Fundamentals of Business Law Summarized Cases, 8 th Ed., and Excerpted Cases, 2 nd Ed. ROGER LeROY MILLER Institute for University Studies Arlington, Texas GAYLORD A. JENTZ Herbert D. Kelleher Emeritus Professor in Business Law University of Texas at Austin

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 2 Learning Objectives What is the employment-at-will doctrine? When and why are exceptions to this doctrine made? What federal statutes govern working hours and wages? What federal statutes govern labor unions and collective bargaining? What federal law was enacted to protect the health and safety of employees? What are workers compensation laws?

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 3 Learning Objectives Generally, what kind of conduct is prohibited by Title VII of the Civil Rights Act of 1964, as amended? What remedies are available under Title VII of the Civil Rights Act, as amended?

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 4Employment-at-Will Historically, employment law was governed by the common law doctrine of “employment at will” where either employer or employee could terminate the relationship at any time, for any reason. Today employment law is heavily regulated by state and federal statutes.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 5 The doctrine of employment-at-will allows the employer and the employee to terminate employment at any time, for any reason, without liability. Some states recognize one or more judicial exceptions to this rule, while some states recognize none. Employment-at-Will

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 6 Contract Exceptions: An implied contract exists between employer and employee. Oral agreements may become part of the implied contract. Tort Exceptions: Wrongful discharge, defamation may be actionable. Public Policy Exceptions (Whistleblowing). Wrongful Discharge.Exceptions

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 7 Child Labor. –FLSA prohibits oppressive child labor practices. Provides regulations for work, depending on the age of child. Wages and Hours. –Davis-Bacon Act -- the prevailing wage act. –Walsh-Healey Act -- the beginning of minimum wages. –Fair Labor Standards Act (FLSA) -- an extension of wage and hour regulation to workers in interstate commerce. Overtime Exemptions. Wage and Hour Laws

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 8 Norris-LaGuardia Act. –Protects peaceful strikes by limiting the injunction powers of federal courts. National Labor Relations Act. –Establishes the right of workers to strike and engage in collective bargaining. –Established the NLRB. Labor Unions

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 9 Labor Unions Labor Management Relations Act. –Prohibits certain unfair union practices such as closed shops. Labor-Management Reporting and Disclosure Act. –Regulates the internal operations of unions and outlaws hot-cargo agreements.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 10 The Occupational Safety and Health Act. (OSHA). –The fundamental federal law aimed toward safety in the workplace. –Enforcement is by OSHA, NIOSH, and the OSHRC. –Procedures and Violations: Employers with 11 or more employees required to keep records. Worker Health and Safety

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 11 State Workers’ Compensation Laws. –These laws reduce employer liability to employees for workplace injuries, and provide a measure of assurance that workplace injuries will be compensated, regardless of the solvency of the employer, by: –Requiring that injured employees make a claim against the employer’s workers’ compensation insurance policy, instead of suing the employer. –Requiring most employers to carry workers’ compensation insurance. Worker Health and Safety

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 12 Social Security and Welfare. Private Pension Plans. –Employee Retirement Income Security Act (ERISA) gives employee a vested right to receive pension benefits at a future date when she stops working. Unemployment Insurance. Income Security

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 13 COBRA prohibits the discontinuance of insurance benefits of workers who have voluntarily or involuntarily been separated from work, unless the involuntary separation was on the basis of gross misconduct. Employers must comply if they have more than 20 employees.COBRA

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 14 The FMLA requires employers with over 50 employees to provide unpaid leave to employees who need to care for a spouse, child, or parent suffering with a serious medical condition. The employee cannot be terminated for taking leave under the policy, and has the right to restoration to the same or a similar position upon return to work. CASE 23.1 Darst v. Interstate Brands Corp. (7 th Cir. 2008). Family and Medical Leave Act

