Being an employer entails a multitude of responsibilities and obligations. While most employers strive to create a positive and productive work environment, there are times when legal disputes may arise. Lawsuits can be costly, time-consuming, and detrimental to both employers and employees. To help employers mitigate these risks, in this blog post, we’ll discuss the most common reasons US employers get sued and how to avoid them.
Discrimination tops the list as the most prevalent reason employers face litigation. Discrimination occurs when an employer treats an employee unfavourably based on their protected characteristics, such as race, sex, religion, national origin, age, disability, or genetic information.
Examples of discrimination can include refusing to hire or promote someone based on their protected characteristic, paying someone less due to their gender, or denying training opportunities based on their race.
According to the annual performance report released by the U.S. Equal Employment Opportunity Commission (EEOC) for the fiscal year 2022, there were 73,485 new discrimination charges filed. This represents an increase of almost 20% compared to the previous fiscal year. Additionally, the EEOC handled more than 475,000 calls, which is an 18% increase from the previous year, and managed 32% more emails from the public.
It is crucial for employers to understand the different forms of discrimination and take proactive steps to prevent such behaviour within the workplace. Let’s delve deeper into this topic and explore how employers can avoid discrimination issues.
Understand the Laws
The first step in preventing discrimination is to fully understand the laws and regulations that protect employees from being treated unfairly. Federal laws, such as Title VII of the Civil Rights Act and the Americans with Disabilities Act, prohibit discrimination based on race, colour, religion, sex, national origin, age, disability, and genetic information. Familiarise yourself with these laws and ensure your policies and practices align with them.
According to a report by Hiscox, approximately one in five U.S. employees who experienced discrimination and harassment at work filed a complaint in 2022, a significant increase from 2010. Additionally, a report by the U.S. Equal Employment Opportunity Commission (EEOC) showed that in 2022, the EEOC filed 113 lawsuits alleging workplace harassment and recovered $78.9 million for victims.
Moreover, in 2022, the top employment lawsuits filed according to settlement value were wrongful termination, retaliation, and harassment, with a total value of over $297 million.
Implement Fair and Transparent Hiring Practices
Ensure that your hiring practices are fair and transparent. This includes conducting job interviews in a standardised manner, asking only job-related questions, and avoiding any form of bias or stereotyping. Make sure your hiring decisions are based solely on an individual’s qualifications, skills, and experience.
Promote Diversity and Inclusion
Establish a workplace culture that values diversity and inclusion. Encourage open dialogue, respect different perspectives, and create an environment where everyone feels included and heard. Actively seek diverse candidates during recruitment processes and foster an inclusive work environment that appreciates the contributions of employees from various backgrounds and experiences.
Provide Anti-Discrimination Training
Regular training sessions on anti-discrimination policies and practices are essential for all employees. This training should cover topics such as recognizing and preventing discrimination, understanding unconscious bias, and promoting respectful behaviours. Ensure that employees at all levels of the organisation receive this training and understand their role in preventing discrimination.
Implement Effective Reporting and Investigation Procedures
Establish clear procedures for reporting discrimination complaints, and ensure employees can easily access these channels without fear of retaliation. Promptly investigate all complaints and take appropriate action if a violation is found. Encourage a culture of accountability by emphasising that reports of discrimination will be taken seriously and addressed promptly.
Regularly Review and Update Policies
Keep up-to-date with changes in relevant laws and regulations, and periodically review and update your anti-discrimination policies as needed. Regularly assess your workplace practices and make adjustments to address any potential areas of concern. Seek legal counsel if necessary to ensure your policies remain compliant.
Remember, preventing discrimination requires a proactive and ongoing commitment from employers. By implementing these practices, US employers can create a work environment that fosters equality, respect, and inclusivity, reducing the risk of discrimination and the accompanying legal repercussions.
Harassment, which often goes hand in hand with discrimination, is pervasive in many workplaces and can lead to significant legal consequences for US employers. It typically involves unwanted actions directed at an individual’s specific characteristics, resulting in a working environment that is intimidating or unpleasant. Let’s delve deeper into this topic and explore how employers can prevent harassment and avoid potential lawsuits.
Establish a Clear and Comprehensive Anti-Harassment Policy
Employers should develop a robust anti-harassment policy that clearly defines what constitutes harassment, provides examples of unacceptable behaviour, and explains the consequences for violating the policy. Ensure all employees are aware of the policy, which should be communicated through employee handbooks, training sessions, and posted in common areas or hosted electronically somewhere employees know to find it.
