Posted on March 19th, 2019
TRANSCRIPTION
Hello, fellow entrepreneurs today I want to talk about what happens when you get a demand letter. Unfortunately, the most productive people in society are the ones that get the … Are at the most risk, let me put it that way.
You may be this entrepreneur that started this wonderful business, took all the risk, spent all the money, and now it’s starting to pay off and you’re hiring employees.
Well, at some point you have a terrible employee and you decide to let him go. Well, it doesn’t end there.
Suddenly, you get this demand letter saying that, I don’t know, you retaliated, you fired the employee because he complained about something.
Who knows? Well, that’s very common in California. I don’t know about the rest of the states, but there’s different levels to this game.
One level is employers that actually do something wrong and they get a demand letter from an attorney that is specific to this industry. That’s one level of it.
Typically, those attorneys won’t be sending you a demand letter or even wasting their time if it wasn’t a legitimate issue.
However, you do get these trolls that basically just send out as many demand letters as they can send out hoping to get you to pay some amount of money to make them go away for nothing.
There’s so many more of them popping up it seems like every day. I mean, I’m starting to see all these newbies jump into the plaintiff’s side of the game because it’s easy.
California laws make it easy for them to sue employers. Whether you like it or not, even if you haven’t done anything wrong, you’re still going to have to spend money to prove you didn’t do anything wrong. They know this.
They figure, they’ll send you this demand letter and it’s easier just to make them … Just to pay them to go away than it would be to fight $100,000 lawsuit to prove you didn’t do anything wrong.
It makes business sense too, that’s why they do this. What do you do when you get a demand letter?
The majority of the demand letters look all the same. It’s basically a letter saying, “We represent so-and-so and we think you did X, Y, and Z incorrectly and we demand all of the records for this particular employee.”
Now, whether they have a case or not as soon as you give them the records, well, they’ll find something, right? Most of the time they’ll find something.
You have to turn over the records, the law requires it. And if you don’t, the penalty for it is $750.
Decide what you want to do based on that.
What do you do when you get this demand letter?
First of all, hire an attorney because the attorney will be able to sniff out whether this is a shakedown or this is a legit claim.
If it’s a shakedown, then they’ll likely have a discussion with you about does this make sense to make it go away quickly or does it make sense to try to fight this thing. Who knows? It just depends on your very specific case.
If this is legitimate, then the discussion will likely be, “Hey, let’s figure out a number that makes sense for this to go away, because if not there’s going to be a lawsuit and here is what the potential liability is.”
Unfortunately, in California if there’s any liability at all, it’s better just to settle because they only have to win $1 on one claim and they get all their attorney’s fees.
Now a $20,000 problem could be $20,000, plus whatever the attorney’s fees are, $100,000 plus.
Plus you paid your attorney’s fees, so now something that you could’ve made go away for some X dollar is now probably going to cost you in the range of two hundred something thousand.
Anyway, that’s what you get with … When you get a demand letter. You only have about 20 days before you’re required to turn over the records.
I think it’s 21 days, so as soon as you get that letter contact a labor defense attorney.
Thanks, everybody.
I appreciate your time.
