Administrative AgenciesThe Federal Trade Commission Act and Consumer Protection Laws
Antitrust: The Sherman ActThe Clayton Act, The Robinson-Patman Act, and
Antitrust Exemptions and ImmunitiesEmployment Law
Environmental Regulation
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
Employment Law
Take care of those who work for you and you’ll float to greatness on
their achievements.
H.S.M. Burns, quoted inMen at the Top (Elliott, 1959)
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
v Legislation protecting employee health, safety, and well-being
v Legislation protecting wages, pensions, and benefits
v Unions and collective bargaining v Equal opportunity legislationv Employee privacy and job security
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v Historic rule of law: employment at willw Employer may fire an employee for any reason
Overview
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v Modern employment law: employment at will unless the employee is protected by a statute in several categories:wEmployment Security wEmployee Health, Safety, and Well-Being wFinancial Protection wEmployment DiscriminationwEmployee Privacy
Overview
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Job Security
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Employment at Will Rulev Traditional employment-at-will rule first
appeared around 1870: either party can terminate an employment contract of indefinite duration for good cause or no cause
v Doctrine limited today by statutes and three common law exceptions:w Public policyw Implied covenant of good faith & fair dealingw Employment promises
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Wrongful Dischargev In states recognizing
exceptions to traditional rule, a terminated employee may sue the former employer for wrongful discharge or unjust dismissalw May also include tort
or contract claims
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Public Policy Exceptionv Terminated employee claims the discharge
was unlawful because it violated state public policy in one of three ways:w Employee refused to commit unlawful actw Employee performed public obligation
such as military duty or whistle-blowingw Employee exercised legal right or privilege
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Whistle-blowingv A whistle-blower is an employee who
publicly discloses dangerous, illegal, or improper behavior by the employer
v In Franklin v. The Monadnock Company an employee was terminated for complaining to human resources about a dangerous coworker and the employee filed suit for wrongful discharge
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Breach of Good Faithv In a wrongful discharge
suit based on breach of the implied covenant of good faith and fair dealing, employee argues discharge unlawful because it was not made in good faith or did not amount to fair dealing
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Breach of Promise Exceptionv Courts have increasingly made employers
liable for breaking promises to employees made prior to or during employment
v If employer breaks promises when it fires employee, it is liable for breach of contract
v Cisco v. King indicates that employee manuals may establish terms of an employment contract
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Employee Health, Safety, and Well-Being
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v Workers’ compensation protects only employees (not independent contractors)w Some state laws exempt certain categories of
employees or employersv When applicable, worker’s compensation
laws allow injured employees to recover under strict liabilityw Removes need to prove employer negligence
and eliminates employer defenses
Workers’ Compensation
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v Workers’ compensation is an employee’s exclusive remedy against an employer for covered injuriesw Unless employer acted intentionally
v Types of recovery: hospital and medical expenses, (2) disability benefits, (3) specified recoveries for loss of certain body parts, and (4) death benefits to survivors and/or dependents
Exclusive Remedy
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v Employees recover only for work-related injuries – those injuries that:1. Arise out of the employment
w Close relationship between nature of employment and injury
2. Happen in the course of employmentw Injury occurred within time, place, and
circumstances of employment
Work-Related Injuries
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v In general, a state agency administers workers’ compensation systems to handle and adjudicate workers’ claims
v States fund workers’ compensation by requiring covered employers to purchase private insurance, make payments into a state fund, or self-insure with a contingency fund
Agency Administration
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v The federal Occupational Safety and Health Act imposes a duty on employers to provide their employees with a workplace and jobs free from recognized hazards that may cause death or serious physical harm
v The Occupational Safety and Health Administration (OSHA) issues and enforces supporting regulations
OSHA
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v OSHA requires employers to inform, train and protect employees, especially with regard to hazardous materials and equipment
v OSHA is authorized to inspect a workplace and issue citations for violations of the act and regulations
