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Professional Service Agreement

Increase in Discrimination Cases Require Close Scrutiny of Practices

Companies have been experiencing an increase in litigation; one that corporate counsels expect to continue to increase in the coming year. Employment and labor disputes account for a significant portion of this litigation. In fact, according to respondents of Fulbright & Jaworski's 6th annual Litigation Trends Survey Report, 45% cite labor and employment as the most numerous types of litigation pending in 2009.

Unfortunately, as unemployment has increased, so have suits against former employers. For the second straight year, survey respondents reported sizeable increases in multi-plaintiff cases in the areas of wage and hour (up 15%), age discrimination (up 11%), and disability discrimination (up 8%).

In the past 12 months, reports of increases in the following have also been reported:

Sex discrimination up 11%
Race discrimination up10%
Religious discrimination up 4%
ERISA claims up 4%

According to Fulbright & Jaworski's survey, the three types of employment claims that cause the greatest monetary exposure for a company are: age (35%); harassment (30%); and race (21%).

Wage and hour disputes remain the primary concern when it comes to multi-plaintiff cases. On the class action front, wage and hour accounts for 40% of all cases. Claims over misclassification, overtime, and meal and rest breaks account for the vast majority. Minimum wage violations account for 6% of all claims.

Given the increases in employment claims, employers should critically examine their policies and procedures with regard to hiring, discipline, termination and complaint investigation. The first defense against potential litigation is an effective internal human resources and equal employment opportunity (EEO) audit. Examining ones practices in light of the current litigation environment will expose potential areas of liability and provide for proactive limiting of exposure.

Likewise, should a complaint be lodged internally, companies must ensure due diligence in conducting thorough investigations. Keys to a successful investigation include having well-written policies that spell out non-discrimination efforts, well-trained management and supervision, manageable complaint procedures, consistent and thorough investigation techniques, and well-written comprehensive reports.

For more information contact SESCO at:

SESCO Management Consultants
P.O. Box 1848
Bristol, TN 37621
(423) 764-4127
(423) 764-5869 (Fax)

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