Here is the transcript from Sound Business Insights Podcast Episode 28 – Common Employer Disputes and Defenses:
Dan
Welcome to Sound Business Insights. I’m Dan Watkins. This episode is about common employer disputes and defenses. This podcast is not intended to provide legal advice.
Neil
Dan, today’s discussion is going to be about the types of disputes that employers get into and some of the strategies and defenses that we provide for them. Can you tell us a little bit about what it’s like to be an employer in California these days?
Dan
Every year it gets harder. They come up with new laws, new issues, new matters, and then the courts rule on them one way or the other. And these employees are more educated. They read this stuff, they’re constantly bombarded with sales pitches from lawyers. So they’re watching everything you do when you hire somebody all across the nation and especially in California.
Neil
And what do you think the risk of disputes are for employers today versus even 10 years ago?
Dan
Twofold.
Neil
Wow.
Dan
There’s a whole industry. It’s doubled. There are class actions, PAGA wasn’t even heard of in 20 years ago. And now every seminar you hear about is on PAGA defense. There’s sexual harassment, used to be the young, the big game in town. And now you’ve got to check your paycheck stubs to make sure that they’re not spelled wrong or there’s a missed decibel point, or you’re going to get a class action lawsuit filed against you in, in a multitude of ways. So.
Neil
So what are the most common types of disputes that we see our employers getting into?
Dan
Well, obviously we have wage and hour disputes. Those are big. They’re everywhere. They’re big in California, they’re big nationally. In fact, the United States Supreme Court yesterday just ruled in favor of the employee again,
Neil
<laugh>. What are some of the others that are heavy hitters these days?
Dan
Well, wage and hour and overtime are similar, but PAGA, a private attorney general claim against the employer is a really heating up. There are law firms that just do that and they send out constant communications to every area of employee you can imagine. And if anyone’s thinking about leaving your employment, they’re going to be tempted to get a little severance, pay involuntary and then misclassification of independent contractors. California keeps changing the law and the courts keep changing their interpretation of the California law. So yes, they do really hard to stay on top of that. Sexual harassment is always a scary thing because you can get sued for sexual harassment and lose, even though no one was actually harassed because you didn’t investigate it. Right. That’s a separate cause of action. Failing to investigate it according to the law, even if your investigation finds out that it was a false claim, which seems terrible, but it’s true. And then discrimination claims are always there. Retaliation again for somebody making a false claim. If you retaliate against them for lying about you and suing and lying about you, you’re still liable for retaliating against a liar. Again, terrible but true. And then general wrongful termination, how people are terminated and whether or not you comply, you can get stuck with 60 days of pay that you inadvertently didn’t know about.
Neil
And even if you do everything right, that’s still a risk. So let’s kind of break these apart one at a time and talk about these disputes from a wage and hour dispute in unpaid overtime. What are the typical types of issues that you’re facing and what are the, some of the better defenses that we can employ?
Dan
Well, the typical type of cases we see are when people aren’t allowed to have breaks. Well, let’s break it down. Let’s break it down to the way I look at it. Great. I break it down into claims where you’re going to get hit with attorney’s fees versus claims where there’s no attorney’s fees allowed.
Neil
That’s really important, Dan.
Dan
Yes it is. Because the ones where you can get stuck for attorney’s fees are the ones you’re likely going to see in a lawsuit or a claim against you because the lawyers rarely go after the ones that are only break time. Right. Or only mischaracterization of how they write the paycheck. Right. Of if it’s not something with an attorney’s fees clause, you’re not going to see it. So let’s, let’s talk about attorney’s fees clause perfect overtime. You can’t stiff people for overtime and you can’t inadvertently stiff people for overtime. How does that happen? Well, you have an agreement with somebody. You tell them, and this is a great topic because the US Supreme Court just came back in Helix Oil rigging and they said, believe it or not, this conservative court said that this $200,000 a year oil worker who had an agreement that he was an highly paid individual who doesn’t qualify for overtime, he sued anyways saying that he should have gotten overtime and he took it all the way to Supreme Court five seven year battle.
Dan
And they said no, this $200,000 year guy should get more and he should get all his overtime even though it was an agreement going in. The lawyers all agreed, everyone looked at it and they wrote it up in a way where he could be deemed not in compliance with the exceptions to overtime. Mm-hmm. On a federal basis. So now it’s called day worker pay. You pay your executives based on day worker, you should have a a lawyer read this decision and advise you on how you describe your pay with your highly compensated employees and your not so highly compensated employees. You should know what you’re doing when you hire the employees so you don’t get sued
Neil
And, in a wage and hour dispute, what is the remedy other than attorney’s fees?
