5 Most Common Lawsuits Against Businesses
Lawsuits are among every business owner’s biggest fears. Different types of businesses have different risk levels. However, some categories of lawsuits are common across the board, regardless of industry. Here are the top five types of lawsuits against businesses.
Discrimination Against Workers
Discrimination is any bias against a worker based on their race or gender or other protected category. Discrimination is the easiest and most common reason for a lawsuit, because workers are protected by federal law against discrimination.
Harassment is included as a category of discrimination. This is any unwelcome conduct based on an employee’s race or gender or other protected category. If an employee claims to have reported harassment to the business owner, and no one takes action, the employee can sue.
Retaliating against an employee for filing a discrimination complaint is grounds for a lawsuit. Some examples of common retaliatory actions are demoting or firing an employee, or creating a hostile work environment.
Lastly, there’s also wrongful termination, where an employer violates the law by firing an employee based on the employee’s protected category. Wrongful terminations are normally based on cases of discrimination such as race, gender, age or religion or other protected category. A former employee may sue a business alleging they were wrongfully terminated based on one or more of these characteristics.
Discrimination Against Customers
Your employees are not the only ones who could sue you. Customer discrimination lawsuits are very common. For example, a customer in a wheelchair could sue if your business does not have a wheelchair ramp.
Wage Law Violations
Wage and hour laws may be local, state or federal. Employees can file lawsuits against employers who violate any of these laws. Most of these lawsuits involve the employer paying less than minimum wage, or refusing to pay overtime for hourly employees.
The federal minimum wage is set by the Federal Labor Standards Act (FLSA). There are two types of employees, exempt and nonexempt. The main difference between these two types is that, generally, nonexempt employees (usually paid hourly) are eligible to receive overtime.
Torts are an area of law where an individual can sue another person or company because of injury or harm. One tort violation is called negligence. This means the violation was unintentional, but the business owner failed to do something that might have prevented the injury. For example, not putting out a wet floor sign could result in a lawsuit if a customer slips and is injured.
The other type of tort is an intentional violation of rights. Fraud, which involves deceiving a person or group of people for personal or financial gain, is a common and intentional tort.
Breach of Contract
Normally, a breach of contract is a lawsuit between businesses. If both businesses agree to a contract and its terms, and one company does not follow through with their agreement, that business owner can be sued.
A breach of contract can take on many forms, such as failing to deliver the goods or delivering goods that are damaged or wrong, failing to pay for received goods, or even revealing trade secrets.
While this type of lawsuit is more common between businesses, customers and employees may also sue a company for a breach of contract.
How to protect your business
The best thing you can do to help protect yourself and your business from lawsuits is to get the proper coverage. Look into establishing your company as an LLC or corporation by reaching out to an accountant who can provide guidance about which corporate entity is best for you.
Securing the right kind of coverage will help keep you protected against lawsuits. There are different types of policies you can look into with an insurance professional, and these range from general liability protection to Errors & Omissions (E&O), Product Liability or Commercial General Liability insurance (among others).
Infinity Insurance can help you with your business insurance to help protect you and your organization.
One thing to consider when thinking about protecting your business from lawsuits is a Business Owner's Policy. Call an Infinity agent with any questions or to buy a policy at 1-800-INFINITY.
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