Don't Let Unethical Employers Screw You

By - 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 his employer.

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 with protests.

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.

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