Why Do Small Businesses Get Sued?

lawyer in his desk

Small business owners are so busy that it’s hard to think about getting sued. Between raising brand awareness, improving marketing strategies, developing new products, and managing employees and business operations, facing a lawsuit is the last thing in your mind. This might come as a bit of surprise for some but getting sued is actually more common in small businesses than you think. This 2020, the Small Business Administration said that more than 53% of small businesses are involved in at least one lawsuit.

Do not underestimate the possibility of a lawsuit. Don’t think you’ll never face a wrongful death lawyer in court. A lot of things can happen in a business. An employee may get seriously injured which can lead to his death. Another employee can harass a co-worker. Someone may feel discriminated by your human resource department. There are far too many issues within an organization for you to think you’re above all these things.

Health and Safety

The Occupational Safety and Health Administration have specific guidelines to keep the employees safe in the workplace. Whether you’re in the construction or medical industry or whether your employees are simply inside an office building, regulations must be followed. While a majority of small businesses comply with these rules, there are a handful of small business owners who do not prioritize safety measures in the workplace. This can lead to lawsuits either filed by the state or by your employees.

Harassment, Discrimination, and Abuse of Power

It is not the owner who often gets dragged into a harassment case at work. Since you rarely spend time in the office or the store, you may have overlooked some office politics and relationships. That’s why it’s important to keep your people in check. You have to make sure everyone understands their roles in an organization. They must realize that the power you give them to run the business does not give them the right to trample on other people.

Your business can get in hot water if your managers, supervisors, and even rank-and-file employees are slapped with harassment lawsuit at work. Even though your organization has no direct culpability to the case, its reputation may suffer. Make sure that everyone understands the policies you follow regarding harassment, discrimination, and abuse. If your small business is to thrive, these things have no place in your organization.


Are you sure you’re up to speed with the changes in labor laws? Are you providing enough rest for your employees? If you’re not paying for their overtime work, you could be facing a huge lawsuit. Make sure that every contract is following the labor laws to a T. If the law said that each employee must get 24 hours of rest a week, then make sure that this is followed. An employee is also entitled to a break in an eight-hour shift. Is everyone taking breaks? Ensure that these things are being complied with.


Modern consumers are quite savvy. They know their rights. You cannot deny them the right of returning or exchanging the goods they bought from your store. They can’t be fooled by false advertisements, too. They want to get what you advertised. You can’t talk your way out of it. Trying to argue with consumers is futile because you can get caught in a lawsuit because of the way your ads are cleverly composed.

So don’t try to be smart with your consumers. They are certainly smarter now. They understand their power over small businesses. When promoting a product, you should be 100% true in your advertisements.

Tax Returns

Talking to a lawyer

If there’s money involved, trust that the Internal Revenue Service would want to know about it. Be careful with your taxes. If you are going to hire an accountant to file your income tax and business tax, make sure you can trust this accountant. Try to know as much as you can about the process. You should still double-check everything. With tax evasion cases, you’re not only facing fees but possible imprisonment. You can never be complacent with taxes.

Copyright and Patent

You cannot copy a business idea, product, or even a strategy. These could all be patented and copyrighted. If you see something in print or someone selling a product, always assume that it is protected by law. You cannot simply copy it and expect to earn a lot of money from it. Before launching any business idea or product, research first if these are protected and copyrighted.

If you want to limit your risk of getting sued, always have a lawyer that you can consult with. A lawyer can guide you in drafting contracts and before entering any partnerships or agreements. You should also keep a close eye on your business. Even a well-oiled machine can break down once you neglect it.