Unfortunately, it is not uncommon for employees to sue the business that the work for. These lawsuits can be very expensive; the average cost to defend against these suits runs into six figures. That includes lawyer fees and settlement costs.

Many employers settle employee lawsuits regardless of whether or not  they are in the wrong just to keep the cost of litigation to a minimum. It is very important to understand why employee litigation happens in the first place, in order to prevent future suits.

Why Do Employees Sue Their Employer?

Most workers or former employees who sue want more than money. They feel that they have been wronged in some way. In fact, they often don’t know what law their employer may have violated when they seek legal advice. They just know they feel devalued and want that to be made right.

Common reasons people sue are:

  • Termination shortly after complaining about something unfair or illegal that they witnessed or experienced at work. They will naturally assume they were fired for being a whistleblower even if the firing was unrelated and due to performance
  • Bullying by a direct supervisor or manager
  • Seeing rules enforced haphazardly, especially if they are punished for something another person got away with
  • Working in a culture with extremely lopsided compensation. For example, the executives are given huge bonuses while no one else gets a raise that year due to cost-cutting measures
  • Wage and hour violations
  • Harassment or hostile work environment
  • Discrimination on the basis of gender, disability, nationality, sexual orientation, or other protected class
  • On the job injury due to employer negligence
  • Immigration issues
  • Wrongful termination

These may be the legal grounds for a lawsuit; however, there’s usually something else going on under the surface.

Protect your Business

Be sure your Human Resources, Payroll, IT, and Legal Departments are prepared with all aspects of employment law that could impact your business. It’s also critical to document employee performance. Note any warnings issued so that terminations connect to employee behavior and not discrimination. Even perfect compliance won’t always protect you from lawsuits.

Your Commercial Insurance program should also be up-to-date and include Employment Practices Liability (EPL) coverage, which is what protects against claims from within the company. Even if the employee’s claims are unfounded, you will be given defense coverage.

A strong company culture is one of the best ways to protect your business. Employees should feel welcome, nurtured, and protected. You must show your employees are valued by treating them with fairness and respect. Identify managers and other leaders who need to work on their communication skills. Pay attention to how your workers feel about your company to help prevent lawsuits.

About Thayer Innes and Freeman Bunting Insurance Agencies

At Thayer-Innes Insurance Agency and Freeman Bunting Insurance Agency, we strive to provide comprehensive insurance solutions to support Ann Arbor homeowners. Our homeowners’ policies can be tailored to meet your specific risk exposures and provides much more coverage than a traditional policy, giving you the peace of mind you deserve. For more information about our products, contact us today at (855) 395-6316.