Have you ever wondered how a single jury award can shatter a company’s financial stability? In this eye-opening episode of Employee Survival Guide®, Mark Carey dives deep into the alarming rise of ‘nuclear verdicts’ in employment litigation, where jury awards can soar beyond $10 million. As the landscape of employment law evolves, understanding these staggering jury awards becomes crucial for both employers and employees alike.
Mark sheds light on the factors fueling these nuclear verdicts, from jury anger over perceived injustice to the pressing call for corporate accountability. With the growing trend of social inflation, jurors are increasingly moved by personal stories of mistreatment, making employment claims not just legal battles but deeply emotional ones. With real-world examples of significant recent verdicts, he illustrates how the threat of exorbitant jury awards reshapes employer strategies, influencing everything from early settlement negotiations to rising insurance premiums.
But it’s not just about fear; it’s about empowerment. Mark emphasizes the importance of proactive compliance and treating employment disputes as critical risk events. He provides actionable steps for employers to mitigate risks, such as auditing workplace policies, training managers effectively, and genuinely addressing employee complaints. By fostering a culture of transparency and accountability, businesses can not only protect themselves but also enhance their workplace environment.
This episode is a must-listen for anyone navigating the complex world of employment law, whether you’re an employee seeking to understand your rights or an employer aiming to safeguard your organization against costly litigation. Tune in for insider tips on severance negotiation, workplace rights, and the nuances of employment contracts. Join us as we explore how to survive and thrive in the challenging landscape of employment disputes, ensuring that both employee empowerment and corporate responsibility go hand in hand.
Don’t miss out on this essential discussion that could redefine your understanding of workplace dynamics and legal strategies. Discover how to navigate the intricate web of employment law issues and emerge victorious in the face of adversity. Your survival in the workplace starts here!
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Disclaimer: For educational use only, not intended to be legal advice.
Transcript:
Speaker #0
Hey, it’s Mark here and welcome to the next edition of the Employee Survival Guide, where I tell you, as always, what your employer does definitely not want you to know about and a lot more. Hey, it’s Mark and welcome back to another episode of the Employee Survival Guide. Today’s topic is nuclear verdicts in employment cases, why employers litigation exposure is rising. So this is a topic that from the employer’s angle, and I want you to listen to what they’re concerned about because, you know, the employers are running around trying to scare the crap out of you and create fear in your work. This is what they’re concerned about. Assessing risk is part of life and an essential part of business. Recent trends in employment law verdicts are causing a reexamination of how employment litigation risk is assessed by employers and their counsel. Employment litigation is always carried. financial and reputational risk. We know that because that’s what we, as plaintiffs’ counsel, that’s our leverage. But in recent years, employers, insurers, and defense counsel have become increasingly concerned about the growing prominence of so-called nuclear verdicts, unexpectedly high jury awards, often defined as verdicts exceeding 10 million. That concern is no longer theoretical. A majority of surveyed respondents 77% reported that they are increasingly concerned about nuclear verdicts. The trend reflects a broader reality. Employment claims that once may have been evaluated primarily through back pay, front pay, and attorney’s fees now may carry a far larger risk profile when presented to a jury. The phrase nuclear verdict is often used to describe an award that substantially exceeds expected settlement value. insurance reserves, or historical outcomes for comparable claims. In the employment context, these verdicts may arise from claims involving discrimination, retaliation, harassment, disability accommodation, wrongful termination, wage and hour issues, or workplace safety allegations. Several factors can increase the likelihood of an outsized verdict. Jury anger over perceived unfairness. Employment cases are highly personal. Jurors may react. strongly when they believe an employee was mistreated, ignored, retaliated against, or denied a fair opportunity to work. Corporate accountability arguments. Plaintiffs’ counsel increasingly frame employment disputes as a broader failure of corporate responsibility rather than isolated personnel decisions. Plaintiffs’ attorneys, like myself, frequently use trial tactics designed to trigger jurors’ survival instincts, framing the employer as a dangerous entity that requires a massive financial penalty to change its behavior. Well, employers just don’t get it and they need to be, you know, a hard argument to make them, you know, convinced that their risk assessment or