When employees take their employers to court, it often surprises managers and leaders.
However, most lawsuits aren’t sparked by a single bad day or a small misunderstanding. They usually come from ongoing problems—unfair treatment, inconsistent policies, or untrained managers—that make workers feel they have no other option but to seek legal help.
Employment law attorney Aaron Zandy, SPHR, once said, “HR professionals don’t get companies sued. Managers get companies sued.” His point is that HR can be a company’s first line of defense against lawsuits. By training managers, documenting decisions carefully, and encouraging fair treatment of employees, HR can help prevent many common legal pitfalls.
Below are 13 of the most common reasons employees file lawsuits—and specific ways HR can help avoid or resolve them.
Managers who don’t understand the basics of employment law, anti-discrimination rules, or effective communication create major legal risks. Even a single careless remark or uneven disciplinary action can trigger claims of discrimination, harassment, or wrongful termination.
A few years ago, a regional retail chain was sued after a newly promoted manager used offensive language toward a subordinate. The employee claimed the remarks were both harassing and racially insensitive. Since the manager never received formal training on harassment and discrimination, the company couldn’t prove it had taken steps to prevent such behavior. Eventually, it settled for a large sum, and the negative publicity hurt its reputation.
Implementing proactive measures and building a culture of accountability can reduce the risk of legal troubles caused by untrained managers.
Set up structured onboarding for all managers.
Include comprehensive training on major employment laws (like Title VII and the Americans with Disabilities Act), as well as effective communication and conflict resolution strategies.
Offer ongoing refresher sessions.
Rules and best practices change. Regular sessions ensure managers remain updated and demonstrate that the company values lawful, respectful conduct.
Implement coaching and mentoring programs.
Pair new or underperforming managers with seasoned mentors who can guide them in leadership, decision-making, and people skills.
By educating managers and holding them accountable, HR can show it made a genuine effort to prevent harassment, discrimination, and other harmful behaviors—significantly reducing the chances of a lawsuit.
When managers fire or discipline employees without clear written records, the company may appear arbitrary or biased. In legal settings, missing documentation can suggest that a manager acted on discrimination or retaliation instead of legitimate performance reasons.
A mid-sized software company was sued for wrongful termination after firing a long-time employee for “poor performance.” During the lawsuit, the employee’s file showed no record of warnings, performance reviews, or any signs of trouble.
With nothing to justify the decision, the employee argued it was really age discrimination. The company ended up settling to avoid larger legal costs and bad press.
Solid documentation policies protect both the company and employees while ensuring fair and consistent treatment.
Implement standardized documentation procedures.
Provide managers with easy-to-use forms or digital tools to record performance issues, disciplinary actions, and feedback sessions.
Train supervisors on record-keeping.
Explain that timely, detailed, and accurate documentation supports fair decisions and serves as a strong defense if legal questions arise.
Encourage consistency and transparency.
Make sure managers apply documentation and reviews evenly so employees don’t suspect favoritism or hidden agendas.
Prioritizing clear, consistent records assures employees—and potential legal reviewers—that decisions are fact-based, often preventing lawsuits before they start.
When employees report serious issues—like harassment, safety concerns, or pay discrepancies—and never hear back, they can feel abandoned or disrespected. In many cases, this frustration is what sends them searching for an attorney.
A manufacturing company faced a lawsuit after an employee reported sexual harassment by a co-worker. HR logged the complaint but never updated the employee on any investigation. Feeling neglected, she filed a suit claiming a hostile work environment. The court noted that the company’s lack of communication showed it wasn’t taking the complaint seriously.
Timely communication and thorough investigation are the best ways to show employees—and courts—that you take every concern seriously.
Establish a clear reporting process.
Give employees multiple ways to report issues: a confidential hotline, an online platform, or an open-door policy.
Investigate promptly and thoroughly.
Interview relevant parties, gather evidence, and document your findings. Quick action signals that you prioritize employee well-being.
Communicate outcomes whenever possible.
While certain details remain private, employees deserve to know their concerns have been addressed.
AllVoices offers a secure channel for collecting and managing employee complaints. By creating a clear “paper trail,” HR can track each report—from submission to resolution—and ensure consistent follow-up.
AllVoices also provides analytics that help HR see patterns or recurring issues, so they can address problems before they escalate.
Performance reviews that are rushed, inconsistent, or inaccurate can backfire. Overly glowing reviews may make it hard to justify a later firing, while vague or late feedback can leave employees feeling blindsided.
A financial services company fired an employee for “constant mistakes,” but her recent performance review was spotless. She sued, claiming she was really fired because of her age. The conflicting documents weakened the company’s case, leading to a settlement.
Well-structured, honest reviews provide employees with clear insights into their performance and protect the organization from legal disputes.
Provide consistent guidelines for reviews.
Use the same evaluation forms and criteria to ensure fairness.
