The Labor Commission, increasing the cost of business

The Nevada Labor Commission was created to protect the worker against the abuses of business in regards to wages, whether for non-payment of wages to minimum and prevailing wage issues. What they have become is a financial burden to many businesses. While I’m all for punishing companies that violate law, there are so many laws, rules and regulations that have to be followed that it can cost a small company tens of thousands of dollars to try and comply. Most of the laws directly affect the cost of doing business, like minimum wage laws and prevailing wage laws. There are many studies that have been conducted that show how minimum wage laws increase unemployment, especially among the unskilled and low skilled workers. Prevailing wage rates or Davis-Bacon wages are just over inflated minimum wage rates. I can employ an unskilled laborer to run a broom and shovel for a respectable starting wage, but when prevailing wage rates kick in, that unskilled broom operator makes more than three times that amount, currently $44.04 in Clark County and when you add the burden to the company that unskilled employee is costing the company over $55.00 per hour. But that’s not the point of this article. This article is going to look at one indirect cost the Labor Commission imposes on business. Unlike any other proceeding, the burden of proof lies with the claimant or the accuser, but in the eyes of the Labor Commission, the defendant is guilty until proven innocent. The burden of proof lies with the business to prove their innocence, regardless of the claim’s validity. The cost to a business to defend against a claim can cost into the hundreds of thousands. These costs can cripple small businesses and force them out of business. I have personnel experience in one case that took over five years to resolve and the only reason it is not ongoing was because it was cheaper to make an offer to settle than to defend the claim. The administrative costs to the company for the research, the written responses, the hearings and investigations over the five years have nearly exceeded the cost of the original claim and that doesn’t include any legal fees. What has to be decided by the company, regardless of being right or wrong, the associated costs of defending weighed against the cost of settlement. In the case mentioned above, the company was 100% right and had proof to prove their innocence from the fraudulent claim and 99% sure the case would be decided in our favor. But is the cost to be right worth the expense? Sadly, in most cases the answer is no. It does not matter that we had signed employment contracts, written polices and documented correspondence; that was not enough evidence. We provided financial records, job records and reports and that was not enough for the investigator. So after five years of meetings and providing mountains of evidence supporting our claim, it was cheaper to offer a settlement. Please see here for links to sources.