Starting and running a small business is a big challenge. While most business owners are primarily preoccupied with keeping the doors open, finding new customers, and trying to beat the odds, for many there is also the fear of a lawsuit if something bad should happen.
Small business lawsuits can quickly become all-consuming obstacles that requires the full attention of owners and/or management. All too often, the consequences of a lawsuit end up determining whether the business will survive or be forced to close.
While not all business share the same level of risk of a lawsuit, there are a handful of common types of litigation brought against businesses that any organization should watch out for.
1) Workplace Discrimination
Getting sued for workplace discrimination means an employer is sued because they have discriminated against an employee based on their race, gender, ethnicity, or other federally protected status.
Another part of discrimination is harassment. This is any unwelcome conduct based on discrimination. If a worker claims to have reported harassment to you, the business owner, and no one takes action, the worker can sue.
Lastly, retaliation is grounds for a lawsuit. This is the action of punishing an employee for filing a discrimination complaint. This could mean demoting or firing them, or creating a hostile work environment for them.
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2) Discriminating Against Customers
In addition from the potential threat of small business lawsuits from employees, employers must also be careful to avoid discrimination lawsuits from their customers as well.
One of the most prominent examples of this type of lawsuit was the recently decided case of a Colorado bakeshop that refused to make a wedding cake for a gay couple.
In short, business owners can discriminate against their customers for the exact same reasons they can’t discriminate against their employees.
3) Wage Law Violations
There are wage and hour laws at both the state and federal level. A lawsuit can be filed against employers who violate either set of laws.
Most wage and hour law litigation involves employers paying less than the minimum wage or denying hourly employees overtime pay.
When a person’s civil rights are violated, the resulting lawsuit is called a tort. One of the most common torts against business owners is for negligence, which means that while the violation was unintentional, it was still the result of the business owner’s failure to do something prudent.
For example, not putting out a wet floor sign could result in a tort being filed when a customer slips and becomes injured.
There is also a tort for an intentional violation of rights, which is most commonly associated in the business world with fraud. Deliberately deceiving customers or business partners for personal or financial gain is a prime example of fraud and will incur a lawsuit very quickly if discovered.
5) Breach Of Contract
Breach of contract lawsuits most often occur between two businesses. If a contract for services is agreed upon, and one party does not follow through with their duties or responsibilities as described in the contract, the other party can sue them for breach of contract.
How To Handle A Small Business Lawsuit
If you are a business owner and are facing a lawsuit as the result of any of the above situations, you should speak with either and employment law attorney or litigation attorney immediately.
A good attorney will quickly help you determine if the lawsuit against your business has merit, and if so, what the next steps should be.