Episode Description
This week on Digital Shop Talk Radio we are doing something a little different. Our guest, Jennifer Grady, Esq., is the daughter of auto-repair shop owners and now specializes in employment law and leadership training. Jennifer is going to share some insight with us on how to handle challenging legal situations, how to effectively implement sexual harassment training in the workplace, and record-keeping like a pro to protect yourself down the road.
Episode Transcript
*This transcript was generated using Artificial Intelligence. Errors may occur. If you notice an error, please contact [email protected].
Tom Dorsey (00:02):
Good morning and good afternoon. Welcome to this week’s edition of the Digital Shop Talk Radio. It’s episode 31, September 4th, 2019, and we’ve got a great show for you. It’s actually a great follow up to some of the shows that we’ve been having over the last several weeks talking about recruiting and building strong teams. And so we thought today we’d bring in another perspective on that and give you some more help and information concerning your legal needs inside of the shop. And so we’ve got a great guest with us today, Jennifer Grady from the Grady Law Firm in Beverly Hills, California. That’s how we roll in the Digital Shop Talk Radio. Jennifer, please introduce yourself. Tell us a little bit about you. I hear you’ve got some little bit of background in what we do in the automotive industry.
Jennifer Grady (00:52):
I do actually, my parents have an auto shop down in Temecula, California. They’ve been a part of ATI for quite a while, so they were my first client when I went out opening my law firm in 2012. So I’ve learned a lot from them. And then I’ve also done webinars for ATI and presentations to their 20 group. And then I do have other clients in the automotive industry. So I think it’s a great mix between my practical knowledge and legal knowledge to be here with all of you and share some information that can hopefully be helpful to your businesses.
Tom Dorsey (01:24):
No, thanks for coming on. Welcome. That’s fantastic. Yeah, you actually came highly recommended from ATI. So tell me a little bit, I mean, do you specialize in auto shops, the passion that was kind of instilled by your parents, I would imagine from their business and probably some of the things that you saw in their lives, trials and tribulations and thought, Hey, this is a good fit and I can help folks out?
Jennifer Grady (01:47):
Yeah, so definitely I gained the entrepreneurship from my parents, had my firm now almost eight years, so really enjoying being a business owner. So I do bring that perspective. And then having seen their business and done trainings inside their shop and working with all of their employees good and bad, definitely have a lot that I’ve been able to bring with my clients. I do have some that have come through ATI, some that have just come naturally. So it is a good portion of my business.
Tom Dorsey (02:18):
And so when you get, say, a new automotive shop client, I mean, what are some of the first things that you would say recommend folks are looking out for to make sure that they’re protected, especially in California?
Jennifer Grady (02:34):
Yes. So as you may know, California is the most employee friendly state, so that can be a challenge for employers. So what I really like to do is be a coach on the front end and teach you everything that you should look out for. Because there’s no central place where all this information is stored. It’s me being on mailing lists and writing blogs and proactively telling my clients what they need to do. They might come into me and say, okay, I started as a tech, now I have my own shop. What do I do? So first thing would be if you don’t already have a legal entity, you would want to incorporate your business with the Secretary of State in California. So you could either do a corporation or an LLC. That’s actually pretty easy to set up. Thing I would recommend is talking with your CPA about which one to do in terms of taxes.
(03:27):
And so then once you do that, you would want to have some bylaws or operating agreement. And a lot of times we have husband wife teams or keeping it in the family, so you would want to have some documents talking about ownership and who gets what. And then also succession planning just briefly is something that you would want to consider. So if anything were to happen to you, would your business go to your spouse or your children or a third party? So you would want to speak with the estate planning lawyer or business lawyer to help you get that set up.
Tom Dorsey (04:01):
And so the first thing you’re going to do is just do a check up on their legal structure of their entity. And then what about from a hiring and operations perspective? I mean, there’s a lot of liability I’m sure in a shop. And then also regulatory issues. And then of course we’ve been talking about how to build strong teams and how to hire really good people. And then there’s so many variables and things that you need to consider when you’re looking at recruiting and hiring practices. And again, in California, I hate to make this about a California show because we got shops all over the world, but I think it’s bootcamp for lawyers in California, wouldn’t you say? What’s that?
