In California, just like any other state, lawsuits are a part of doing business. Litigation can drain time and money from a business, and not all types of legal action qualify for coverage under business insurance. Business owners can take a proactive stance to protect themselves and minimize the likelihood or impact of lawsuits. The following represent some of the most common types of lawsuits companies face.
Employee discrimination and wrongful termination
Employers must take steps to ensure they remain aware of current federal and state laws regarding discrimination, wrongful termination and other employee-related legal issues. Small companies without human resources departments may have more risk exposure due to a lack of employment policies and procedures designed to promote diversity and fairness and prevent harassment and other workplace problems that could turn into lawsuits.
Laws regarding wages and hours worked protect employees from employers who fail to pay minimum wage or overtime pay and related issues. An employer’s insurance typically won’t cover these types of business lawsuits. Claims can include employers who misclassify workers as salaried to avoid paying overtime wages.
In business law, anyone with a connection to a business can file a lawsuit for discrimination. Customers, vendors, patients, suppliers and others may file a lawsuit based on discriminatory language or other grounds.
A tort involves an injury or wrongdoing by one party against another and covers a wide range of civil wrongs or injuries. An action may be intentional, such as when someone deliberately harms another person or their property. It can also be unintentional, such as when someone harms someone else or their property due to negligent behavior. Common torts include fraud, defamation and personal injury claims.
Invasion of privacy, such as a person hacking into a company’s computer system to gain confidential information, is an example of a tort.
Breach of contract
Companies often have legally binding contracts with employees, suppliers, distributors and other parties. Breach refers to a contract violation by one of the involved parties. Typical breaches of the contract include customer non-payment for goods received, suppliers failing to deliver promised goods and employees not honoring the terms of an employment contract.
Awareness of common business lawsuits can help companies proactively protect themselves from legal disputes’ costs and damages.