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5 Litigation Threats for Businesses 

5 Litigation Threats for Businesses

The relationship between an employer and employee is usually mutually beneficial, as the employer needs the skills or ability of the laborer, who in turn, receives financial compensation for the work. However, there are many issues that can arise in the work environment that jeopardize the harmony of this relationship. In today’s litigious landscape, lawsuits against an employer or company can be frequent, especially in these five areas.

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1. Wrongful Termination or Discrimination Allegations

Many times an employee will allege that their employer discriminated against them during the application or hiring process, in regards to a promotion, or with their salary. Lumped into this category are often cases of wrongful termination, where an employee feels they were let go without a satisfactory reason or without cause. As acts of harassment, discrimination, wrongful termination, and retaliation are protected by federal anti-discrimination laws, companies facing these claims rely on an employment lawyer and insurance policy for their defense.

2. Wage Violations

Some companies are exposed to claims of wage violations, accused of failing to comply with local, state, or federal wage and hour laws. A minimum wage requirement has been set for companies operating in the United States, as well as guidelines for overtime pay and hourly labor limits. Most of the claims filed in this area have employees seeking overtime wages or minimum wage retribution.

3. Non-employment Discrimination

While employees seem to be the most affected by acts of discrimination, vendors, customers, suppliers, and others involved in transactions with a company can claim grievances of discrimination. There could be allegations of derogatory remarks or harassment for ethnicity, refusal to serve, or price inconsistencies.

4. Breach of Contract

The dealings between companies are often founded in contracts, and failing to comply with your side of the agreement could open up a legal claim on breach of contract. Not delivering a good or service on the agreed-upon timeframe or failing to provide the stated materials for the product can all lead to claim in this area.

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5. Torts

In this area of litigation, a third party could file a claim of either intentional or unintentional torts. This is where an allegation of civil rights violation occurs. It could include issues with property damage or bodily injury. Some insurance policies will cover claims in these areas for company loss, but those injured will often file suit for damages.

Companies facing exposure in these areas should have legal counsel on retainer, but they should also follow risk management strategies. This can help limit risks and losses before an incident occurs.

 

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