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Law And Order

Reasons Why Family Businesses are Sued by Employees

Family owned and operated business continue to make up roughly 20% of all small business in America. While there are dozens of benefits to working alongside family, there are an equal number of unique struggles these companies face. One of the less common challenges a family owned business can face is a lawsuit from one of its employees. 

It might sound crazy, one family member suing another, but it happens to plenty of businesses. That isn’t the only way these organizations find themselves in a lawsuit, though. Here are a few reasons why employees might decide to sue. 

Family and Non-Family

If the business is small enough, it might be able to operate with the help of family alone. For most, however, additional staff is required to fill in the gaps. Assistants, waiters, cashiers and more are often hired to keep things afloat. Keep in mind that a small business is any with less than 500 employees, which means hired help is often a vital component of these companies. 

These individuals might be seasonal, part-time, or full-time. When the business experiences financial difficulties, these employees are often the first to be laid off. This can lead to wrongful termination lawsuits, which can quickly dismantle any small business. 

Family Issues

A family is made up of several unique individuals, all of whom have their own personalities and drawbacks. While it’s easy to place someone who is less than adequate at finances in another role, avoiding issues like harassment or offensive language become a challenge.

Family members often find it hard to discipline one another. This can lead to sexual harassment, racial slurs, and other forms of discrimination left unchecked. It’s vital that every member of the family works to prevent these issues and immediately remedy any situation they discover. 

The Boss

While the business might be family owned and operated, there’s almost always one relative who takes on the roll of the head boss. It’s a solid strategy, but it can also cause the organization’s structure to fall apart at the seams. 

What can relatives do when their father or mother is the wrongdoer? Handling this delicate situation is often so challenging that family members either ignore the behavior or pressure employees to drop any complaints in order to keep the business out of legal trouble. 

Reasons and Protection

Discrimination, sexual harassment, wrongful termination, and violations of privacy are the top reasons employees sue family owned businesses. It isn’t just outside employees, either. Family members often sue their relatives when relationships or the business turns sour. 

Picking up Employment Practices Liability Insurance (EPLI) is highly recommended to cover lawsuits from workplace accidents, but you need a family law attorney to handle the types of cases above. This is especially true when handling an out-of-family lawsuit.

For the in-family variety, your attorney might be able to mitigate the situation before it ever reaches court. This is ideal for the family business, helping mend relationships and saving the family a financial headache. However, it isn’t always a possibility. 

Adam is a content marketer, gym rat, husband, father and entrepreneur.

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