These are the most common things US employers are sued for
Disclaimer: this article does not constitute legal advice, and instead is intended to be for general information only. We recommend that you talk to your attorney before making any legal decisions.
If you’re expanding your business overseas, one of the things on your ‘to-do’ list will be learning the laws of the land. Of course, you needn’t be an expert – that’s what you’ll be appointing an attorney for, helping you to navigate the basics and being there for advice if and when you run into issues.
But, it certainly helps to have a general understanding of some of the things that US employers are sued for – if only to help make you more aware of good practices, or to flag up any risks of employing staff overseas you may not have considered…
1. Making everyone an ‘independent contractor’
If you’re concerned about the financial commitment that hiring employees entails, you might be tempted to classify your staff as ‘independent contractors’. That’s because independent contractors aren’t entitled to share in company benefit programs, such as health care, family leave or paid vacation.
And, it’s often cheaper for businesses to work with independent contractors; that way, businesses won’t have to pay particular taxes, social security or Medicare contributions.
But, beware – incorrectly classifying your workers as ‘independent contractors’ is something that can quickly become something US employers are sued for, risking significant penalties and legal costs.
2. Not giving US workers a lunch break
Employers who fail to give their workers a rest break when they’re entitled to it risk litigation. In California, for example, employers must give their staff a minimum of a 30-minute lunch break (unpaid) if the employees’ work period exceed five hours.
However, you also need to make sure your employees are taking their lunch break at the right time: the lunch break must occur no later than the end of the employee’s fifth hour of work.
So what happens if you don’t give your workers a sufficient meal break within the correct time frame? Well, you might be ordered to pay the additional wage in the pay period in which the missed lunch break occurred. This figure could really stack up if you’ve had your employees working without breaks for a long time.
3. Incorrectly classifying US employees as ‘exempt’
Another thing that US employers are sued for is incorrectly classifying their employees as ‘exempt’. Exempt employees are usually high-level executives or administrative workers. These workers are paid a specified amount of money regardless of the number of hours they work in a week. This means that employers will pay them a fixed wage rather than paying overtime and rest breaks.
However, many employers incorrectly classify employees as ‘exempt’, in the hope of not having to pay for all the extra hours their employees are doing. To do this, employers designate their employees as ‘non-exempt salaried’.
An employee who turns to litigation, therefore, may see their employer having to retrospectively pay additional wages for all the overtime that was performed, as well as penalties to failing to pay the overtime originally and penalties for failing to pay for meal and rest breaks.
4. Discriminating against a protected class
Discriminating against a protected class is another thing that US employers are sued for. US workers can attempt to sue their employers if they believe they have been treated unfairly due to their:
- Familial status
- Veteran status
Also, each state protects employees based on their sexual orientation and marital status (though bear in mind that the specific laws vary from state to state). So, for instance, if a female worker believes that she has not been promoted due to recently falling pregnant (despite performing her job in a satisfactory manner), she may be able to make a claim of discrimination against her employer due to the fact she is a member of a protected class.
5. Wrongful termination
Finally, something else US employers are sued for is wrongfully terminating their employment relationships with workers. While many US workers are hired ‘at-will’ (meaning there is no contract, and employees and employers can terminate their employment relationship without notice), there are circumstances under which termination is ‘wrongful’.
For instance, if an employee is a whistle-blower and reports an instance of fraud only to find then that their employment relationship is terminated, it may constitute wrongful termination.
This all sounds quite scary, doesn’t it? Well, try not to be put off – a good attorney will help you navigate every aspect of US employment law, so there’s no reason you’ll end up accidentally doing any of the things that US employers are sued for.
However, if you’d like to do away with these kind of worries completely, you could opt for hiring your US workers through us at Foothold America. We’ll take care of all the HR logistics and guide you where employment matters are concerned, freeing up your time, money and energy to plough into business growth instead.