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What Happens When Your Employee Sues You?

By July 31, 2019March 11th, 2024Insurance

Did you know that general liability will not provide coverage if a current or former employee feels he/she has been treated unfairly or was wrongfully terminated?

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It does not matter the quality of the allegation or if you are innocent—You must ask yourself…Do I have the funds to defend myself if I am sued? After all, attorney retainers begin around $5,000.

Here are some of the top reasons employers are sued by their employees:

1. There Are Such Things as Illegal Interview Questions

People can sue you even if you never hired them, or before they are added to your work team! All applicants of any job that you have should be treated equally during the interview process, both for best professional practices and legal reasons.

For example, it is frequently reported that women are subjected to interview questions to see if they are pregnant, have children and/or plan to have children. Also, there are many situations where individuals with obvious disabilities have received questions that focused on their disability rather than their ability to perform the job. These types of situations are discriminatory, unprofessional, rude and illegal. Bottom line—if applicants believe they didn’t receive the job due to their gender, disability or other legally protected class, you can be in lots of trouble financially and your reputation might take a big hit.

2. A Former Employee Has the Right to Sue You for Illegal Termination

What does that exactly mean? Sometimes things just don’t work out, and in an at-will employment state, illegal termination might seem impossible since the employment relationship can be broken by employer or employee at any time…But, wrongful termination is real and the repercussions for you are as well.

Common reasons employees feel that they were terminated are (1) discrimination towards their legally protected class, and (2) them reporting the inappropriate actions of another employee. It is also common for employees to believe that their verbal agreement between them and the company that promised continued employment was not met.

3. Retaliation Is A Big No-No

Like briefly mentioned above, retaliation towards an employee happens, and it happens more often than you think. If an employee pursues his/her legal rights to fill out a complaint internally or with a federal state agency, it is illegal to retaliate on the employee. Repercussions that employees can face after reporting their boss or another coworker include demotion, harassment, excessive schedule changes, firing/being let go and so much more. Every employee who experiences retaliation are protected by law and have solid grounds to put in a complaint against their current or former employer.

4. Do Not Give Unfair Discipline

Seems obvious from the title, but it is sometimes not as clear in the day-to-day of the workplace. In the heat of the moment, any rash discipline can mean a future lawsuit. Yikes.

Employees know when they’ve been disciplined differently than their coworkers who are in similar situations. Differences in job title, seniority, age, etc. does not matter—in terms of the law, discipline must be just and fair. Problems surface big time when managers or supervisors fail to follow the company discipline policy.

All employees should be aware of your company’s discipline policy. And, when the time comes for disciplinary actions, every employee needs to face the same discipline for specific behavior.

5. Workplace Harassment Doesn’t End There…

Harassment does not usually pertain to a random offensive joke or occasional rude comment. When offensive actions towards a worker happen constantly, your office has workplace harassment and you as an owner are responsible for ceasing that harassment. No one wants to work in a hostile environment or be managing one. Employees work better when they are given a healthy place to do their jobs, and you want less complaints and lawsuits. Harassment can happen by anyone and towards anyone. A common form of reported harassment has to do with the protected status of an employee. Cultural, generational, etc. barriers can really hurt your business and discrimination cannot be allowed. Don’t choose the tough love route by any means.

6. Know What the Illegal Decisions about Medical Requests Are

This is can get confusing, so make sure that all your ducks are in a row. Medical leave rules can get confusing to the employee as well as the employer or manager. Even the most minor missteps can warrant legal attention. The FMLA, ADA and workers’ compensation is there to protect the rights of the employee to medical leave and reasonable accommodation. You as an owner should make sure that your managers are trained well in law and communication so that they build a healthy relationship with all the workers that they oversee, and so they know the law incase attendance issues or health concerns arise.

Remember: A manager who denies an employee’s request for FMLA leave or reasonable accommodation may prompt a lawsuit. And, lawsuits like these are sticky—they are common things that the public shares and will remember, which can make a mess of your reputation amongst potential/current customers, employees, sponsors, etc.

7. Unlawful Money Actions Will Hurt You Big Time

Money is one of those things that can be a little tricky, so make sure that you know how to avoid unlawful exemption decisions and docking pay.

Unlawful Exemption Decisions: The Fair Labor Standards Act (FLSA) outlines the rules to determine which employees receive or don’t receive overtime pay. Determining employee eligibility is difficult, and something that companies get wrong often. Yes, mistakes happen…But, this can be an expensive mistake. Any employee who has been incorrectly categorized can, and should, explore available legal solutions.

Docking Pay: Please always keep in mind that there is very little legal room for employers to reduce how much employees are paid. That being said, discipline shouldn’t usually result in docked pay. Also, neither employers nor employees can (1) negotiate different overtime pay than what is specified in the law, or (2) wave overtime pay for any reason.


And the list goes on…Do you have the $5,000-$10,000 retainer for the attorney to defend you? Give us a call today to review your options: 425-320-4280.

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