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How Mandatory Arbitration Can Limit Nevada Employee Rights

How Mandatory Arbitration Can Limit Nevada Employee Rights
Employers are increasingly including mandatory-arbitration clauses in the agreements employees sign after being hired. The clauses are designed to prevent employees from filing lawsuits against their employers for just about any kind of employment-related issue, from unpaid overtime to unlawful discrimination and wrongful termination. Instead of going to court, employees are required to submit disputes to a private arbitrator. Because our legal system favors freedom of contract, an employee who is subject to a mandatory-arbitration clause may have no option but to comply. For employees the arbitration process can offer some benefits when compared to litigation, but it has a range of potential problems that make it a mixed blessing.

Arbitration has some advantages over ordinary litigation . . .

Arbitration can be thought of as a “light” form of litigation. Like litigation, lawyers usually represent both sides in the dispute, there are rules governing what can be used as evidence, and there are rules of procedure that in theory ensure that both sides receive a fair hearing. For employees, arbitration has two main benefits over litigation: it tends to be faster and cheaper. The backlog in our court system means a new case can take years to resolve, while an arbitration firm tends to not have the same bandwidth problem. And because the rules are simpler and the process less formal, attorneys’ fees and other costs tend to be lower.

. . . but many disadvantages.

For an employee the downsides of arbitration can be significant. Here are just a few of the issues:
  • No option to appeal. A typical arbitration clause will provide that the results of the arbitration are binding and can’t be appealed to the courts. An employee who isn’t satisfied with the outcome of binding arbitration may have no right to appeal the decision.
  • One reason employers favor private arbitration is the secrecy of the process. The results of private arbitration typically are confidential, and quite often the employee is bound by an obligation to keep the results secret as well. In cases involving unlawful discrimination or sexual harassment, one can see how a confidential process benefits the employer at the expense not only of the individual employee bringing the complaint, but potentially many other employees as well.
  • Unequal power. Litigation tends to balance the inherently unequal employer-employee relationship, by giving both sides equal rights before the law. Private arbitration doesn’t always meet the same standard. Some arbitrators may have an incentive to favor employers, because an employer will continue to use an arbitrator that it thinks will take a more favorable view of the employer’s side. This problem has been well documented.
Together these problems can frustrate an employee’s efforts to enforce important legal rights. Because arbitration can be binding and unappealable, it is especially important for employees to seek good legal advice.

GGRM is a Las Vegas law firm

The attorneys at the law firm of Greenman Goldberg Raby Martinez are proud to serve working people in the Las Vegas area. If you are in a dispute with your employer and have questions about how a mandatory-arbitration clause affects your rights, we would be happy to talk to you about your options. For a free attorney consultation call us today at 702-388-4476 or ask us to reach out to you through our contact page.

Should I Sign a Severance Agreement?

Should I Sign a Severance Agreement?
Severance agreements are a way for employers to manage labor risk during staffing changes. They typically include terms to protect the employer, such as noncompetition clauses and waivers of legal liability, and in exchange give departing employees a compensation package. For the employee, a severance agreement can be a helpful way to ease the financial strain of a job transition. But before signing one, it’s important to understand how it may affect your rights. Here we discuss three major concerns in severance agreements: non-competition clauses, confidentiality obligations, and waivers of liability.

Restrictions on future work can limit your career options

Non-competition clauses are a common feature of severance agreements. Because they can limit your professional options in significant ways, it’s important to take care before agreeing to them. A typical non-compete clause will restrict the kinds of work an employee can do for a period of time after the job ends, so the employee cannot immediately go to work for a competitor or steal clients from the company. A non-compete could prevent you from taking a job you really want, or it could get both you and a future employer into a dispute with your old company. Recent changes to Nevada law limit the permitted scope of non-compete clauses. Among other things, an employer must compensate employees for agreeing to them, and the compensation must be appropriate for the kinds of sacrifices the employee is expected to make. The scope of the non-compete also needs to be limited to what is necessary to protect the employer, and it cannot impose an undue burden on the employee.

Confidentiality is sometimes more complicated than it first appears

Many employers require their employees to sign confidentiality agreements when they’re first hired. These agreements typically require the employee to keep certain information confidential for a period of time after leaving the company. A severance agreement could extend the term of an employee’s confidentiality obligations or, if a confidentiality agreement isn’t already in place, impose new obligations. Complying with confidentiality requirements can mean more than just keeping secrets. It can also mean taking certain actions, like destroying records, and can extend to limiting who you talk to or work for. In the latter case, what looks like a confidentiality clause could actually be a form of non-compete.

Waivers of liability can undermine your legal rights

Perhaps the most common reason a company will ask departing employees to sign severance agreements is to get the employees to waive all legal claims against the employer. Especially where the employer has engaged in practices that are potentially unlawful, such as racial or disability discrimination, denial of overtime pay, or unwarranted denial of insurance, an employee should think carefully about whether signing a waiver is a good idea. Signing a waiver, especially when it’s accompanied by the sort of compensation that comes with a severance package, can eliminate an employee’s ability to pursue legal action in the future.

Before signing a severance agreement, get help from an attorney

At GGRM we are committed to helping workers in Las Vegas understand and protect their rights. If you have been asked to sign a severance agreement and you have questions about how it might affect your rights, our attorneys would be happy to help. For a free consultation with an attorney call us today at 702-388-4476, or send us a request through our site.

Misclassification of Employees as Independent Contractors in Nevada

Misclassification of Employees as Independent Contractors in Nevada
To avoid the obligations that come with hiring employees, employers will sometimes use contracts to characterize workers as independent contractors. Although there’s nothing wrong with working with independent contractors per se, unscrupulous employers sometimes use this approach to deny rights to workers who are employees as a matter of law. Employee misclassification imposes serious costs on Nevada workers, especially those who are injured on the job.