Jennifer Grady (04:53):
I have clients with offices in multiple states, New York, dc, Texas
Tom Dorsey (04:58):
Health. Oh yeah, sure.
Jennifer Grady (04:59):
And so we have to make uniform policies for the company, and they always say it, California, that’s what we’re going to do because it’s the most complicated. So we’ll be ahead of the game in our states.
Tom Dorsey (05:11):
If it works there, it’ll work anywhere. Yes, exactly. But specifically when it comes to hiring practices, there’s always a lot of questions. And I think probably a great bit of information if you can provide it is structuring how you pay technicians, right? Because some think they have to pay hourly, but I want to pay a flat rate. How do I make sure that I’m protected from a compensation perspective?
Jennifer Grady (05:39):
So first thing that I would recommend is to get an offer letter in writing, and that is where you’re going to determine whether they’re exempt or non-exempt. So a lot of times people go around the terms 1099, and that’s not a legal term, that’s just the tax form that you’re using. So somebody who is a manager is probably the only person who’s going to be exempt. So everyone else under California would be non-exempt, which means they have to get meal and rest breaks and over time. And so you’re really going to have to track that with your timekeeping. So you should confer with the lawyer on that to make sure everyone in your shop is properly classified. And then you’d put this in an offer letter. And probably a lot of people don’t have that, and that is where you would say their job title, whether they are bringing their own tools or whether you’re providing them, because if you provide them, you don’t have to do that extra rate.
(06:33):
And so I’ve had definitely people call me and look into the nuances of that. You would also have their hourly rate, their hours, any health benefits or retirement plans that you offer. You’d also say that they need to bring appropriate documentation for their I nine, which you have to do within three days of hire. So a lot of people probably miss that. And so you’re just going to outline the relationship. And then on the first day of work, we have a whole list of documents that they would need to sign, and then you’re going to keep that in their personnel file. And so then we can talk a little bit more about that and what we would include in there unless you
Tom Dorsey (07:14):
Yeah, sure. Yes,
Jennifer Grady (07:16):
The personnel file is a little bit tricky because there is so much that we need to put in it. First we have the offer letter and the job application. You would want to save that in case there’s ever any claims about discrimination in hiring, if you’re going to do drug testing, would want to have a standalone document that says they agree to it and what the terms of that are, maybe an arbitration agreement that can help keep any lawsuits outside of the court. And then I always have a meal unrest break agreement that says they know and understand that they have to take their breaks and they have to take their lunch. And if they don’t, they can be disciplined.
Tom Dorsey (07:57):
And is there a place where somebody could go maybe to get download some of those docs as a template or something like that?
Jennifer Grady (08:06):
So some are on the Department of Industrial relations website. So for example, in California we have something called a notice to employee, and that is where you’re telling them which type of paid sick leave you’re offering, who the workers’ compensation carrier is. So that is required by law. Otherwise I have a suite that I have been preparing over the last seven or eight years is something we can share. Sometimes if you’re part of an HR group, like California Employers Association or you work with SESCo, sometimes they can provide those as well. So few options out there.
Tom Dorsey (08:42):
Yeah. Fantastic. Thanks. And so we are digital shops here. So can they store those documents in a digital file? Does it have to be a physical file? And how long do they have to keep that stuff around for even if you let somebody go or whatnot?
Jennifer Grady (08:57):
Sure. So I am a paperless firm myself, so I have everything on Dropbox. I have Carbonite backup, and then I have a practice management system. So I have them in the three places. So if you were to do that, I would recommend you have it on a server or somewhere that only a few people, maybe one or two have access. Or if you have an offsite shop, maybe in a locked file cabinet, I did have someone who his employees broke in and stole their personnel file. So you do want to make sure that you have backup copies and that you do it right away. And so you don’t just kind of throw it in a pile and forget to scan it. And then two years later when we need to look at it, you’re like, oh my gosh, we don’t have it. And then when you do scan it, scan the whole document with the signature so that we know what the signature page goes to. Otherwise it’s not too helpful.
