Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 1 Chapter 22 Employment Law Chapter 22 Employment Law Making and Terminating Employment Contracts Duties of Employers and Employees

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 2 Chapter Making and Terminating Employment Contracts GOALS Describe how employment contracts are made Explain how employment contracts are terminated

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 3 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS MADE? Employment is a legal relationship based on a contract that calls for one individual to be paid for working under another’s direction and control. The party who pays someone in order to direct and control that person’s activities is the employer.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 4 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS MADE? The party who is paid by the employer to serve under the employer’s direction and control is the employee. If there is no contract to pay for work, or if there is no direction and control, the relationship between the parties is not one of employment. An independent contractor agrees to produce a finished job without being supervised and is not an employee.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 5 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS MADE? Terms of the employment contract Express agreements – Express employment contracts are oral or written documents. Written contracts expressly describe all of the elements of the employment relationship. Most express contracts are partly written and partly oral. Express terms usually include compensation and fringe benefits and may include duration of job or time required for advance notice of termination.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 6 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS MADE? Terms of the employment contract (cont.) Implied agreements (cont.) Employment contracts can always be identified as either “at will” or “for a specific period.” Other terms also are implied from the way individual employers supervise their employees.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 7 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS MADE? Terms of the employment contract (cont.) Terms imposed by law – State and federal laws impose many important terms into each employment contract whether or not the employer and employee want them included. These terms include: Payment of minimum wage Hiring of racial and other minorities over other qualified applicants, if necessary.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 8 Chapter 22 Name three sources of the terms in employment contracts.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 9 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? By performance – Completion of the job or the running of the period of employment defined in the contract terms terminates most contracts of employment. The courts will look at the express, implied, and terms defined by law to determine the obligations owed by the parties to one another. If there are no obligations, the employment contract is terminated.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 10 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? By termination at will – When the employer and employee do not specify a length of time for the employment relationship, the law assumes that either party may terminate employment at any time without liability.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 11 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? By termination at will (cont.) Wrongful discharge Firing because of race, religion, gender, age, disability, pregnancy, veteran status, or national origin is job discrimination and illegal. Dismissing an employee for engaging in unionizing activities is prohibited by federal law.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 12 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? By termination at will (cont.) Wrongful discharge (cont.) Most states deny the power to terminate at will when it is used to retaliate against those who: Refuse to commit perjury at the request of the company Insist on filing a workers’ compensation claim Report violations of law by the company Urge the company to comply with the law When an employer fires an employee for a reason prohibited by law, it commits the tort of wrongful discharge.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 13 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? By termination at will (cont.) Violation of contract terms – Employers who make promises orally or in company documents to “treat employees fairly” may cause this promise to become a part of the employment contract. As a result, the employer cannot fire an employee without a fair reason. Government employees – Employees who work for the government (public employees) are entitled to due process before being discharged.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 14 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? By material breach – If the obligations of the employment are not fulfilled, breach of contract occurs. If a material breach occurs, the injured party can treat the contract as terminated without liability. Employer fails to pay employee on agreed upon date Employee fails to perform daily required tasks for which he/she was hired

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 15 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? Unemployment compensation Workers who have been terminated despite having complied with all the terms of their employment contracts are said to have been discharged without cause. These discharged employees are entitled to unemployment compensation benefits. Unemploy- ment compensation is money paid by the govern- ment or private insurance fund to workers who have lost their jobs through no fault of their own.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 16 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? Unemployment compensation (cont) Workers who have been discharged for cause are not eligible for unemployment compensation. The US Department of Labor considers the following to be causes for discharge: Felonious conduct Participation in an unlawful strike Starting a prison sentence of longer than 30 days Failing mandatory drug tests Engaging in willful misconduct in disregard of the employer’s interest

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 17 Chapter 22 HOW ARE EMPLOYMENT CONTRACTS TERMINATED? Unemployment compensation (cont) Unemployment compensation payments are made by the states in cooperation with the federal government under the Social Security Act of Payments begin one to two weeks after termination. Unemployed person is paid a percentage of the regular wage every week for a limited period of time. Unemployment compensation is generally not available to those who quit voluntarily, strike, or refuse to accept similar substitute work. Part-time workers may qualify for unemployment compensation.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 18 Chapter 22 What are the three main ways in which an employment contract is terminated?

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 19 Chapter Duties of Employers and Employees GOALS List an employer’s duties Name an employee’s duties

