When Can An Employee Sue You?

When you’re an entrepreneur, there are a lot of moving parts of your business. There are also a lot of potential rewards that come with being a business owner, but at the same time, risks. 

One risk that you’re taking is that of being an employer. 

Employee Sue You

You have a responsibility, legally and financially to your employees. Sometimes, you might find yourself in a situation where your employee is unhappy with you or even wants to take legal action against you.

When can your employer sue you, what should you do if an employee sues you, and what else should you know?

You should always have a lawyer who can represent you or your business as needed, but the following are some general things to know about when an employee might be able to sue you.

Firing an Employee

Some of the primary reasons that employers get sued by employees relate to firing. Your employee might say they were wrongfully terminated and bring a lawsuit against you. 

There are specific situations that fall under this umbrella most often, including:

  • Maybe you didn’t give a reason for firing an employer, or they might say you didn’t. If you’re an at-will employer, you might not even think you need a reason. However, an employee who isn’t given a reason for their termination might make one up. A lawyer could also make one up. You need to be clear and specific about why you’re firing someone to protect yourself. 
  • If you fire an employee for poor performance, but they have good performance reviews, this can come back to haunt you in the form of a lawsuit. If you’re going to fire an employee because of subpar performance, you need to have a paper trail. Otherwise, your former employee might have a legitimate case against you. 
  • You could fire someone at a bad time and that could be seen as retaliation. For example, if your employee files a complaint about you or someone in your business, and then you fire them, that could be viewed as retaliation even if you honestly didn’t make the association. You could have fired them for something entirely unrelated, but is that how it’s going to look to an outsider? If you’re going to fire someone after they’ve made a complaint, you need documentation showing why you did what you did. 
  • If you fire someone for not following certain company policies, you have to make sure that they knew what those were, those policies were documented, and they were well-trained on them. 

Other Reasons an Employee Might Sue You

If you’re an employer, some of the other frequent reasons you could get sued include:

  • Are you asking illegal questions during the interview process? For example, if you’re interviewing a woman and you ask her if she’s planning to have children, this can be illegal. You could be asking discriminatory questions, and someone could sue you before even becoming an employee, citing their belief that they didn’t get the job because of discrimination. 
  • If you fire someone and it seems like you’re unfairly targeting them in your disciplinary process, they could sue. For example, if you fired them for something other employees frequently did without consequence, then you might face a lawsuit. 
  • Discipline can’t come in the form of docked pay. Employers don’t have a lot of room for reducing employee pay. You also can’t negotiate different terms for overtime than what the law calls for. An employer can’t waive their overtime either, but if you allow this as an employer, you could face legal action from employees. 
  • Retaliation was touched on briefly above, but it doesn’t just mean that you fire someone in a way that could make it seem like you’re getting back for them filing a complaint. It can also mean that you harass them, unfairly change their schedule or demote them, just to provide a few other examples. 
  • Defamation occurs when you make an untrue statement about an employee that results in losses of some kind for them. 
  • Harassment is another big one. Workplace harassment occurs when someone in your business makes another person feel uncomfortable. It can create a hostile work environment. It can include sexual harassment, but there are other types of harassment as well. 

Can You Sue an Employee?

We most often talk about situations where employees might sue you, but as an employer, there could be times when you question whether you can sue someone who works for you or did at one point. 

Examples of when you might have a case to sue a current or former employee include:

  • If your employee caused damages that then led the third party to sue you, you might be able to sue for the employee to pay for the damages they caused. 
  • Sometimes employers are bound to responsibilities or certain tasks because of contracts they sign. If your employee doesn’t uphold their end of a contract, then you might sue them. There are non-compete and non-solicit contracts that are the most common examples of when this might happen. 
  • Most employees have positions that are at will, which basically means they can quit any time. In rare cases, if an employee doesn’t provide you reasonable notice that they’re going to quit, you may be able to sue them. This is usually something that happens when an employee is a high-level person in the company, and they’re difficult to replace. 
  • Just like an employee can potentially sue you for defamation, you can do the same. Defamation can damage your personal and business reputation, but it’s a complex situation because you have to provide proof of not just the defamation but the damage it led to. 
  • You can possibly sue an employee for theft or intentional property destruction. 

You face a lot of legal risks as a business owner, but having a good lawyer and understanding laws and regulations can help you protect yourself against lawsuits coming from employees, past and present.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas, United States. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses grow their bessiness.