The Most Common Legal Issues for Startups To Consider

By David Thompson

Aug 17, 2022 06:52 PM EDT

Photo by Mario Gogh on Unsplash(Mario Gogh on Unsplash) (Credit: Getty Image)

Complying with legal laws is a matter that shouldn't be taken lightly for all businesses, big or small. As a business owner, you might be surprised by the tiniest details you must abide by in order not to put yourself in the position of dealing with lawsuits. Having a proactive strategy is better than dealing with the consequences of legal lawsuits. 

Here are common lawsuit causes you should pay attention to:

1. Controversial principles in contracts

There are a few things in life we can all collectively agree on, like the color of the sky, but when it comes to principles in legal contracts, disputes are bound to happen, especially if the terms aren't clear. For instance, the contract can clearly state that a party will get paid x amount if he/she does the job right. However, 'doing the job right could have several meanings. In this case, disputes arise.

Even worse, what if you promise something in writing, such as returns on an investment, and have no intention of doing so. That's fraud, and if discovered, you better have a great criminal defense attorney on speed dial. 

2. Harassment

If you're a business owner, one thing you must consider is that there's probability harassment occurs at the workplace. Although it's hard for an employer to get directly sued for harassment, it's not impossible. 

An employer isn't responsible for supervising every single behavior that happens in the workplace, but there should be strict rules against harassment. This means that there's a dedicated procedure to deal with harassment complaints, which you might be sued if you don't act upon.

3. Not paying employees fairly

One of the most common lawsuits that arise is that employers fail to pay their employees fairly, especially when it comes to smaller companies. That's because when you work in a startup, job descriptions aren't as strict as in bigger companies since the number of employees is limited. An employee might find himself working overtime or replacing someone for some time which leads to overtime disputes. 

To prevent getting sued by your employees, there's no better option than to pay them fairly in the first place. Make sure that the extra hours they've worked are paid without any excuses.

4. Injuries at the workplace

It's not rocket science that workplace injuries are common on construction sites, but have you thought about injuries in other - considered safe - workplaces? Even if your job is to sit at a desk all day long, you can get a back injury, so there is always a risk of injuries in the workplace. As an employer, you are required to have safety precautions and react to any safety complaints you get from your employees. 

It's not your responsibility to except every safety hazard that might happen, but you can be sued for not having safety precautions and not responding to safety complaints when you get them.

5. The unfair firing of employees

Although employees are employed at your will, that doesn't give an employer the right to fire them for any reason. For instance, you can't fire someone just because their personal opinion interferes with yours also if it has anything to do with race, religion, or sex.

Also, you can't fire someone to avenge them because they raised a complaint against something that could hurt your business. Also, if you ask an employee to go against the law and they refuse, that gives them the right to sue you if you fire them. The laws that protect an employee's rights when it comes to termination differ from one state to another. 

6. Discrimination 

This one can be extremely harmful to your business if the employee successfully defended themselves. So, make sure that you focus on treating people fairly and have processes for any incentives given promotions or advancement for employees. This prevents any wrongful blame that can happen because there's a structured process to refer to as to why the employee did or didn't deserve the advancement. 

7. Discriminatory questions during the interview

As a small business, you should have a list of questions you're not allowed to ask in interviews, especially when you don't have a human resources department in your company. These questions are related to sex, religion, family status, etc...; while it's better and safer to avoid these questions, there are some cases when an employer is allowed to ask them. 

However, if you do ask them, you are not allowed to discriminate according to their answers. For instance, you can't choose to hire a woman because she stated that she's planning on having children in the future. 

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