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The Top 7 Reasons Employees Sue Employers

Our Guide Breaks down the Top Reasons Employers are Sued by Employees

For the majority of the time, the employee-employer relationship can be both rewarding and productive for the company as well as the employees.

But a breakdown in the relationship can result not only in hurt feelings, but sometimes, concerns that the employers’ conduct may have violated federal or state employment and wage/hour laws. According to the Equal Employment Opportunity Commission, wrongful termination lawsuits increase every year, with the most significant peak in 2008 after the economy crashed.  In a down economy, employment cases tend to rise.

In the bell curve of employment lawsuits, the fewest kinds of claims are those where: a) the employee’s claims truly have no merit; and b) the employer has truly acted nefariously.  The largest percentage of employment cases, on the other hand, arise because of miscommunication, poor timing, insufficient training of management, insufficient or unenforced policies/procedures, and insufficient documentation. Here are the top reasons that employment lawsuits are brought:

“Unfair Disciplining ” / No Reason for Discipline. If an employer has demoted or cut the hours of an employee, or terminated the employee, the employee may be left wondering why the  measure was taken. Employers generally feel as though having at-will employees gives them the ability to fire employees at any time for any reason, without giving a reason.  But the problem is that when no reason is given, speculation can result in allegations that the action being taken for improper reasons (such as in retaliation). No employment decision should come as a surprise to employees, and progressive disciplinary procedures should be used to ensure consistent application of discipline, documentation, and fair notice to the employee.

Job candidate feels he/she should have been hired. Employment decisions to hire a job candidate are often made when there is a good rapport in a face-to-face meeting between the candidate and the interviewer. But if a job candidate feels he/she was subsequently not hired following an in-person meeting, especially if discussions prior to the meeting were very positive, the candidate could raise claims that he/she was not hired for  improper reasons (race, religious, sexual orientation, national origin, etc.) once the interviewer has “had a look at them.”  Employers should establish objective qualifications for available positions, a consistent interview process, expiration dates for applications/resumes, and training to interviewees to ensure no lines are crossed during the interview process.

Suspicious Timing.   If an employee is disciplined or terminated shortly after filing an internal complaint about their rights as an employee, the employers’ practices,  how the employee is being treated by a supervisor or other coworkers,  or asking for medical leave, there is a high probability that allegations of retaliation may ensue.  Unless a legitimate reason exists as to the employee’s discipline or termination, the employee may assert that the adverse action was taken to silence them for raising protected concerns or engaging in protected activity.

Slow or Whitewashed Internal Investigations.  If an employee does file a complaint, it is imperative that management thoroughly investigate it quickly and not whitewash or half-heartedly perform the investigation.  Especially if the allegations involve discrimination or harassment, it is important for employers to take all employee complaints very seriously, as separate allegations can be brought in court for an employers’ failure to prevent harassment or discrimination.

Lack of Accommodation. Everyone needs treatment at some point for medical conditions.  A fair number of employments lawsuits are brought because employers do not always know what constitutes a medical condition or disability that must be accommodated.  Failing to provide reasonable accommodation to employees or engaging them in a good faith interactive process can result in claims being brought for violations of California’s FEHA laws,  ADA, as well as FMLA.  Procedures should exist for employees to request accommodations and leave, as well as training for managers and supervisors receiving such requests.

Defamation/”Blacklisting” After Departure. A good number of lawsuits also arise, especially when employees are fired, based on the employee’s belief that the employer is badmouthing the former employee to hinder them in finding new work.  In California and other states, providing negative untrue information in connection with a reference request is a violation of state law. To avoid problems with former employees, companies should have a policy regarding the information that is provided to prospective employers seeking job reference requests. Only factual information, such as dates of employment, position held, salary/hourly rate, etc. should be provided.

Violations of Wage/Hour and Labor Laws. Finally, there are often times when a departing employee consults with an attorney, who conducts and investigation of the employee’s circumstances and detects that the employer may have been violating wage/hour and other labor laws.  In many cases, the precise nature of the legal claims giving rise to the employee’s allegations do not always matter to the employee — an employee who feels unfairly treated by the employer will seek legal help as a general matter, and will usually follow the advice of counsel in bringing claims different (but perhaps stronger) than those initially contemplated. In some states, like California, the penalties, costs, and fees associated with wage/hour claims often overshadow the base claim itself, and if the employer is large enough, can result in a class action claim.

Avoiding friction in the employer-employee relationship often requires honesty, proper documentation, and training so the necessary rules and procedures are being followed, and employees’ legal rights are not violated, even when they are demoted or terminated.  Even when all of the rules are followed perfectly, however, disputes can still arise.

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Getting Legal Help

AXIS Legal Counsel’s provides legal advice to numerous businesses throughout California with a variety of legal matters, including employment, employee relationships, labor law, and wage/hour matters, as well as compliance with California’s numerous employment and labor laws. We have assisted clients develop employment policies, become compliant with California’s wage and hour laws, prepare employee handbooks, management agreements, employment agreements, independent contractor agreements, and numerous similar labor law and employment legal matters. We have also represented clients in litigation matters involving employee and independent contractor disputes, mediations, lawsuits, and arbitrations. For information on retaining AXIS Legal Counsel to represent your business in connection with any legal matter, contact [email protected] or call (213) 403-0130 for a confidential consultation.



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