Record EEOC claims. Rising litigation. Soaring damage awards. It’s a simple formula: economy down = lawsuits up. Or so the experts say.

We wanted to see what our loyal Blawg visitors are experiencing.  At our most recent webinar, we asked our more than 1,500 attendees:

Are you seeing an increase in employment law claims?

Looks like the experts are right. A whopping 0% of our audience reported a decrease in claims. 100% are either seeing an increase or no change. Interestingly, though, only 5% reported a substantial increase.

Here are the full results:

• Yes, substantial increase — 5%
• Yes, modest increase — 28%
• No change — 64%
• No, modest decrease — 0%
• No, substantial decrease — 0%

Click here, here and here for more on this topic. As always, thanks for your participation!

According to a new Gallup poll, a majority of Americans favor making union organizing easier but very few are following the Employee Free Choice Act (EFCA) closely.

The highlights:

• 53% said they would favor “a new law that would make it easier for labor unions to organize workers.” 39% are opposed.
• 70% of Democrats favor such a law, as do 52% of Independents.
• 60% of Republicans are opposed.
• Only 12% are following EFCA “very closely” and only 22% “somewhat closely.”

None of the questions dealt specifically with the “card check” piece of EFCA. As the Gallup organization noted: EFCA is a “complex piece of legislation with numerous components, making it difficult to assess overall support for the bill among a population that is largely unaware of it.”

A new study by the law firm of Seyfarth Shaw confirms what we’ve been seeing in the headlines in recent months:  when the economy goes down, lawsuits go up.

The firm’s Fifth Annual Workplace Class Action Litigation Report identifies several major trends in the world of employment lawsuits:

1.  Class Actions Up.  The financial meltdown is resulting in increased class action litigation, including ERISA class actions seeking recovery for 401(k) losses and post-RIF discrimination and WARN Act cases.  In fact, employment-related class actions are the #1 exposure driving corporate legal budget expenditures.

2.  Wage & Hour Up.  The volume of wage and hour suits continues to “increase exponentially.”  The number of Fair Labor Standards Act (FLSA) class actions outnumbered all other employment-related private suits.  The biggest wage and hour explosion is at the state level, particularly in California, Florida, Illinois, Massachusetts, New Jersey, New York, Pennsylvania and Texas.

3.  $$$ Up.  Settlements/damages paid out on workplace class actions continues to rise, especially in ERISA cases.  The top ten settlements alone in 2008 totaled more than $18 billion.

What will 2009 bring?  Probably more of the same, unfortunately.  Each of the above trends is expected to continue to grow in 2009.  “The findings in this year’s report illustrate that the trend we’ve analyzed for the past few years continues unabated:  there is an explosion in class action and collective litigation involving workplace issues,” said J. Stephen Poor, Seyfarth’s Managing Partner.

The lesson?  Take proactive action NOW.  Identifying and addressing class action vulnerabilities should be at the top of every employer’s list of 2009 priorities. 

In other words, imagine what the world’s toughest plaintiffs’ firm would sue you for and fix it before they get a chance.

How much time will your employees spend shopping online at work this holiday season?  Here are some interesting statistics from the Information Systems and Audit Control Association (ISACA):

• 63% of employees shop online using their work computers
• 55% of employers allow online shopping but don’t educate employees about potential risks
• 26% of employees shop online without adequately checking web site security
• employees between the ages of 18-24 spend the most time shopping online and take the most risks
• employers lose an average of $3,000+ in productivity per employee due to online shopping

In addition to lost productivity, failure to address the above activity can result in viruses, spam, phishing and other horrible things that can cripple a company’s IT infrastructure. 

Almost all companies have implemented computer usage policies to deal with these issues.  But many of them are ridiculously overbroad and inconsistently enforced, which can result in morale issues and discrimination lawsuits.

So, what should employers do?

1. Implement a reasonable computer usage policy and consistently enforce it.
2. Train employees on appropriate computer usage before the holidays and follow up with reminders.
3. Implement basic security measures such as spam filters, patches, firewalls and intrusion detection systems and update them regularly.
4. Monitor networks for suspicious activity, respond quickly to threats and remind employees to notify management of potential problems.
5. Conduct periodic risk assessments and update the usage policy and security measures accordingly.

For more from ISACA on this topic, click here.

Hate to be the bearer of bad tidings, but a new survey projects that the recession will last fourteen months.

According to the Philadelphia Reserve’s latest Survey of Professional Forecasters, the current recession began in April and will last through June 2009.  That would make it the third-longest recession since the Great Depression.  Only the 16-month recessions of the mid-70s and early 80s were longer.

As we discussed here, employment claims are one of the few things that go up during a downturn.  It’s more important than ever that employers know and follow the law.  Here’s what you can do to stay out of legal hot water:

Don’t Forget to WARN.  The Worker Adjustment and Retraining Notification Act (WARN) requires advance notice of a “plant closing” or “mass layoff” in certain situations.  Click here for our handy WARN Cheat Sheet.  Also, make sure you’re familiar with your own state’s laws.  Some states have enacted WARN-type statutes and/or require advance layoff notice under unemployment regulations.

