9 Common Small Business Lawsuits

Opening a business means taking risks, which could include legal complications. When a company is open to the public with employees, there is a potential for litigation. For owners of small businesses, it is important to protect themselves and the company from these potential lawsuits. The following are nine common small business lawsuits that owners could face. If you would like to learn more about how to protect your small business, consider scheduling a consultation with an experienced business attorney at Von Rock Law by calling (866) 720-0195.

Employment Discrimination

According to the United States Equal Employment Opportunity Commission, under Title VII of the Civil Rights Act, employers cannot discriminate against employees based on sex, race, color, national origin, or religion. While the law only applies to those businesses with 15 or more employees, all small businesses should be aware of these laws. A company should not take any action that could be seen as discriminatory against a protected class of employees. There are 10 protected classes of workers in the United States in the following categories:

  • Age
  • Sex
  • Race
  • Religion
  • National origin
  • Pregnancy
  • Familial status
  • Disability
  • Military status
  • Genetic information


Harassment is another issue that small businesses should address in the workplace. While a small business may not be liable for employees’ actions, these companies should have the proper procedures and policies in place to help employees report any abusive behavior. However, encouraging reporting may not be enough to avoid a lawsuit. Most businesses should also draft a policy regarding disciplinary action against those who harass others in the workplace. Small business owners should ensure that managers and supervisors conduct themselves appropriately and that employees have the resources to report unwelcome or inappropriate behavior.

Wage and Hour Disputes

Small business owners often handle a wide range of responsibilities, including managing payroll. If employees are not paid their proper wages or if hours are improperly calculated, legal problems may arise. Federal and state laws mandate the minimum wage and provide guidelines for paying overtime rates. Some discrepancies can simply be the result of poor bookkeeping. However, some business owners may intentionally withhold wages from workers. Small businesses that do not pay employees properly may be subject to lawsuits and potential fines from the federal government. Therefore, small business owners will want to ensure that all employees are paid the correct wages.

The United States Department of Labor Wage and Hour Division provides the following tips to small business owners:

  • Pay all employees properly
  • Adhere to all state and federal requirements, especially if employing minors
  • Provide eligible workers with unpaid medical or family leave
  • Ensure that all workers know their wage and hour rights

Customer Discrimination

The first three common small business lawsuits concerned employees, but this type of litigation can be filed by customers. Federal laws protect private customers from discrimination from state-operated businesses. However, state laws also provide protection for individuals who may have been discriminated against by a company that is open to the public.

If a customer has been discriminated against due to being part of a protected class, he or she may be able to file a lawsuit against the small business. Business owners should, therefore, train all employees in proper customer service and be aware of all laws prohibiting discrimination. A knowledgeable business attorney from Von Rock Law may be able to help protect your business from these types of lawsuits.

Personal Injury

When a business opens its doors to the public, there is a chance of eventually facing a personal injury lawsuit. One common example of this type of litigation is the slip-and-fall lawsuit. A customer who falls on the property and suffers injuries may accuse the business of failing to alert customers of dangers on the property, which led to his or her injuries. Any company that is open to the public should ensure the safety of its customers. Business owners should, therefore, consider conducting routine inspections of the property. All issues must be addressed as soon as possible after the owner is made aware of the problem. Also, employees should know how to make the space safe for all customers.

COVID-19-Related Issues

As a result of the COVID-19 pandemic, there has been an increase in litigation against small businesses. Some customers and employees have filed lawsuits regarding potential COVID-19 exposure or retaliation claims over vaccine mandates. These lawsuits have led to many litigation questions involving small businesses and their responsibilities.

Breach of Contract

Small business owners can also find themselves at the center of contract disputes. Many companies rely on multiple contracts with vendors, customers, and others for their operations. All small businesses need to adhere to the terms outlined in those agreements to avoid the possibility of a lawsuit. Breaching a lease, selling substandard products, or making late payments can all lead to a lawsuit against the business.

Intellectual Property

Business owners will want to protect their intellectual property (IP) and prevent potential lawsuits. If the company has created a software concept or invention, for example, getting a patent for the product is essential. Additionally, business owners should be sure that their IP is not too similar to that of another company. Everything from using a trademarked name to creating similar products can leave a business vulnerable to legal issues with intellectual property. 

Disputes with Shareholders or Partners

Inner company turmoil does not only occur in large corporations. Small businesses can also face similar problems. Generally, smaller companies have a limited group of shareholders or partners who are vested in the decision-making processes. Because these are generally closer relationships, the smaller numbers can also lead to disputes. Small business owners must, therefore, adhere to all partnership terms to avoid potential lawsuits based on disputes.

Reach Out to an Experienced Business Attorney Today

These represent the most common small business lawsuits. Many businesses can stop or prevent litigation by taking a few precautionary steps. However, even with certain measures in place, a small business could still face lawsuits from various sources, including customers, employees, or partners. If you would like to learn more about protecting your small business against the possibility of litigation, consider contacting an experienced business attorney from Von Rock Law by calling (866) 720-0195 to schedule a consultation today.

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