The High Cost of Non-Compliance
In the event of an audit or lawsuit, your business could be fined hundreds of thousands to millions of dollars if your records and practices are non-compliant with employment regulations. Below are some real-life examples of the cost of non-compliance. All recent and some may be in your area. It doesn't matter your size, your industry, or your intention, the government will fine you. Let's be honest, our government is broke. They even budget for employer fines. They're not going to give you a break if non-compliance is discovered.
Non-compliance of federal and state employment regulations can directly impact the bottom line of any organization, but especially small businesses. It is important to understand the ramifications of business decisions so as to minimize the financial exposure of business decisions. The following are some examples given by the Society of Human Resource Management (SHRM) of the financial impact non-compliance is having on American businesses.
Wrongful Termination - $500,000
Average defense costs are approximately $85,000. Jury verdicts typically average $500,000.
Sexual Harassment - $95 Million
In 2011 a Belleville, IL employee was awarded $95 million in a sexual harassment case because the employer did not handle the complaint correctly.
A judge awarded a recruiter $8.1 million for sexual harassment, sex discrimination, retaliation, and emotional distress claims against her employer.
Age Discrimination - $4,200,000
A former claims adjuster, age 37, was awarded $4.2 million by a jury who found that age was a determining factor in his termination. After a jury trial, an employee was awarded more than $800,000 in damages from the employer, who was found to be in “willful” violation of the Age Discrimination in Employment Act.
Racial Discrimination - $380,000
An African-American employee, who was fired after testing positive on a drug test, was awarded $380,000 by a jury. The employee was asked to submit testing after he was involved in a minor accident. Although he requested a confirmatory test, the company refused and terminated him.
Family and Medical Leave Act (FMLA) - $80,000
A hospital employee was fired when she took leave to care for her two sick children. After being found liable, the hospital had to pay $58,000 in back pay and benefits. A jury awarded an employee, who was fired after requesting leave for depression and anxiety, $19,000 in damages and $80,000 in attorney’s fees.
Disability Discrimination - $7,100,000
A verdict in the first Americans with Disabilities Act case to be litigated by the Equal Employment Opportunity Commission (EEOC) awarded $572,000 to a plaintiff who was fired after he was diagnosed with terminal brain cancer. A jury awarded a discharged executive $7.1 million in compensatory and punitive damages after he was fired one day before he was scheduled for release from an outpatient alcohol rehabilitation program.
Fair Labor Standards Act (FLSA) - $10,000
The FLSA provides that an employer found guilty of willful violations of the Act may be fined up to $10,000. Subsequent violations may include imprisonment for up to six months. Furthermore, the employee has the right to sue “any court of competent jurisdiction” for any unpaid minimum wages or overtime.
Illegal Immigrant Workers - $10,000
If a company is found to willfully violate the Immigration Reform and Control Act, the company can face up to$2,000 for each unauthorized alien. If subsequent violations follow, the company will be subject to fines ranging from $2,000 to $10,000 per violation, and an additional $1,000 per each paperwork violation incident.
National Origin Discrimination - $18,000,000
A texas federal court jury has awarded four former managers of a large convenience store chain more than $18 million after the chain was found to have discriminated on the basis of national origin.
Religious Discrimination - $500,000
A security guard was awarded $500,000, including attorney’s fees, after he was harassed and prevented from praying at work.
Negligent Hiring - $2,500,000
After a deliveryman attacked a customer, the employer was held liable for $2.5 million for negligently hiring and retaining the deliveryman. No job interview was conducted; no references were requested; and he was not asked to complete a job application. It was later discovered that the deliveryman had a juvenile record for armed robbery and burglary and had adult records of arrests and convictions for assault and battery.
COBRA - $1,000,000
Both husband and wife were covered under group plans for their respective employers (dual coverage under both plans). The husband contemplated leaving his employer and asked if he would be entitled to elect COBRA. His employer assured him that he could elect COBRA. He paid all monthly premiums due for coverage. Several months later, his wife gave birth to twins who required intensive medical care. The husband’s plan denied claims for coverage, asserting that the husband never should have been permitted to elect COBRA because he had dual coverage at the time of the termination. The wife’s plan denied all claims as well. A lawsuit resulted. The court awarded damages to the husband and wife in excess of $1 million.
Equal Employment Opportunity Commission (EEOC) - $775,000
The EEOC alleged that Target created and condoned a racially hostile work environment at its store in Springfield, Pennsylvania. The agency said a group of black employees were subjected to inappropriate comments and verbal berating based on race. Further, when one of the black employees objected to this treatment, he was retaliated against, according to the agency. The settlement provides a class of 14 employees with $775,000 and requires that all managers in the store receive training in the company’s equal employment opportunity policies.
Do not risk losing your business