Posted on July 9th, 2019
Below is a complete transcript of this video.
Tommy:
So John, thank you for joining us today.
John:
No problem, Tommy. It’s great to finally meet you after so many emails back and forth.
Tommy:
Yeah. So maybe we should start off by telling our users and our listeners a little bit more about yourself. Why employment law? Why only business owners that you’re representing?
John:
Well, I sort of fell into it. I’ve always litigated but I started out as an entertainment attorney and I was litigating entertainment cases. Well, doing a lot of transactions, but a lot of litigation too.
Well, I’d say almost 100% of the litigation stuff I was doing was employment related because the laws just kept triggering more and more litigation.
So at some point I just decided I wanted to litigate and then I just moved into the employment side, or just doing litigation and not doing any type of entertainment.
And besides entertainment companies I started getting other companies, like restaurants. I know you guys are big into restaurants and that’s a big hotbed for litigation.
I have an entrepreneurial background, so even though the lion’s share of the money honestly is on the other side of it just because of the way the laws are skewed, it makes it very easy to make a lot of money if you’re a plaintiff side attorney, but as an entrepreneur myself and with my entrepreneurial background and going through these same issues with employees myself, it just didn’t feel right to do the other side of it.
So that’s why I’m here fighting the good fight for the entrepreneurs and business owners of the world.
Tommy:
You have a lot of content online and we’ll share it at the end of the interview, but it’s really refreshing to see somebody just do one side and understand it well. So, that’s huge kudos. There’s a lot of different areas, and a lot of our users, they get confused in the different areas that they can go to court or lose money at.
Can you walk us through what the differences are between a Labor Board case? A case in Superior Court and an arbitration?
John:
Yeah, so let me start with arbitration because that’ll be the easier one. Arbitration is by agreement. So typically you wouldn’t be an arbitration unless there’s some sort of agreement that you’ve both signed saying that any employment related cases are going to go to arbitration.
And that usually happens at the beginning of the employment relationship. So usually it’s the company that elects to arbitrate or wants to arbitrate these types of claims, and then it’s by contract. So instead of suing, they have to go and trigger the arbitration however the agreement says to trigger it.
And if they did just sue in Superior Court then the company would have the right to then have it moved to arbitration.
And in California, arbitration isn’t as great as it used to be. It used to be where you could force the attorney’s fees on the other side, at least their own attorney’s fees. So arbitration was great. Now you can’t do that anymore and arbitration is really expensive.
Superior Court claims of course are expensive, but the difference is in a Superior Court claim monthly you’re paying all of these fees, whereas in arbitration you’re paying all of these fees and then at some point you’ve got to pay the arbitrator.
And in California, it’s $40k to $60k, so that’s a one time fee that you’re paying the guy when he’s about to arbitrate. So it’s a lot of money. I don’t find it very valuable anymore.
I prefer the Superior Court. However, in certain instances, you’d rather arbitrate than be in Superior Court. For example, if I had a sexual harassment case and it’s a 50-year-old guy and the sweet little innocent girl next door, of course, I would rather have that in front of one guy that was previously a judge versus a jury full of 12 people who are likely going to feel bad for her and rule in her favor with some ungodly amount of money. So that’s arbitration.
Superior Court is the most common one, Superior or Federal. Superior Court more, but sometimes Federal. And that’s really just what you see on TV.
Somebody goes down, files a complaint, they serve it on you, and then you’ve got to defend it. Those are fairly expensive. If it were to go all the way through trial, depending on the type of case, it’s $150k, $200k.
And if it’s a class action which is part of Superior Court, it’s much more than that.
And then you have Labor Board claims. Labor Board claims are the least expensive, but they’re the least amount of leverage also.
So a Labor Board claim, it’s only for wage and hour type stuff, so they would never handle sexual harassment or anything like that. And with the Labor Board claim, they just go to the Labor commissioner, file a complaint, and then the Labor commissioner brings you in to try to mediate it and then they have a hearing if you don’t resolve it.
