Why do you want to put a contract in place? You might think it’s because you want to memorialize the terms you’re agreeing to so that you can enforce them sometime down the road- if you have to. The problem with that is that the terms you want to memorialize are not the kind of things that usually give rise to a lawsuit. You want to put the price and the payment terms, the date and maybe a renewal provision. Since you’ve likely already agreed on that stuff in e-mails, invoices, letters, etc. you really already have a written memorial of that stuff. But what about what happens when the unforeseen occurs and something goes wrong? The first thing you’ll ask is “what does it say in the contract” and it’s my job to make sure that the answer is not “Nothing- that’s not addressed here”. That’s why you don’t want to insist on a “short two pager”, but rather, insist that the pertinent bases are covered even if it makes it long and full of “legalese”.
People frequently present a long factual scenario to me- usually a brief history of a misfit employees long and rocky employment history- and then want to know “Can that employee sue me?” I tell them that, with very few exceptions, the answer is YES! People can generally sue others for anything at all. Whether they can sue and WIN, however is a very different analysis.
Unfortunately, the reality is that litigation is expensive, and even if the employee has a completely made-up claim (and you can prove it), it can often cost an employer many tens of thousands of dollars just to prove that it is right. Consequently, it’s no wonder that the vast majority of such cases end in settlement, whether really warranted or not.
As an employer, it’s imperative that you take steps to try to minimize the chances of being sued by your employees. There are a few broad categories that make up the vast majority of such lawsuits. Those are: lawsuits related to alleged violations of state or federal wage and hour laws; allegations of harassment, wrongful termination, discrimination and retaliation; failure to accommodate a disability; or a combination of some or all of the above.
Today’s post will deal with one aspect of wage and hour claims: OVERTIME PAY. As seems to often be the case, California has some unique rules that make its overtime calculations more onerous on employers than the federal laws. For example, in California, employees are entitled to overtime pay (1.5 times the rate of regular pay) for any hours they work after 8.0 in a single day, or any hours they work after 40.0 in a single week. It is NOT legal to offer the employees “comp time” instead of overtime (for example, if you work 48 this week, rather than getting paid for 40 hours of regular pay and 8 hours of overtime, an employer might simply pay the 40 hours of regular and then give the employee a “paid day off” the following week- this is illegal).
Also, while it’s OK for employers to “ban” overtime (i.e. make it a violation of company policy for an employee to work overtime without first getting specific approval), the employer must still pay the employee for all of the hours worked- including any overtime at time and a half- even if the employee did not get permission and violated the policy. The employer can discipline the employee (up to and including termination in some instances) for violating the policy, but it may not refuse to pay the employee for the hours worked.
Importantly, every employer should have an employee handbook or manual. The manual should include policies on many issues, including the employer’s wage and hour policy, overtime policy, equal opportunity employer policy, etc.
I must warn you, however, if you call and ask me whether your soon-to-be-former employee can sue you for X, Y, or Z, the answer is likely to be “yes”. Our job is to minimize the chances of that happening to you in the first place, and ensuring that you’ve taken the appropriate steps to win the case quickly if it does.