Sexual Harassment Part II – The Employer’s Perspective

 

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Sexual Harassment Part II - The Employer's Perspective
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Sexual Harassment Part II – The Employer’s Perspective If your employees work more than 40 hours a week, they should be entitled to overtime pay. Overtime is an hour and a half rate every hour per week after 40 hours. For instance, if an employee earns $15 an hour, they should be making $22.50 per hour for an hour after 40 hours per week. But not every employee is eligible for overtime. If you're not sure which employees are and aren't eligible, make sure everyone earns at least $455 per week. Alternatively, you could classify some of your employees as 1099 or independent contractors, but you have to avoid misclassification.  Misclassification is when companies characterize their employees as 1099 employees but still have them work at a place for 40 hours a week under the direction and control of the employer. The implication is that the 1099 employees can file a lawsuit in court to recoup the payroll taxes they have to do at the end of each year from the employer. It can become a more significant issue if you're misclassifying multiple employees.  Employers also need to be wary of discriminatory behavior and learn to nip it in the bud. The internal process you put in place for dispute resolution, including harassment and discrimination, can save you from potential losses from lawsuits. And if you own a small business with under ten employees, you're the sole arbiter of any issue and must try to be neutral.  Want to learn more about these employment law issues, including severance agreements, non-competes, and when and how to use them?  Learn more in this episode of the David vs. Goliath podcast with elite personal injury lawyer Matt Dolman and his guest, Trescot Gear, Esq. They discuss overtime, avoiding unpaid wages lawsuits, dealing with discriminatory behavior, misclassification of employees, using severance agreements, and more.   

In this episode: 

  • [00:48] Matt Dolman introduces his guest, Trescot Gear, Esq., and the topic of the day 
  • [01:07] What are the overtime laws?   
  • [05:29] The difference between a 1099 and a W2 employee and the employment law issues you should know 
  • [09:47] What is discriminatory behavior, and how should an employer nip it in the bud?  
  • [15:22] Dealing with internal disputes as a small business owner
  • [18:44] Wrongful termination: what it is, what to watch out for, and how to avoid making unemployment payments
  • [21:26] Everything you need to know about severance agreements
  • [26:23] Adding nondisclosure and non-competes to severance agreements

