Many lawsuits filed against employers are based on allegations that the employer violated a federal, state, or local wage law. These laws are collectively called wage and hour laws.

The Federal Labor Standards Act (FLSA) sets the federal minimum wage standards. It also governs child labor, record keeping, and overtime pay. Under the FLSA there are two categories of workers, exempt and nonexempt. Generally, nonexempt employees are eligible for overtime pay while exempt workers are not. Many states and municipalities have enacted their own laws regarding wages and overtime pay.

Wage and hour suits are often based on claims that the employer failed to pay either the minimum wage or overtime pay. Workers may also contend that the employer avoided paying overtime by in appropriately classifying them as independent contractors.  Law suits based solely on allegations of wage and hour law violations are not likely to be covered by insurance.  Such suits aren't covered by general liability policies and are specifically excluded under many employment practices and directors and officers policies.

Torts

Many suits filed against businesses by third parties are based on torts.  A tort is a violation of a person's civil rights. There are two types of torts that can lead to lawsuits against businesses: unintentional torts (negligence) and intentional torts.

Negligence committed by a business owner or employee can cause an accident that injures someone or damages someone's property. The injured party may sue the business or the employee for bodily injury or property damage. Intentional torts like false arrest and wrongful eviction can also generate suits against businesses. Claims against a business for bodily injury or property damage may be covered by a general liability policy.  Claims based on certain types of intentional torts are also covered by liability policies under personal and advertising liability coverage.  

Breach of Contract

Also common against businesses are suits alleging breach of contract. A business owner breaches a contract  when the business fails to comply with the terms of the contract.  Most claims based solely on breach of contract aren't covered by liability policies. 

Employment discrimination isn’t always illegal. In fact, you are free to discriminate against people who come in late, people who are unqualified, and people who insist on wearing socks with sandals. Illegal employment discrimination is limited in scope.

6.  The Federal Civil Rights Law (Title VII) prohibits employment discrimination on the basis of race, color, gender, religion or national origin.  Sexual orientation is not explicitly listed.

As of now the courts are divided as to whether or not sexual orientation falls under gender discrimination, and some states and cities it clear that discrimination on the basis of sexual orientation is illegal. However, it would be safer to consider discrimination on the basis of sexual orientation illegal.

In addition to Title VII discrimination, there are several areas listed.  They are pregnancy, genetic information, disability and association with someone who has a disability are all protected under federal law.

Employment Discrimination Lawsuits Are Rising Rapidly

The EEOC reported that employment discrimination lawsuits are on the rise and that’s been the case for several years.  Although 2017 figures are not yet available, one would not expect them to have dropped from 2016 figures, which are as follows:

  • Retaliation: 42,018 (45.9 percent of all charges filed)
  • Race: 32,309 (35.3 percent)
  • Disability: 28,073 (30.7 percent)
  • Sex: 26,934 (29.4 percent)
  • Age: 20,857 (22.8 percent)
  • National Origin: 9,840 (10.8 percent)
  • Religion: 3,825 (4.2 percent)
  • Race/Color: 3,102 (3.4 percent)
  • Equal Pay Act: 1,075 (1.2 percent)
  • Genetic Information Non-Discrimination Act: 238 (.3 percent)

So, why are employment discrimination cases increasing so rapidly? Here are four theories:

1. Employees are constantly being educated - just as in the case of your rights, if you don’t know them you don’t have them, If you don’t know something is illegal, you won’t file a legal complaint about it.

Although the original discrimination laws were passed more than 50 years ago, not everyone knows their rights. As more people learn, they can better recognize when a boss or coworker behaves illegally.

As additional training programs by employers increase with the intention of preventing discrimination and harassment increases, people become more aware harassment they faced in the past.

This increased awareness doesn’t necessarily indicate an increase in bad behavior.  Often times it’s because of awareness.  This is almost a double edge sword … hopefully, more people will understand their responsibilities as well, and actual cases will decrease over time.

Increased Coverage

This goes along with increased awareness. As people see reports of discrimination in the news, they realize they are not alone, and there is something they can do about it. In 2017, the Washington post and the New York Time combined had over 3500 articles that mentioned discrimination … As the song goes … "those who own the airways owns the minds of the people."   

If you are reading and hearing about law suits and the huge amonts of money being paid out everyday … you can infer that discrimination is everywhere, and it brings up questions. If it’s racial discrimination to have a certain dress code any place one may assume that to also true in an office setting.  Of course, to some winning a law suit conjures up the through of possible financial gains. 

But you can rest assured that there are slip and fall chasers … and a settlement of say $15,000 would make a lot of people very happy and especially because such cases real get further than a quick settlement

Social Media

In the past, you could complain to a few friends, complain to HR but now-a-days people seems to thing of social media as their lawyer … complaints usually hit the web even before lawyers are called.  And if it goes viral … well, people seem to feel like they have been Authenticated … and “the beat goes on!”

Business Owners Reactions 

Employers are reading the same headlines and attending the same training classes that employees do. The number one reason for a discrimination lawsuit in 2016 was “retaliation.” Vengeance is Mine” … Not Yours!

Employers know that they can face serious consequences for violating discrimination laws. In an attempt to make the problem “go away” they sometimes play like an ostrich or even worst … retaliate against employees by punishing them for complaining.

In almost all cases of retaliation. employers are hoping to shut up the complainer so the problem will go away … sometimes it does and people will leave for another job, now-a-days more and more employees decide to sue on a retaliation charge.

According to my research, of those cases that make it to court, employers win 99% of the cases.  But remember:  Most such cases settle out of court. Many are sealed, so you have no idea how much money, if any, the employee received. But, huge sums are not common, but there are always lawyer fees.

Cases can also take years to work their way through the courts, during which time you are under lots of stress.  That’s another reason why most business owners agree to settle out of court.

Business owners needs to make his or her own choice. But it does mean that you need to be careful how you act in the workplace. People won’t stand for illegal discriminatory behavior anymore. And that’s a good thing.

On a personal note:  Over the last several there have been three different attempted lawsuits filed against me.  Two were slip and fall related, (I am a landlord) and one involved an auto accident.  I walked away clean on all three cases, BUT I am certain it was because I had strong lawyers in my corner in each case.

My recommendation:

Don’t Leave Home Without Your Pocket Lawyer! He/she can be as close as the Red Button on Your Phone!