Conduct Regular Anti-Harassment Training
Implement regular training sessions for all employees to raise awareness about harassment and prevent it from occurring. These sessions should educate employees about different types of harassment, the impact it can have on individuals and the workplace, and what steps to take if they witness or experience harassment. Emphasise the importance of a respectful work environment and provide guidance on appropriate workplace behaviour. It may be worth noting that training requirements vary by state and number of employees, and to check with their local state laws to ensure compliance.
Encourage Open Communication and Reporting
Create a culture that encourages open communication and provides multiple channels for reporting incidents of harassment. Employees should feel comfortable coming forward with complaints or concerns, knowing they will be taken seriously and that there will be no retaliation. Maintain confidentiality to the extent possible throughout the investigation process.
Conduct Thorough and Impartial Investigations
Promptly and thoroughly investigate all claims of harassment. Appoint trained individuals who are impartial and objective to conduct the investigation. Document the investigation process and findings accurately. Take appropriate action if harassment is substantiated, ensuring the implemented consequences are fair and consistent.
Lead by Example
Leaders and managers within the organisation should serve as role models by exhibiting respectful and inclusive behaviour. Executives should demonstrate zero tolerance for harassment and enforce policies consistently. By setting the right example, leaders create a ripple effect throughout the organisation.
Regularly Evaluate and Update Policies
Continually review and update anti-harassment policies to ensure they align with legal requirements and evolving best practices. Stay informed about any changes in laws related to harassment prevention. Periodically assess the effectiveness of your policies and make improvements as necessary to proactively address potential issues.
By actively working to prevent harassment and creating a supportive work environment, U.S. employers can significantly reduce the risk of harassment lawsuits. Prioritising the well-being of employees, implementing effective policies and procedures, and promoting a culture of respect will help foster a harmonious workplace and protect both the reputation and legal standing of the organisation.
Retaliation is a common reason why US employers face legal action. It occurs when an employer takes adverse action against an employee in response to a protected activity, such as filing a complaint or participating in an investigation. It is crucial for employers to understand the laws surrounding retaliation and take proactive steps to prevent any form of retaliatory behaviour. Examples of retaliation can include firing, demoting, or reducing an employee’s hours after they reported harassment or discrimination, or adversely changing their work conditions. Let’s explore how employers can avoid retaliation issues.
Educate Managers and Supervisors
Ensure that managers and supervisors are trained on the laws and regulations related to retaliation. They should understand what actions constitute retaliation, including both obvious and subtle forms. Provide guidance on how to handle complaints and investigations without engaging in retaliatory behaviour. Emphasise the importance of creating a supportive and respectful work environment.
Develop and Communicate Clear Policies
Establish a well-defined policy that explicitly states the organisation’s commitment to preventing retaliation. Clearly communicate this policy to all employees, including the potential consequences for engaging in retaliatory behaviour. It is essential that employees are aware of their rights and understand that they have a safe avenue to voice concerns without fear of retaliation.
Encourage Open Communication Channels
Create a work environment that encourages open communication and dialogue. Build trust and rapport with employees, so they feel comfortable speaking up without fear of retribution. Provide various channels for employees to report concerns, such as anonymous hotlines or suggestion boxes. Regularly remind employees of these reporting mechanisms and emphasise that retaliation will not be tolerated.
Conduct Prompt and Thorough Investigations
When a complaint or concern is raised, promptly and impartially investigate all allegations. Maintain confidentiality throughout the investigation process, as this can help alleviate concerns about potential retaliation. Document the investigation process, including interviews, evidence, and findings. Take appropriate action based on the results of the investigation, ensuring that any form of retaliation is addressed swiftly and appropriately.
Remember, preventing retaliation requires constant vigilance and proactive measures. It is critical for employers to create a work environment where employees feel safe to report concerns, knowing they will be taken seriously and protected from any retaliatory actions. By implementing these strategies, US employers can minimise the risk of retaliation lawsuits and foster a culture of integrity, trust, and respect.
4. Wrongful Termination
Wrongful termination is a common reason why US employers face legal action. It occurs when an employer terminates an employee in a manner that violates federal or state laws, employment contracts, or public policy. To avoid wrongful termination lawsuits, employers should adhere to best practices and legal requirements throughout the termination process. Let’s explore some strategies to avoid wrongful termination.
Understand At-Will Employment
First, ensure that both employers and employees have a clear understanding of at-will employment. Communicate this policy in writing through employment offer letters, employee handbooks, or other employment agreements. Clarify that employment is at-will and that it can be terminated by either party at any time, with or without cause, as long as it is not based on discrimination or retaliation.
Establish Clear Employment Policies and Procedures
Implement clear and comprehensive employment policies that outline the conditions under which employment may be terminated. These policies should adhere to federal and state employment laws and clearly communicate the reasons for termination. Ensure that employees receive copies of these policies and acknowledge their understanding.
