The Biggest Legal Threat to Your Business
If you’re a business owner, odds are you do everything you can to grow your business, minimize risk, and prevent failure. You diversify your products and services, purchase expensive insurance policies, and try to stay ahead of the curve on market changes and legal challenges. What’s the #1 commonly ignored threat to your business that can cost you hundreds of thousands of dollars, and even force you into bankruptcy? The answer is wage and hour lawsuits, which too often are a form of “legal extortion” by unscrupulous attorneys who inflate minor violations of California’s numerous and complex labor and employment laws to impose huge penalties on companies just like yours.
Employment Lawsuits Are on the Rise
The number of employment class action lawsuits is skyrocketing every year.
In 2014, there were over 450 employment class actions filed against California businesses. In 2015, this number more than doubled, with over 1,100 employment class actions filed in California.
Since 2020, there have been over 2,000 employment class actions and PAGA lawsuits filed against businesses every year, with the number of lawsuits and costs per lawsuit increasing every year. The cost of a class action or PAGA lawsuit is substantial.
This is your biggest legal threat.
More Money, More Problems
Lawyers representing employees follow the money. Because California employment law favors employees, the number of lawyers filing these lawsuits is growing and their tactics are getting more and more sophisticated. These lawsuits typically cost tens of thousands to defend with defense attorney fees ranging from anywhere from $50,000 to over $1 million depending on the size of the case and the business. The cost of settlement is even higher and can range from several hundred to several thousand dollars per employee.
Do Nothing - The Odds Are NOT in Your Favor
What’s the response from most business owners to an employment lawsuit? Virtually nothing. Wage and hour lawsuits are not covered by typical insurance policies. Specialty insurers are recognizing this trend and are experimenting with the California market, but currently the minimum monthly premium for complete wage and hour class action coverage is over $15,000. If insurance companies want you to pay $180,000 a year to protect your company from wage and hour lawsuits, then you can be confident these lawsuits are a huge risk to your company.
Traditional Protections Are Not Effective
Your HR department (if you have one) is often overwhelmed by the crush of day-to-day tasks and usually has little time, let alone the knowledge, to properly train managers and employees on how to protect your company against sophisticated lawyers coming after you for hundreds of thousands or even millions of dollars.
Many businesses pay significant money to outsourced HR companies or third-party payroll companies, thinking they’re protected. The explosion in wage and hour class actions shows otherwise. A third party might try their best to summarize the law for you or update your handbook, but they fall short in creating and implementing best practices that will not only educate managers and employees, but also help to prevent these kinds of lawsuits in the first place.
The Solution:
Train, Certify, and Document
Cal Comply provides businesses with a real solution to help prevent and protect against employment lawsuits.
Built to Protect
Cal Comply allows businesses to quickly and efficiently educate and train managers and employees on wage and hour rules and best practices. It deters wage and hour lawsuits before they happen by allowing every employee to receive training, an exam, and a certificate of completion. Since lawyers filing employment suits often work on contingency, time is money, and they typically sue only the most vulnerable businesses: Those without adequate protection and training. For a plaintiffs’ lawyer looking to make a quick buck, a business that already has proof of certified training on wage and hour rules does not make for an easy or attractive target.
The Numbers Don’t Lie
The statistics show that if you are doing business in California, your business is exponentially more likely to get hit with a wage and hour lawsuit than to have your building burn in a fire or to have one of your executives embezzle millions. Yet virtually every business buys expensive insurance policies to cover these contingencies. For a fraction of the cost of most insurance policies, Cal Comply can become a powerful ally in your suite of risk management products.
