In 2008, U.S. small businesses paid $105.4 billion in tort liability costs according to the U.S. Chamber Institute for Legal Reform. It’s a number we can assume has continued to grow, with more than 100 million lawsuits filed in our nation’s courts every year. From loss of customers and blemished reputations to devastating financial hardship and bankruptcy, they can cause lasting damage. Fortunately, understanding recent lawsuit trends may help you protect your small business.
Lawsuits by Employees
Employees may file lawsuits when they feel their employer—or a potential employer—has discriminated against them. According to the Equal Employment Opportunity Commission (EEOC), retaliation was the most common cause in 2015, accounting for more than 44 percent of all cases. This was followed by race (35 percent), sex (30 percent), disability (30 percent), age (23 percent), national origin (11 percent), religion (4 percent) and equal pay (1 percent).
Your employee handbook is one of the best tools you have to protect yourself against employee lawsuits. It should clearly outline how you classify employees, eligibility for overtime pay and benefits, how employees should request time off, your company’s holiday and vacation policies as well as anti-discrimination, harassment and safety policies and avenues for complaint. If you’re in an at-will employment state, the handbook should explain this as well.
While you should give every new employee a hardcopy of the handbook and have them sign a document acknowledging their receipt and understanding of the materials within, you should also maintain a digital copy for easy updating.
Lawsuits for Copyright Infringement
From the music you play in your lobby and the stock photography you use on your website to the things you share in your company’s social media posts, you could be vulnerable to a copyright infringement lawsuit costing tens of thousands of dollars if you haven’t purchased or otherwise properly licensed the use of any creative property.
You can reduce your lawsuit risk by checking the original source of anything you want to publish or repost. If you don’t see a copyright notice, it’s still wise to request the permission of the author/artist. Get written consent or license the work. A simple credit is generally not enough.
Lawsuits by Customers and Vendors
Your employees are not the only parties who can sue you for discrimination; your customers can as well. Fail to provide adequate disabled access and facilities or refuse to serve a customer due to his or her race, religion or sexual orientation and you may quickly find yourself facing a discrimination lawsuit. Personal injury lawsuits are also a hazard for any small business that welcomes customers or vendor representatives onto its premises.
If you stay abreast of the latest laws and avoid practices that could be classified as discriminatory or put your employees or customers at risk, you reduce your chances of a small business lawsuit. However, investing in general liability insurance is essential for greater peace of mind. To explore your options, give us a call today.