Corporate Culture & Employee Litigation

Every corporation needs an excellent in-house attorney to fight complex legal battles in their stead—someone to act in the best interests of the company and its future. In addition to the everyday intricacies of business litigation, house counsel may also have to field lawsuits from current or former employees who have a legal objection to something that happened during their tenure at the business. When employee lawsuits become a pervasive issue at a business, not only is the cost in billable hours exponential, but the legal judgements that result from these litigations can be devastating for companies. While litigation in general can be characterized as the cost of doing business, companies with healthy corporate culture experience a much lower rate of employee lawsuits. So, how can healthy corporate culture reduce the chance of a lawsuit?

Corporations across the United States are starting to understand the value of healthy corporate culture. Employee lawsuits aside, unhealthy corporate culture can have detrimental, snowballing effects that occur when employees are unhappy in their capacity and unengaged in their work. This is why corporations must improve their culture from within, so that employee retention and productivity remain high. Corporations also have millennials making up the majority of the workforce in the nation, complete with a set of values that propels them to seek a better work-life balance. This means that millennials are less likely to stay in a job where they are unhappy, and will simply seek a more amendable opportunity that allows them to have the work-life balance they desire.

When employees do not feel heard or valued by their employer, they’re far more likely to file a lawsuit related to their grievance. And unfortunately, no company is safe. In 2010, 99,922 EEOC charges were filed in the state of Florida alone, a datapoint that makes leadership wonder not if they’ll be the target of a lawsuit, but when. Employee lawsuits can drag out over months or even years, exponentially getting more expensive. The average settlement in an employee claim or lawsuit is $40,000. That expense alone can be devastating to a company, but that does not account for the disruption to daily operations, and the fact that litigation costs are on a steady rise. In 10% of cases, settlements result in $1 million or greater, a sum that could be the beginning of the end for many medium to small corporations.

The risk of a lawsuit can be even greater depending on the state in which it is filed. According to the Hiscox Group, a majority of states carry around a 10% change of having an employee lawsuit filed against them. However, in Georgia, the probability is 19%. In states like New Mexico, California, and Nevada, the probability can be as high as 55%. The area with the highest probability of litigation is the District of Columbia, with a terrifying 81% chance. The reason for the wide range in probabilities is two-fold: First, the legal standards in each state regarding discrimination and hostile work environments can vary. Secondly, the states with higher risks have more binding laws regarding litigation that can create extra hurdles for companies at the state level. This is why corporations must stay current on employment legislation, especially if they have locations across multiple states/jurisdictions.  

So, how can corporations protect themselves against litigation from current or former employees? In-house counsel fields lawsuits when they are filed, but did you know there was a more proactive method to combatting employee litigation? The answer is simple: healthy corporate culture. When a corporation has a healthy corporate culture, it means that the employees feel valued by their employers in their capacity within the organization. It means that employees who feel valued are engaged, thereby greasing the wheels of internal, daily operations. This increased productivity means progress for the company, and the cycle of healthy corporate culture begins anew with leadership rewarding engaged employees for their hard work.

Research shows that the number one reason behind employee lawsuits is retaliation. In an average scenario, the employee reports an internal issue, usually regarding a form of discrimination. Following the inclusion of the investigation, when the employee cannot track for upward mobility, or a form of unwarranted disciplinary action occurs, they assume the reason is for reporting the previous issue. This can result in that employee filing a lawsuit for receiving unfair treatment on behalf of their employer. When organizations have healthy corporate culture, this is far less likely to occur.

If your company or organization needs a corporate culture overhaul, call Lauth Investigations International today for a free quote on our corporate culture audit program. We can help you improve your business from within and decrease the likelihood of employee lawsuits. When it comes to your business, you should expect facts, not fiction.