Dan
Well wage in our dispute the remedy for us fix the wage in our problem if there is one. And we do that rather quickly because we get so many of them every day. So you are the plaintiff’s lawyer, you’re suing my client. Well the minute my client knows something, he’s going to tell me. I’m going to look at whatever he or she may have been doing, I’m going to fix it. It’s usually like the remedy is a fix the way the paycheck’s written or calculated or the breaks or whatever, I’ll fix it. Pay the employee the extra $500 before the lawyer can file a lawsuit. And so if there’s no breach at the time of the lawsuit, there’s no attorney’s fees and your case goes away
Neil
And he has no incentive to bring it.
Dan
Correct.
Neil
Right. Which goes back to another thing you often say, Dan, I hear it coming out of your mouth all the time, is that if employers would just call you the minute they’re aware of an issue, there’s so much more we can do to help him.
Dan
Correct. Even after you’ve been sued, like in a class action, there’s a case called pickup sticks. Now pickup sticks is odd because it’s actually the name of a restaurant. Yes. And they were the defendant in the action. And it’s kind of funny that their name also is been codified with a defense. Meaning pick up any members of the class and settle with them in a correct fashion. And you can take all the wind out of the sails of a class action. But if you do it wrong then it could be determined to be retaliation.
Neil
Yes.
Dan
So, but if you get there early with your lawyer on a pocket con case and they can look at all the things you’ve done and you’ve been accused of doing and they can say, well to remedy these problems with these people will cost a fraction of what it would cost just to defend it. They can jump on it, use pickup sticks, case law and other cases interpreting that to get your case resolved before you spend hundreds of thousands of dollars in attorney’s
Neil
Fees due to a class action. And if you lose then you have their attorney’s fees on top of that.
Dan
Oh yeah, exactly. Plus you got to pay penalties on top of the remedies. Uh, it’s a fraction of the cost to have a lawyer who’s up to speed on getting these things solved and out of your life as fast as
Neil
Possible. So call the Watkins Firm, get it fixed. That’s the fastest, cheapest way out of these things. Correct. Generally
Dan
Speaking and, and if you go to another law firm and they’re not saying, this is how we can end this quickly, then you’re in for a long, hard, painful, expensive battle
Neil
Or you’re in the wrong place.
Dan
Right.
Neil
So let’s shift the conversation down to the national stuff. Family medical leave, Americans with Disabilities Act. There’s some very finite rules that have to be followed and this is a big area where employees trying to literally take advantage. What are those cases like and what are some of the details that are important for employers?
Dan
It comes up so much and it kind of goes back to your employee manual. If you have an up to date employee manual, then the people working for you can go to that and see the correct interpretation of the law that’s been stated to the employees and to your staff enforcing those rules. Because most of these cases come along when you have administrative staff enforcing a year old, a two-year-old policy and getting you in trouble, although they’re just following what you have in place. All those rules change. Every year we send out notices to all our clients, try to keep them up to speed and we update their employee manuals on a regular basis.
Neil
Very good. Sexual harassment and discrimination kind of go together their accusations of what most society would consider to be some sort of foul behavior. A lot of these cases don’t have any teeth dam, but they sure sound horrible when they’re coming in the door. Can you talk a little bit about that?
Dan
Well, sexual harassment is a form of discrimination and it just has the sexual part into it.
Neil
Right.
Dan
According to the law, you’re sexually harassing them because of their gender, which is discrimination. Be that it may, there’s a different defense to discrimination as there is for sexual harassment. And we’ve won so many defense cases on sexual harassment because we look at them in a very unique fashion. We can identify witnesses and evidence in a matter that is not taught in the journals. It’s learned over 30 years of winning these cases by going a different route and then closing off the opportunity for the plaintiffs to win these cases because they’re full of crap.
Neil
Dan, can you give us an example of how these cases go and maybe at egregious time when you thought, ah, that employers cooked or there’s no way this is going to stick.
