After the holidays, Santa was met by a process server who handed him a lawsuit, listing him and Mrs. Claus as defendants. It was no use for Santa denying that he was good ole St. Nick as his identity was not in question. Thus, he accepted the lawsuit.
After a review of the lawsuit, Santa’s attorneys (Frosty, Kandy and Kane) explained that he was being sued by several of his elves for failure to pay overtime and provide proper itemized paychecks. Mr. Frosty, the senior attorney told Santa that these kinds of lawsuits are very common in California and can do great damage to an employer unless the employer sets up his workforce correctly.
Santa explained that he paid all his elves a salary. His last and first quarters were his busiest which required the elves to work extra hours. The second and the third quarters were not as busy, resulting in his elves working less than 35 hours a week during those two quarters. With the elves agreement, Santa made an arrangement to pay the elves the same salary throughout the year so they would not have a reduction in pay during the slow times.
When Mr. Frosty, Esq requested the employees’ time cards, Santa advised that the elves rarely completed timecards, and that none for those elves who worked on Saturdays had completed any time cards. Additionally, the elves who worked Saturdays were paid with cash or candy canes (the official currency in the North Pole). Santa also explained that two of the elves plaintiffs were paid the full salary, even though they did not work in the first three quarters in 2013 due to their injuries.
Under California law, these arrangements were most likely a violation of the law and can result in the employer paying damages and penalties. Each elf was entitled to a paid 10 minute rest break for every four hours worked and entitled to at least a non paid 30 minute lunch for any work day where an elf worked 5 hours or more. Further, even though Santa clearly overpaid, at least 2 of the elves, he cannot use those payments as a credit. Also, since there were no timecards, it is assumed under the law that the elves were correct on any amount of hours they said they worked.
Mr. Frosty, Esq recommended that Santa incorporates his business as soon as possible. He also advised to make sure that each employee clocks in at beginning of the workday, clocks in and out for breaks and lunches and then clocks out at the end of the day. Santa must monitor his employees to insure their taking their lunch and rest breaks otherwise an 8 hour work day will result in overtime.
Mr. Frosty, Esq also advised that Overtime is to be paid whether or not the elves are on salary, as salary is not the determining factor as to whether an elf is exempt from overtime.
Although Santa went through a bad experience in this lawsuit, he kept his faith in the other elves and with the help of Mr. Frosty, Esq he is now incorporated and better prepared to run his gift factory so he can in the future provide us all with a wonderful merry Christmas.