Consistently Apply Performance Management and Discipline
Establish a performance management system that provides clear expectations and feedback to employees. Regularly evaluate employees’ performance, document any performance concerns or disciplinary actions taken, and provide opportunities for improvement. Consistency is key—treat all employees similarly and avoid singling out individuals unless there are legitimate reasons for doing so.
Consider Progressive Discipline
If performance or conduct issues arise, consider implementing a progressive discipline process. This involves a series of increasingly serious interventions, such as warning notices or training, aimed at helping the employee improve. Termination should be the last resort after all other attempts to address and rectify the issue have been unsuccessful.
Seek Legal Guidance
If uncertain about the legality of a termination decision, seek legal advice from an employment attorney to ensure compliance with federal, state, and local employment laws. An attorney can provide guidance specific to your jurisdiction and industry, helping mitigate the risk of wrongful termination claims.
Conduct Exit Interviews
Conduct exit interviews with employees who are leaving the organisation voluntarily or involuntarily. These interviews can help identify any potential concerns or issues related to the termination process. Actively listen to feedback and make necessary improvements to avoid repetition of similar situations.
By following these strategies and ensuring compliance with employment laws, employers can minimise the risk of wrongful termination lawsuits. Maintaining transparency, consistency, and fairness throughout the termination process is key to protecting both the organisation and the rights of employees.
5. Wage and Hour Violations
Wage and hour violations are another one of the most common reasons why US employers face legal action. These violations occur when employers fail to comply with federal and state laws regarding minimum wage, overtime pay, classification of employees, and other wage-related regulations. To avoid wage and hour violations, employers should adhere to the following best practices.
Know and Follow Wage and Hour Law
Stay up-to-date with federal and state wage and hour laws, including minimum wage rates, overtime requirements, and exemptions. Laws can vary, so it’s important to understand and comply with the specific regulations applicable to your organisation’s location and industry.
Accurately Classify Employees
Properly classify employees as either exempt or non-exempt from overtime pay. Exempt employees are generally not eligible for overtime, while non-exempt employees are entitled to receive overtime pay for hours worked beyond 40 in a workweek. Ensure that employees’ job duties and salary levels meet the criteria set by the Fair Labor Standards Act (FLSA) and any applicable state laws.
Keep Accurate Time and Pay Records
Maintain accurate records of employees’ time worked, including clock-in and clock-out times, meal breaks, and any other applicable pay records. These records are essential to calculate regular and overtime pay accurately. Train managers and supervisors to properly record and track employees’ time and ensure that employees have a clear process for reporting their hours.
Avoid Off-the-Clock Work
Ensure that employees are not performing work-related tasks off the clock. Examples of off-the-clock work may include completing job-related tasks before or after regular working hours, responding to work-related emails or calls during non-working hours, or attending mandatory training sessions without compensation. Employers should establish clear policies regarding off-the-clock work and communicate these policies to employees.
Train Managers and Supervisors
Educate managers and supervisors on wage and hour laws and their obligations to comply with these regulations. Provide training on topics such as accurately recording employees’ time, properly calculating overtime, and recognizing potential violations. Encourage open communication between supervisors and employees regarding any concerns regarding wage and hour issues.
Conduct Regular Audits and Seek Legal Guidance
Regularly review your organisation’s wage and hour practices and conduct self-audits to identify and address potential compliance issues. It can be helpful to seek legal guidance to assess your organisation’s specific compliance with wage and hour laws. Legal experts can provide valuable insights and ensure that your practices align with the applicable laws.
By being knowledgeable about wage and hour laws, properly classifying employees, maintaining accurate records, and implementing clear policies, employers can minimise the risk of wage and hour violations. Regularly reviewing and updating practices, along with ongoing training and self-audits, can help ensure compliance and protect both employees and the organisation from legal repercussions.
Employer-employee relationships can be complex, and legal disputes are an unfortunate reality. By understanding the most common reasons US employers get sued and taking proactive measures to prevent such situations, employers can safeguard their businesses and foster a positive work environment. Preventive measures such as implementing anti-discrimination and anti-harassment policies, offering regular training, promoting a culture of compliance, and maintaining accurate records can significantly reduce the likelihood of legal disputes.
Navigating the legal landscape can be challenging, and it is advisable for employers to consult US employment experts to ensure adherence to relevant laws and regulations. By prioritising legal compliance and cultivating a supportive work environment, employers can significantly reduce the risk of litigation and establish thriving, mutually beneficial workplaces for both employers and employees.