3 Most Common Lawsuits Faced by Small Businesses


No one wants to think about facing a lawsuit, but as a small business owner, it can be even more stressful. The reality is that legal fees are costly and can put small businesses in dire financial situations if not handled properly. The best-case scenario is to prevent lawsuits all together by taking the necessary precautions. Of course, you can never eliminate the chance of an accident completely, but by knowing what to look out for, you can do your best to prevent them. Here are some of the most common lawsuits faced by small businesses.

  1. Breach of contract

Breach of contract is one of the more common lawsuits you may face as a small business. A breach of contract is whenever your company does not carry out all the terms stated in a contract. It could be a contract with a client, supplier, vendor, or employee. If you do find yourself in court due to a breach of contract, make sure you have court reporters present. They will transcribe the hearing to make sure all parties are clear on everything said. Some ways you can breach a contract are:

  • Failing to deliver goods and services
  • Failing to pay for products or services
  • Delivery of incorrect or damaged goods
  • Violating an NDA or service agreement
  • Delivering inadequate or incomplete service
  • Dismissal of an employee without notice
  • Failure to deliver on contractual promises to your employee (i.e., Bonuses)

Make sure you are aware of all terms of any contract you sign, and you follow through on your agreements.

  1. Discrimination

Discrimination is another typical lawsuit you may face as a small business owner. That would include employee or client discrimination. If there is any perceived discrimination against religion, race, age, sex, disability, pregnancy status, or gender identity, then you may have a lawsuit on your hands. Employees may perceive discrimination, even if that isn’t your intent. It’s essential to be aware of what may constitute discrimination so you can ensure you don’t find yourself in a legal battle.

For example, if you require that all employees rotate shifts on Sundays, it may be seen as discrimination against religion, because they may attend church on Sundays. Another example is failing to give an employee a promotion to a position they qualify for because you know they are pregnant. Unequal pay is another common form of discrimination.

  1. Injuries

Accidents happen, and you cannot wholly avoid workplace injuries. That said, you should take all necessary precautions to ensure your employees are safe when on the job. Slip and fall accidents are more frequent than you might think and can often lead to severe injuries. Even if your work environment isn’t hazardous, a tumble down the staircase may still end in a lawsuit.

Workers’ compensation is your biggest asset, so make sure you have full coverage. Assess all potential risks within your workplace and aim to eliminate them as much as possible. Also, make sure that all your staff have comprehensive health and safety training to identify risks, as minuscule as they may seem.


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