Top 4 Mistakes that Get Employers Sued

America is experiencing an explosion of employee claims and lawsuits.  All too often, such claims are frivolous.  Still, if they are not adequately handled by the employer, even frivolous claims can cost substantial time and money to defend.  By avoiding mistakes, an employer can substantially reduce their likelihood of having to defend employee claims.  Employers should make an effort to do the following:

1) Know what classes and conduct are protected under current law.

Federal and state laws are constantly evolving.  Federal law has long protected classes such as nationality, race, religion, sex, and disability.  Those categories have since been expanded, such that sexual discrimination is now being applied to gender roles, sexual orientation, and transgender situations.  Moreover, the definition of a disabled person was expanded by Federal law in 2011.  The laws also include age discrimination protections for those over 40.  Some states have applied these discrimination laws to small business, to complement the Federal prohibition against discrimination for larger businesses.  Employers should learn and understand the protections for their state, and anti-discrimination policies should be written into employee manuals.

2) Take claims seriously.

Some of the worst outcomes begin with an employer who did not take a claim seriously.  As a result, when the employee proceeds with a lawsuit, the employer is not prepared to defend the suit.  Just believing a claim is frivolous does not provide the necessary information for a defense.  Instead, the employer should take every claim seriously, conduct an investigation, document all information, and take reasonable action as permitted by law.  The employer should avoid placing himself or herself as the sole decision maker.  Seek the advice of a third party, particularly legal counsel.

3) Do not allow employees to perform work tasks while off the clock.

Within employment law, wage dispute claims are increasingly common.  For small and large companies, employees are coming forward and claiming that they performed work during a break, on their lunch hour, or before or after hours.  While such claims might initially seem minimal, when accumulated over time and combined with potential overtime exposure, such claims become substantial.  There is a simple solution.  Prohibit off the clock work, whether running errands, reviewing emails, or otherwise.

4) Do not misclassify employees as independent contractors.

In light of the current economy, many employers are attempting to re-categorize employees as independent contractors.  However, simply calling someone an independent contractor does not make them so.  An independent contractor must be truly independent with regard to the extent of control by the employer, and the nature of work and services performed by an independent contractor.  The IRS has criteria for the definition of an independent contractor, as do each of the states.   An employer must know the criteria for their state, and follow the parameters set by the IRS, to lawfully categorize a relationship as one of an independent contractor.  Otherwise, an employer can face IRS sanctions, workers compensation liability, unemployment obligations, wage and overtime payments, and civil liability for employees.


If you have questions about these or any other aspect of employment law issues, feel free to contact the Vaughn Law offices at (303) 586-5905 or contact Senior Attorney Justin Vaughn at  We look forward to helping in any way we can.

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