Transcript

  Welcome to the eighth episode of the Dolman Law Group podcast. I'm here with employment lawyer, Trescot Gear. Trescot say hello to our audience.   Matt, pleasure to be back.   So today we're going to keep it kind of employer focused, go over issues that are really germane, just to employers only.   Let's do it.   All right. So tell me about what are the overtime laws and unpaid wages? What do we need to know?   Okay. So typically if you're working more than 40 hours in a given week, and depending on the kind of occupation you have, you should be eligible for what's known as time and a half, which is your hourly rates multiplied by a half, add together. That should be what you make in overtime, anything over 40 per week.   Okay.   You were so say you make 15 bucks an hour, you work 45 hours. That's five hours of overtime. You should be making 22.50 per hour for any of those hours over 40 per week. Now the key with this is that not everyone is eligible for overtime. You and I, for instance, as licensed professionals, are ineligible for overtime, you can work your associates at Dolman Law Group, like mules.   I know.   Good to know.   Yeah.   And as long as you're paying them more than right now, 23,000 bucks per year. So maybe you're right around that floor of the associates.   A little bit above it.   Maybe a little bit above it, then you can work them almost as long as you want. Now there are new overtime laws coming into effect. We're trying to do some retroactive analyses of these. The overtime standard right now is going to possibly, if the DOL enacts it, bump it up to $47,700. If you are below that salary threshold and you fit into all the various exceptions and exemptions, then you qualify for overtime, anything over 40 per week, you get your time and a half.   Sounds good.   Now, but the key with this is that, like I just mentioned with the professionals, not everyone is eligible. If you're an engineer, for instance, if you're a doctor or lawyer, if you're an administrative work, for instance, these are all different exemptions that prevent you from getting that overtime.   Okay.   And so honestly, it's a case by case basis. You, as an employer, say you run a tech firm, for instance, you've got 15 employees, all doing a variety of different tech based jobs. Some of those people may qualify for overtime. Some may not it's honestly on a case by case basis, based on upon the job done, that's what's known as the duties test.   Okay.   The court, if say someone goes, who's working as a administrative assistant at a tech firm, worked 55 hours that last week for about a year. She definitely wants her 15 hours per week for the rest of the last year to be compensated by you.   Yeah. 750 hours she's on.   Exactly.   Yeah.   And whatever she's making per, time and a half. Well, the court is going to look at what was she being asked to do? Was she ever in control of a department of people? Was she ever being asked to do high level work? The kind of highly skilled expertise work that someone like a CEO, a CFO or someone in some sort of management would be asked to do, if she's not being asked to do this that's clerical, then she may have a case for it. Honestly, it just each individual story is told.   So what is the litmus test? So she may have a case. She said she doesn't necessarily have a case. What's the gray area?   The, the gray area right now is called the administrative exemption. It's are you performing higher level work for your corporation? To the extent that is existing in the running of the corporation, as opposed to say filing papers, are you an accountant? Like an accountant may not be eligible for overtime, but someone who is a file clerk could. So honestly, if you think you have an unpaid overtime case, you've got to come to people like us to analyze what you're doing on a day to day basis.   Let us know about the case.   Exactly. Because from an employer standpoint, there are two things I can tell employers all the time. If you want to be safe, make sure everyone's making at least $455 per week, 455 per week right now is the threshold. If you bump everyone up to 455 or more per week, you don't have any sort of problems.   Okay.   And the alternative, if you just don't want to spend the 455 per week on employees, start making them either independent contractors or start making everyone, everyone's duties need to be clearly delineated.   So then that's brings the next question. What's the difference between a 1099 and a W2?   This is the newest thing that's been going on.   Yeah. I understand 1099 is an independent contractor. W2's a salaried employee, but where's the classifications really affect you in employment law? What are the issues that are germane to each?   So the germane issues these days are what's now is misclassification. That's where a person who's been listed as a 1099 employee was actually performing the duties of a W2 employee. And the employer has been getting around having to pay certain payroll taxes and to worry about those withdrawals for FICA, social security, Medicare, all the stuff that the first time you get a paycheck, you go, "Who is this Mr. FICA, why is he taking out a chunk of my a paycheck every time?" Employers are getting into danger these days, because a 1099 employee is literally should be called an independent contractor. You don't have someone controlling your day to day work. You have the ability to come and go, as you please you're able to perform tasks individually, usually remotely. Because remember the five years ago, if you and work from home, you'd be 1099 out.   If you're working from home, you're just a guy who's behind at a computer, logging his hours, then getting paid, then dealing with your CPA, having to pay the payroll taxes on the back end. But now more and more employers are characterizing their employees as 1099 employees, but still having them be working at the place for 40 hours a week and still under the direction and control of the employer. That's where the misclassification comes into play.   Okay.   