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Employers are getting pounded in labor court cases

by Garland M Baker on April 21, 2008

And an employer could be just a homeowner

Employers are suffering heavy losses in their labor court battles with employees. Judges are also clobbering employers with hefty awards to the employees to serve as a warning to bosses to stay out of court.

In one labor case, a court decree Friday surprised a retired couple. A judge ordered them to pay thousands of dollars to a guard service. The judge ruled that the proprietor of the service really was an employee and not an independent contractor. The homeowners have contracts between themselves and the guard firm to prove otherwise, but the judge discarded the documents as rubbish.

Another case is unbelievable but true. An employer fired a worker after giving the worker three letters of reprimand for disobeying orders. It is law that an employer must give a worker three letters before firing the individual for disobedience. In this case, the worker sued and won. The worker said the third letter should have read, “We are calling your attention for disobeying an order for the third time, so you are fired,” not what it read: “It is the third time we call your attention for disobedience, and since we have called your attention twice before, you are fired.”

The judge ruled each letter is a punishment and the third letter should not mention the first two. One Costa Rican lawyer calls this kind of law kindergarten jurisprudence.

Why do employers lose and employees win in labor court? Here is an analysis:

There are three elements that make a person working for another an employee in Costa Rica: prestación personal, remuneración, and subordinación laboral.

Prestación personal means a worker must do his or her work personally. They cannot hire others to do their work. Remuneración means payment. Workers receive payment for their work. Subordinación laboral means the worker takes orders.

So in the case of the homeowners, the judge put a lot of weight on the fact that the operator of the guard service did most of the work himself and that the couple contracted directly with him as an individual and not as a third-party corporation.

So the guard was entitled to be reimbursed for overtime, vacation, the Christmas bonus, social security charges and other employee benefits. Usually corporations can only collect the contract amount.

Legally speaking, certain inherent principles apply to legal matters with employees, and these principles are the reason workers win most of the time in labor court.

The protector principle grants workers social protection. Courts act in dubio pro operario. When in doubt regarding the circumstances and evidence of a conflict between an employer and an employee, the court must rule in the favor of the employee. In addition, many times different laws can be applicable to the same situation. In theses cases, the law most favorable to the employee applies.

The non-renounce principle grants employees non-renounceable rights. This means workers cannot renounce their rights under any circumstances. The nature of labor law in Costa Rica guarantees worker rights over any private agreement.

The continuity principle views all labor contracts as indefinite. This means labor law contemplates that contracts with workers do not have an end. They go on forever. This is why when one company buys out another, the law guarantees the employees all

their rights under the new administration. This principle also gives employees the benefit of the doubt when they do something wrong. If a worker breaches any rules, and the employer does not take immediate action to correct the situation, the lack of discipline turns the breach into a right.

A perfect example of this principle is cellular telephone use in the workplace. Nowhere in the labor law is there an article that states employees have the right to use cellular telephone at work. However, most employers do not curb their use, turning the use into a right.

The primacy of the reality principle guarantees workers — no matter what any contract or agreement states, whether it be for an indefinite or definite term, outsourcing or for professional services — that the reality of the circumstances will rule. Therefore, if a judge believes a freelancer is an employee, regardless of an existing contract to the contrary, the contractor will lose in a dispute and have to pay the freelancer all the benefits of an employee with interest and costs.

The reasonability principle gives the benefit of the doubt to the employee. In many cases, employees do not know for whom they work for in a job. They know who gives them orders and who reprimands them, but they do not know the legal entity responsible for their rights. In these cases, the employees can sue everyone they think is responsible and request everything they believe they are due.

In many situations — one example is construction — many companies work together on a job. A construction worker in a labor dispute can sue the construction company that hired him or her as well as the owners of the project individually.

Recent changes to the labor law extended the statute of limitations from six months to 12 months to file a claim against an employer. The statute of limitations is suspended when an employer denies the worker a letter specifying the reason for dismissal or when a worker files a claim at the labor ministry. When an employee files a lawsuit within the proper period, the worker can file for up to 10 years worth of benefits.

The moral of this article is a simple one. Do not play games with labor relationships in Costa Rica. The labor courts are ruthless in dealing with employers who try to skirt the rules.

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