Train managers to give balanced feedback.
Encourage specific examples of strengths and weaknesses so employees know exactly what to improve.
Set deadlines for performance reviews.
Timely evaluations show the organization takes development seriously and avoids “surprise” terminations that can fuel lawsuits.
Stronger Introduction
Inconsistent enforcement is a common trigger for discrimination claims. Employees may feel they’re singled out due to race, gender, age, or another protected status. Courts often view inconsistent actions as evidence of possible bias, making it crucial for companies to apply policies uniformly.
A call center fired an employee for chronic lateness, while a co-worker with similar attendance issues only received a verbal warning. The fired worker sued, alleging racial bias. The court’s finding: the employer could not justify the unequal treatment, leading to a settlement.
Consistency signals to employees—and the courts—that the company applies its rules equally and fairly.
Publish clear, accessible policies.
Include them in an employee handbook, and ensure everyone knows the consequences of breaking the rules.
Provide uniform training for supervisors.
Managers should understand exactly how to handle discipline, from minor infractions to terminations.
Audit disciplinary actions.
Regularly review how managers across departments enforce policies to catch inequities early.
AllVoices allows companies to store and reference policy documents in one centralized platform.
Any investigations or disciplinary actions stemming from policy violations can also be tracked within the tool, ensuring HR has a consistent and transparent process for every case—helping to prevent charges of favoritism or bias.
Wage and hour issues—such as underpaying employees, denying overtime, or misclassifying employees as “exempt”—are among the most common reasons for lawsuits. These claims can lead to expensive legal fees and back pay awards.
A restaurant chain faced a class-action lawsuit after several employees reported working “off the clock.” They regularly stayed late to clean and prep for the next day without overtime compensation. The business ended up paying millions in damages and suffered significant bad press.
Staying current on wage laws and enforcing accurate recordkeeping are key to avoiding costly legal challenges.
Regularly review job classifications.
Confirm each role’s exempt or non-exempt status aligns with federal and state guidelines.
Implement reliable time-tracking systems.
Encourage employees to accurately log all hours, and train managers to approve or correct timesheets promptly.
Stay informed about labor laws.
Overtime rules, minimum wage rates, and other regulations can change. Regular updates help protect the company.
Laws like the Family and Medical Leave Act (FMLA) or state-specific leave statutes protect employees who need time off for medical or family reasons. Denying an eligible employee’s request—or penalizing them for taking their legally protected leave—often leads to litigation.
An office administrator diagnosed with a serious health condition requested FMLA leave. Her supervisor mistakenly told her she hadn’t worked enough hours, so she was denied. When she missed work for treatments, she was fired. The court later found she was indeed eligible for FMLA, and the company was liable for back pay and damages.
A thorough understanding of federal and state leave laws helps HR avoid legal trouble and support employees during difficult times.
Educate managers on leave eligibility.
They should know the basic triggers for FMLA or other leaves and involve HR to confirm eligibility.
Maintain clear records of leave requests.
Document all correspondence so you can prove compliance with legal requirements.
Show empathy and flexibility.
Working with employees to schedule or manage their absences can boost morale and reduce legal risks.
From offhand comments to overt bullying, any form of harassment or discrimination can spiral into legal claims. Courts tend to side with employees who can show a pattern of abusive behavior, especially if the employer failed to stop it. Beyond legal consequences, a hostile environment hurts morale and productivity, driving away top talent.
A warehouse employee reported repeated racial slurs by a co-worker. Management dismissed it as “just joking around.” Eventually, the employee sued for a hostile work environment. The company settled for a large sum, and the public backlash cost them both money and goodwill.
Zero tolerance is essential. Employees who feel safe and respected are more likely to stay engaged and less likely to pursue legal remedies.
Set clear, written policies.
Define harassment and discrimination, outline reporting procedures, and explain consequences for violations.
Train everyone—not just managers.
All staff should learn what behaviors are unacceptable, how to report issues, and what to expect when they do.
Enforce rules consistently.
Investigate all complaints and discipline offenders. Ignoring “small” issues can quickly escalate into bigger problems.
AllVoices was founded to provide an anonymous, accessible channel for reporting workplace harassment and discrimination. Employees can submit complaints securely, and HR can respond, investigate, and track each step within the platform. This helps ensure a consistent process and gives employees confidence that their concerns won’t be dismissed.
Retaliation claims are among the fastest-growing types of employment lawsuits, largely because the law offers broad protection for anyone who raises legitimate workplace concerns. T
he timing of negative actions—like a poor performance review right after a complaint—is often enough to make retaliation a plausible claim.
A sales associate reported possible wage theft in her department. Within days, she was reassigned to a position with less pay and fewer hours. She sued for retaliation, arguing the timing was no coincidence. The court agreed that the employer provided no solid evidence for the sudden job change, leading to a settlement.
