Identifying the Most Common Types of Employment Lawsuits (And How to Avoid Them)

Posted By: Team Moody,

As an employer, it is your responsibility to deal with conflicts between workers and even between employees and management. Often, these incidents may be resolved by discussing the matter or addressing the underlying issues and concerns. But not all situations are easily remedied. In some cases, employees may be subjected to words, actions, or conditions that they consider unfair, hazardous, or unethical. Whether the person in conflict with the employee is a coworker or an employer, the incident may result in employment lawsuits.

One way by which employers could avoid or mitigate the potential damage caused by these lawsuits is to obtain employment practices liability insurance (EPLI). MD EPLI provides comprehensive coverage against employment lawsuits, preventing costly settlements, lengthy court proceedings, and other legal consequences.

Identifying potential causes of employment lawsuits

Even if you already have EPLI, there are ways by which you could avoid facing an employment lawsuit or at least reduce the damage they could cause. Identifying these common types of employment lawsuits and learning how to prevent them will help ensure your company’s reputation and minimize or eliminate potential costs.

Wrongful termination

One of the most common reasons behind employment lawsuits is wrongful termination. These cases often stem from being fired or laid off for perceived unfair or fraudulent reasons.

There are a few ways by which you could protect yourself against a wrongful termination suit by an employee. Always conduct a thorough investigation before firing anyone, and ensure that the offense is stipulated in the company’s printed policies and guidelines. It would also help to have a third-party witness to the employee’s action.


Discrimination is an increasingly common concern in the workplace. Although these incidents often stem from race-based conflicts, they may also revolve around age, gender, religion, sexual orientation, and even mental or physical disabilities.

Accusations of discrimination are never easy to deal with for the accused and the person making the accusation. As an employer, it is your responsibility to foster an open and tolerant environment where no one experiences discrimination based on the above factors. If necessary, discuss any issues with the conflicting parties so that you could achieve a mutually favorable resolution.

Workplace harassment

Harassment is a serious concern, and not just for women and minorities. Targets of workplace harassment include anyone who feels threatened or placed in a disadvantageous position, whether by a coworker or an employer.

Always conduct yourself in a thoroughly professional manner and take reports of inappropriate behavior or bullying seriously. There should be no room in your company for suggestive words and actions, innuendos, overly familiar gestures, or anything that could cause anyone to feel uncomfortable.

Refusal to correct payment errors

Refusal to correct payment errors puts you at risk of a costly employment lawsuit. Unfortunately, mistakes can occur in any aspect of a business’s operations, even in payroll matters. There are many possible reasons why employees may not receive the expected compensation, even though most of them are justified.

Always be open and receptive to questions and concerns about payment-related issues. Be prepared to explain the reasons for the discrepancy and make sure that you have written records that support your actions.

It would help to encourage employees to bring up payroll-related conflicts with HR. If the mistake is on your end, rectify the error and reimburse the employee as soon as possible.

Workplace injuries

Injuries in the workplace are among the most common reasons for employment lawsuits. For better or worse, the law often comes down on the side of the employee who experiences an injury on the job, particularly if they aren’t at fault.

The best way to protect yourself against claims arising from work-related injuries is to ensure your workers’ safety and well-being. Make sure that the job site and your materials and processes meet the safety requirements in your industry. You should also address potential safety issues as soon as possible.

These are only a few of the most common employment lawsuits you could face as a business owner. It isn’t always easy to resolve them or their root causes to the satisfaction of everyone involved. It is up to you as the employer to foster a healthy and productive environment to avoid these incidents.

Even if you have the best of intentions and act in good faith, there may be situations wherein one or more of your employees find cause to file an employment lawsuit. Before this could happen, it is vital to obtain EPLI from a reputable insurance company. This is the single best way to protect your firm, your assets, and your professional reputation from unexpected employment lawsuits.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.