4 Common Employee Lawsuits and How to Prevent Them

An employee at your jewelry store always arrives late for his shifts. After repeated verbal warnings, his behavior hasn’t changed, and you decide to let him go.

But during your exit conversation, he says he thought he was arriving on time for shifts—and asks for documentation of your warnings. The requests surprises you, as you’ve been verbally warning him of possible consequences of his actions for months.

You don’t have a written warning that addressed his behavior, nor do you have a position description, employee handbook or past performance review. And because of this, you’ve made yourself vulnerable to a wrongful termination lawsuit.

Such lawsuits are becoming more common and can significantly impact small businesses owners who don’t have the capital to staff a dedicated human resources department or legal professionals. Which is why it’s important to be proactive in protecting yourself and your business by adopting proper hiring, firing and other employee-relations procedures (along with adequate insurance). It’s also crucial to develop a safe and fair workplace where employee lawsuits are less likely to occur.

Here are four common employee lawsuits and how to prevent them:

Wrongful refusal to employ a qualified applicant

Following the same screening, interviewing, and hiring procedures for every applicant is important.  A consistent and documented hiring practice can help remove any unintentional biases and will assist you in hiring the applicant that suits your business the best.

If a wrongful refusal to employ claim were made, you would then be able to show the process you went through and provide a rational explanation for the decision to not hire a qualified applicant.

Wrongful deprivation of career opportunity, demotion, evaluation, reassignment or discipline

Much like your hiring process, your review process with all employees must be consistent and well-documented. Holding regular performance reviews with your employees not only provides a healthy and productive workplace but also helps employees understand their responsibilities and your expectations.

Clarifying the criteria on which they’re being evaluated can make their jobs more satisfying and allows managers to systematically determine if the time is right to provide an opportunity, demotion, reassignment or disciplinary action. Once again, a documented process can provide a strong argument against any claims like these that are made.

Wrongful termination

Your business’s ability to document performance reviews and clearly communicate with staff is essential, especially if a situation arises that may lead to termination or other disciplinary action. Addressing issues early and explaining the potential implications of not meeting certain standards will help eliminate the possibility of a lawsuit.

The most difficult part of the termination process is when you inform an employee of his or her dismissal. When doing so, always be respectful, but make the reasons for his departure known. Your previous communications and documented performance reviews are intended to make this turn of event unsurprising, because you’ve previously made this consequence clear.

Unlawful work-related harassment, coercion, discrimination or humiliation

Stay up to date on any applicable federal, state or local statutes that create a protected class. For example, there have been many milestone pieces of legislation at the federal level, such as:

The Equal Pay Act of 1963: If men and women perform equal work in the same workplace, it is illegal to pay them different wages.

Title VII of the Civil Rights Act of 1964: Ultimately, a person’s race, color, religion, national origin, or sex can’t be the basis of discrimination. Also, unless it poses problems to business operations, employers must reasonably accommodate the sincere religious beliefs of their employees and applicants.

The Age Discrimination in Employment Act of 1967: In addition to the protected classes defined in the Civil Rights Act of 1964, individuals 40 or older are also protected against discrimination.

Title I of the Americans with Disabilities Act of 1990: This law made it illegal to discriminate against a person who is disabled – yet qualified – in state and local governments, as well as the private sector. Much like Title VII, reasonable accommodations must be made for employees who have known physical or mental disabilities, unless it poses problems to business operations.

Sections 102 and 103 of the Civil Rights Act of 1991: As an amendment to Title I and Title VII, this law permits monetary damages in cases of intentional discrimination.

It’s important to note that these laws also make it illegal to retaliate against a person because he or she complained, filed charges or participated in an investigation regarding employment discrimination.

When prevention isn’t enough

Even businesses that are extremely dedicated to following these practices are still at risk for an employee-related lawsuit. An employment practices liability policy can protect your business when a delicate workplace situation arises. —Logan Moore

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