By: Christina M. Reger

A recent survey published by Hiscox compiled data on employment charge activity from the Equal Employment Opportunity Commission (EEOC). A copy of the report is attached. The report provided some concerning statistics for small and mid-sized business owners.

The report concluded that 19% of all charges resulted in a defense and settlement. Conversely, the 81% that did not result in payment does not mean that such matters did not involve the legal cost to defend the EEOC charge.

Equally significant, the average cost to defend and settle an EEOC charge was $125,000, and the median judgment is approximately $200,000. That is not an insignificant sum to a small business owner. Oh, and the $200,000 judgment amount does not include the legal defense costs to litigate the charge.

Lastly, the report noted that the average duration of an employment claim is 275 days.

What does that mean for you? 275 days of business disruption, staff that must be pulled off of their regular duties to gather documents and prepare them, you or members of your staff meeting with lawyers, time away from the business for meetings, conferences or settlement negotiations, preparing for hearings and then eventually you (and possibly members of your staff) missing work to testify. What else does it mean? An opportunity for 275 days of bad press in print and on social media for your business.

Oh, and at the end, you have to pay the attorney and possibly the employee.

So how can you prevent or, at the very least, mitigate such events from happening to you?

It starts in the hiring process. Making sure your hiring policies are up to date and that they comply with federal, state and local laws.

Then once the employee is hired, they should be provided with an up-to-date, customized employee handbook (not the freebie you downloaded from the internet) which summarizes your company’s policies and procedures on issues such as discrimination, harassment, and a thorough complaint policy, to name just a few. If you don’t have a handbook or yours has collected dust on your shelf, I suggest you contact an employment attorney.

Lastly, train your employees on these policies as well as educate them on how they can report such issues internally — so that you can address the issues before you get those papers from the EEOC.