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Business laws: the most common lawsuit risks to avoid

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This guide outlines the most common business laws that lead to companies and small business owners ending up in court – and how to avoid it.

It is in many respects, something of an undesirable symptom of modern living in the United States, that our country has a seemingly unquenchable lust for litigation. Never mind personal litigation issues, if you own a business you had better make double-sure that you have all of your regulatory compliances checked and rechecked and even then, ensure that whatever local or state-wide requirements and business laws you need to fulfill, are in their turn also checked and regularly audited.

The law is, in its most basic existence, is a set of rules that by design are meant to ensure that all citizens within a society have equal access to protection from wrongdoing, and indeed to offer the cornerstone of civilization that societies use to govern themselves with. 

Whether or not the intention for the legal system was to become the repository for the nouveau-entitled classes or not will be determined by history, but be that as it may, the American legal system is one of the most revered and respected in the world and with the dramatic increase in business laws litigation and class action suites across the country, you are very likely to have reason to interact with the law at some stage.

So how do you navigate choppy legal territory from a business perspective when something goes wrong in your office or on your premises? How do you protect yourself from harassment claims and disgruntled employees? 

We’re going to look at a few of the most common litigious areas within business laws, in the United States today.

“If we desire respect for the law, we must first make the law respectable.” – Louis D. Brandeis, Former Associate Justice of the Supreme Court of the United States, 1916 – 1939.

Business laws behind most common lawsuits

Within the corporate environment, there are typically five lawsuits that companies most regularly face for breaking business laws, outside of legal action between companies. These are:

Lawsuits around cases of discrimination

When employees experience unfair treatment or perceived unfair treatment at the hands of their employers, they may be entitled to file a discrimination lawsuit against that employer. In the United States, there are certain classes of employees that are protected by one or more of many federal anti-discrimination laws. These employees could be members of a specific racial group, gender, skin color, nationality, sex, disability, religion, pregnancy, veteran status, sexual orientation, or age.

Discrimination can be experienced in a variety of ways in the workplace and can even occur before a prospective employee has been officially hired to work for the company. For example, if a company advertises a vacant position at the company and suggests the type of ‘preferred’ candidate that the company would like to hire, this may be cause for legal recourse under business laws.

Some other common discrimination cases could result from pay disparities among equally-qualified workers in the same or similar positions or when certain employees are denied the use of company facilities based on their appearance.

Avoiding these kinds of lawsuits is difficult, but it’s not impossible, and retaining a credible and professional law firm that guides your policies and procedures as well as serves as counsel for difficult situations, can help you out of trouble before it happens.

You can read some interesting information on discrimination cases, here.

Harassment

Harassment in the workplace can be verbal, physical, or both. Verbal harassment can be experienced in the form of jokes, innuendos, slurs, name-calling, insults as well as unwanted physical contact. It is important to note that in terms of physical harassment, under business laws it is how this contact is received that determines the legal context and not the intention in which it was ‘given’.

The harasser could be another employee, a manager or supervisor, or an onsite contractor and the lawsuit could be brought against the employer for not dealing with the situation properly whether or not there is any culpability on the part of the employer.

Harassment claims are complicated and can be lengthy and very expensive and the cost could ultimately extend beyond the financial cost, to a reduction in reputation or damage to the brand.

Wrongful termination

These are cases that can find their origins in a multitude of reasons and for a multitude of reasons and unlike discrimination or harassment cases are not an actual cause of action on which a lawsuit can be filed. Instead, under business laws, this is a blanket term that’s used to describe various causes of action. These can be both direct and indirect but in any event, result in the unlawful termination of an employee.

In the United States, most employees are employed on an “at-will” basis, which means that they can be reasonably dismissed by their employer for any reason and without warning, provided that the reason is not illegal under business laws. Employers will usually require that their employees sign an acknowledgment of at-will employment as soon as they’re hired, giving the employer a defense against lawsuits.

Wage and hour violations

In terms of business laws and labor protection, wage and hour claims could potentially be a big risk to employers because not only is there the potential for lawsuits from employees but also on the part of state and federal levels. For the most part, these violations are usually uncovered through audits as opposed to action from employees themselves.

Personal injury

When injured at work, employees will probably file a workers’ compensation claim. There is another option though and this could cost the employers significantly more – a personal injury suit.

Employers can be held liable under business laws in personal injury cases for injuries that employees sustain at the workplace which are, at least in part, due to the negligence of the employer. Whereas workers’ compensation claims typically cover lost wages and medical treatments, personal injury claims could include medical expenses, lost wages, loss of future earning capacity as well as additional damages for pain and suffering – and these could amount to big, big numbers.

Conclusion

Now, before you think that none of this will happen to you – consider that a study released by the US Chamber Institute for Legal Reform has shown that the US tort system’s commercial liability costs exceeded $343 billion in 2018 and small businesses shouldered a massive $182 billion, or around 53% of those costs.

But, there is one sure-fire way to ensure that your risk is as minimal as possible and it’s the simplest of all: As an employer, do the right thing, and to help you do that you’ll need a partner like JacksonWhite Criminal Law Department that can assist with criminal law and more.

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