How To Resolve Employee Disputes Legally

By John Devendorf, Esq. | Reviewed by Canaan Suitt, J.D. | Last updated on August 5, 2025

Employee disputes are a part of almost all workplaces. Even well-functioning businesses have employees who are unhappy with the company, supervisors, or coworkers. Resolving employee disputes quickly helps prevent problems from escalating into costly legal disputes.

This article provides an overview of employee conflict resolution and strategies to resolve disputes quickly, effectively, and legally. If your company is dealing with employees or coworkers who cannot resolve issues on their own, talk to an employment law attorney for legal advice.

Common Causes of Employee Disputes

Employee disputes can involve disagreements with their employer, supervisors, or other co-workers. Disputes may involve personal issues, like a coworker’s hygiene, but can also concern more serious legal issues, like sexual harassment claims.

Employment disputes can involve:

    • Overtime pay and wage disputes
    • Employment discrimination
    • Wrongful termination and severance agreements
    • Harassment and or hostile work environment
    • Breach of employment contract

    Unresolved workplace conflicts can be time-consuming, stressful, and hurt employee morale. In some cases, disgruntled employees may take legal action.

    When facing a lawsuit, employers must defend against the legal claims or settle. If the employer is found liable, damages can include the employee’s lost income and benefits, emotional distress, and legal fees.

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    Some of the most costly legal disputes involve discrimination and sexual harassment claims. Under Title VII of the Civil Rights Act of 1964, employers cannot take adverse action against workers based on protected classes, including race, color, sex (including sexual orientation and gender identity), and national origin.

    Employees who think they are treated differently by their employer based on a protected class can take legal action. Employees (and former employees) can file a complaint with the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC investigates claims and tries to resolve disputes with the employer. The EEOC or the employee can also file a civil lawsuit against the employer.

    If an employee reports discrimination or harassment, employers must take those claims seriously. Investigate any alleged discrimination and take corrective action. Ignoring harassment complaints can expose the employer to financial penalties and litigation.

    Dispute Resolution Process and Procedures

    There are several effective methods for resolving workplace conflicts. For example, arbitration and mediation are types of alternative dispute resolution (ADR) that can resolve disputes without going to court or more formal legal proceedings.

    • Mediation. The parties work with a neutral third-party mediator who helps them talk through their issues and come up with a solution. A mediator doesn’t make a decision for the parties, but facilitates a settlement.
    • Arbitration. Involves a third-party arbitrator or panel of arbitrators. Both parties present their case to the arbitrator, who makes a binding decision to resolve the dispute. Arbitration is less formal than going before a judge and is not bound by laws, statutes, or court rules. However, arbitration is generally more formal and takes longer compared to mediation.

    Company policies should clearly outline the dispute resolution process. When employers have company policies to address conflicts, employees can expect fair treatment and a chance to be heard.

    Employers can take steps to address potential conflict before issues arise. An audit of your company’s dispute resolution procedures can identify inconsistencies, gaps, and areas of improvement. Employers can also survey employees to ask about understanding and effectiveness of how the company handles conflicts.

    It’s best practice to always document conversations, emails, meetings, and disciplinary action regarding employees. Documenting events and outcomes helps with tracking, monitoring, and the employees’ assurances. This information is also helpful if the employee later takes legal action.

    An employment lawyer with experience in worker disputes can provide legal advice about your company’s conflict resolution process. An attorney can review your grievance procedures and company policies to make sure you follow best practices. An attorney can also mediate disputes.

    If an employee takes legal action, an attorney can provide legal advice about your options. An attorney can negotiate to resolve the legal claim or represent your company in court. For more information about how to resolve employee disputes legally, contact an employment law attorney.

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