What Are the Most Common Employer-Employee Disputes?

Running a business means managing people, not just products or services. Even well-run companies with good intentions can find themselves in disputes with employees. Many business owners are surprised by how quickly a disagreement or negotiation over pay, performance, or termination can turn into a legal problem.

Understanding the most common employer-employee disputes is an important step in protecting your company and reducing your risk. Below is a straightforward overview of the issues that come up most often. If you need to know how Illinois law applies and what you can do in your case, call our Naperville business attorney right away. We also offer outsourced general counsel services for small businesses that need legal help in 2026. 

Why Employer-Employee Disputes Are So Common

Employment relationships come with expectations on both sides. Employees expect fair pay, safe working conditions, and equal treatment. Employers expect employees to follow policies, perform their jobs, and protect company interests.

Problems start when expectations are unclear or poorly documented. According to the U.S. Equal Employment Opportunity Commission, more than 81,000 workplace discrimination charges were filed nationwide in the most recent data year alone. Wage and hour disputes remain one of the most common types of employment claims across the country, particularly with overtime classification.

Illinois employers face additional obligations under state law, which can differ from federal standards. Failing to comply, even accidentally, can expose a business to lawsuits and audits. 

What Are the Most Common Employer-Employee Disputes?

While every workplace is different, certain categories of disputes appear again and again. Business owners should be especially familiar with these areas.

The most common employer-employee disputes include:

• Wage and overtime disputes
• Employment contract and restrictive covenant disputes
• Discrimination claims
• Sexual harassment and hostile work environment claims
• Retaliation and whistleblower complaints

Understanding each category can help employers spot risks early and respond when they need to.

Wage and Overtime Disputes Under Illinois Law

Disagreements over pay are among the most frequent employment disputes. Employees may claim they were not paid for all hours worked, were denied overtime, or were misclassified as exempt from overtime requirements.

In Illinois, employers must comply with both federal law and the Illinois Minimum Wage Law. Illinois has adopted higher minimum wage standards than the federal government. In 2026, the minimum wage is $15 with scheduled future increases that will affect budgeting and payroll. The Illinois Wage Payment and Collection Act also requires employers to pay earned wages and final compensation in a timely manner.

Common wage disputes involve unpaid overtime, off-the-clock work, improper deductions, and disagreements over bonuses or commissions. Even small payroll errors can lead to claims for back pay, penalties, and attorneys’ fees.

Employment Contracts and Restrictive Covenants

Disputes over employment contracts are another common issue. These disputes often involve non-compete agreements, non-solicitation clauses, and confidentiality clauses.

Illinois law has placed clear limits on non-compete agreements. Under the Illinois Freedom to Work Act, non-compete clauses are generally unenforceable for employees earning below certain income thresholds, and employers must meet specific notice requirements before enforcing these agreements.

Employers may also face disputes when employees claim their termination violated contractual promises, or when former employees allegedly breach confidentiality or non-disclosure obligations. These cases often turn on the exact language of the contract and whether it complies with current Illinois law.

Workplace Discrimination Claims

Discrimination claims can arise at any stage of employment, including hiring, promotion, discipline, and termination. Employees may allege discrimination based on protected characteristics such as age, disability, race, sex, religion, or sexual orientation.

Illinois employers must comply with the Illinois Human Rights Act, which often provides broader protections than federal law. For example, Illinois law applies to smaller employers than some federal statutes and covers additional protected categories.

Even when an employer believes decisions were based on performance or business needs, lack of documentation or inconsistent treatment can make defending these claims more difficult.

Sexual Harassment and Hostile Work Environment Claims

Sexual harassment cases often involve allegations that an employer failed to prevent or address inappropriate behavior by supervisors or coworkers.

Illinois law requires employers to take reasonable steps to prevent harassment and respond promptly when complaints are made. The Workplace Transparency Act expanded employer obligations, including training requirements and reporting rules.

Claims may involve quid pro quo harassment, where job benefits are tied to sexual conduct, or hostile work environment allegations based on repeated or severe behavior. Retaliation against employees who report harassment is also prohibited and frequently alleged.

Retaliation and Whistleblower Disputes

Employees may claim they were punished for reporting misconduct, safety violations, or legal violations. Retaliation claims are often paired with other employment claims and can be easier for employees to prove.

Illinois has specific whistleblower protections that prohibit employers from retaliating against employees who disclose illegal activity or refuse to participate in unlawful conduct. Retaliation claims can involve termination, demotion, reduced hours, or other adverse actions.

Because retaliation claims focus on timing and employer motive, careful documentation and consistent enforcement of policies are critical.

How Can Employers Resolve Employee Disputes?

When disputes arise, employers have several options depending on the seriousness of the claim and the business’s goals.

Internal Resolution

Some disputes can be resolved internally through clear policies, prompt investigation, and corrective action. Others require negotiation, mediation, or formal legal proceedings.

Litigation 

Litigation may be necessary when employees file lawsuits or administrative charges. While litigation can be time-consuming and expensive, it may be unavoidable. Cases in which an employer believes an employee is objectively wrong, or when there is not adequate precedent, sometimes require litigation. 

Alternative Dispute Resolution

Alternative dispute resolution, such as mediation or arbitration, can offer a more efficient path in some cases. Mediation allows both sides to discuss the dispute with a neutral third party, while arbitration involves a binding decision outside of court.

An experienced business attorney can help employers evaluate the best approach based on risk, cost, and long-term impact.

Call a Naperville, IL Business Law Attorney 

Employer-employee disputes expose businesses to significant risk. Understanding Illinois employment laws and acting with wisdom and legal caution will help your business succeed in the long term.At Gierach Law Firm, we work with business owners to protect their interests in employment disputes. If your business is facing an employee dispute or you want guidance on reducing risk, call Gierach Law Firm at 630-756-1160. Speak with a Naperville business law attorney about your situation before it gets out of hand.