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 20 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees Reasonable treatment – If the employer commits an assault or battery upon the employee, the employee can quit without liability and may sue for damages. Safe working conditions – The working conditions must not be harmful to the employee’s health, safety, morals, or reputation. Safe working conditions include tools, equipment, machinery, and the building itself.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 21 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees (cont.) Fair labor standards – The federal Fair Labor Standard Act establishes the minimum wage and maximum hours for all employees under the jurisdiction of the act. Maximum hours worked per week at regular rate of pay is 40 with no daily maximum except for transportation employees. Overtime must be paid at 1 ½ times the regular rate of pay.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 22 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees (cont.) Fair labor standards (cont.) Those not covered by the act include executives, administrators, and professional workers. Hourly provisions apply only partially to workers in seasonal industries. Special rules apply to trainees, apprentices, student workers, and handicapped workers. In some circumstances, they may be paid at 85 percent of minimum wage.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 23 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees (cont.) Payroll deductions – Payroll deductions are deductions withheld from the employee’s paycheck by the employer. The employer is legally obligated to withhold a percentage of the employees pay for federal and state income taxes, social security payments (FICA), Medicare, and unemployment insurance. Some states require deductions for workers’ compensation which is an insurance fund that compensates employees injured on the job.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 24 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees (cont.) Military service – The Military Selective Service Extension Act of 1950 requires that certain military persons be re-employed by their former employer after honorable discharge from the service. Persons who have been drafted, enlisted, or called to active duty receive this protection provided they are still able to perform the work.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 25 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees (cont.) Voting – Over half the states provide that workers must be given sufficient time off with pay, at a time convenient to the employer, to vote in primary and regular elections.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 26 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to employees (cont.) Family and medical leaves – The Family and Medical Leave Act requires that a covered employer grant to an eligible worker up to 12 weeks of unpaid leave in a year for the following: Serious medical conditions Birth and care of a newborn child of the employee Care of an immediate family member with a serious health condition Circumstances involved with the employee’s receiving children for adoptive or foster care

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 27 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to minors – Federal and state laws are designed to protect minors and are based on the following principles: 1.A person’s early years are best used to obtain an education. 2.Certain work is harmful or dangerous for young people. 3.Child labor at low wages takes jobs from adults.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 28 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to minors (cont.) State laws – When state child labor laws are stricter than federal laws, state laws have control. States usually Specify a minimum age for employment Limit number of hours a minor can work and require a work permit for individuals under the age of 18 Set maximum number of working hours per day Prohibit night work Prescribe the grade in school that must be completed Set required age for hazardous occupations

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 29 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to minors (cont.) Federal law – The Fair Labor Standards Act (FLSA) set the minimum protection for most young workers. Illegal for people under 14 years old to work 14 and 15 year olds are only permitted to work limited hours after school in non-hazardous jobs 16 and 17 year olds can work unlimited hours in non- hazardous jobs.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 30 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to those injured by employees If an employee, acting within the scope of employment commits a tort (injures persons or property), the employer is liable for the damages. If an employee commits a tort but is not acting within the scope of the employer’s business, the employee alone is liable for any resulting injuries. The employer may be held liable if the employee has acted with the intention of furthering the employer’s interests.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 31 Chapter 22 WHAT ARE AN EMPLOYER’S DUTIES? Duties owed to those injured by employees (cont.) The person who hires an independent contractor is not liable for the contractor’s torts. If the job is inherently dangerous, such as blasting with dynamite, the party who hired the independent contractor may be liable to those injured.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 32 Chapter 22 Name the duties owed by employers to their employees.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 33 Chapter 22 WHAT ARE AN EMPLOYEE’S DUTIES? Duty to fulfill the employment contract – An employee has a duty to fulfill the express terms of the employment contract and other implied agreements made with the employer as well as duties imposed by state law.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 34 Chapter 22 WHAT ARE AN EMPLOYEE’S DUTIES? Duty of obedience – The duty of obedience means that the employee has a duty to obey the reasonable orders and rules of the employer. This duty exists whether or not the employee has expressly agreed to it. An employee cannot be required to act illegally, immorally, or contrary to public policy.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 35 Chapter 22 WHAT ARE AN EMPLOYEE’S DUTIES? Duty of reasonable skill – The duty of reasonable skill requires that those who accept work possess the skill, experience, or knowledge necessary to do it. Duty of loyalty and honesty – The duty of loyalty and honesty obligates the employee to look out for the employer’s best interest.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 36 Chapter 22 WHAT ARE AN EMPLOYEE’S DUTIES? Duty of reasonable performance – The duty of reasonable performance obligates the employee to perform the job tasks with competence. Occasional minor failure to perform as expected ordinarily is not sufficient grounds for dismissing the employee. Any employee may be discharged if unable to do the work because of illness or injury.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 37 Chapter 22 What duties are owed the employer by an employee?

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 38 Chapter 22 PREVENT LEGAL DIFFICULTIES As an employee... Realize that you and your employer are parties to a contract in which you both have rights and duties. Before you go to work, learn as much as you can about the job. Find out about hours, pay, duties, dress, fringe benefits, and any other related matters. Avoid tardiness and absenteeism. Continued on the next slide

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 39 Chapter 22 PREVENT LEGAL DIFFICULTIES Remember that in addition to reasonable skill and performance, you owe your employer loyalty, honesty, and obedience. However, the duty of obedience does not require employees to engage in illegal, immoral, or unsafe activities. Remember that you are personally responsible for your own negligent acts. This is true even though the injured party may also be able to recover from your employer. Continued on the next slide

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 40 Chapter 22 PREVENT LEGAL DIFFICULTIES As an employer... Remember to treat your employees reasonably and provide them with safe working conditions. Be aware of and comply with applicable federal and state laws governing the work environment. Prevent vicarious liability for the potentially tortious acts of your employees by training them properly, especially if they have immediate contact with the general public.