California Jury Verdicts Scare Employers Out of State

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California Jury Verdicts Scare Employers Out of State

Most employers in California have probably heard the news that a jury in San Francisco awarded a former worker for the world’s largest electric car manufacturer $137 million. This award for the black elevator operator who worked for the company for under a year comes from allegations the worker made of racial harassment, which he claims to have suffered during his time at the job.

This considerable verdict has become somewhat commonplace in California in recent years as eight, and nine-digit awards have ceased to be quite so standout. Over the last nine years, juries in the state have given out dozens of verdicts awarding multi-million dollar sums. In fact, one well-known lawyer specializing in representing employees in cases like these boasts of achieving more than $500 million in settlements, with numerous cases achieving individual verdicts valuing in the tens of millions.

This new and clearly enormous settlement against this electric car manufacturer is not even the largest example of its type in the state. This honor goes to a fairly recent case against a retail chain specializing in auto parts which racked up an almost unbelievable sum of $186 million, notably achieving the largest award to a single employee plaintiff ever recorded. It is important to keep in mind that many of these verdicts will fail to survive upon appeal or certain motions made post-trial. However, they certainly make an impression and create a concerning pattern that employers should take notice of.

Due to the clear danger employers face in going before juries in the Golden State, a large number of employers have attempted to provide themselves a layer of protection with arbitration agreements. The benefits of these agreements made with employees and applicants are clear; however, a recent opinion issued by the Court of Appeals for the Ninth Circuit means that this protection may not hold out either. 

Given the dangers that employers are facing in California, as well as the high costs of business and living for their employees, it should come as no surprise that many employers are relocating out of the state altogether. In fact, after this recent verdict, the electric car manufacturer announced they were moving, and they certainly are not alone, with a total of 272 companies having moved their headquarters out of the state between the start of 2018 and June 30th of 2021. Many companies have found that the lower risk, as well as the reduced cost of living and doing business, outweigh the disadvantages.