Lawsuits Infecting American Dream -- Small Business

It's not just big companies that end up fighting lawsuits. More and more small companies are being sued by their workers. This reflects a growing fear in the once congenial work environment of many a small business, says Thomas Harvey, president and CEO of Assurex International, which cosponsored a recent survey on workplace lawsuit prevention. "One of the advantages in working in a small company is, you really get to know all the people and their families," Harvey says. "You aren't tied up in all the policy manuals like in a big company." But lately, "That's been polluted by this fear that somebody will sue you. That's unfortunate, because the strength of the U.S. economy is in small businesses." Each year in the U.S. more than 40,000 employment suits are filed. Discrimination suits have increased 2,200% since 1974, and sexual harassment claims have more than doubled since 1991. The nationwide survey of 100 human resource professionals -- 93% from firms with fewer than 500 employees -- shows most have taken strategic action to prevent the risk of such lawsuits. Eighty-six percent have created written human-resources manuals, 63% have implemented training programs for managers and supervisors, 57% have developed employee grievance policies, 51% have hired human-resource managers or consultants, and 48% have purchased Employment Practices Liability Insurance, which protects against workers claiming discrimination or wrongful termination based on race, sex, or, disability. Harvey, who himself has run small businesses for nearly 20 years, says owners must now comply with "regulation which is bordering on silliness. "You can't really build an understanding of individuals when you are recruiting them on the front end. You can't ask about family, can't say 'Do you have children?'" And once they're hired, "You can't even physically pat them on the back." Five years ago only a couple of insurance companies offered Employment Practices Liability Insurance; now there are more than 30, says Harvey. The survey was cosponsored by Columbus-based Assurex, the University of Miami, and the Miami-based American Mediation Institute.