You've got to be careful if you're going to be having your employees as 1099 employees, that they have a level of freedom and control that your regular W2 employees like your employees here at the Dolman Law Group who are probably almost all W2's.   Yes. All.   That means that you have the ability to exercise daily control over them, over their tasks, their activities in exchange, they don't have to worry about their payroll taxes at the end of the year because you're taking, it's being taken out of each paycheck.   So the penalty for violating, this is what?   Penalty for violating it is the misclassified employee.   Yeah.   Can file a lawsuit in court to recoup the payroll taxes he's having to do at the end of each year if he's 1099 employee. So say, you're making $35,000 as a 1099 employee. You're probably going to have to pay five to $7,000 at the end of the year in payroll taxes.   Yep.   At the end of the year, compared to the person who was making 42,000, but it has them, has his own $7,000 are already taken out over the course 52 weeks. So yes. So there, so there is a danger, especially if you're doing this with multiple employees. If they all catch on that they're not qualifying for 1099 status. You have a major issue on your hands.   It can all hit you at once too.   Exactly. Because employees talk to each other, they unfortunately will band together, not as class action, but they'll start dumping different plaintiff law firms with cases.   Correct. And what is the ramifications for the employer in terms of attorney fees? Can they be stuck on the hook for paying the other side's fees?   Now? I'm actually not sure if there's an attorney's fees provision laid out.   Okay.   In this type of action.   Okay.   But not only do you have issues from a lawsuit standpoint, you also have an IRS issue because if you've been misclassifying your employees,   You're not paying proper tax.   Not paying proper taxes and uncle Sam will always get his.   Fair enough. Any other issues regarding 1099 versus W2?   That's the most prevalent one. So if you're an employer who has six to eight to 10, 1099 employees go back through what they're doing and try and analyze whether or not they're actually truly 1099, we're about to save you thousands of dollars right now, by just going through and reanalyzing, whether not they need to be turned into W2 employees.   Okay. So best business practices is someone like myself ensuring that the duties are spelled out.   Yes.   Has full control over my employees, that they're not just operating at their own discretion.   That word discretion is a really good way to describe it. Yes. If you're 1099 employee, you should be able, if not to dictate the terms of your employment to the very least have a modicum of control and discretion in how you go about achieving the task. Obviously you're still an employee of the entity.   Yes.   But you've got some latitude that you don't already have.   You have to answer to them, but you're given a lot of room and a lot of rope.   The latitude. Exactly. Exactly. Yes. Okay.   As an employer, what do I have to look for in terms of discriminatory behavior? How do I nip it in the bud if I see it early, what do I look for? I know it's kind of, it's a very liberal movement right now. The me too movement and a lot of very similar actors are taking place. What rise, the level of discrimination? When is it in the gray area? When is it not discrimination?   So yes, obviously it's a very heightened environment that we're currently,   Sure.   Currently in. And I'm sure some employers can feel as though they're under incredible scrutiny in either the me too movement or any sort of racial discrimination of the kind. The first thing you want to be doing, is by nipping in the bud, by simply going, knowing what your employee's doing day to day. If you're exercising the control, like the W2 employees, you need to be monitoring your employees, not talking about a big brother security here, but you need to be monitoring their emails, their correspondence, especially in the new age of social media, the interoffice correspondence. Now, possibly at a firm like this, you may have some sort of instant messenger function where different employees can talk to each other, through instant messages.   Sure.   You'd be amazed at how so much harassment can just occur interoffice through this new digital media. So you need to have the ability to review your messages. You may have concerns, innovation of privacy.   That's what's natural when there's a conversation.   There's no reasonable expectation of privacy in a workplace like this when it comes to instant messages.   Okay.   Or even emails. If it's on on correspondence, if it's on your servers, you have the same access to it that they do. Now, you can't bug, you can't go and bug the bathroom.   Of course.   You can't go and bug your office. Those are federal violations. But when it comes to reviewing instant, you can review instant messages. You can review emails, anything that's involving you, your employers overall, all, your logo or your entity's essence. You need to be in control of that and nipping stuff in the bud before it becomes a problem. Now, things may become just a dispute between two employees. That's not in and of self discrimination. It's when you're noticing that either a single employee is being singled out. Or maybe not. The word bully too is thrown my way too much, I think.   Maybe like a campaign of harassment?   A campaign of harassment would be a better way of,   Okay.   Of describing it. This once again comes into the fact of where you have an HR function at your workplace. Do you have just a simple pamphlet or an employee handbook? I tell all my employer, clients, you've got to have something in writing.   We do here. We have something that delineates, what is allowed and what isn't allowed, but when is it too detailed? And when are we missing certain elements that should be to cover our proverbial ass. I mean, it's a CMA.   CYA, CYA.   When are we not covering our ass? When are we missing things that it should be covered? What are you seeing out there now?   