Even the most well-intentioned managers can stumble into legal trouble without realizing it. We’re not talking about massive, obvious mistakes here—but rather the small, casual oversights that can quietly snowball into serious problems.
Consider this number: 522,000. That’s how many employee inquiries and complaints were filed with the Equal Employment Opportunity Commission (EEOC) in a single year. Most of these cases likely began with a simple interaction, a small decision, or a minor misstep at the manager level.
As one saying goes: “A casual oversight can snowball.” What may seem like an offhand comment or a rushed decision can quickly escalate into a formal complaint, an investigation, or even a lawsuit. And the costs are staggering—the average damages for a single discrimination lawsuit can reach half a million dollars. For a small business, that’s potentially devastating. For larger organizations, it’s still a serious financial and reputational blow.
So where do these hidden risks actually lurk?
Managers communicate constantly—both in writing and in speech. But even well-meaning words can backfire.
Take performance reviews, for example. A manager might write a friendly, encouraging comment in an evaluation. Later, if that employee’s performance declines and they’re terminated, that vague positive note can become exhibit A in a lawsuit, contradicting the official reason for dismissal.
To avoid this trap, managers should follow three crucial rules:
Equally important are the words spoken out loud. A simple assumption—such as not offering a demanding project to a parent with young children—can cross the line into discrimination. Even with good intentions, those decisions expose the company to risk.
One of the fastest ways to escalate a situation is to ignore an employee’s complaint or request.
Here’s a surprising fact: the number one charge filed with the EEOC isn’t for discrimination itself—it’s for retaliation. Over half of all charges include it. This means that even if the initial complaint had no merit, mishandling the response can still lead to liability.
Retaliation often hides in subtle changes, not obvious punishments. For example:
These shifts may feel small, but if they’re tied to an employee speaking up, they can be considered illegal retaliation.
The law also requires active engagement. Under the Americans with Disabilities Act (ADA), managers must participate in an interactive process when employees request accommodations. Simply saying “yes” or “no” isn’t enough—managers must engage in a genuine discussion to find solutions.
The nuts and bolts of employment—wages, schedules, and workplace safety—are ripe for compliance risks.
One common mistake is misclassifying employees as exempt or non-exempt. Non-exempt employees must be paid overtime for hours worked beyond 40 in a week. If this rule is ignored—even for “just a few emails after hours”—the company could owe years of back pay.
The Department of Labor issues about $2.5 million in penalties every year for misclassification, not including the wages that must be repaid.
Safety is another critical area. Managers are the frontline guardians of workplace safety. Failing to explain equipment properly, overlooking hazards, or relaxing safety rules can result in injuries, OSHA fines, and major liability.
Avoiding these pitfalls isn’t about dodging one-off mistakes. It requires building a systemic defense—a culture of compliance.
That means:
It is far cheaper—and far more effective—to prevent legal issues through culture and training than to fight lawsuits and penalties after the fact.
So here’s the question every organization should ask:
Is your workplace culture a safety net that catches issues early—or a minefield where hidden risks are waiting to explode?
The answer can make all the difference.