In the business world, regulatory agencies make sure that businesses fulfill their obligations and requirements to the people working for them. A company can face business litigation if it makes mistakes in how it manages and treats their employees. Every business owner must know how business litigation can arise and understand the reason they should always avoid or prevent such situations. Employee-related litigation can occur due to the following issues:

Employee Misclassification

Employee misclassification happens when a company does not properly classify its employees as either employees or independent contractors. The classification of a worker significantly affects the kind of pay and benefits they get. Generally, full-time employees may be eligible for benefits such as overtime, workers’ compensation, and sick leave. Meanwhile, general contractors are not eligible for these benefits from the company they are offering services to unless their contract has provisions that state otherwise. If this issues results in litigation, a business should start exploring an attorney’s website to know if they specialize in this kind type of case. 

Wrongful Termination

In most states, employers and employees can end their working relationships for legal reasons with or without notice. But employers cannot fire a worker for taking part in protected actions like taking important medical leave, whistleblowing testifying against the employer in court, or filing workers’ compensation claims. If employers take adverse actions against workers or terminate their job for engaging in legally protected actions, the latter may be liable for retaliation. 

Failure to Draft Comprehensive Employee Contracts

Businesses need to hire workers to grow. But they must develop comprehensive employee contracts. First, they must set the right type of expectations and rules for workers. Can they fire a worker at any time without legal consequences? What type of performance does a company expect from its workers?

In addition, companies must comply with government regulations. For example, most of them should carry workers’ compensation liability insurance. Companies that fail to meet this legal requirement can be penalized by the state and face liability for damages when a workplace injury occurs. Also, companies must protect their trade secrets, data, and insider information. Thus, they may need to have an attorney draft non-compete, non-disclosure, and non-solicitation agreements. 

Failure to Understand Health and Safety Laws

Companies must make sure their workers work in a safe environment. The laws that apply depend o the industry a business is in. Taking steps such as performing risk assessments, consulting with an attorney, and working with insurance companies is important. From here, a company can take proper measures to protect the business from liabilities and penalties.