Companies everywhere are facing the prospect of having to make the most of limited resources these days, and the area of compliance and ethics is no exception. However, the latest available data clearly indicates that organizations that choose not to allocate sufficient resources to eliminating human resources-related litigation risks do so at their own peril. According to United States Federal Judicial Caseload Statistics, approximately one out of every five federal lawsuits filed in U.S. District Courts in 2013 involved HR and employment law allegations.

The risk of a lawsuit isn’t the only concern regarding inadequate HR compliance. In recent years, the Equal Employment Opportunity Commission has developed and implemented a strategic enforcement plan in an effort to crack down on discriminatory practices in the workplace, which has yielded significant results. According to the EEOC, the agency assisted in the recovery of more than $372 million on behalf of employees who filed charges of discrimination against their employers in 2013 alone.

States have also ramped up their enforcement efforts. Many states have enacted employee-friendly laws with regard to HR-related issues such as discrimination, harassment, and wrongful termination. To make matters worse, many states place no limitations on the amount of damages that may be awarded to a successful plaintiff. Thus, an unfavorable lawsuit verdict in a state court could have even more dire financial consequences for a company than an adversarial federal judgment.

Here at Lighthouse Services, our own data reflects what is occurring in the corporate world at large in terms of HR compliance issues. In 2013 68.7 percent – just over two-thirds – of the reports received via our hotlines involved HR-related complaints.

Why are HR-related complaints/lawsuits so pervasive today?

The fallout from the economic crisis of 2008-09 can be blamed for much of the current trend toward HR-related complaints and litigation. The resulting recession caused many companies to trim their payrolls, which has placed a heavier burden on remaining staff members. Today’s workers are often asked to do more, but without receiving a commensurate increase in pay. Logic dictates that stressed-out, disgruntled workers are more likely to file complaints against their employers, which makes them a prime target for retaliatory behavior. It isn’t difficult to understand why retaliation has been the leading source of complaints filed with the EEOC for five consecutive years.

A 2013 survey of employers conducted by employment and labor law firm Littler Mendelson further illustrates the litigious environment that is prevalent in so many of today’s workplaces. Nearly half of the respondents indicated they have heard complaint/lawsuit threats from their employees during the previous year, an increase of 25 percent. Additionally, 85 percent of respondents indicated their greatest fears were HR-related.

Steps to prevent HR-related litigation issues before they arise

While there is no doubt that HR-related complaints and lawsuits are on the rise, the good news is that there are steps you can take right now to reduce your company’s risk. A good place to start is by identifying the areas in which you are most vulnerable and directing resources in a streamlined approach to address them. If you have an ethics hotline in place, closely monitor the reports and review the statistics generated by your provider. This will give you a clear indication of the issues that are causing your staff to file complaints, so you’ll know exactly where to focus your preventive measures. If you do not yet have a hotline in place and would like to learn more about the features and benefits one can provide for your business, click here.

Also consider bolstering your compliance training efforts, particularly in the areas of discrimination, retaliation, and harassment. Lighthouse Services can assist you if you need to implement new or update the current employee training programs in your workplace. We’ve partnered with Syntrio, a leading provider of cost-effective ethics and HR compliance training courses, to offer a wide range of e-learning solutions that can be customized to your company’s specific training needs. To get more information about our HR-related training courses, click here.

Finally, carefully review your current policies and procedures regarding discrimination, harassment, and retaliation, and update them as necessary. Examine your company’s Code of Conduct to ensure it adequately addresses these issues. If you need assistance in developing a comprehensive Code of Conduct for your business, download the informative Lighthouse Services whitepaper “Developing a Code of Conduct: A Step-by-Step Guide.”