Posted on March 28th, 2019
Below is a complete transcript of the video.
Hello again, fellow entrepreneurs. It’s John Fagerholm again, and today I want to talk about a Labor Board horror story. And there’s the story, but then there’s going to be the moral.
So I want to tell you the moral of the story afterwards.
So anyway, I had this client that owned this factory, and he purchased the factory four years previous to getting a Labor Board claim.
So as he’s running this factory, you know, he’s a real tough guy.
I guess the previous owner was really a soft guy and really catered to his employees. Whereas this new guy was a little bit tougher on them, you know, he demanded certain things and wasn’t breaking the law at all but, you know, just not as nice of a guy as the previous owner.
So at some point he decides that there’s a certain division of his company that is unnecessary and isn’t producing.
So he laid off about 20 people. Now in those 20 people, there was one particular ringleader.
So that ringleader got everybody to file Labor Board claims. And fortunately for my client, he had very, very, very good records, punch in, punch out, both when they started and when they finished.
Punch in, punch out for lunches and everything was perfect. So, it was a huge dollar amount, especially with 20 people.
The Labor Board wasn’t very kind about the hearings. They made us do 20 people back to back on three separate days, back to back, which is ridiculous, right?
Now when we get in there, it was clear from the first half hour or so that the Labor commissioner just absolutely did not like my client, you know, he was a rough guy, spoke roughly, and she just didn’t like him at all.
So the claim from all of these former employees were that they weren’t paid for overtime and they didn’t get their lunch breaks, and they didn’t get their 10 minute breaks.
Well, it’s easy, right? We have the records to show.
So for every hour that they claim they weren’t paid overtime, I basically just pulled out a time card and said, is that your signature on the time clock?
Is that … Do you see where it says, I warrant and represent that these hours are correct? Do you see where you were paid correctly?
And there was no argument against that. So the only place that there wasn’t a punch in and a punch out was for the 10-minute breaks.
Well, so the hearing officer starts going in about these 10-minute breaks, and then I remind her that, well, under California law you’re required to provide them but you’re not required to enforce them, right?
So I give her the handbook and I say, look, see, this is where they say you take your 10-minute breaks. And then my client testified, yes, and it’s a factory, which has a bell and the bell rings when they take each break and the bell rings when they come back, and everybody leaves together and comes back together.
There’s no way these people could not have taken their 10-minute breaks.
So then she starts arguing, and I’m talking about the hearing officer here, not the plaintiff. The plaintiff didn’t even have to argue her case.
The hearing officer was doing her best to give them something. And so the hearing officer says, well, how do you know that they were taking their 10-minute breaks?
And again, I remind her that my client is not required, by law, is not required to make sure they take their 10-minute breaks, it’s just required to offer them.
But then he pulls out his cell phone and he shows her realtime video and he says, see, I can see it right here.
I can see every time I can see everybody doing everything. Well, so for me that was an easy win. We had all the records.
The only thing that they could come up with was something that they’re not required to prove anyway, so that we didn’t have the records for that.
But I thought, you know, the way the law is written and the fact that he has a bell system and monitors it, that it would be an easy win.
Well, it comes back with judgment for the plaintiff for just the 10-minute breaks, the one thing we didn’t have documentation for.
So of course, on appeal we would have won this easily.
Here’s the problem, the way the system works is that if you appeal it, you have to come up with a bond for 100% of the judgment, and I think she gave something like $4,000 per individual times 20.
So you know, you do the math, that’s quite a bit of money that my client would have had to come up with.
So not only do you have to post the bond, but then if you lose even $1 in superior court, because now it goes to superior court, so now you’ve got to pay your attorney’s fees and if you lose even $1, you’re going to lose that bond and you’re going to have to pay the attorney’s fees on the other side because now the plaintiff is required to get an attorney.
So it just didn’t make sense.
We ended up just settling for some amount. I don’t even remember what it was, less than, than the $4,000. So that’s the horror story.
The horror story was that even when you have all of the evidence, you could still lose in the Labor Board.
Now the moral of the story is don’t be disliked by the Labor Commissioner or by the hearing officer.
Now, what people don’t realize is, yes, they’re required to follow rules, but they’re administrators, they have a lot of power, and you could still defeat them.
Let’s say in superior court, you could still appeal it and defeat them in superior court if you’re absolutely 100% correct, but the risk is just too great.
Not only do you have to put up a bunch of money, but if you lose even $1 in superior court, you’re going to have to pay all those attorney’s fees on the other side.
So anyway, that’s the story.
That’s the moral of the story.
Appreciate your time until next time.