Maintaining fairness and transparency in all management decisions helps employees feel safe to raise concerns.
Separate the complaint from discipline.
If performance or conduct issues surface, document them thoroughly and handle them independently from any complaint the employee made.
Use consistent review processes.
Big changes—like demotions—should be approved by HR and at least one other manager to eliminate hidden motives.
Reinforce a non-retaliation policy.
Make sure managers know any action that looks like retaliation can be as harmful legally as direct discrimination.
AllVoices’ anonymous reporting tool allows employees to report concerns, including potential legal violations, without fear of being identified. This helps prevent whistleblower retaliation because managers cannot single out who raised the issue. The platform’s tracking also ensures each complaint follows a standard investigation process.
Even in at-will states, you can’t fire employees for illegal reasons—like reporting unsafe conditions or refusing to engage in unethical acts. If an employee suspects they were let go for speaking up, they may claim wrongful termination.
An engineer refused to falsify safety data for a construction project. Soon after, the company fired her for “insubordination.” She argued the real reason was her refusal to break the law. The court sided with her, awarding back pay and damages.
Making sure managers follow consistent, well-documented processes for each termination helps prove the company’s actions were legitimate.
Require solid performance or conduct records.
Document negative performance, warnings, or other incidents that led to the termination.
Get a second opinion.
Have another manager or HR professional review every termination decision to confirm it’s fair and justified.
Use exit interviews.
These can uncover hidden issues or misunderstandings before they become legal claims.
Unsafe environments—like broken equipment or lack of protective gear—can cause injuries and expensive lawsuits. Employees expect (and are legally entitled to) a workplace that meets safety standards.
A factory worker lost a finger because a safety guard was missing from a piece of machinery. Records showed that supervisors knew about the hazard but never fixed it. The worker received a large settlement, and the company faced additional fines from safety regulators.
Making safety part of the company culture reduces legal liability and supports employee well-being.
Collaborate with safety teams.
Work together to identify hazards, schedule inspections, and respond quickly to any concerns.
Encourage open communication.
Employees should feel comfortable reporting safety risks without fear of punishment.
Document every fix.
Showing proof that you addressed safety hazards can be vital if an injury leads to litigation.
Overpromising — on bonuses, guaranteed hours, or permanent job security — can lead to breach of contract claims. Even if it’s not written, an employee might argue they relied on verbal assurances when making career or financial decisions.
A high-performing salesperson sued when management changed her commission structure mid-year after previously promising it would “never change.” The court viewed the repeated statements as implied contract terms, and the company settled to avoid a trial.
Clarity and transparency in offers and policy changes help employees trust your organization—and avoid legal disputes.
Keep offers in writing.
Outline salaries, commissions, and benefits in detail so expectations are clear.
Train managers to avoid casual guarantees.
A statement like “You’ll always have a job here” might become legally binding in some contexts.
Update policies regularly.
Ensure compensation plans match current practices and legal requirements.
A culture of disrespect—like constant belittling, public shaming, or bullying—often leads to low morale and high turnover. While disrespect alone isn’t always a direct legal claim, it’s often tied to harassment or discrimination lawsuits.
At a large tech firm, a manager regularly berated team members during meetings, sometimes resorting to personal insults. One employee sued for emotional distress, supported by other workers who experienced similar treatment. The lawsuit revealed deeper issues around workplace culture, forcing the company to settle and overhaul its leadership approach.
Creating an environment where employees feel valued goes a long way toward preventing legal disputes and retaining top talent.
Lead by example at all levels.
Executives and managers should model respectful communication, setting the tone for the rest of the company.
Offer conflict resolution avenues.
Mediation or coaching can resolve interpersonal issues before they grow into legal complaints.
Encourage open, constructive feedback.
When employees believe their voice matters, they’re more willing to share concerns and less likely to sue.
AllVoices provides a channel for employees to anonymously report issues that may stem from bullying, disrespect, or a general culture of fear. This early feedback helps HR identify problematic behaviors before they escalate into legal claims. By addressing patterns of disrespect, companies can improve morale and reduce turnover.
These 13 issues are common reasons why employees sue their employers, but they’re also preventable. With the right training, thorough documentation, fair policy enforcement, and a culture that prioritizes respect, HR can act as the organization’s strongest defense against lawsuits.
Platforms like AllVoices further strengthen that defense by offering a structured, anonymous way for employees to voice concerns—ensuring that potential problems are addressed quickly and consistently.
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For specific questions about your situation, consult qualified legal counsel.
Stay up to date on Employee Relations news
Stay up to date on Employee Relations news.
.svg)
.svg)
AllVoices helps People Teams surface, investigate and respond to workplace incidents more consistently and efficiently. AllVoices offers audit-ready documentation, early trend detection, and AI-powered features to save People Teams time on manual tasks.