If You RIF, RIF Right.  To withstand judicial scrutiny, a RIF must be based on legitimate nondiscriminatory business reasons.  Make sure all RIF decision-makers can clearly articulate those reasons before you proceed.  Also, the criteria used for selecting RIF participants should be as specific, concrete and consistent as possible.  Multiple factors may be used, but the more subjectivity there is, the more likely it is that potentially discriminatory factors could creep in.

Severance and Release.  Consider offering severance agreements in exchange for releases of claims to further reduce risk.  Make sure you comply with the older worker waiver protections under the law.  Check out our our ADEA Cheat Sheet for an overview.

Be Careful What You Write.  Be very, very, very careful about what you put in writing.  If you’re sued, the plaintiff’s attorney will undoubtedly demand every single e-mail, memo, note, jotting and scribble that’s remotely related to your process.

Talk to Your Lawyer.  Run the RIF plan by your legal counsel and conduct discrimination testing to make sure everything’s on solid legal footing.  Come up with a plan to protect as many documents as possible under the attorney-client privilege.

Click here for more tips.  Hope this helps.

According to the latest study from Jury Verdict Research, discrimination verdicts are on the rise.  The median award rose a whopping 70%, from $147,500 in 2006 to $252,000 in 2007.

Some other fascinating facts . . .

What are an employer’s chances of winning at trial?

Employers won only 38% of discrimination lawsuits in 2007, the worst win rate of the decade and down from 45% in 2006.  The lowest win rate (30%) was in sex discrimination cases and the highest (43%) was in race discrimination cases.

What employers took the biggest hit?

Manufacturing/industrial had the biggest verdicts, followed by government, transportation and then service/retail.

What forms of discrimination generate the biggest verdicts?

Age discrimination was #1, followed by disability, sex and race.

Are employers better off in federal or state court?

Employers are better off in federal court, where they won 43% of the cases in 2007, versus only 34% in state court.  In addition, the median federal award was 22% lower than the median state award.

What should we expect in the near future?

As we discussed here, employment lawsuits typically rise in a downturn.  So, it’s fairly reasonable to expect the above numbers to continue rising.

Where can I get more?

For the full report – required reading for all HR professionals, business owners and employment lawyers – click here.

According to a new study, contractors hired to investigate federal discrimination claims are resolving cases 35% faster and 52% cheaper than government employees.

Data compiled by the EEOC shows that contractors took an average of 149 days to investigate each case, while EEOC investigators took 230 days.  The average cost of a contracted-out case was $2,247 versus $4,753 for cases investigated in-house.

For more, click here.

In preparation for my upcoming October 30 Halloween webinar, entitled Answers to the World’s Scariest Employment Law Questions, I conducted a survey of the finest employment lawyers in the country to get their answers to the following question:

What are the top ten employment law issues most likely to wake you up screaming in the middle of the night?

Here are the answers . . .

1. Inadequate knowledge of employment law basics
2. Executive misconduct
3. Any form of discrimination
4. Wage and hour violations
5. Retaliation
6. Inadequate investigation
7. Failure to follow policies
8. Bad documentation/communication
9. Emotional rather than fact-based decisions
10. Inconsistency

Over the next few weeks leading up to the webinar, we’ll give you our recommendations for reducing the scream-inducing capacity of each of these truly frightening items.

In the meantime, I suggest using this list as a sort of self-audit priority list.  Start with #1, assess your company’s risk, and then take steps to fix it.  Then move on to #2 and repeat.  If you get all the way through #10, you (and your lawyers) should be able to sleep a whole lot better.

More to follow.

A new study indicates that all parties to a lawsuit may be better off settling rather than going to trial.

Litigation consultants DecisionSet studied civil trial verdicts over a forty-year period and reached some interesting conclusions.  The highlights:

• approximately 90% of all cases settle
• plaintiffs made the wrong decision in 61% of cases by going to trial
• defendants made the wrong decision in 24% of cases by going to trial
• getting it wrong cost plaintiffs an average of $43,000
• getting it wrong cost defendants an average of $1.1 million

So, who’s to blame for all these bad decisions?  According to Randall Kiser, co-author of the study, the answer may be litigation lawyers.  ”It’s entirely possible that attorneys are not giving adequate advice,” he says. 

As evidence, Kiser pointed to a “troubling finding” that bad decisions to go to trial have actually become more frequent over the years.  “It’s peculiar if any field is not improving its performance over a 40-year period,” he said. 

In its analysis of the study, the New York Times noted that “[c]ritics of the profession have long argued that lawyers have an incentive to try to collect fees that are contingent on winning in court or simply to bill for all the hours required to prepare and go to trial.”  It also pointed out that law schools don’t teach lawyers how to handicap the odds of winning a trial.

Lawyers have been quick to criticize the study, which actually hasn’t been released yet.  “Most clients think they are completely right,” Michael Shepard of the law firm Heller Ehrman told the Times.  “A good lawyer has to be able to tell clients that a judge or jury might see them differently.”

The Lesson

Whether it’s lawyers or clients who are more at fault, we suggest taking matters into your own hands by doing an early case evaluation of all lawsuits to determine the merits of settlement versus trial.  Click here for handy tips on that and other ways to make litigation less painful.

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.