Tom Dorsey (09:49):
Yeah, that’s great advice. And it was free. So tell me a little bit about, okay, now I’m pretty covered. I got all my docs in there and I got my new hires in. Tell me a little bit about how I should be taking care of day-to-day interactions with my staff. Sometimes I might be barking orders at ’em, sometimes I might be congratulating and cheering, sometimes I might even be taking ’em out for a dinner or something as a celebration. Should I be worried about how I manage that and document that?
Jennifer Grady (10:32):
Yes. So I say as a lawyer, documentation is key. And you had asked me how long to keep documents. I would say at least four years from the time that they leave the business because we have statute of limitations. You may have heard of that with a lot of lawsuits. You want to at least have that document in case that happens so you have proof of whatever happens. So in terms of documentation, I do think if you have any discipline, a verbal warning isn’t very helpful either. If I say, okay, let me see the file, and there’s nothing in it. So I always recommend we have a form we use for discipline that you can type up what happened, reference that the site in your employee handbook. So if you don’t have an employee handbook and you have two or more employees, I definitely recommend getting that. That’s kind of the overview of your entire business. And then it has all of the leave laws in there. It has your own company policies, and so you can refer to that a lot. And anytime there’s any issue that comes up, we go and we look at the handbook and we see what the roles are.
Tom Dorsey (11:40):
And so you help folks build, because I imagine an employee handbook should be specific for the business. It’s not like you can just go buy one at borders or something, right, order it on Amazon. So you help folks prepare employee handbooks?
Jennifer Grady (11:55):
Yes. So we have a very long questionnaire from everything to what’s your tardiness policy, taking personal calls at work or your dress code policy, are you providing equipment or clothing or anything like that? And so we spend a lot of time getting that information, putting it in the template which we built. And that also has all the up to date leave laws. So in California there is new parent leave. If you have 20 or more employees, if you have five or more employees, there’s pregnancy, disability, leave. So there’s all these that you may not have any idea about. And so those are going to be in there. They’re mandated by the state of California. And then we want to make this personal, so we’re going to have your welcome message message from the president, all the contact information and who to call. And some companies are more strict than others or they have different personalities. And so we like to convey that in the handbook since that is something that you’re giving to the employee on the first day.
Tom Dorsey (12:57):
Yeah, there’s so much nuance when it comes to that stuff. You sure don’t want to have to swim through all that by yourself. You don’t want to learn about it when you get a letter from the state.
Jennifer Grady (13:08):
That’s how most people learn.
Tom Dorsey (13:10):
So right,
Jennifer Grady (13:11):
All of these types of podcasts and getting the word out there, it’s kind of preventive maintenance. And I know that you’re all preaching that to your customers that cost you a lot more to replace an engine than maybe to do an oil change or transmission fluid change. So that’s really what we’re doing is arming ourselves upfront. It’s a lot cheaper to spend few hundreds or thousand or two on a handbook than tens of thousands later. And if you want to get into what lawsuits look like, we can talk about that as well.
Tom Dorsey (13:45):
Yeah, and sure, and that’s a great analogy. How often should I bring my legal car into your shop for maintenance checkups? Is that annually? And bring review changes to the laws and then add that to the handbook. And then also I’m sure the other documents that I get in my hiring process and other things.
Jennifer Grady (14:10):
Sure. So the important thing to know about California is that the law changes twice. And so that would be in July, things go into effect in July and January 1st. So even minimum wage is down to the city. So some change January 1st, some change July 1st. There’s even one city in northern California that changes October 1st. And so that can change a whole host of things as well. And then we’re always going to seminars to learn the change in the law, and so we would put that in the handbook. Even other things as to whether someone is an independent contractor or an employee, that law is changing all the time. So we’re kind of always trying to figure that out and help. But other than that, you would want to check in and just make sure you’re doing everything right, talk about any potential issues you have. If you do want to terminate someone, I always recommend doing a performance review first. That way they’re on notice and it’s their job to lose. I find that when people are terminated abruptly and they had no warning, that’s when they get upset and they go and they call a lawyer, and then they’re going to start looking for other violations that weren’t even a part of the reason why you let them go.
