This article is the first of a two-part series on Employment Litigation Risks guest written by CEDR HR Solutions, a human resources solutions company. Like The American Association of Orthodontists (AAO) selected Lockton Affinity as an “endorsed partner” for the AAO-Insurance Program, CEDR HR Solutions was selected as AAO’s human resources services partner. CEDR HR Solutions offers AAO members a free HR consultation, employee handbook evaluation, access to their HR Vault® software and an exclusive discount on a customized employee handbook.
Though some employers see it as the type of thing that can “wait until later” to address, employment law compliance is an ongoing responsibility for employers that needs to be handled correctly from the day you first open your doors to patients.
Since so many practice owners put off their compliance obligations until it’s too late, employment litigation is an expensive and all-too-common reality for many employers.
This litigation can often be avoided with a little bit of advanced preparation and ongoing support from knowledgeable professionals. Here’s what you need to know about employment litigation for your business and what you can do to prevent lawsuits from coming your way:
Employment Litigation Costs and Facts
Employers and managers quickly learn that defending – let alone winning – a lawsuit by a former employee costs time, effort, and money. In fact, your practice may suffer more from the distraction caused by a lawsuit in terms of morale and lost time than you realize.
The financial cost is also worrisome for small businesses. Studies show that about 1 in 5 small and mid-sized employers in the U.S. will eventually face employment charges, with the average cost to defend and settle those charges coming in at around $125,000.
When you consider that the median judgment for employment lawsuits that are decided by the courts is around $200,000, with 1 in 4 of those cases resulting in a judgment of $500,000 or more, it’s a recipe for potential disaster for any small employer.
According to the most recent data available from the Equal Employment Opportunity Commission (EEOC), 2020 saw 67,448 discrimination claims and 24,211 harassment claims filed against employers by employees.
Though the total number of claims in each category dropped slightly from the prior year (from 72,675 discrimination claims and 26,221 harassment claims in 2019), the EEOC still managed to collect an astonishing $439.2 million from employers in 2020 to settle those claims – a figure that marked an increase of $53.5 million, or about 13.9 percent, from the previous year’s total of $385.7 million.
While the total number of claims has trended slightly downward for the last few years, the average payout employers made per claim rose by more than 22 percent in 2020, which is harrowing news for business owners.
Protecting Your Practice with Your Employee Handbook
Visit Part Two of this series to learn how AAO members can receive an exclusive discount on a customized, legally compliant employee handbook from the HR experts at CEDR HR Solutions. If you are curious about the current state of your handbook, reach out to CEDR to have an HR expert review your handbook for free.
The best way to win an employment lawsuit is to prevent it from being filed in the first place. Many AAO members are shocked to learn that an employee handbook, when properly written, can prevent lawsuits from happening.
A legally compliant handbook demonstrates to any interested party (like a plaintiff’s attorney or enforcement agency) that you are aware of the laws that apply to your business, which is the first step in the right direction.
CEDR CEO Paul Edwards says that poorly written employee handbooks are typically self-made, borrowed, or created from a template. “The problem is expertise. Just like it takes specialized expertise for a doctor to provide treatment, writing policies and creating a handbook takes specialized knowledge and talent.”
To be legally compliant, your practice’s handbook should:
- Be specifically crafted for your practice, industry, number of employees and your location, right down to the county you live in.
- Contain rock-solid, legally compliant policies (Consider working with CEDR HR experts to learn how to maximize the protective benefits of that document).
- Include policies that are in line with all federal, state, and local laws that apply to your business.
Once you’re confident that your employee handbook is complete, you should enforce and apply the policies consistently and fairly with all your employees. Your employees should be aware of the handbook and its policies.
- Have your employees read the entire handbook and sign the last page of the document to signify they read and understood its contents.
- Repeat this practice when updates are made.
- Require new employees to read the handbook on their first day as part of the onboarding process.
Having a signed, compliant employee handbook is an important first step in preventing and protecting against potential employment litigation, but it’s not a complete solution when it comes to addressing HR problems at your practice.
Continue reading Part Two of Lockton Affinity and CEDR’s series on Employment Practices Risks to learn about the additional employment practices solutions available to AAO members.