There are a lot of ways in which a business can find itself embroiled in litigation. Unfair and deceptive trade practices, product liability and breach of contract disputes are common. While these legal actions can threaten the financial well-being of a business, as well as its reputation and good will, consumers and employees can also be negatively impacted when a business fails to act in accordance with the law. This is why all parties to a business dispute should make sure that their interests are aggressively protected throughout the legal process.

This may be especially true when wage and hour claims arise. These types of legal actions often come to light when a business is accused of underpaying or misclassifying employees, thereby unfairly taking advantage of them. Many of biggest corporations have faced lawsuits dealing with unpaid overtime and misclassification of employees as subcontractors, but the truth of the matter is that these lawsuits are often quickly settled with very little harm caused to the business in question.

For small businesses, though, one of these lawsuits can be devastating. This is because settling one of these claims can be costly, leaving a business without the resources it needs to get by. Even if a business chooses to litigate these matters, the drawn out process can be expensive. This is why many small businesses that face wage and hour claims end up going bankrupt.

Of course, businesses aren’t the only ones affected by these legal issues. Employees can lose out on much needed and deserved wages. When employers fail to pay them what is owed, their very financial well-being can be on the line. They may end up losing their car or their house, and they may be unable to adequately provide for their children.

So, there is a lot at stake on both sides of a lawsuit involving disputes over wages and hours. Fortunately, many of these issues can be headed off by competent business planning and revisiting existing and ever-changing labor laws to ensure compliance.