OSHA Rules & Enforcement
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v Family and Medical Leave Act (FMLA) covers those employed for > 12 months (>1,250 hours) by an employer employing 50 or more employees
v Employers who deny FMLA rights bear civil liability to the affected employee
Family & Medical Leave Act
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v Covered employees may take a total of 12 workweeks of leave during any 12-month period for one or more of several reasons: w Birth of a childw Adoption of a childw Need to care for a spouse, child, or parent
with a serious health conditionw Employee’s own serious health condition
Family & Medical Leave Act
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Financial Protection
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v Federal social security system is funded by the Federal Insurance Contributions Act (FICA), which imposes a flat percentage tax on employee income below a base figure and requires matching amounts by employers to support programs:w Social securityw Disabilityw Medicare
Social Security
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v Covering discharged workers, each state administers a system of unemployment compensation under federal guidelinesw Funded by federal and state unemployment
compensation taxes paid by employersw Workers who voluntarily leave without good
cause, are fired for misconduct, fail to actively seek new work, or refuse other work generally are ineligible for benefits
Unemployment Compensation
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v Employers often contribute voluntarily to employee retirement income through pension plans
v Employee Retirement Income Security Act of 1974 (ERISA) imposes:w Fiduciary duties on pension fund managersw Record-keeping, reporting, and disclosure
requirementsw Guaranteed employee participation
ERISA
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v Remedies for ERISA violations include civil suits by plan participants and beneficiaries, equitable relief, and criminal penalties
ERISA
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v FLSA regulates wages and hours by entitling covered employees to 1. Specified minimum wage whose amount
changes over time, and 2. Time-and-a-half rate for work exceeding 40
hours per weekv Exemptions: executive, administrative,
and professional personnel
Fair Labor Standards Act
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v FLSA prohibits oppressive child labor by any employer engaged in interstate commerce or producing goods for such commerce
Fair Labor Standards Act
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v See U.S. Dept. of Labor Int’l Child Labor Program website
v Until the National Labor Relations Act of 1935 (NLRA or Wagner Act), U.S. workers attempting to organize and obtain better working conditions and pay often were treated like criminals
Collective Bargaining
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v NLRA gave employees the right to organize by enabling them to form, join, and assist labor organizations and to bargain collectively through their own representatives
v The Act also prohibited employers from engaging in certain unfair labor practices and established the National Labor Relations Board (NLRB)
Union Activity
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v NLRA amended in 1947 and 1959 to restrict union activity, but organized labor may still engage in collective bargaining to achieve a collective bargaining agreement and may protest unfair labor practices by employers
Restrictions on Union Activity
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Test Your Knowledge
v True=A, False = Bw Employment at will is the rule of law in all fifty
states.w An employer (100 employees) may not fire a
man for taking a two month leave of absence to care for his seriously-ill wife.
w Workers’ compensation is an employee’s exclusive remedy against an employer for covered injuries
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Test Your Knowledge
v True=A, False = Bw The Fair Labor Standards Act prohibits any
form of child work or labor by any employer engaged in interstate commerce.
w OSHA may not inspect a workplace or issue citations for violations of the act without a warrant issued by a judge.
w An employer may terminate a whistle-blower immediately because whistle-blowers make defamatory comments to the public.
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Test Your Knowledge
v Multiple Choicew Under Workers’ Compensation, employees
recover only for: w(a) Injuries that affect an employee’s ability to
do his or her jobw(b) Work-related injuries that arise out of or
happen in the course of employmentw(c) Injuries that occur during any period of
employment, whether on or off the jobw(d) both A and B
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Information for Discussionv Roughly 6,371 job-related injury deaths,
13.3 million nonfatal injuries, 60,300 disease deaths, and 1,184,000 illnesses occurred in the U.S. workplace in 1992.
v The total direct and indirect costs associated with these injuries and illnesses were estimated to be $155.5 billion, or nearly 3 percent of gross domestic product (GDP).
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Thought Questionsv Do you think that people take advantage of
government employment laws? Do you believe that Workers’ Compensation programs are effective methods to handle the substantial cost of workplace injuries?
