With jobs still hard to find for many workers, it appears that many are filing discrimination claims to fight terminations.
According to a recent Employment Law Alert by Ohio law firm Zachin & Rich, discrimination claims filed with the Equal Opportunity Commission (EEOC) “exploded” in the six months leading up to April 2010. During that time, 70,000 claims were filed, representing a 60 percent hike over the same period in the previous year. The article cites more terminations and the tight labor market as reasons for the increase.
When an employer is charged with one of these claims, the legal costs alone can be astronomical, even if the employer is found to be innocent of discrimination. Many employers simply cut their losses and settle the claims just to avoid the escalating costs of fighting the claim. Then there is the cost in time. Discussions with lawyers, gathering information to defend against an EEOC claim, and EEOC mediation or hearings can easily monopolize weeks, even months, of an HR department’s time. In addition, if the company is found to be liable for discrimination, they could pay hundreds of thousands of dollars in penalties and back pay!
The increasingly litigious climate in today’s employment environment is one reason many companies are turning to contracting to boost their workforces. By hiring a contractor and outsourcing their employment to a contracting back-office, they can escape much of the liability associated with that worker because the back-office generally assumes that liability as the Employer of Record.