Employee scheduling and supervision, financing, inventory and customer satisfaction are among the issues that complicate running a business and keep owners up at night. Businesses may also face the risk of legal actions and liability.
Common reasons
Lawsuits are not restricted to business law and cover many other legal areas. Business spends an average of $1.2 million each year defending against legal actions.
Partners or suppliers may file a breach of contract against the business. Failure to pay for goods, failure to deliver goods on time, delivering damaged or incorrect goods are typical reasons.
Payment disputes and other labor law violations are grounds for lawsuits from contractors and employees. Employers must comply with Illinois wage laws and the federal Fair Labor Standards Act.
Discrimination against employees, customers and clients is one of the most common actions. Federal and Illinois laws prohibit discrimination based on a person’s age, race, gender, sex or disability and aggrieved parties may also file their own private actions.
Sexual harassment involving customers, as well as clients and customers, is another common ground. Businesses may help protect themselves by having a zero-tolerance policy, effective employee handbooks and training.
Finally, many businesses face premises liability and other personal injury lawsuits. Slip and fall accidents in stores, food poisoning in restaurants and criminal assaults in retail establishments and bars are examples of the problems that lead to these lawsuits.
Class action lawsuits
A class action lawsuit occurs when one or more plaintiffs, known as the class, charge the defendant. These lawsuits usually involve numerous individuals who suffered harm or loss because of the defendant’s actions.
Typically, the damages that each plaintiff claimed are too small to justify individual legal claims. Combining several claims into one class action lawsuit increases the leverage to force a settlement.
The federal Class Action Fairness Act was passed in 2005. It is intended to protect businesses from abusive class actions. Federal or state courts may have jurisdiction over the lawsuits, depending on the circumstances. The CAFA provides greater ability for defendants to move a class action lawsuit from state to federal court.
Protection
There is no method or advice that serves as a 100% guarantee against lawsuits, especially frivolous actions. But best practices such as effective supply chain management, strong human relations policies, employee training, thorough employee vetting and recruitment and safety precautions can prevent many of the problems or negligence that underlie business lawsuits.
Corporate liability insurance protects businesses against claims from injury or damage to customers, clients, workers or property. If a business is found liable, these policies cover legal costs, payouts, and damages.
Forming a limited liability corporation or incorporating a business may protect the personal assets of owners or officers from liability exposure. Corporate limited liability limits losses to businesses, protects personal assets and establishes a separate legal entity for the business.
Attorneys can assist businesses with compliance with business and employment laws and initiative-taking measures to prevent lawsuits. They can also represent their interests in business and class action lawsuits.