Dan
Yeah. Well I learned at a young age, <laugh> back in the early nineties how to defend these cases. And that was that women are people and that women look at each other like people and that men, the male attorneys, the male judges, the male sexual harassers, for some reason they don’t and they don’t get it. But when you get a jury filled with women watching another woman describe what happened to her, they’re not always going to be sympathetic. They’re going to spot the BS better than the men do. And so if you know that and you also approach it like as opposed to what everyone wants to do, uh, he said something dirty to my client and that’s the end of the case. Did you say it? Yes. They think the case is over, it’s not over. Did she laugh <laugh>? Does she talk dirty all the time?
Dan
Was she offended? What kind of things does she do? What kind of clothes does she wear? All those kinds of things are really difficult to get into evidence. But you can, if you know what you’re doing, if you know the exceptions to the evidence code and you know the discovery rules, there’s special discovery statutes that we’ve been using for years that most lawyers don’t know about. Mm-hmm <affirmative> that you can actually, normally you cannot ask somebody about their past relationships period. It’s the rape shield doctrine. Right. That applies from criminal law all the way to civil law. But if you are have a lawyer that knows these defenses and knows how to approach questions to people that walk the line, you’re going to win almost all your cases.
Neil
So if you’ve ever been in a case where you’re thinking, ah, if the other attorney just does this, we’re cooked.
Dan
Yeah, I did a plaintiff case once, I don’t do them, but it was for a client who knew this person a relative or a friend or whatever. And so I had this case and I told the client I go, we’re not going to win because their lawyer said, know what I know and they’re going to ask these questions about how truly this and that and how you should have reacted. And they never did. So a case that we would’ve settled for $75,000 and there were egregious things that happened from a objective point of view. Mm-hmm. <affirmative>. But subjectively, if you look at the whole picture, it was a $75,000 case at best they end up taking this case and fighting it on the facts of did this manager do this? Did he do that? Did he say this? And they never went towards the area where I always go <laugh> at my client. They never really went there. No. Of course I objected and did all the things that lawyers do, but they never really knew the law and they ended up paying, having their client pay almost a million dollars. Wow. Yeah. Because they never ever went to the evidence that would’ve won the case for him. So,
Neil
And you’ve had several cases where our clients have told you, Dan, I did it or Dan I’m cooked. This is …
Dan
All of them!
Neil
…I can’t defend (what I did). And what is the outcome in these cases? All of them?
Dan
All of them. All of them! I love the fact they come in, I go, just tell me the truth. Say it all because I’m not, I don’t care whether you did it
Neil
Right. I’m not here to judge you
Dan
And then I love the conversation we have after the jury comes back and says, we’re fine for the defense. Yeah. And they’re like, how did that happen? Because we weren’t focusing on what our managers did or what was said. We were focusing on how the plaintiffs reacted and how their lawyers had them overreact.
Neil
Yes.
Dan
Which is terrible.
Neil
Yep.
Dan
Terrible that they, they have them all dressed in house in the prairie outfits walking in there like they’re completely different people. They dress them up like somebody they’re really not. And they destroy their own case. And then we tell our clients, don’t settle for this much. Bring your price down because they’re messing up their case. Yep. And you know, most cases settle and they settle low because they do that.
Neil
And juries are amazing things, aren’t they?
Dan
Well they spot the BS that US lawyers who get all focused on our law and our lives can’t see They’re real people. They spot what real people are doing and they’re better judged than judges and attorneys.
Neil
Great. The last two buckets stand that are kind of retaliation, it’s a natural human emotion that if somebody, especially if you’ve been falsely accused of something, there’s a reaction that just wells up in you. But then there are so many times where this area of the law is abused. So can you talk to me a little bit about retaliation cases and the kind of things that you, you shouldn’t do and then the types of ways to defend when you’re accused of it.
Dan
Wrongful terminations are retaliation, let’s call them the grandfathers of employment claims. <laugh>. Before all these laws came out, we had wrongful termination. And that’s what you called this entire area of law.
Neil
Hmm.
Dan
Was wrongful termination.
Neil
Interesting.
Dan
You are fired because I don’t want any of these people working at my company. Right. Wrongful termination, it went all the way back to the unrest, civil Rights Act, civil code section 51, et cetera.
Neil
Amazing.
Dan
That’s how far back you’d have to base it on common law. You’d have to base it on statutes that didn’t cover much and you’d sue for wrongful termination and you’d have to defend based on wrongful termination because there were very little rights for employees. They weren’t fired. So as long as you didn’t fire them, I guess back in the day you could torture them all you wanted and yell at them and berate them. And that was just tough. They could quit and then they come up with constructive termination and then they passed more laws and statutes at it was tough times. We grew up in tough times.
