Category Archives: Legal

Employee Lawsuits, what should you do

Employee lawsuits are more common than you think.   When you run a small business, it’s easy to feel like your employees are friends or even family members. But in a court of law, they are your employees — and, as their employer, you should take steps to protect yourself and your company in the event that one of them sues you.

The FLSA: Learn It, Know It, Live It

The most common type of lawsuit brought by employees is a “wage and hour” case, or a dispute over whether or not you’ve adequately compensated them for hours they’ve worked. The Federal Fair Labor Standards Act addresses these issues, although each state, county, and city may have their own additional rules.

Most cases begin when “non-exempt” (or hourly, part-time) employees are treated like “exempt” (or salaried, full-time) employees. “Exempt” means exempt from the FLSA. In other words, salaried employees may work overtime without being paid extra, whereas hourly employees must receive overtime pay.

“There’s a booming industry in these types of cases, where employees are not getting paid time and a half,” says Keith Gutstein, partner at Kaufman Dolowich Voluck & Gonzo. He adds that that restaurants, hotels, gas stations, car washes, landscapers, and other cash businesses are at greatest risk.

No contract can waive an employee’s right to be protected by the FLSA. There is often an agreement to work overtime without being paid time and a half, Gutstein says, “but the fact is, it’s illegal, even though employer and employee are happy. After termination, they often realize they can go back and get all the overtime that is owed to them.” In fact, the FLSA compensates workers for up to three years of back overtime — and some states award twice that. Also, if you’re at fault, the FLSA doubles the award and requires you to pay the plaintiff’s legal fees, too.

To protect yourself, keep pristine records of employee hours and pay. Without records, an employee could claim any rate of pay and hours. Also, if the government gets wind that you pay workers in cash, it will investigate to insure that it’s collected all the tax revenue it’s due. Many times, in fact, an employee unwittingly triggers an investigation by filing for unemployment benefits.

Discrimination and Harassment

Many other employee lawsuits derive from behavior on the job, and, as such, can be tough to defend against. The Equal Employment Opportunity Commission protects employees from discrimination if they are a member of a “protected class” based on gender, age, race, and disability. (Sexual orientation and marital status are not protected under federal law, but they are in many states.) The EEOC will even prosecute on behalf of claimants, so your employee does not even have to retain a lawyer to launch such a suit.

In order to file a discrimination or harassment complaint with the EEOC, an employee must prove four things: that she’s a member of a protected class, that she’s qualified and performing the job in a satisfactory manner, that she’s suffered an adverse action (such as lack of promotion or termination), and that the adverse action was the result of membership in a protected class.

If a court allows the suit to proceed, it doesn’t mean the employee has won, it just shifts the burden back to the employer to prove that the adverse action was based on legitimate business reasons, Gutstein explains. “You have to rely on documentation—counselings, warnings, write-ups,” he says.

Your most important tool, however, is your employee handbook, which should outline company policies about discrimination and harassment, your disciplinary process, and should make clear that there is an open door policy for reporting any and all complaints about discrimination and harassment. There also must be appropriate training around these policies.

Assuming that you have an employee handbook and such practices in place, you can fall back on the Faragher/Ellerth defense, which allows an employer to file for a case to be dismissed because there was an open-door policy for reporting discrimination and harassment that the employee did not use before filing suit.

5 best practices to avoid employee  lawsuits

Top 10 Employee Handbook Mistakes

An employee handbook sets expectations and standards for employees.

In fact, an employee handbook is one of the best ways to protect your business from employee lawsuits and clearly communicate your company policies. The absence of a formal handbook or policy manual, or a poorly drafted one, puts you at a disadvantage to defend yourself should your business face a lawsuit.

Policies that are too specific and rigid can potentially limit an employer’s flexibility when dealing with real issues. Conversely, policies that are too general make it difficult for employers to hold employees accountable for their actions and behavior.

So how does an employer find the right balance? The first step is to be aware of the potential pitfalls. Download CalChamber’s “Top 10 Employee Handbook Mistakes” white paper and learn what your company can do to avoid them.

Download the Free White Paper

Do you know what’s important in a Non-Disclosure Agreement?

Are you hoping to get someone to invest in your business? Or perhaps you’re thinking about working with a business partner in a collaboration arrangement or joint venture?

If you are, you are probably worried about how you will protect the confidential information about your business.

You’ve probably heard the terms “NDA” (short for Non-Disclosure Agreement) and Confidentiality Agreement. But how are these agreements relevant and what do you need to think about?

The first thing to say is that an NDA and a Confidentiality Agreement are just different names for what is the same type of agreement – that is, one that says information disclosed by one party to another must be kept secret and not disclosed to third parties.

You may be thinking that as an NDA/Confidentiality Agreement is a legal document, it will be expensive to put in place. And anyway, hasn’t someone told you that there is no point in having one because you won’t be able to afford to enforce it?

These are common misunderstandings. I want to make it clear that this is not the case and give you an idea of what are the key things that you need to know.

1. Is it worth putting an NDA in place?

2. Where do I get an NDA and will it be expensive?

3. Who needs to be a party the Agreement?

4. Lots of NDAs look very different: are they really the same?

5. Extras: Bells, Whistles

6. Dragons!

7. Boilerplate

Read more