“Small business owners need to be better informed about the resources and options that are available to help employers prevent an employment charge and defend their company when an allegation is made,” said Jeffrey O’Shaughnessy, Hartford Steam Boiler vice president for employment practices liability.
Workplace discrimination charges were up 15 percent in 2008, the most recent reporting period for the U.S. Equal Employment Opportunity Commission (EEOC), and $376 million was awarded to employees. Many more claims were filed with state courts and agencies.
The survey of small business owners found that 42 percent felt more vulnerable to employment charges because of a weak economy and recession-fueled layoffs. And 60 percent were aware of new employment laws and legislation that could maker it easier for workers to file an employment-related claim or lawsuit.
When asked how much it would cost to defend and settle a typical employment charge, 60 percent of the small business owners estimated it would be less than $20,000.
“In fact, 81 percent of employment-related charges are settled for an average of $22,400 to $40,500, even when the claim is found to be groundless,” said O’Shaughnessy. “The survey results show that many small business owners greatly underestimate the true cost of defending themselves against an employment claim. With nearly half of those responding unaware that more affordable coverage is available, it’s clear that many small business owners are exposed to the threat of a costly and distracting employment charge.”
