Alaska Employment Law

Since the mid-1990’s, the success rate of plaintiffs who bring employment lawsuits has steadily increased. [Fn]   [National] jury verdict statistics shows that in 1994, only fifty percent (50%) of plaintiffs were successful at trial.  By contrast, sixty-four percent (64%) of plaintiffs who went to trial in 2006 were successful on their claims.  In fact, between 2002 through 2006, plaintiffs who went to trial enjoyed success rates ranging from sixty-one percent (61%) to sixty-six percent (66%) in any given year.

At the same time that plaintiffs are becoming more successful at winning employment lawsuits, the compensation awarded by juries to successful plaintiffs at trial has steadily increased.   In 1994, the median jury verdict in employment litigation was $ 93,000.  That number has steadily increased, so that in 2006 the median jury verdict in these cases was $ 200,000.  The median for reported settlements was $ 84,978 in 2006 whereas the median for reported settlement in 2000 was only $ 70,500.  These statistics have been consistent with my  experience when I have served as plaintiff’s counsel.

These statistics are very alarming for employers.   However, there are ways in which you can substantially reduce your out-of-pocket costs by limiting your risk of being sued and by increasing your chance of successfully defending a lawsuit brought by a disgruntled employee or former employee.   Here are some recommendations:

(1)  Consider purchasing an EPLI (employment practices liability insurance) policy.  If you are ever sued, this policy will be money well spent, as legal fees and costs and any monetary judgment beyond a certain amount (typically, there is a $50,000 deductible) will be paid by the insurer.  Legal fees and costs in these cases are high:  in many lawsuits the legal fees and costs will exceed $200,000 and could be far higher.  In fact, over the years I have been involved in several cases where the legal fees and costs were almost a half million dollars by the time the cases reached the appellate court level.  A trial transcript alone (needed when a case is appealed by either party) can cost $25,000 to $30,000, while expert witness fees (used in some cases) often add an additional $30,000 to the cost of litigation. So, the savings from having such a policy can be significant. 

(2) Be sure you periodically have an attorney review your hiring materials and personnel policies and procedures.  Employment law has been steadily changing, so the policies you adopted five years ago or the job application you have been using may be out-of-date and expose you to avoidable risks. 

(3)  Conduct periodic training sessions on sexual and other forms of harassment, retaliation, and discriminatory conduct, and be sure your managers and supervisors know the procedures for properly handling an employee’s complaint of harassment, discrimination, or retaliation.          

(4)  Conduct regular reviews of employees, be honest about your assessment of that employee, and make sure the performance of each employee is properly documented (i.e., a written review with the employee’s signature acknowledging receipt of that review).             

(5)  If you receive a complaint of sexual or other harassment, retaliation, or discrimination, get legal advice immediately on how to handle that situation so you make certain the complaint is handled properly.  Complaints must be handled promptly, so it is important that such complaints be given your immediate attention.   No complaints of this nature should be ignored, summarily dismissed as trivial, or minimized because the employee has a reputation of being difficult or a trouble maker.  Be aware that if an employee complains that “physical boundaries” have been crossed, “employee X creeps me out,” or “I don’t want to be in the same room as employee X,”  you must look into the matter, as complainants are often too embarrassed to describe what really happened unless questioned by the employer. 

(6)  If an employee has previously complained about harassment, retaliation, or discrimination and that employee has performance issues or needs to be disciplined, it is prudent to review the situation with legal counsel before taking any disciplinary actions or before giving an adverse performance evaluation.  Retaliation claims have a high success rate at trial so a scenario such as this must be handled very carefully.

(7)  Any time you are considering firing an employee due to performance issues or conduct issues, be sure to consult with legal counsel to make sure that termination is warranted, the risk of a subsequent lawsuit is minimized, and your documentation supports the termination decision.  Your failure to take this step prior to termination could prove very costly.
                                                            
Hopefully these “tips” will prevent you from becoming the Defendant in costly and protracted litigation, particularly an unsuccessful Defendant!  In employment law, an ounce of prevention is always justified, not only in avoiding potential liability, but also minimizing the chance of occurring the substantial direct and hidden costs and distraction of litigation. 

[Fn] The statistics were reported by Jury Verdict Research, which tracks jury verdicts and settlements in lawsuits involving employment law claims.