Our employer clients often ask us, "What are the odds that an employee will sue my company?"
Clients frequently ask for odds, especially when it comes to litigation. "What do you think, Jay? Fifty-fifty? Sixty-forty?" But in litigation, odds are just about impossible to calculate. I can tell you if you have a reasonably good case, a reasonably bad case, or a case that is equally likely to go either way. Beyond that, it's nearly impossible to come up with an actual number for the probability of winning.
But as for the odds of getting sued, it is possible to give some useful numbers, based on some rough statistical analysis. Over the holidays, I did some number crunching of my own. Here's what I came up with:
In Massachusetts (where my office is, and where many of our clients are), there are about three million employees working in workplaces with five or more employees. (I got my numbers from 2006 US Census data, the most recent numbers available. You can check it out here.) Employers with fewer than five workers aren't very likely to be sued; in fact, in Massachusetts, the magic number for most employment cases is six employees.
There are about 3,000 discrimination charges filed in Massachusetts in a year, according to the Massachusetts Commission Against Discrimination's 2007 Annual Report. The Massachusetts Attorney General's Office processes about 5,000 wage complaints each year. I got this number from a 2006 Boston Heraldarticle reporting 2005 numbers, and then extrapolated. There were 364 employment cases filed in the Massachusetts federal district court in 2008. (You can check out your state here.) The Massachusetts state-court system doesn't publish this sort of information, but I estimate that about 2,000 of the 35,000 civil cases filed in superior court are employment related.
So all told, we're looking at about 10,000 employee cases for 3,000,000 Massachusetts workers. That's a ratio of 1 in 300. Does that seem like a lot? Wait till you crunch some more numbers.
If you're a Massachusetts employer with just ten employees, then you have a 3% chance of having one of those employees sue you in 2009 (all things being equal). But watch how the numbers jump up as your workforce increases. With a hundred employees, you stand a 28% chance of being sued this year. An employer with 250 employees faces a 57% chance, while a 500-worker employer is staring at an 81% chance. By the time you get to a thousand employees, you have only a 3.5% chance of not getting sued this year. More than a thousand workers, and you face an almost certainty of employment litigation.
You also need to consider the mean number of lawsuits. If you have 300 employees, the mean of your probable lawsuits is (duh) one. At a thousand employees, your mean is 3.3. In other words, a thousand-worker employer has 96.5% chance of getting sued, and is likely to face an average of just over three different employee lawsuits in a year.
Keep in mind: these numbers don't account for a number of factors that could lower or raise your company's odds. For example, your industry is a big factor: restaurants, hotels, and hospitals are more likely to be sued; while law firms are less likely. Whether your company is unionized is another big factor: if it is, you're much more likely to be sued. Also, your state may have different odds. Massachusetts is a classic blue state with employee-friendly laws and institutions; a red state is likely to have lower odds for lawsuits.
Still, it's useful to have a rough idea of the risks you face. Once you know the risks, you can better prepare for them.