Why Employees Sue: The Top 10 Legal Pitfalls for Employers

Employment lawsuits rarely stem from a single, dramatic event. More often, they grow from overlooked details, inconsistent enforcement, and poor communication. When an organization handles a workplace issue carelessly, employees fill the gaps with their own assumptions — and those assumptions frequently lead to a courtroom.

Drawing on insights shared by labor and employment attorney Mario Bordogna at a SHRM26 session in Orlando, these 10 patterns frequently land employers in court:

• Performance review sabotage: A manager tolerates poor performance for months, then moves to terminate. When the file shows only “exemplary” reviews, the firing looks suspicious and invites a discrimination claim. Now more than ever, employees want to know where they stand and how to further their careers.
• Inadequate separation reasons: Bordogna, a partner at Bowles Rice LLP in the Pittsburgh area who assists employers across the United States, called this mistake one of “playing hide the ball.” Letting an at-will employee go without any explanation gives the worker room to invent one, often assuming retaliation or bias.
• Insufficient interactive accommodation processes: Brushing aside a disability accommodation request, rather than discussing it thoroughly, can lead to Americans with Disabilities Act (ADA) claims.
• Poor investigation practices: Delaying, rushing, or skipping an investigation into a complaint tells employees their concerns do not matter and erodes trust across the organization.
• Untrained or poorly performing managers: Supervisors who misunderstand the law drive employees out or fumble compliance requests, exposing the company to liability.

Toolkit: Empower Managers With Strategies and Tools for Growth

• Wage and hour compliance errors: Sloppy time tracking, miscalculated regular rates of pay, and misapplied exemptions fuel costly wage claims.
• Failure to follow company policies: A thorough handbook means little when one worker faces discipline for a violation and another walks free.
• Misclassification of employees as contractors: Engaging a worker as a contractor while controlling their work like an employee violates the Fair Labor Standards Act.
• Neglecting leave alternatives: Terminating an employee the moment their Family and Medical Leave Act leave runs out ignores that added leave can be a reasonable ADA accommodation.
• Maintaining an unhealthy work environment: Allowing bullying and incivility to fester builds gateways to conduct that genuinely breaks the law.

“When this stuff happens, it creates trickle-down effects too for optics — other employees hearing about it and thinking that you’re not conducting your process,” Bordogna said. “In the end, that’s the issue — that whatever action you took as a consequence of your partial or incomplete investigation is not deemed credible. Basically, what it boils down to is if this comes forward in litigation, you’re either looked at as an employer that’s incompetent or doesn’t care — and neither one of those are good, so what’s the solution?”

Toolkit: Termination Best Practices

Preventive Solutions

How can you protect your organization from these costly outcomes? Structured, proactive habits offer the strongest defense.

Build a respectful culture by setting a top-down standard of zero tolerance for harassment, with clear reporting channels for in-person and virtual teams alike. Strong compliance is not a one-time project. It is a daily practice that protects your people and your bottom line.

"When your managers are misstepping in the areas where they have leaves, it can come and bite you in multiple ways,” Bordogna said. “Flipping the script starts with thinking about this differently. Think about the authority your managers are given. If it's something better centralized in your resources, you might be able to nip and tuck some ways that lessen your risk."

Employers can strengthen compliance and workplace decision-making by focusing on the following actions:

• Document consistently: Make written evidence of poor performance a prerequisite for any termination.
• Memorialize separation reasons: Put the honest reason for a termination in writing so employees cannot fill the gap themselves.
• Use accommodation checklists: Standardize the interactive process and keep job descriptions accurate and current.
• Standardize investigations: Identify trained investigators in advance, follow clear steps, and close the loop with whoever filed the complaint.
• Track hours and pay carefully: Get the basics right on the regular rate of pay and record every working hour.
• Enforce policies evenly: Update handbooks as laws change and review the relevant policy before disciplining anyone.
• Invest in manager training: Coach supervisors on the essentials, centralize HR decision-making, and remind them of personal liability. “You have a hammer, and maybe you have to remind them about the fact that they have liability risk too because under many employment statutes, they can be sued individually and held responsible individually for damages,” Bordogna said.
• Audit classifications regularly: Track current U.S. Department of Labor guidance and reassess contractor relationships often.

How-To Guide: How to Conduct a Workplace Investigation