Tom Dorsey (15:23):
Yeah, that’s great. That’s great point. And then, so let me ask you this. I am on top of it and I’m regularly updating. Is this, because any business owner really, you’ve got a potential legal action from staff, you got to cover yourself, make sure that you’re doing everything according to regulation, but then you also have potential legal action coming in from the customer side of it too. And so you got to make sure you’re covered both ways. So how would I make sure I, so I guess what I’m asking is if I show a history of maintaining this and being up to date legally, is that going to kind of go in my favor when I get somebody, I don’t want to say frivolous, but there’s a lot of frivolous stuff that happens. Is that going to look favorably on me if I maintain my legal vehicle regularly?
Jennifer Grady (16:24):
So first of all, I would say since we can never prevent,
Tom Dorsey (16:28):
Yeah of course
Jennifer Grady (16:28):
we want to get insurance. So you’re going to want general liability insurance for any accidents, and then you’re going to want to look into employment practices liability, EPLI insurance, and that can cover these discrimination and harassment claims. And then there’s a subset of that for labor claims. So it can be expensive, but I definitely recommend calling your broker and looking into that. So step one, insurance, step two, always keep good records, good documents. Step three, train your employees, train your managers, make sure they know how to take complaints because the ones that get to those really big judgements are the ones that botched it. So for example, if there’s a winery that might be in Temecula that had a harassment suit, and instead of they actually let the person go and then they rehired him, and so he was harassing people and doing all sorts of crazy things, and then that resulted in an $11 million judgment.
(17:28):
And so that winery, unfortunately is no longer there anymore. So one thing would be if something comes to you, call counsel right away. If you get a letter or a lawsuit in the mail, don’t delay and just kind of throw it to the side and hope it will go away. And you usually have only 30 days to respond, and then your lawyer needs time to prepare a response. So that’s another thing. One other thing I recommend I had mentioned is the arbitration agreement. And that can keep it out of the courts and keep it private. And then another thing I always do is recommend a severance agreement. And so if you’re going to let somebody go, you may want to give them two weeks salary in exchange for them agreeing not to sue you. And I think that’s another really helpful thing that people overlook.
Tom Dorsey (18:15):
And that’s a great point about keeping that out of the public eye. What happens when I have maybe some malicious reviews and stuff like that? What are options? I mean, do you advise folks on best practices when it comes to maybe slanderous and stuff that could be damaging to their business?
Jennifer Grady (18:35):
So if it is a defamation by definition, it would have to be untrue. So I know this is a very tricky area, and I know Yelp really does not help. I’ve heard a lot of people with issues with Yelp when they just say hands
Tom Dorsey (18:49):
Off, you pay enough. Wait, say that, cut that out, dusty,
Jennifer Grady (18:54):
Everyone has opinion
Tom Dorsey (18:57):
Lawyer on here, don’t mess with me.
Jennifer Grady (18:59):
So I mean defamation, if it is. So, we’ll remember, slander is spoken, libel is written. So if it is actually untrue, then you can sue them for it if you show that you incurred damages. So probably people don’t do that too much on Y. So I would recommend talking to the person or writing a response, acknowledging it. I think there’s nothing worse than seeing someone with one or two stars and they never responded to any reviews at all. And if you do have a lot, then now we’re kind of wondering, you do as a consumer have to weed through that and figure out what’s the average here? There’s a lot of complainers nowadays. So I think just handling it gracefully, figuring out what’s the issue, can we make it right? Then a lot of times, sometimes people do take these down. If it’s a competitor that’s doing this sneakily, it can be a little bit more challenging to prove, since I know Yelp doesn’t really take that off there.
Tom Dorsey (19:58):
What would you do like a cease and desist or something like that to somebody if it was a malicious, like a competitor review or maybe a disgruntled former employee or something like that,
Jennifer Grady (20:08):
If you know who it is. I haven’t gotten into doing that. I know it is challenging, but I would maybe start with the response section.
Tom Dorsey (20:18):
Yeah, yeah. That’s what I always recommend is just bury it in good stuff because that’s kind of how that thing works. I mean, they’d really have to go out of their way to keep pinning some bad review about you. If you throw 200 new reviews on top of it, pretty soon nobody will find it. But I mean that stuff I guess is case by case
Jennifer Grady (20:38):
One bad one. Hopefully people can see through that.