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Equal Opportunity Legislation
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v As an amendment to the FLSA, the Act forbids pay discrimination based on gender: employee may not be paid a lesser rate than employees of opposite sex for equal workw Equal work defined as substantially equal in
terms of effort, skill, responsibility, and working conditions
w Unlike FLSA, EPA covers executive, administrative, and professional employees
Equal Pay Act of 1963 (EPA)
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v The Equal Employment Opportunity Commission is an independent federal agency authorized to enforce employment discrimination laws, investigate allegations of discrimination, and interpret statutes by issuing rules, regulations, and guidelinesw See the EEOC website
The EEOC
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v Employer may raise one four defenses in a lawsuit filed under the EPA by showing the pay disparity is based on (1) seniority, (2) merit, (3) quality or quantity of production (e.g., a piecework system), or (4) any factor other than gender
Equal Pay Act of 1963 (EPA)
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Title VII of 1964 Civil Rights Act
v Prohibits employers from discriminating on basis of race, color, religion, gender, or national origin
v Prohibits sexual harassment and discrimination because of pregnancy
v Covers all employers employing 15 or more employees and engaging in an industry affecting interstate commerce
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Title VII Procedurev If an employer’s act violates Title VII, the
aggrieved person must file a charge or complaint with EEOC for investigation and allow agency to either file a lawsuit or obtain resolutionw See EEOC website regarding procedure
v If, after six months, EEOC fails to file suit or resolve the claim, plaintiff may obtain a right to sue letter and file a civil lawsuit
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Title VII Remediesv If private plaintiff or EEOC wins a Title VII
suit, several remedies exist: compensatory damages, reasonable attorney’s fees, and equitable relief
v If discrimination was intentional, an employee may obtain back pay for lost wages and compensatory damages for emotional distress, sickness, loss of reputation, or denial of credit
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Title VII Remediesv Punitive damages are
available if defendant discriminated against current or prospective employee with malice or reckless indifference to plaintiff’s rights
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Definition of Discriminationv Discrimination is refusing to hire, failing to
promote, firing, or otherwise reducing a person’s employment opportunities for a person in a protected class
v Two methods to prove discrimination:w Disparate treatmentw Disparate impact
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v Plaintiff must show s/he was treated differently because of race, gender, color, religion, or ethnicity (prima facie case)
v Once plaintiff proves prima facie case, the burden shifts to employer to show a legitimate and non-discriminatory reason for discriminationw Plaintiff must then prove that employer’s
reason is mere pretext to win the case
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Proving Disparate Treatment
v Disparate impact occurs if an employer has a rule or practice that, on its face, seems non-discriminatory or neutral, but the impact excludes too many people in a protected classw Example: height or weight limits, taking a
written testv If plaintiff proves disparate impact, burden
is on employer to show job-related reason
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Proving Disparate Impact
v An employer may prevail in a Title VII claim if it can prove a legitimate reason for the discriminatory act or practice based on:w Seniorityw Meritw Bona fide occupational qualification
(BFOQ)
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Title VII Employer Defenses
Becknell v. Board of Education
v Facts: w Becknell, a female qualified and certified to be
an assistant principle applied for open positionw A male teacher, not certified, also applied and
received the positionw Becknell sued under state civil rights statutew Substantial evidence existed that the board chose
a male simply based on gender
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v Trial Court Decision: w Trial court granted
summary judgment to Becknell since being male is not “a bona fide occupational qualification for the assistant principal position”
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Becknell v. Board of Education
Affirmative Action
v Title VII permits private employers to design and implement employment programs to emphasize the hiring and promotion of minority candidates
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Title VII and Religionv Employers must make reasonable
accommodation for a worker’s religious beliefs unless the request would cause undue hardship for the businessw The term religion is broadly definedw Undue hardship exists if accommodation
imposes more than a minimal burden on an employer
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Title VII and Sexual Harassment
v Two major categories of sexual harassment are prohibited by Title VII:w Quid pro quo (this for that): when an
aspect of a job is made contingent on an employee’s sexual activity
w Hostile work environment: when sexual talk and innuendo are so pervasive that a hostile work environment is created for the employee
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v Harassers and victims may be either gender
v Keeton v. Flying J, Inc. confirms that Title VII allows recovery when the harasser is a female and harassee is male
v Harasser(s), individual manager(s), and the company are potential defendants
Title VII and Sexual Harassment
Age Discrimination in Employment Act (ADEA)
v Prohibits age-based discrimination against employees or job applicants at least 40 years old
v Covers organizations that engage in an industry affecting interstate commerce, and employ at least 20 persons
