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Survey: Employment Disputes Lead Litigation in the U.S.

Survey Employment Disputes Lead Litigation in the U.S.Lawsuit Trends Put Spotlight on Employment Practices Liability

In Fulbright’s 9th Annual Litigation Trends Survey, findings show that the U.S. (and the U.K.) is dealing with more litigation and regulation, reaching a five-year high in 2012. In the U.S., employment disputes and contract litigation led the way. The survey gathered input from 392 in-house attorneys, including 275 U.S. respondents, on litigation issues and trends. Fulbright is a leading international full-service law firm.

“Ever since the financial crisis, our litigation trends survey has found respondents confronting increased regulatory scrutiny,” said Otway B. Denny, the head of Fulbright’s global disputes practice. “As litigation rebounded in 2012, more companies, particularly in energy, health care, and manufacturing, experienced an increase in government and regulatory investigations. All three of these industries, along with technology, were involved in investigations that concerned at least six different U.S. regulators.”

When it comes to employee disputes, worries over whistleblower allegations continue, as the number of allegations made remained high during the past 12 months – particularly among larger companies. More than one-fifth of all respondents (26% in the U.S. – up from 22% in the previous survey) reported being subject to allegations by a whistleblower. And, as we discussed in a previous blog, in the Security and Exchange Commission’s (SEC) latest annual report on the Dodd-Frank Reform Act’s whistleblower protection program, the agency received 3,001 reports in 2012.

In addition, the Occupational Safety and Health Administration (OSHA) reported a record number of filed whistleblower complaints under its program in 2012. The number of whistleblower cases submitted to OSHA in fiscal 2012 reached 2,787, up 5% from 2011’s total of 2,648. OSHA enforces the whistleblower provisions of 22 federal laws. Whistleblower complaints range from railroad conductors alleging they were punished for reporting safety problems under the Federal Railroad Safety Act to corporate officials alleging financial fraud covered by the Sarbanes-Oxley Act of 2002.

According to the Fulbright survey, the most common outcome of a whistleblower allegation was an internal investigation, particularly in the financial services industry. The second-most common outcome was a regulatory investigation. Least common was a proceeding brought by a whistleblower or a third party.

On the positive side, according to the survey, as U.S. unemployment rate declines, employment litigation from race discrimination to wage and hour disputes has dropped somewhat. While last year’s survey showed 25% of U.S. companies reporting an increase in this type of litigation over the prior 12 months, this year’s survey showed that rate cut to 12%. Across the various industries, only engineering (20%) and health care (22%) reported rates of increase in wage and hour disputes that match the previous year’s overall average.

Protecting Your Firm Against Employee Lawsuits

In addition to implementing Best Practices across the organization to help mitigate losses involving employment practices issues, Employment Practices Liability Insurance (EPLI) is critical. This policy provides coverage for alleged wrongful practices involving sexual harassment and discrimination, hiring and firing decisions, vacation and leave policies, promotions, and hostile work environments, among many others. Additionally, EPLI policies can be purchased to cover wage and hour disputes. They can also cover claims by employees who charge that they were the subjects of an adverse employment decision solely because they disclosed an unfair or illegal practice by the employer. This is one of the few policies to specifically cover whistleblower claims.

Wrongful practices can result in steep damage awards, and legal bills can run high. If there are regulatory or government investigations involved, costs can escalate. Find out about properly protecting your company with EPLI insurance. At Axis Insurance Services, LLC we can design a policy that fits your business needs. Give us a call at (877) 787-5258.

Sources: Fulbright, OSHA, SEC

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Blogged on: March 25, 2013 by Mike Smith
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