The claims employers face most often, from unpaid overtime to retaliation, and the everyday practices that prevent most of them.
Large companies have HR departments and lawyers. Small businesses usually have an owner, a couple of managers and a payroll provider. That makes simple mistakes more likely: an employee paid a flat salary who should get overtime, a manager who fires someone a week after they complained, or a timecard edited without a record. Many of these claims are expensive even when the employer wins, because of legal fees and time.
To record clock-ins, breaks and overtime automatically, see EZTime time and attendance software.
This guide covers the most common types of claims and the practical steps that prevent them. It is not a substitute for legal advice when a dispute arises.
Wage and hour claims are among the most common lawsuits against employers with hourly staff, and they are often brought as collective or class actions on behalf of many employees at once. Typical issues include:
Prevention: record all hours worked, pay for every minute of work, keep an audit trail of time edits, and review classifications. Our guide to protecting your business from wage and hour claims goes deeper.
Federal law prohibits discrimination based on race, color, religion, sex (including pregnancy, sexual orientation and gender identity), national origin, age (40 and older), disability and genetic information, generally for employers with 15 or more employees (20 for age). Many state and local laws cover smaller employers and add protected characteristics.
Prevention: use job-related criteria for hiring, scheduling, pay and promotions; write down the reasons for decisions; and train managers. Our glossary covers age discrimination, disability discrimination and racial discrimination.
Harassment claims arise when unwelcome conduct based on a protected characteristic is severe or pervasive enough to create a hostile work environment, or when a job benefit depends on submitting to it. Employers can be responsible for harassment by supervisors, coworkers and sometimes customers if they knew or should have known and did not act.
Prevention: a clear written policy with more than one way to report, prompt and fair investigations, and training. Several states require sexual harassment training. See workplace investigations.
Retaliation means punishing an employee for a protected activity: complaining about discrimination or harassment, reporting a safety issue, filing a wage claim, taking protected leave, or participating in an investigation. A retaliation claim can succeed even when the original complaint does not. It is the claim most often linked to manager behavior: cutting someone’s hours, moving them to worse shifts or disciplining them soon after a complaint.
Prevention: train managers to recognize protected activity, review any adverse action against someone who recently complained, and keep the reasons for decisions documented and consistent. See adverse action.
Most U.S. employment is at-will, but terminations can still be unlawful when they are discriminatory, retaliatory, breach a contract or violate public policy, such as firing someone for jury duty. Our guide to at-will employment exceptions explains the main ones.
Prevention: follow a progressive discipline policy where possible, document performance problems as they happen, and make sure the reason given for termination matches the record.
Claims arise when employers deny or interfere with FMLA leave, count protected leave against attendance, fail to accommodate a disability, pregnancy-related limitation or religious practice, or refuse to reinstate someone after leave. State paid sick leave and family leave laws add more rules.
Prevention: train managers to route leave and accommodation requests to one person, respond in writing, have an interactive conversation about accommodations and keep protected absences out of attendance points.
| Claim | What it is about |
|---|---|
| Negligent hiring or retention | Harm caused by an employee the employer should have known was dangerous |
| Privacy and biometrics | Collecting fingerprints or face scans without consent, especially under laws such as Illinois’s Biometric Information Privacy Act |
| Whistleblower claims | Retaliation for reporting suspected legal violations |
| Equal pay | Paying men and women differently for substantially equal work |
| Labor law | Disciplining employees for discussing pay or working conditions together |
| Workers’ compensation retaliation | Punishing an employee for filing a workplace injury claim |
EZTime records every clock-in, clock-out and break, keeps an audit trail of timecard corrections and sends labor rule alerts before overtime or rest limits are crossed. Signed policies and acknowledgments are stored in each digital employee file, and time off requests leave a clear record of what was asked and approved. Those records are often what decides a wage and hour dispute.
For employers with hourly workers, wage and hour claims are among the most common, and retaliation has been the most frequently alleged basis in EEOC charges for years.
Yes. At-will employment does not protect a termination that is discriminatory, retaliatory or otherwise unlawful.
Under the FLSA, generally two years, or three for willful violations. Many states allow longer.
It is not required, but many small employers buy employment practices liability insurance to cover defense costs.
Accurate time records, signed policies, documented discipline and the reasons for employment decisions.
EZTime keeps hours, breaks and corrections on record with a full audit trail. For a team of 15, EZTime starts at about $30 a month ($2 per employee).