v Remedial procedures, defenses, and remedies are similar to Title VII claims
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Americans with Disabilities Act
v Prohibits employers from disqualifying a job applicant or employee if employee can, with reasonable accommodation, perform the essential functions of the job
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Definition of Disabilityv Disability under the ADA is:
w A physical or mental impairment that substantially limits one or more of an individual’s major life activities
w A record of such an impairment, or w One’s being regarded as having such an
impairmentv Employer may not ask about disabilities
before making a job offer
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v Act covers employers who have 15 or more employees and are engaged in an industry affecting interstate commerce
v Accommodation is not reasonable if it would create undue hardship for employer
v Remedial procedures, defenses, and remedies are similar to Title VII claims
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Americans with Disabilities Act
v U.S. Supreme Court trend has narrowed the concept of disability under the ADA
v In the 1999 case of Sutton v. United Airlines, Court held that corrective measures (treatment, available cure) must be taken into account in determining whether an impairment is a disability
v In Toyota, Supreme Court required the disability be permanent or long-term
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Americans with Disabilities Act
Employee Privacy
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Overviewv Employer interests in surveillance of the
workplace may conflict with employee privacy interests
v Unless otherwise specified by statute, U.S. Constitution does not apply to private employmentw Federal privacy laws typically apply only to
federal employees and state law covers private sector employees
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Employee Polygraph Protection Act of 1988
v Applies to private employers and current or prospective employees
v Enforced by Department of Labor (DOL), an employer may not:w Require or request employees to take a
polygraph (lie detector) testw Use or inquire about polygraph resultsw Discriminate based on polygraph results or
an employee’s failure or refusal to take test
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v Certain employers exempted: government, private firms with security-related interests, private firms investigating economic loss
v For violations, DOL may file suits or issue civil penalties and private parties may sue for damages and equitable relief
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Employee Polygraph Protection Act of 1988
Drug & Alcohol Testingv Testing by public employers
is legal under search and seizure provisions of Fourth Amendment if:w Reasonable basis for
suspecting employee drug or alcohol use on the job exists
w If such use could threaten public interest or public safety
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Employer Searchesv A public employee has a reasonable
expectation of privacy in areas such as his or her office, desk, or files, but a search of those areas is constitutional if the search is reasonable under circumstancesw Requires balancing employee’s legitimate
privacy expectations against government’s need for control of the workplace
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Employer Searchesv A public or private employer who conducts
an allegedly unreasonable search may be sued by an employee under common law claim of invasion of privacy
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Records & Referencesv Most states allow employees access to their
personnel files maintained by employers and limit access by third parties
v Employers who transmit such data to third parties, such as information in a reference letter, may be liable for civil claims of defamation or invasion of privacy
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Employer Monitoringv Employers could monitor the workplace by
closed-circuit television, video monitoring, telephone monitoring, computer workstation monitoring (keystroke counting), and using metal detectors
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Employer Monitoringv Many firms tell employees
that e-mail, voicemail, Internet usage, and other communications and transactions are subject to monitoring
v TBG Insurance Services Corp. v. Superior Court illustrates the legal impact of these policies
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Test Your Knowledge
v True=A, False = Bw The Civil Rights Act prohibits employers from
discriminating on basis of race, color, religion, gender, or national origin.
w Two methods to prove discrimination are disparate treatment and disparate impact.
w Discrimination based on a BFOQ is legal.w Every employer has the right to request a
prospective employee to take a pre-employment polygraph.
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Test Your Knowledge
v True=A, False = Bw Unless otherwise specified by statute,
protections of the U.S. Constitution do not apply to government employees.
w The Americans With Disabilities Act prohibits employers from disqualifying a job applicant or employee with a disability for any reason.
w The two types of sexual harassment claims are quid pro quo and undue hardship.
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Test Your Knowledgev Multiple Choice
w If an employer’s act violates Title VII, the aggrieved person must:
(a) File a charge or complaint with the EEOC(b) Allow the EEOC to investigate the charge (c) Allow the EEOC to file a lawsuit or obtain
resolution(d) All of the above(e) File a lawsuit within 6 months in federal
district court
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Thought Questionsv Employers may be able to
monitor your work by video, audio, computer keystroke, or other methods of surveillance. Are you comfortable with this fact? Are broad allowances for employer surveillance good public policy?
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