Don't Let Unethical Employers Screw You
By Steve Gillman - September 11, 2013
This morning I read an article about a new way some employers
have been ripping off their employees in recent years. It was
about the rise of employment contracts that demand private arbitration
as an alternative to courts. In one example an employee had not
been paid for all of the hours he worked, and he tried to sue,
but the court would not hear his case, because he had signed
away his right to sue when he was hired. His employment contract
said he was agreeing to private arbitration in any dispute with
Now, this might seem okay to those who love free-market alternatives
to what are normally government functions. Some might even argue
that private arbitrators who specialize could be better than
traditional judges at understanding a case and making a fair
decision. But there is a problem with this, and it starts with
the simple fact that arbitrators have to be hired by someone,
and that someone is almost always -- by contract -- the employer.
Not surprisingly, employers win many more cases when they go
to arbitration than when they go to court. The arbitrators know
they will not be chosen too often if they do not deliver the
result required (sorry guys, but if you do not know it, then
your subconscious mind does, and it will influence you -- your
mortgage payment and dream boat require it to). This is a huge
conflict of interest.
In other words, when you sign one of these employment contracts,
you are agreeing that the company can do what they like to you
without consequence. Normally you cannot sign away your rights.
You can't sell yourself into slavery, for example, for any price,
because no court will uphold a contract that says you have to
remain someone's slave. But when it comes to these contracts
and others designed to screw employees, the courts have been
ruling in favor of employers.
In another case mentioned in the article a man was driving
a car for a limousine company, but was not given enough hours.
He was hired as an independent contractor, so he had no unemployment
benefits and had to pay his the entire 15.2% payroll tax on his
own (in the form of the self-employment tax), along with the
usual income taxes. When he wanted to drive for other clients,
though, he received a cease-and-desist order from his employer/client.
They pointed out that in the bundle of papers he signed when
starting with them, he had a agreed to a non-compete clause.
If he wanted to drive for others he would have to quit and wait
a year according to the terms of the contract.
Now, this might be legal, but think about the ethics for a
moment. They do not offer enough hours for him to earn a decent
paycheck, and use the legal system to stop him from working for
others in his chosen profession. Yes, he was unwise to sign the
contract, but perhaps they are also being unjust. I seriously
doubt that when they hired him they explained that if they had
no work for him he could not drive for others. More likely they
glossed over the non-compete clause and made it seem that he
would have plenty of work.
What can you do in situations like these? In the first case,
if it was me, and my hours were not paid in full, I would be
tempted to head for my previous employer's home (I say "previous"
because I sure wouldn't be working for him any longer) to "find"
something that might serve as compensation. I don't tolerate
being screwed. But on the other hand, I certainly don't want
to advocate illegality if there is a chance of getting caught,
so what are the legal options?
In the second case, the fact that the driver uses his employer's
car and has no other clients makes him an employee by IRS guidelines.
He might start by threatening to send a letter to the IRS to
make this clear. The company would then have to pay back taxes,
unemployment taxes, workman's compensation insurance, and their
half of payroll taxes. This might be enough to get them to drop
the clause keeping him from working for others. If that is not
enough, he might tell his employer that if they do not either
give him enough work or drop the offensive clause, he will protest
visibly and scare away clients. There is nothing illegal in sending
letters to regular clients of the company telling them the employer
is unjust and that if they use the service they may have to deal
In the first case the employee who wasn't paid for some hours
might explain very clearly on paper what he is owed and why,
and give this to the employer. Then he could explain very clearly
a series of steps he will take -- all legal -- to do as much
harm as possible to the business if he is not paid within a week.
These steps might include protests in front of company property,
directly approaching customers to explain to them what kind of
business they are dealing with, letters to the editors of local
papers, and contacting local television news programs for possible
stories about the case. If the company sells a product that is
reviewed online, encouraging people to post honest negative reviews
is another possibility.
At the very least, workers should quit working for employers
that repeatedly do unethical things. If they can afford to, they
might also consider refusing to sign contracts with unfair terms,
even if this means not getting the job. And, of course, to the
extent possible in a system where laws are bought by the highest
bidder, we should try to change the law to recognize that our
rights are not for sale. It is time to help employers become
more honest and fair, and it is time to financially (and otherwise)
punish those who are not, in order to change their behavior.
The Value of Labor