Neil
Yes. And so today, how does an employer actually terminate a work relationship without facing a judgment by a court?
Dan
It’s hard. There’s something, there’s a term called pretext. Pretext is doing something for one apparent reason, but having a, a secret agenda for why you’re really doing it. Hmm. And so the way you describe the reasons for termination can get you in deep trouble. So if you have an employee that you want to let go and you’re worried they’re going to sue you, call your lawyer, spend a few hundred bucks, have them help you word the reasons for their termination and they’ll be literally very little chance of them suing you for giving them a pretextual reason.
Neil
Great.
Dan
Sometimes I get hired to go in and if they’ve got to fire a few people or let’s say 10 or 15, right. I’ll spend the day terminating people because the boss and the administrator don’t want to do it and they want to make sure it’s done right. And having a buffer with your lawyer in between the admin means that what the lawyer said really can’t be attributed to the company because that’s what the lawyer said or mis said. So you have another level of protection.
Neil
And another area of issues that we defend employees in is when they’re facing conferences or hearings, especially the informal hearings in front of the labor Commissioner. Can you talk a little bit about that exposure?
Dan
Well, I’m never very excited because my clients are usually going to lose because it’s slanted towards their employee. However, if you know that 95 or 96% of all cases settle, then you can use this time as they go through the Labor board hearing to gather information to see how strong their position is to get some advice from your attorney. You don’t have us, you don’t need us to go if you don’t want to, but if you do, we’ll go and we’ll gather even more information. Sometimes we go because they make claims that may lead to a class action.
Neil
Yes.
Dan
So we’ll jump on that. But your standard labor board claim, you can go and then there’s a a one page form you filed to make it go if you lose to the superior court. And at that point in time is when the employee who’s making the claim has to decide whether they want to share their money with a contingency lawyer or not. So while they’re looking around for a lawyer to, to take him over to the uh, superior court, that’s a great time to settle the case for nuisance value. And you check with your lawyer, you find out what it’s going to cost and you just say, oh, I’m going to spend, you know, this much money and as opposed to 10 times that much money, uh, hiring a lawyer. Right. Then we can advise you over the phone on that.
Neil
Another thing you often say, Dan is the best defense is a good offense. And that generally starts with the employee handbook and policies and procedures. Can you talk a little bit about how we go on offense?
Dan
Sure. It’s he with the most witnesses wins.
Neil
Hmm.
Dan
Sooner you know about a claim against your company, the sooner you can go and gather witnesses that will speak to your side before they’re tainted. You see everybody works in an office or a company and they talk to each other, they go to lunch and they try to turn if they’re unhappy, everyone around them against you. And people’s opinions change just after a few conversations. So if you get there early, you can talk to people, do a little investigation and stop it before it starts. Or if it’s too late, you can get the lawyers involved quicker and we can resolve it faster just by getting control of the evidence. Hmm.
Neil
And today record keeping is so much more important than it was even five years ago. And with the new laws that hit the books this year, how important is record keeping Dan? And how does good record keeping help when we’re involved?
Dan
We have trained staff here that help our small business clients with their HR issues and we will have them go through and you’ll be paying $500 an hour, you’re paying much less than that. Having people that are trained that go to all the seminars that stay up on every issue, look through your items and check your record keeping and say you’re good to go or you’re not. And if you’re the owner, you can have your staff contact our staff and they’ll fix things up for you and you’ll sleep better at night.
Neil
Very good. So Dan, we’ve had a broad conversation about the types apparels that employers face. If you had to sum it all up, if one of our employers feels like they’re getting into some troubled water, what’s your best piece of advice?
Dan
Well, same thing I tell everyone who owns a business. You should have a banker, you should have an accountant, a CPA, not just for taxes, just for day-to-day profitability. And you should have a relationship with a lawyer and you can pick up the phone and say, I’m worried about this. You don’t have to go in for a formal visit, you don’t have to pay a big retainer. You can pick up the phone and say, I’m worried about this employee. And they’ll send some emails back and forth and you’ll immediately know whether you need to go ready to fight or just do this and you’ll be fine.
Neil
Take action.
Dan
Correct. Just, we’ll know off the top of our head. We do this every day. Different clients, same issue. Call us … we’ll tell you that Mole is not cancer!
<both laugh!>.
Dan
You can learn more about the Watkins firm at https://watkinsfirm.com or call our office at (858) 535-1511 for a free consultation.