Law Department Management Blog
In a 2005 post entitled Top 10 Hidden Employment Costs, the iCatchIT site included three statements that troubled me.
1) “150,000 lawsuits related to the workplace are currently pending against U.S. businesses.”
2) “Employees prevail in 60% to 70% of cases that go to trial or hearings (Kiplinger Letter).”
3) “The average amount of damages awarded to workers who sue their employers is $650,000 (Louisville Courier-Journal), in addition to average litigation costs of $75,000 per suit.”
If these three statements are true and swallowed without blocks of analytic salt, then taken together they mean that employees will prevail in 97,500 lawsuits or hearings (65% of 150,000) that will cost employers around $7.3 billion in costs ($75,000 times 97,500). Even more stupefying: $63.375 billion in damages.
The data, which crops up all over the internet, must be wrong so I did some archeological digging.
As to 1), the germ of this urban myth seems to be that “USA Today recently estimated that there are more than 150,000 wrongful employment practices complaints currently filed at state agencies and the Equal Employment Opportunity Commission (EEOC),” citing to Chubb data. Thus, the myth, based first of all on an estimate by a newspaper, warps the administrative complaints into full-fledged lawsuits.
2 and 3) expands promiscuously on partial, unexplained data. “More and more so-called wrongful termination cases (wrongful discharge) are being tried by juries, which tend to favor employees. Out of 120 such suits surveyed by The Rand Corp. in 1988, 66% were won by employees. The average award: $650,000 per suit.” The myth broadens the original study, limited in number and based on one type of complaint, to hearings and all employment-related cases. I couldn’t source the average litigation costs per suit.
Another online source gave “average settlement awards” for six kinds of employment cases: sexual discrimination ($249,700); sexual harassment ($316,000); wrongful termination ($778,000); breach of contract ($890,000); race discrimination ($1,025,000); and age discrimination ($2,565,614). The wrongful termination amount roughly matches the Rand figure, but how does one account for “settlements” as compared to judgments awarded by courts?
Data are crucial, but data that gets repeatedly distorted to serve someone’s purposes – selling litigation insurance, providing legal services, lobbying for legislative change – can too easily spread unchecked and mis-inform many, many people.