analysis they use to punish employees and get away with it doesn’t work. And that’s what that speaks to. Internal documents and inconsistent explanations, emails, text messages, performance reviews, investigation notes and shifting and termination rationales can significantly affect credibility of an employer. Punitive damage exposure is a big one. Some of our statutes and some state laws, New York City Civil Code actually has large punitive damage capability at risk for the employers. In certain claims, evidence of malice, reckless indifference, or intentional misconduct can transform the damage analysis and cause a jury to award an enormous punitive damage award. Social inflation. Jurors may be willing to award large sums where they believe a verdict is necessary to deter misconduct. or send a message to a large employer. Recent high-dollar verdicts illustrate why employers are paying close attention. A June 2022 verdict in California for $464 million in a case alleging sexual and racial harassment. An October 2022 Texas verdict for $366 million in a case alleging racial bias. A $58 million jury verdict involving a workplace injury where a California man you broke his foot while working on a train manufacturing yard. A $35 million jury verdict involving an ADA claim where a truck driver in Nebraska alleged he was not hired because he is deaf. And an $11.25 million jury verdict involving retaliation where a black fitness instructor in New York alleged he was fired after complaining about a co-worker’s racist and sexually inappropriate comments. The National Law Journal reported the average jury award among the top 100. U.S. verdicts more than tripled between 2015 and 2019, skyrocketing from 64 million to 214 million. Furthermore, 30% more verdicts surpassed the 100 million threshold in 2019 compared to 2015. These examples involve different legal theories and factual settings, but they share a common lesson. Jurors may respond forcefully when they believe an employer failed to act fairly, failed to follow the law, or failed to take employee concerns seriously. Not surprised. The risk of nuclear verdicts affects more than cases that actually reach the jury. It can change the economics of employment litigation from the outset. According to a survey, Responses, 39% of respondents, respondents being employers, reported noticing increased insurance premiums, while 29% said they have attempted early settlement negotiations to avoid trial risks. That’s the common default that most employers take is try to early settlement negotiations, and we encourage that as well. It works for both parties. Those figures are consistent with what many employers are seeing in practice. The threat of a runaway verdict can influence insurance underwriting. claim reserves, mediation strategy, and a willingness to resolve claims earlier in the litigation process. For employers, this means litigation exposure should not be measured only by the probable value of a claim. It should also account for the potential validity of a jury outcome, the cost of defense, insurance limits, reputational harm, that’s a big one, and the practical consequences of prolonged litigation. Employment claims can be particularly susceptible to high verdicts because they often turn on credibility, motive, and fairness. A jury may be asked to decide not only whether the employer technically complied with the law, but whether managers acted honestly, consistently, and respectfully. Common points to include poor documentation, missing vague or after-the-fact documentation can undermine an otherwise defensible decision, and consistent discipline. Just treating… different treatment of similarly situated employees can create a powerful evidence of discrimination or retaliation. We call it disparate treatment. Failure to engage in the interactive process. This happens a lot. Disability accommodation claims can become especially risky when an employer appears dismissive or inflexible to the employee’s concerns and requests. Weak investigations. They don’t do investigations. They just paper them. A superficial or delayed investigation into a harassment, discrimination, or retaliation. Complaints may become central evidence at trial. We attack this issue all the time. Employers try to cover it up in the form of attorney-client privilege, but you can’t have an affirmative defense when you have a privilege assertion like that. If you have an investigation, you’ve got to show us what you did, what you look at. Retaliation timing. Even where the underlying complaint lacks merit, adverse action soon after a protected activity can create a significant exposure. And I want to tell you for a fact that I deliberately try to create circumstances like that to catch employers. and have them, well, do the wrong next thing. And they do it. And so we build a retaliation claim on potentially weak cases. It also provides reporting of complaints of discrimination, provides an insurance policy for longevity of employment for a matter of weeks and months until the employer decides to get the gumption to fire the individual without thinking that they’ve amassed enough time between the complaint and the termination, which is never the case. Untrained supervisors. This is a good