You're missing things when you're not allowing some sort of internal grievance process to come into effect you, it's not required by law, but there are ways to cut the problem off before it starts growing legs. If you don't have some sort of informal mediation process between two disgruntled employees or an ability for an employee to reasonably bring concerns, not the comment box, but reasonably bring concerns up the chain of command to a supervisor without fear of a reprisal.   Yeah.   You've got to have that. You've got to have something that empowers your employees to not feel as though they've been threatened by the coworkers or the supervisor. And then ignored by management. If it's laid out in your handbook, that everything is confidential, every complaint is confidential. And if there's some sort of dispute resolution process internally, that will save you so much trouble down the line. This can be something as simple as putting the two people in the same room with each other, having paying for an informal third party. This is the one time you may actually want to consider having a small outlay for a mediator of some kind when it involves a dispute between two higher employees.   Okay.   Let's be Frank. If these are two, $8 an hour employees who are calling each other names or bullying each other,   The juice isn't worth the squeeze.   Exactly. Yeah, but these are especially they're salaried employees at a higher threshold. You need to be nipping the stuff in the bud by removing the threat of a future lawsuit. You remove that by showing to a third party or to a future investigator that you've taken every amiable effort to resolve the internal dispute. And now when it comes to individual discriminations, you got to be compliant with ADA. Now at a public buildings, you've got to have access. If your employees are sick, you can't fire them for being sick, but you can lay out appropriate absence procedures. You can lay out appropriate procedures for calls out. What's the number one cause of terminations in America. It's a no call, no-show, someone doesn't follow an appropriate internal procedure stays in all day. Then it comes to work next day and realizes they're fired. Well, they may think that they've been fired because they were sick. If you've laid out in your internal procedures, a simple, no call, no-show policy that is enacted across the entire workplace equally, they can't try and then claim that they've been singled out.   Okay.   These are all some of the ways that you can just get them before this thing grows like a virus.   When you, going back a minute, when you talked about going up to chain of command and having the ability to, reconcile some of these issues, what about if you have a very small business with only three or four employees, how does that transcend? And what if you are the sole arbitrator being the owner, but the issue might lie with you.   You've just got to be so careful. Especially since you as the small business owner,   Yes.   Are almost the sole arbiter. As you said of disputes in the office, any favoritism you may show, especially for instance, whether it's true or not, whether you're a white male and the person who is bringing the action is an African American female for instance, you cannot show that you've put placed undue weight on the race, being a factor or her gender being a factor in her treatment.   One way or the other.   One way or the other. You, it sounds crazy, but you have to remain completely neutral. Even if in a small business, you're going to have certain biases that are just inherent biases. You have to remain, which is why you bring in a third party. You either bring us in as your HR functionary or you have to bring in a mediator or an arbitrator to resolve the internal dispute.   Is that common at big businesses?   It's common, big businesses now with small, with people under 10 employees.   Yeah.   Oftentimes the issue that comes in is that you, as a business owner have a legitimate right to run your business as efficiently and effectively as possible. And if this person is being an irritant and a bother to you, you've got to find a reason for them to either quit the behavior or leave your corporation without the optics of a discriminatory or a retaliatory event.   So let's case scenario.   Okay.   Right. Somebody had a fact pattern. You are the employer, I'm the employer.   Okay.   And somebody's bringing possibly a discriminatory case or starting to allege those facts, but it's a smaller business. We have 30 employees here, but let's say we're a smaller business and only have three or four employees.   Okay.   I'm the sole arbiter of that issue. I'm also the person who created the issue or at least that's the allegation, how do I resolve the issue?   So the first thing you want to do, and we're going to go back to episode seven for a second.   How's mediation seem neutral, if I'm the person hiring the mediator?   Well, a mediator is supposedly supposed to be a completely neutral entity. Even if you're paying them, oftentimes in a, let's go back into the way we do day to day from a legal standpoint, both sides contribute to the mediator's fees.   Sure.   So that there's no impropriety. Now, when you suffer higher than the mediator? What you're going to want is to have the mediator create a reason statement as to the outcome of the incident.   Okay.   So, you're paying them not only to be there and be present and hopefully resolving any sort of internal dispute, also paying them for their own analysis of your danger zones of,   Okay.   You're basically paying for a risk assessment. The mediator can act as your risk assessor in this, because the next step that the employee's going to do is file a charge with the proper agency.   EOC.   EOC or FCHR.   Yeah.   So you can remove a lot of your internal stresses as a small business owner by either having a reward system in place for your employees or making them feel as though they're empowered to seek solutions other than litigation.   Okay.   Against you.   Wrongful termination cases. What do we watch out for there?   