There's a (potentially large) mistake in my contract, is there a need to address it?

Question

A company that's using the contracting firm said they'd pay me $X per hour, and the same amount for hours over 40 in a given week. Apparently there's an exemption from the 1.5x pay for certain engineering positions, which I was told this was. I was (and am) happy with the pay we agreed on.

So the contracting firm sent me a copy of the standard contract to read and sign. But the contract said I was to be paid 1.5x the amount of my normal rate for overtime.

Before signing, I sent them a message saying, "I think this is a mistake." And they came back and said, "You're right, it's supposed to be 1x for overtime." They sent me another copy, but it had the same mistake in it. At that point, I signed it since we were on the same page regarding the terms even though it was still wrong. My thinking was that it was just a piece of (digital) paper that was wrong, and in my favor anyway. The actual contract (the intangible agreement between the two parties) was correct and mutually agreed upon.

My question is, with the contract as it stands, is there any risk that I am taking by not fixing it? I'm getting paid the amount I expect (1x for overtime) and have no intentions to pull more out of them just because the written contract is wrong. I don't want to be in a bad situation, but I don't want to go through the hassle of changing something that doesn't matter either.

Note: I live/work in New York state

Answer 1

Clearly in this case the writing does not reflect your actual agreement. If you were to bill for 1.5x your normal rate for hours over 40/week, relying on the writing, and it came to court, you might win, based on the general rule that matters explicitly covered in the written agreement are treated as final, and evidence of contradictory oral agreements are often not accepted to contradict the contract document. This is known as the parole evidence rule.

But you don't plan to issue such a bill, so that won't come up. I don't see that you are at any legal risk. But you could send the client a letter saying that you signed the contract document so as not to hold the job up, but you think there is a mistake in it (pointing out exactly where and what the error is). This would help establish your ethics and good faith, so that if somehow there was a problem over this later (although that seems unlikely) you can't be accused of any improper actions. Keep a copy of any such letter.

By the way, if you are an independent contractor, the governmental standard for overtime does not normally apply (in the US). If you are an employee of a consulting company, it may or may not, depending on your salary level and the kind of work you do. An independent contractor can contract for a higher rate for overtime hours, if the client is willing to agree. Many clients will not be willing.

Answer 2

The contract itself does not present much of a danger, but the fact that they messed this up repeatedly does raise the question of whether they will mess other things up. For instance, when they fill out your 1099/W2 form, will they do so based on your actual income, or based on the 1.5x rate?