Workers pay a high price for misclassification

Workers who are mischaracterized as independent contractors lose out on a wide range of important protections. In Nevada, most employers are required to provide their employees with various kinds of insurance coverage, including workers compensation, unemployment, and temporary disability insurance. Employers are also required to pay a portion of the employment taxes related to workers’ wages. Unlike an employee, an independent contractor only gets the specific compensation bargained for in a contract. An independent contractor usually isn’t protected by an employer’s insurance policies. Instead, the contractor must carry his or her own insurance, including for work-related injury. An independent contractor also has to pay self-employment taxes, and isn’t protected by minimum wage laws.

The Nevada definition of independent contractor

Under Nevada law, NRS 608 et seq., workers in Nevada are treated as independent contractors, rather than employees, if they fall within one of three categories:
  1. The first category captures workers who have applied for a federal employer tax identification number or Social Security number, or has filed a federal income tax return for a business or earnings for self-employment, in the previous year.
  2. The second category applies to people working under a contract that requires them to hold a state or local business license and to maintain any necessary occupational license, insurance, or bonding for the term of the contract.
  3. The third category applies to workers who meet at least three of following criteria:
  • The worker has control and discretion over the means and manner of performance of the work.
  • The worker has control over the time the work is performed, unless agreed to in the contract.
  • The worker is not required to work solely for one employer, unless required by law or agreed to in a written contract with a limited term.
  • The worker is free to hire employees to assist with the work.
  • The worker has invested in the worker’s own business by, for example, buying or leasing tools and equipment, obtaining necessary licenses, or leasing work space.
The important thing to remember about the definition of independent contractors in Nevada is that if an employee doesn’t fit within one of the criteria described above the employer can be on the hook for all the benefits that employees are entitled to as a matter of law.

How an employee can be misclassified as an independent contractor

As with many legal issues, knowing whether misclassification has happened requires a careful analysis of the facts. Employers will often try to misclassify employees by asking them to sign employment agreements that, at least on paper, check the necessary boxes to make the employee fit within the definition of independent contractor. Misclassification arises in such cases when the facts of the job don’t correspond to the wording of the contract. For example, the agreement may say that the worker is free to work for other clients, but in practice the manager might make clear that working elsewhere would result in the worker being fired.

Recover what’s yours

When an employer misclassifies employees to avoid a basic cost of doing business in Nevada, it hurts workers and their families, especially when workers are injured and denied the insurance coverage they deserve. At GGRM we work passionately to address this kind of injustice and get our clients the compensation they are owed. If you think you have been wrongfully misclassified and you would like to learn more about your legal options, reach out to us today for a free attorney consultation. We’re reachable at 702-388-4476, or through our contact page.

The State of Employment at Will in Nevada

The State of At-Will Employment in Nevada
Nevada is an at-will employment state, which means that by default, an employer or employee can end an employment relationship with or without cause, and without further obligation to the other side. At-will employment protects the freedom of workers to choose when and where they work, and the freedom of employers to fill their labor needs as they see fit. Like most baseline rules, the at-will employment standard is subject to a range of exceptions and limitations. Understanding how these nuances work is important both for Nevada employers and for employees who think they may have been wrongly terminated.

Employers are free to fire employees, unless

In general, at-will employment means that an employer can terminate an employee whenever it needs to. But not every reason for firing an employee is lawful. Nevada and federal law protect employees from adverse employment decisions in a range of circumstances. For example, employers are not allowed to retaliate against employees who report an employer’s illegal behavior. The law also protects employees in specific situations, like those who are victims of domestic violence, have a disability, or are pregnant. An employer also cannot make hiring decisions based on a wide range of traits protected by federal civil rights laws, including an employee’s race, national origin, sex, religion, age (in the case of workers over 40), bankruptcy history, or citizenship status.

Employment contracts can change the rules

Another major exception to the at-will employment rule is for contracts that specify when and how an employee can leave the position or be let go. This rule acknowledges that the two sides of an employment relationship can freely choose to forego the flexibility of the at-will standard in favor of meeting other needs. An employment contract can be express, such as a written document, or it can be implied. An implied contract can arise if an employer somehow leads an employee to believe that his or her job is only subject to being terminated for limited reasons. Company policies or the promises of managers can give rise to an implied employment contract. If the employer fires the employee without having met the tacit conditions of an implied contract, the employee might have an argument for wrongful termination. Workers are often denied important benefits and rights as a consequence of being mischaracterized as independent contractors instead of employees. For example, employers are not required to provide independent contractors with benefits that must be given to employees, like workers’ compensation insurance. If an independent contract gets injured on the job, she is expected to have her own insurance policy. Nevada law provides guidelines for when a person can be characterized as an independent contractor (NRS 608 et seq.).

An attorney can help resolve questions about at-will employment

Understanding at-will employment can be challenging, thanks to the wide range of rules and the frequent lack of clear, easy to follow guidelines. Workers who think they might have been mistreated by an employer can feel helpless, especially when the employer seems to hold all the cards. This can be especially true when a worker is injured on the job and is denied health benefits, either because the employer has wrongly terminated them after the injury or because the employer argues that the worker was an independent contractor and not eligible for workers’ compensation. For decades, GGRM has helped workers who have been injured on the job to get the compensation and care they deserve. If you have been denied coverage for a work-related injury, it’s important to talk to an experienced attorney who can help you protect your rights. Whether you need legal representation immediately or would just like to speak with an attorney, give us a call at 702-388-4476 or visit our website.