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Why You Should Fear Employee Lawsuits

Why You Should Fear Employee Lawsuits

If I had a dollar for every conversation I’ve had with small business owners where they proceeded to tell me how their employees would NEVER sue them, I’d be a rich woman.  Well, maybe not rich, but I’d have a nice little stash for an overdue vacation somewhere far, breezy, and secluded.  I understand we lawyers get a bad rap for always predicting doom and gloom and jumping to the absolute worst scenario, but a lot of times there is truth in this approach.  We see humanity at its worst, and we see it every day.  Families turning on each other over deals that went bad are an attorney’s light work.

Employers who think that all of their employees are perfectly contented individuals who work tirelessly, want nothing more than to make their employers lots of money, and who would never do anything to bite the proverbial hand that feeds them is, well, cute.  Even more than cute, it’s scary.  It’s scary because this unrealistic belief keeps some employers from implementing small but essential procedures that can help mitigate future lawsuits.  I point out small businesses in the title of this blog for three reasons: 1 – they usually have a closer familial-like relationship with their employees;  2 – they are more likely to run their day to day business on a skeleton crew and therefore have less time to dedicate to such legal matters; and 3 – they usually don’t have the money to hire a lawyer to give proactive legal advice.  I can’t stress enough how important it is for small businesses to take a proactive approach to protecting their business.  I understand how difficult it is to keep a million balls in the air, especially when time and money are scarce, but if businesses don’t stop and take a moment to implement preventative measures, the consequences are dire.

Here’s a cautionary tale from a few years back.  A female former manager sued Michaels, an arts and crafts store, after they allegedly violated the Americans with Disabilities Act and the Family Medical Leave Act.  The woman claimed that after she was harassed when undergoing chemotherapy treatments, and subjected to a hostile work environment, she was wrongfully terminated.  She won and received a total award of $8,100,722.  Her back pay and pain and suffering alone totaled $4,100,722.

Scared yet?

Here are some ways small businesses can help protect against the most common employee lawsuits:

Tip #1: Don’t Discriminate

Employees should not be discriminated against because of their race, gender, age, disability, national origin, pregnancy, religion, sexual orientation.  If any aspect of an employee’s employment is premised on any of these, that is discrimination.  This means that employers cannot hire, fire, promote, or give/take away employment related benefits based on those criteria.  I always encourage employers to pull the compensation and promotion records of their employees and review them to make sure wages are distributed fairly.  This seems simple enough, but sometimes the most simple things elude even the wise.  If you have a Hispanic individual with a Ph.D. who has not been promoted in 10 years, and is making the same amount as their lesser qualified counterpart, chances are you need to take a long hard look at the situation.

Tip #2: Keep the Workplace Free From Hostility

A hostile work environment is an offensive working environment as a result of harassment.  Employers should proactively create welcoming and non-offensive environments for all of their employees.  This means means employers have to WAM (Walk Around Management) to listen to and see what’s going on outside their offices.  Implement policies that prevent foul language, provocative pictures from being displayed, and tacky jokes.  And for goodness sakes, if an employee tells a manager of a situation that was offensive, take action!  The law says that if an employer knew or should have known, they’re on the hook.

Tip #3: Don’t Retaliate

If an employee is engaged in a protected activity (i.e. filing workers‘ compensation or discrimination claim, participating in another employee’s discrimination or sexual harassment claim, etc.), employers can’t take adverse employment actions as a result.  No firing, no demoting, no passing up for a promotion, no giving extra work, no taking work away, (I could keep going on, and on) if any of these actions could be perceived as being negative and as a result of a protected activity.   If there’s any question, talk to a lawyer.  Otherwise, just don’t do it because it’s not worth risking a lawsuit.

Tip #4: Incorporate

I feel like I shouldn’t have to say this, but I wouldn’t be a good attorney if I didn’t at least give it an honorable mention.  This doesn’t prevent lawsuits, but it does protect small business owners.  This is just an added layer to help protect against lawsuits and other creditors gaining access to personal assets.

Tip #5: Hire a Lawyer!

Laws are complicated, expansive, and employers are held accountable for understanding and implementing each and every one that’s applicable.  There are lots of inexpensive(ish) lawyers out there who are more than happy to help you identify where your legal weaknesses are.  And in the spirit of  shameless self-promotion, my law firm offers lots of inexpensive solutions for small businesses lawsuit prevention.  Just shoot me an email at and let me know what you need help with.


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