The problem with Labor Board claims is that the Labor Board represents the other side. Even though they say, “Hey, we’re taking this equal mediation type of role,” it doesn’t happen like that. They’re really the attorneys for the other side. And then on top of that they’re the judge, jury, and executioner.
So unless you have absolute documented evidence that you didn’t do something wrong, chances are the ruling is going to go against you. And they also have collection powers, which is really, really nasty too.
So in Superior Court, if they get a judgment against you, they still have to collect. Labor Board, they have these wicked collection powers, one of them being they can shut down your business until you pay the judgment. I’ve never seen that happen, but the fact that they even have that power is pretty sinister if you ask me.
Tommy:
Wow.
John:
Sorry, did I go on a huge long rant that’s uninteresting?
Tommy:
No, that’s good.
John:
Just interrupt me anytime I do that and you start snoozing, just tell me.
Tommy:
No, it’s good. Fascinating. Is there anything that employers can do in terms of choice in [inaudible 00:07:13] where things go? Or that’s just on the other side?
John:
Well, that’s the arbitration agreement. So, there are times that somebody has filed a Labor Board claim and then we’ve had an arbitration agreement so we just walk in and say, “I’m sorry you don’t have the authority to hear this.” And they usually agree. They go, “Yeah, you’re right,” and then they kick everybody out.
The problem is, depending on the dollar amount … Excuse me, depending on the dollar amount, you may not want to kick the Labor Board off these cases because the Labor Board, there’s no really attorney’s fees attached to the Labor Board.
With arbitration, there are attorney’s fees attached and with Superior Court, there are attorney’s fees attached. So if you can get it into the Labor Board and it’s a small dollar amount or if you have overwhelming evidence, then you might as well just take a shot at the Labor Board because you’re not going to have $100k in attorney’s fees to pay over a $5,000 problem, which you could have in arbitration or Superior Court.
Tommy:
Is there anything employers can do to prevent class action lawsuits?
John:
That’s where arbitration agreements are good because you can force class actions into arbitration too. So that’s good. That will save you a ton of money because class actions cost $300k, $400K to defend. They’re very, very, very expensive.
However, not everybody is a good class action candidate. So if I have five employees, I’m not a good class action candidate. Even if I had 20, 25 employees … Actually, let’s say I had 50 employees, which is typically a good class action candidate, but I’m losing money every year, then I’m not a good candidate for a class action because the attorney on the other side is going to spend all of this money to get you into a class and then even if they win, you don’t have anything.
See, the biggest problem with my employer clients sometimes is they have a hard time understanding what game they’re playing because they’re in business.
So everything is about, if you’re successful, it’s about doing the right thing, having a good reputation, paying people when they’re supposed to be paid, things like that.
But that’s not the game you’re playing when you’re litigating. The game you’re playing is how much money are you willing to spend to prove you didn’t do something wrong.
So the attorneys on the other side are not filing class actions because you’re a terrible guy. They don’t care about that.
They’re filing a class action because they see something that they could target and they know you have the money to settle. Nobody wants to go through a class action lawsuit. 99% of them get settled even before determining the size of the class, or if there’s even a class, because both sides were taking too much risk. It’s very expensive, even for the other side, to litigate.
They’ve got to cover all the costs up front. However, if they win, they get all of that back. So they’re certainly in a better position than the employer.
Tommy:
And even if they win, does it matter how much they win to get all of the attorney fees back?
John:
Yeah. And even when you settle a class action, part of the settlement is the representative, whoever the named plaintiff is, part of the settlement is the attorney’s fees, and part of the settlement is the rest of the class.
So what people don’t realize about class actions is that the attorney makes the lion’s share of the money, then the class representative makes a larger portion, and then everybody else in the class makes peanuts. We’re not talking about a lot of money here. I’m sure you’ve gotten those mailers that say, “Hey, we’re suing AT&T under this class action, do you want to take your 75 cents or do you want to …?”
Do you know what I mean? So that’s what it is. And I’m not saying all of them are 75 cents, but I’m saying to be involved in a class action, chances are, unless you’re the class representative or the attorney, you’re not making a ton of money here.
You’re just holding up business. You’re just hurting the business that employs you, really.
