More Unemployment = More Lawsuits?
Unemployment jumped from 5.0% to 5.5% in May, the largest increase in 22 years. Check out the Department of Labor’s latest Employment Situation Report for all the gory details.
According to a study by Stanford Law School, a rise in unemployment triggers an increase in employment lawsuits. For example, a 1.5% rise in unemployment was found to result in a whopping 21% jump in lawsuits. The study also found an increase in damages awarded during a downturn because it takes plaintiffs longer to find jobs.
Those findings are supported by the EEOC’s numbers. Last year, there was a 9% increase in charge filings, the highest since the 1990s. The EEOC recovered more than $345 million in damages, a 26% increase over the prior year.
What does this mean for employers? Be even more careful to follow the law during a downturn. The risk of a big lawsuit goes up the more the economy goes down.