Well,   I know we kind of skated around the issue. We've touched on a little bit.   Yeah. I feel like wrongful termination. You're always sort of skating around it. And in Florida, most owners are going to know that we're an at will state. You could be hired or fired for almost any reason, which a lot of owners are going to fall back on. Terminated because they weren't learning quickly enough. Especially as from an efficient business standpoint, you see this a lot in law firms. You just don't have time to train certain people. And if they're not going to be able to make up the ground in time, they got to go.   Yep.   But if this person in a protected class or this person has been showing a pattern of behavior, wrongful termination, Florida doesn't really exist. It only exists if it was tied to a discriminatory act, event, AKA your race, disability, age, gender, sexual orientation, little fuzzy on whether that's actually become becoming of the class these days. If that was a basis for the termination or the retaliation. Other than that, you are safe in Florida. If you can show a legitimatory, non-discriminatory motive for your termination of them. For instance, we all know people who were fired just because it was a bad fit.   Sure. Happens every day.   But when it's a bad fit, you need to have documented the reason for the bad fit for the inevitable possible lawsuit. The first thing an investigator is going to do when someone files, what could be a frivolous EOC charge, they're going to ask you what was the reason for termination? Same for an unemployment. Okay. This happens a lot of times in unemployment cases.   Sure.   If you don't want to pay, pay for their unemployment for the next two or three months, you're going to challenge their unemployment finding. The good news in Florida is that if you're found to be the cause of your own termination, you're not eligible for unemployment. So when you're trying to fight unemployment, you are laying out why it was a bad fit. And there was why there was no sort of malfeasance on your part.   Okay.   You need to be very careful of course, that any action you took, would've been done to any employee that deviated from the standards of conduct, like episode seven, we talked about how you can create your own standard of conduct and standard of performance. Anyone who drops below it, whether they are disabled, whether they are a war veteran, whether they're just a waspy white male, all fall into the same category and are held to the same standards. If you can legitimately show that you're going to be insulated from almost all liability under the sun.   Fair enough.   It's all by insulation.   You said it well, severance agreements. What do we need to know there? What's a proper severance agreement? What are the considerations, what goes into in putting together a severance agreement?   So Florida's one of several states. As you can tell that are pretty employer friendly. A lot of labor laws support the employers, at the end of the day. I advise my clients though, that severance agreements at the end of the day are going to be worth the couple thousand dollars that you put into them. A severance agreement from a general definition standpoint is an agreement between the terminated employee or to terminate the employees of resigning and the previous employer that in exchange for money, they would not have already earned. They release the employer from liability and waive all claims they have to sue the employer for anything that happened during the course of the employment.   Okay.   So AKA, the person who's been to discriminate against, let's say it's actually been a discriminatory event. Let's say that you as the employer or the five person company, you think, "Well, crap, we may have gone from teasing this person to maybe there was a little bit of harassing behavior. Maybe we're not totally going to be at fault, but there's enough wiggle room, enough gray area."   Sure.   In this,   Some exposure.   Let's offer them a severance agreement. Severance agreement says, Hey, for a certain number of years that they work for the company. So they worked there, there for five years. You offer typically one to two week severance for every year of employment.   Okay.   Unless they're really high, high level employee, which case it could be more money being offered. You want to offer just enough money to make them question whether they want to sign it or not. Now, unfortunately it's not, it's not really an economic threat. It's sort of an economic reality. Can you afford the extra two months that we're offering you in exchange for not suing the corporation ever again? Or are you willing to take the chance of filing a lawsuit and getting nothing? So you have this agreement that says, "Hey, John Smith, you worked at this firm five years. We're offering you $10,000 in severance in exchange will also offer Cobra to you." Cobra is the carryover.   Sure. When for when you lack health insurance.   When you lack health insurance, yes. You allow them to elect into Cobra, you offer to write them a letter of rec, you offer that you won't contest their unemployment compensation. You're doing all this as an employer to protect yourself down the line. If you honestly feel though that you are completely secure and there's not even a chance or a whiff of discrimination, then just pay them their final paycheck that they were already owed and have them be in their way. Severance agreements I say are used for two kinds of cases, cases where there's enough of smoke, where there could be fire down the road for retaliation harassment or for a high level employee that's performed well for you. And you want to create a standard of conduct to entice future employees down the line.   Okay.   AKA use sort of a carrot and stick approach to bring people in. If the word around town is, "Hey Smith incorporated, they'll offer severance to their employees." That's actually a perk that you can offer at the outset of employment that, hey, we're not just going to terminate you and walk away.   