Tom Dorsey (20:41):
Yeah, yeah, yeah, exactly. Right. And it’s a lot of averages. It’s funny too, because if you see something that’s five stars and there’s no bad reviews, all of a sudden you’re like, ah, that’s fake. That’s probably fake. There’s always that one person out there.
Jennifer Grady (20:58):
Yeah. Now it can be a little more human. And then do you help with the reviews at all or
Tom Dorsey (21:04):
Yeah, yeah, we do review management reviews are always a great, it’s one of those underutilized things I think that shops have an advantage of in a digital age is because nothing’s stopping you from responding to all those reviews. I recommend respond to a hundred percent of the reviews good and bad, put it out there because you get a lot of opportunity to talk about your culture and put SEO valuable keywords in your response so that you get some ranking factors. And there’s a lot of good things that come. Don’t let somebody else talk for you, represent your business for you online, get out there and do it yourself.
Jennifer Grady (21:49):
And I like to see that companies are engaging with their customers as opposed to just no one ever responding ever. It shows an interest in your company and its reputation in the community.
Tom Dorsey (22:04):
Yeah, no, it drives value. You say, oh, this person cares. This person is local. If that’s important, this person is engaged. And gosh, that just tells me that if I do happen to have a bad experience, well at least I’m going to get a response. It might not be the one I want, but I’ll get one. Yeah. So that’s fantastic. So what about from a planning perspective? If I’m looking at, gosh, I just inherited this business, or I’m just hanging my shingle for the first time. I’m 22 years old, just got out of school, I want to be a success 50 years into the future, what are we doing from a legal perspective on business planning?
Jennifer Grady (22:46):
Sure. I would start with the business plan first, and there are great resources that are for free. Actually the Small Business Association or the SBDC, I actually started there when I went on my firm went out on my own. I really didn’t know anything about business. And I went there and I worked with a coach and we even did figuring out the legal part and then researching it myself too. So I wouldn’t stop there, but that’s a good place to start. And then we talked about marketing. We did the business plan, and that’s a good way for you to figure out how much capital am I going to need? Can I afford all this equipment? Can I afford my staff and labor? And then update that every year. And so in terms of succession planning, again, you would want to have documents with a lawyer who can help with that to talk about who the business is going to go to.
(23:37):
You may also look into key person insurance. So if you do have a partner in your business that maybe isn’t related and you both have, is the business going to go to your spouse if you pass away or are we going to use the insurance to buy out your spouse and then give the money to your partner? Because not every spouse wants to be involved or has this experience or the knowhow, or maybe they have their own career. So that is something. And so you’d want a buy sell agreement and that can talk about that relationship and what to happen. You also want to maybe put your business in a trust, and so that is a little bit harder to find if you were sued. And then that also could avoid probate, which is very costly and time consuming. So if you pass away, you don’t want your heirs spending all the money that they would earn on lawyers and going to court. You want it to pass to them very easily.
Tom Dorsey (24:29):
Yeah, no, that’s a great point. So again, it just seems like, so in what order should I do something? Should I prepare my business plan then come see you, or should I just have a summary of my goals and what I’m trying to do and then come see and you help me develop that business plan? What would you say is the best approach there?
Jennifer Grady (24:50):
So I wouldn’t say don’t come if you don’t have your business plan. A lot of people don’t want to do it. They don’t know how to do it. It’s complicated, but that’s just a thought. So a lot of times if you come, it’s too bad when people say, oh, I want to research it first before I call you. Well, that’s why you’re calling me because I already know the questions and why are you going to waste your time doing that when we can get right down to it? So I would say as soon as you were ready to take it seriously, is the time to call a lawyer and once you start having money on the line, absolutely. Once you hire people before you get that lease, I know that if you don’t know what you’re doing, you can get taken advantage of by landlords, especially if you’re a first time Leslie, they may have to make a personal guarantee.
