The Top 10 Reasons Employers Get Sued — and How to Prevent Them
Ms. Pomerantz is the CEO of TPG HR Services USA and has over 35 years of Human Resources practices experience. She holds a Master’s in Human Resource Management (MHRM) and is a certified Senior Professional in Human Resources (SPHR) and SHRM Senior Certified Professional (SHRM-SCP). Mary also serves as CEO of Mary Pomerantz Advertising, one of the largest recruitment advertising agencies in the country. Earlier in her career, she was president of the 17th largest staffing firm in the country.
Understanding the risks of workplace legal disputes is critical for any employer. Employee lawsuits can drain financial resources, damage reputations, and create a culture of fear and mistrust within an organization. For HR professionals, business owners, and managers, awareness of common legal pitfalls isn’t just a necessity—it’s a key strategy for building a legally compliant and positive workplace environment.
Below, we’ll explore the top 10 reasons employers face lawsuits and provide actionable, clear, and easy-to-follow steps to safeguard your organization, employees, and bottom line.
1. Discrimination
Why It Happens:
Workplace discrimination lawsuits often arise when employees feel they’ve been treated unfairly due to race, gender, age, religion, disability, or other protected characteristics under Equal Employment Opportunity (EEO) laws.
How to Prevent It:
- Implement Anti-Discrimination Policies
Develop clear, zero-tolerance policies on discrimination and regularly communicate them to your employees.
- Train Managers and Employees
Conduct mandatory training sessions on topics like unconscious bias and lawful hiring practices.
- Document Employment Actions
Keep thorough records of hiring, promotions, disciplinary actions, and terminations to ensure they are merit-based and defensible.
2. Harassment
Why It Happens:
Harassment in the workplace, including sexual harassment, creates toxic environments and can lead to significant legal and financial consequences.
How to Prevent It:
- Create a Safe Reporting Mechanism
Ensure employees have a confidential way to report harassment without fear of retaliation.
- Train Employees Regularly
Offer training that defines what constitutes harassment and how to prevent it.
- Investigate Complaints Promptly
Take all complaints seriously, launching immediate, impartial investigations and addressing issues quickly.
3. Wage and Hour Violations
Why It Happens:
Lawsuits related to unpaid wages, misclassification of employees, or failure to account for overtime are surprisingly common and easily preventable.
How to Prevent It:
- Understand Wage Laws
Familiarize yourself with federal, state, and local wage laws, including those for overtime and minimum wage.
- Track Hours Accurately
Use reliable timekeeping systems to track employee work hours.
- Classify Workers Properly
Ensure employees are correctly classified as exempt or non-exempt under the Fair Labor Standards Act (FLSA).
4. Wrongful Termination
Why It Happens:
An employee who feels they were unfairly dismissed may claim wrongful termination, alleging that the decision violated their rights or the terms of their employment contract.
How to Prevent It:
- Develop a Termination Protocol
Familiarize yourself with federal, state, and local wage laws, including those for overtime and minimum wage.
- Consult Legal Counsel
Use reliable timekeeping systems to track employee work hours.| - Communicate Clearly
Use clear, consistent language when discussing performance or corrective actions leading to termination.
5. Unsafe Working Conditions
Why It Happens:
Employers have a duty to provide a safe workplace under the Occupational Safety and Health Administration (OSHA) regulations. Failure to do so can result in lawsuits and penalties.
How to Prevent It:
- Conduct Routine Safety Audits
Identify and address hazards to ensure compliance with industry safety standards.
- Train Employees on Safety Procedures
Provide ongoing training on workplace safety and emergency protocols. - Maintain Safety Records
Document incidents, inspections, and corrective actions to show a commitment to safety compliance.
6. Retaliation
Why It Happens:
Employees who take protected actions, like reporting harassment or participating in whistleblowing, are sometimes retaliated against, leading to costly lawsuits.
How to Prevent It:
- Create Clear Anti-Retaliation Policies
Make sure all employees are aware that retaliation will not be tolerated.
- Train Supervisors
Teach managers how to handle reports of complaints without engaging in retaliatory actions. - Monitor Employment Actions
Regularly review actions like disciplinary measures or demotions for potential retaliatory motives.
7. Family and Medical Leave Act (FMLA) Violations
Why It Happens:
Employers who fail to grant eligible employees leave for medical or family reasons risk violating the FMLA.
How to Prevent It:
- Understand FMLA Requirements
Familiarize yourself with what the FMLA covers, including leave eligibility and notice requirements.
- Track Leave Accurately
Keep thorough records of leave requests and approvals. - Train HR Teams
Educate HR staff and managers on handling FMLA requests lawfully.
8. Misclassification of Independent Contractors
Why It Happens:
Incorrectly classifying workers as independent contractors instead of employees can lead to legal disputes over benefits, taxes, and wages.
How to Prevent It:
- Review Worker Roles
Use federal and state guidelines to evaluate whether workers should be classified as employees or contractors.
- Audit Classifications Regularly
Routinely reassess classifications, especially when job roles change. - Consult Legal Experts
Seek guidance if you’re uncertain about classification decisions.
9. Failure to Accommodate Disabilities
Why It Happens:
Employers are required to provide reasonable accommodations for employees with disabilities under the Americans with Disabilities Act (ADA). Failure to do so can result in lawsuits.
How to Prevent It:
- Understand the ADA
Familiarize yourself with disability accommodations required by law.
- Engage in the Interactive Process
Work collaboratively with employees to identify reasonable accommodations. - Document Efforts
Keep detailed records of accommodation requests and actions taken to address them.
10. Breach of Employment Contract
Why It Happens:
When employers fail to meet obligations outlined in employment contracts, they may face legal action for breach of contract.
How to Prevent It:
- Draft Clear Contracts
Use precise, legally sound language in employment agreements.
- Fulfill Contract Terms
Ensure all contractual promises and commitments, like salary adjustments or benefits are upheld. - Regularly Review Agreements
Periodically review contracts for compliance and updates as laws and company policies evolve.
Take a Proactive Path to Workplace Compliance
Preventing employment lawsuits begins with understanding the risks and proactively addressing them. By implementing clear policies, providing comprehensive employee training, and ensuring compliance with labor laws, employers can foster a fair, supportive, and legally safe workplace. Investing in proactive measures not only minimizes legal exposure but also promotes a culture of trust and respect—an invaluable asset to any organization.
Partnering with TPG HR Services
TPG HR Services can help your company in any HR capacity; we can provide as much or as little HR help as your company needs. Give both your employees and your company the best chance to succeed by choosing TPG HR Services as your HR partner. Contact us today to discover more about our services and how we can assist your company.