one. Managers who do not understand protected activity, accommodation obligations, leave rights, or anti-harassment policies can create unnecessary risk, and they do this every day. It’s just amazing how employers do not train their frontline employee managers and just were happily in business for the last nearly 30 years. Practical steps employers can take. Employers cannot eliminate the risk of employment litigation, but they can reduce the likelihood that a dispute becomes a high-exposure case. The following steps are especially important in the current environment. Number one, audit policies and practices. Employers should regularly review anti-discrimination, anti-harassment, and retaliation or disability accommodation, leave, etc. policies. Written policies should match actual practice. Employees should understand how to raise concerns. It’s not something you just put on paper, folks. It’s something you have to follow through with and make sure your team understands it. Train managers. Number two, train managers before problems arise. Frontline supervisors are often the employer’s first line of defense or the source of damaging evidence. I would say the latter here. Training should focus on recognizing protected complaints, escalating concerns, documenting performance issues, avoiding retaliatory conduct, and handling accommodation requests appropriately. Employers never do this correctly. I mean, never. Employers, keep on doing that because we’ll keep on catching you and keep on creating risk and liability and payout to our clients. Number three, document decisions contemporaneously. Good documentation should be accurate, timely, factual, consistent. Employers should avoid vague statements, exaggerated criticisms, and unsupported conclusions. If a termination or discipline decision is later challenged, the record should show a clear and legitimate basis for the action. Employers never do this, ever, because we look for it all the time. And there’s always these hokey, after ad hoc rationales applied after the fact, like it’s going to matter. It’s just ridiculous. Employers never do that. Number four, take complaints seriously. What a novel idea. Employee complaints should be assessed promptly and objectively. Never met an employer who actually did that correctly. Even informal complaints may constitute protected activity. That’s a fact. It doesn’t have to be in writing. You can do it verbally. Employers should document the intake, investigation steps, findings, remedial measures, and communications with the employee where appropriate. And employees should document that too on your side. All that’s very much discoverable in litigation. Number five, reassess litigation strategy early. Given the rising concern over nuclear verdicts, employers should evaluate litigation risk early and realistically. That includes reviewing problematic documents, identifying sympathetic facts, assessing witness credibility, considering venue risk, you know, where the court is, confirming. insurance coverage, and determining whether an early mediation may be appropriate. The bottom line, nuclear verdicts are reshaping how employers should think about employment claims. A case that appears manageable on paper can become significantly more dangerous if a jury views the employer’s conduct as unfair, retaliatory, indifferent, or inconsistent with its own policies. For employers, the best defense remains proactive compliance. Strong policies train managers’ consistent documentation, prompt investigations, and early strategic evaluation of litigation risk. As verdicts continue to rise, the employers that treat employment disputes as business-critical risk events rather than routine personnel matters will be better positioned to control exposure and avoid costly surprises. Now, if that actually happened, reality, they’d be putting me out of a job. But it doesn’t happen. We’re concerned that it doesn’t happen. And my professional opinion is that employers just take that risk every single time. They don’t think that the employee will challenge them and bring their claims to fruition, hire counsel and go through it. They probably have this assistance that they’ve gathered from some consultants, some high-paid consultant. But reality, this article and this topic we’re talking about, jurors are taking notice of. bad behavior on employers’ parts, and they’re punishing them. And it’s not going away because employers don’t care. So you get their attention by making a large nuclear verdict from a jury. Hope you enjoyed the topic. Until next time, thank you for letting me be of service. If you like the Employee Survival Guide, I’d really encourage you to leave a review. We try really hard to produce information to you that’s informative, that’s timely, that you can actually use and solve problems on your own and at your employment. So if you’d like to leave a review anywhere you listen to our podcast, please do so. And leave five stars because anything less than five is really not as good, right? I’ll keep it up. I’ll keep the standards up. I’ll keep the information flowing at you. If you’d like to send me an email and ask me a question, I’ll actually review it and post it on there. You can send it to mcarey@ capclaw.com. That’s capclaw.com.