(25:38):
And if you have partners, you don’t want to be that one person with a guarantee and they’re not. So you want to see how to spread that risk around or after maybe two or three years, if you do have a history of good payments, seeing if you can get off that guarantee or are there cam charges? Is your lease going to exponentially increase after a few years? So all those things, you may want a real estate lawyer to help look at your lease and somebody who’s savvy and they know what they’re doing and what to look out for, it’s definitely worth that money up front rather than getting in a bad lease that now you’re stuck for years and it’s going to be huge penalties to get out of
Tom Dorsey (26:17):
It. Yeah, definitely. Yeah, it’s smart. Gosh. And I know that there’s so many people out there, they just kick themselves, they say, because it kind of happens that way. It happened with me. It’s just, gosh, I start this business and I fill out some forms and then I think, okay, well I’ll do this next week, and then I just fall into things and then I look back and go, oh my gosh, I wish I would’ve thought about this or developed this better or covered myself in this fashion. So really it does, it behooves you to get out there and just start it out the right way from the beginning and avoid all those pitfalls before you even have to look out for ’em. And then of course, you can always blame Jennifer. That’s what I like. I like scapegoats.
Jennifer Grady (27:10):
I would say in the beginning, and just for an example, for me, I hate math and I hate accounting. And I know, I mean, at the very least, I started, I did keep track of every single expense even before you incorporate, you can still keep track of those and maybe didn’t hire the right CPA the first year. And so then I spent the next two years trying to fix it.
Tom Dorsey (27:33):
That’s
Jennifer Grady (27:33):
My one weakness where I’m always like, can you please just teach me so that I don’t have to get this big amount of money that I have to spend every April and then the next year I learn a little bit more, okay, here’s a tip from profit first. Have a separate account for taxes that is auto withdrawing Every single week, you’re going to have to make quarterly payments. You’re going to have a big surprise if you’re making money, which is a good thing, you’re going to get hit with taxes. So you want to have that money, calculate how much you’ll owe, withdrawn every week. And then when you do have to make them, it’s not a crisis because that money is there in your account. So one of the best things I
Tom Dorsey (28:10):
Do, yeah, it’s structured and it’s just such a relief. It’s just one of those things because that’s a great point is that when you’re a new business owner, you’re wearing so many hats and when you find yourself in there, something always falls through the cracks in all these areas. You can’t be perfect at everything. And usually you’re going to be kind of halfway at most and just offload it, farm that stuff out as much as you can to somebody who can focus and is an expert in those areas. And it becomes so much more. It’s just math, right? If your numbers work out and gosh, you can afford this many hours of help and this many, this much time, then take advantage of it because like you said, brilliant advice is that it’s, and shop owners know this, right? Because they make a living doing this. It’s so much more expensive to fix somebody else’s mistake than it is to just maintain it the right way the first time. So if there’s any questions, if you folks want to chat something in while we have Jennifer on here, feel free, and Dustin, you can let us know if you got any questions out there while we get her. And then of course, you can always extend the conversation onto our Facebook forum. Jennifer, how do folks get ahold of you?
Jennifer Grady (29:23):
Great. So you can find us at www.gradyfirm.com. You can give us a call at (323) 450-9010, or you can email me at [email protected].
Tom Dorsey (29:37):
That’s fantastic. Yeah, no, thank you very much for coming on this week. Like I said, I think it was a great way to kind of finish off the conversation that we’ve been having with our audience about recruiting and developing both a culture and this really, we talked a lot about transparency and putting out getting your staff on board and having them buy in and be participating in that culture. Well, you know what? There’s no better place to start than a legal business plan. Really putting those goals on paper and committing to ’em, and then of course, making sure that you’re protecting your crew and your customers and yourself from a legal perspective with the help of somebody as fantastic as Jennifer Grady. Jennifer, again, I can’t thank you enough for coming on and helping us out. I think people learn a lot of stuff. And if you want to get ahold, if you want to continue that conversation on our Facebook form, you know where to find it, get ahold of Jennifer, if you have anything specific that you’d like to ask. And until that time, until next Wednesday, we’ll be doing this all again, same time, same place, Wednesday, 10:00 AM Pacific time, 1:00 PM Eastern. Until then, get out there and make some money. Thanks a lot, Jennifer. Really appreciate it. Good luck.