You could also be seen as a weak link, or you could be seen as the, somebody could be taken advantage of by offering such.   You could be, you could be seen as that.   The various allegation will, the response will be that we'll come back with a severance.   And that's why you need to, you don't give severance to everyone. You don't give severance to the person who stole from your company, or you don't give severance to a person who screwed up and cost your firm tens of thousands of dollars.   Sure.   You're giving severance to the people that you don't want to be seeing them in two years in federal court or the people that were such a high value to you, that you want to create a positive working relationship with them in the future somehow. And you realize that opinions in the community can go a long way in the future. But from a severance standpoint, you're not required to in the state of Florida. There is no requirement that you give severance and this, by the way, everything we've been talking about deals with private employees and private employers.   Yes.   If you're a public employee in the state of Florida, you have your own internal grievance process. You have your own standards for severance. As we always joke that you had to kill someone to ever get fired. If you work for the government, we're only half kidding. You have an incredible amount of job security when you're a public employee.   Sure do.   So a lot of this has been talking about was private employers and for private employees, just as a disclaimer to this video.   So in all severance agreements, are we looking at a contemporaneously, receiving a release or confidentiality?   Yes. You're looking for in exchange for me cutting you a check in 10 days for the amount of money, you're signing a release, releasing all liability, waving all claims once it's assigned. So it's basically a contract that severance agreement is a contract.   Sometimes confidentiality.   Confidentiality's going to be in play. A nondisclosure is going to be in play. We haven't even touched. And maybe we want to touch briefly noncompetes.   Sure.   Inside of this, oftentimes in a severance agreement, and this is a very, this is not devious, but a really clever outside council will incorporate a non-compete in this as well. Especially if it's a highly specialized type of industry, sales. You see so many non-competes with sit in sales contracts, or in sales, severance agreements, non compete basically says, "Hey, because of the amount of confidential information you've received in the course of your employment, and because of all the highly detailed proprietary information that you've received for the next two years, you can't work for so and so, in this geographic range up to two years." Anything over two years is going to be invalid in Florida. Anything more than 150 miles is going to be seen as probably being invalid, unless you are a national corporation.   Okay.   Now judges may overturn the non-compete years from now, but what you're buying, you're buying peace of mind. You're buying that hey, I'm giving them cash and they're getting a nice exit out the door, but I'm getting something back for this. I'm getting the protection of knowing they can't turn around and go to my competitor, utilize my trade secrets, my proprietary info, and screw me over on the back end. I suggest noncompetes for any employee in some sort of capacity or any employee in any sort of capacity where they have access to such confidential information and proprietary information that makes it damaging to your brand. If they,   You got to prove it's proprietary. You show it affects the Goodwill of the business.   Yes, you have to show that it is so tangible to have the running of your business. And it's so specialized to your business. Can't just be that, Hey, you work for a hospital. Therefore you can't work for a hospital anymore.   Sure.   Also there's public policy standards too. If someone is like a paramedic, you can't prevent them from never working for another hospital or a paramedic corporation. So there's still certain public policy restrictions on this, but non-competes restrictive covenants and the like, should be used sparingly. But when they are used are incredibly effective.   When they're not ambiguous.   When they're not ambiguous. And the key with this, I tell people on both sides of the aisle, the noncompetes only as valid as a person trying to enforce it is. So the person never tries to enforce noncompete and you violate it. There's really no harm, no foul. It's when you violate it and your previous employer learns about it, then they can go and litigate you for a breach of contract, because it's technically a contractual term.   Sure.   And so they can litigate your breach of contract. And also in your severanceagreement, you want attorneys fees to be a provision in any severance agreement you have. You want any dispute about agreement a year from now two years from now, however long it's in validity to have a prevailing party fee statute in there or fee provision in there.   Okay.   You want that.   Any other issues you want to discuss today?   I think we put the employers on a pretty good footing right now.   Yeah. I think we were pretty thorough today. I really appreciate coming on Trescot Gear. This concludes episode number eight of the Dolman Law Group podcast. Thank you very much.   Thank you.

💡 Meet Your Host 💡

Name Matthew A. Dolman, Esq. Title: Partner at Dolman Law Group Accident Injury Lawyers, PA   Specialty: Matt is a nationally recognized insurance and personal injury attorney and focuses much of his practice on the litigation of catastrophic injury and wrongful death cases throughout Florida.  Connect: LinkedIn | Twitter | Instagram   

💡 Featured Guest 💡

Name Trescot Gear, Esq. Title: Managing Owner at Gear Law, LLC Specialty: Trescot exclusively practices Labor and Employment Law, representing both employees and employers in litigation related to contracts, wage disputes, discrimination, retaliation, and other labor-intensive areas. Connect:  LinkedIn   

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