According to the U.S. Equal Employment Opportunity Commission (EEOC), the number of workplace discrimination charges filed with the EEOC increased 15 percent in 2008, with the largest increases in retaliation and age-based claims. In fact, the EEOC is experiencing the highest level of charge filings since it opened its doors in 1965.
Growth of all discrimination charges seems to be the result of an aging workforce and increased reductions in force. In January 2009, 2,227 mass layoff actions (i.e., affecting over 50 companies) resulted in the separation of 237,902 workers, according to the Bureau of Labor Statistics. During the 14 months from December 2007 to January 2009, there were 25,712 mass layoff events. In February 2009, the number of unemployed workers increased by 851,000 to 12.5 million; unemployment reached 8.1 percent. Consequently, continued growth of workplace claims seems certain.
With discrimination charges on the increase, costly lawsuits are likely to follow. The 2008 Edition of Employment Practice Liability: Jury Award Trends and Statistics, analyzed trends in jury awards from 2001-2007. Among the statistics reported are the following.
- 21 percent of verdicts obtained by prevailing plaintiffs were between $100,000 and $250,000; 18 percent of the verdicts were between $250,000; and $499,999. Approximately 45 percent of the verdicts were over $250,000, while about 32 percent of the verdicts were over $500,000.
- Between 2001 and 2007, the median jury award in discrimination cases rose from $147,950 to $250,000.
- 22 percent of awards in age discrimination claims were between $100,000 and $249,000; 52 percent of awards in age discrimination claims were over $250,000 with 18 percent over $1 million.
- In 2007, the probability of a plaintiff’s verdict in age discrimination claims reached 62 percent, its highest since 2002. That rate is slightly higher than the overall adverse verdict rate. Between 2001 and 2007, plaintiffs won about 61 percent of employment cases tried before juries.
- Retaliation claims present the greatest exposure, as employers have tended to fare poorly (i.e., 19 percent of retaliation verdicts between 2001 and 2007 were between $100,000 and $250,000; 20 percent of the verdicts were between $250,000 and $499,999; and approximately 28 percent were over $500,000). The median verdict was $200,000. The Supreme Court’s Burlington Northern and Santa Fe Railroad Co. v. White, 548 U.S. 53 (2006) decision, holding that actions with no immediate monetary impact could be “retaliatory,” will continue to encourage retaliation claims.
- The median verdict in discrimination cases heard by state court juries between 2001 and 2007 was $250,000, significantly higher than federal court verdicts (median of $175,000).
- Although recent reports suggest litigation claims are decreasing, given the number of recent layoffs and terminations and the struggling economy, we expect there to be more cases filed during the next year.
- Among settlements reported to the Jury Verdict Reporter, 23 percent resulted in payments of $100,000 to $250,000; about 18 percent were over $250,000. These award and settlement amounts are exclusive of legal fees—both claimants and defense fees. Cumulative legal fees sometimes exceed the cost of liability.
It is noteworthy that these awards and settlements do not include the fastest growing and costliest kind of claim—unpaid wage and overtime claims—which typically are prosecuted as collective or class actions. When discharged workers seek post-separation legal advice, they are likely to be asked by counsel about possible entitlement to overtime pay. Consequently, Fair Labor Standards Act (FLSA) of 1938 and state wage claims also are likely to increase.
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by Paul J. Siegel, Esq. and Ana C. Shields, Esq., Jackson Lewis LLP
For more information about employment practices liability and commercial insurance, call Brown & Brown Insurance of Nevada at 702-597-5110.