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 15 Immigration Law Immigration Reform and Control Act of –Amnesty to certain groups of illegal aliens living in the United States. –Sanctions for employers. –Criminal and Civil Penalties. –Antidiscrimination Provisions.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 16 Immigration Law Immigration Act of –I-551 Alien Registration Receipts. –H-1 B Visa Program. –Labor Certification. –H-2, O, L, and E Visas. Immigration Reform on the Horizon.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 17 Title VII prohibits discrimination in employment on the basis of race, sex, color, religion, and national origin. “Sex” now includes pregnancy. In addition to prohibiting religious discrimination, employers must reasonably accommodate an employee’s religious practices. Enforcement of Title VII by EEOC.EEOC Title VII of the Civil Rights Act of 1964

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 18 Intentional vs. Unintentional Discrimination Intentional (“Disparate-Treatment”) Discrimination. For prima facie case, applicant must prove: –She is member of a protected class; –Applied, qualified and rejected for job; and –Employer continued to seek applicants. Unintentional (“Disparate Impact”) Discrimination. –No-protected applicant sues Employer who tries to integrate members of protected classes into workplace.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 19 Title VII prohibits employment policies or intentional/ negligent discrimination on basis of race, color or national origin. Company policies that discriminate are illegal, unless (except for race) they have a substantial demonstrable relationship to realistic qualifications for job. Discrimination Based on Race, Color, and National Origin

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 20 Employers must “reasonably accommodate” the “sincerely held’ religious practices of its employees, unless to do so would cause undue hardship to employer’s business. Discrimination Based on Religion

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 21 Title VII prohibits sex discrimination in the work place. Employers are prohibited from classifying jobs as male or female or from advertising such, unless employer can prove gender is essential to the job. Plaintiff must show gender was determining factor in hiring, firing or lack of promotion. Constructive Discharge. Discrimination Based on Gender

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 22 Gender Discrimination Two types of sex discrimination: –Differential treatment. –Sexual harassment, which itself, exists in two varieties: Hostile Work Environment. Quid Pro Quo.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 23 U.S. Supreme Court has interpreted Title VII’s prohibition against sex discrimination to include a prohibition against sexual harassment. There are currently two forms of recognized sexual harassment: –Quid Pro Quo. –Hostile Work Environment. Sexual Harassment

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 24 Hostile environment occurs when workplace is “permeated” with discriminatory intimidation, ridicule, insult so severe to alter the conditions of the victim’s employment. The conduct in the workplace must be offensive to a reasonable person as well as to the victim, and it must be severe and pervasive. Hostile Work Environment

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 25 Harassment by Supervisors Must have “tangible employment action” for employer liability. Quid Pro Quo harassment involves demands for sexual favors by a supervisor from a subordinate, in exchange for some workplace benefit. 2006: employer’s retaliatory actions may be evidence of harassment.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 26 Harassment by Co-Workers and Nonemployees Employer generally liable only if employer knew or should have known and failed to take action. –Employee notice to supervisor is notice to Employer under agency law. Employers may also be liable for harassment by non-employees. Same-sex harassment also violates Title VII.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 27 Remedies under Title VII Liability may be extensive. Plaintiff may receive: –Reinstatement. –Back Pay. –Retroactive Promotions; and –Damages.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 28 The Age Discrimination in Employment Act (ADEA) protects individuals over the age of 40 from workplace discrimination that favors younger workers. Plaintiff must show: –He was member of protected age group, –Was qualified for the position from which he was discharged, and –Was discharged under circumstances that inferred discrimination. Discrimination Based on Age

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 29 Discrimination Based on Age Case 23.3 Sprint/United Management Co. v. Mendelsohn (2008). State Employees Not Covered by ADEA. U.S. Supreme Court cases: –Kimel v. Florida Board of Regents (2000). –Tenessee v. Lane (2004). Federal Employees Explicitly Covered by the ADEA. Gomez-Perez v. Potter (2008).

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 30 The Americans with Disability Act (ADA) requires employers to offer reasonable accommodation to employees or applicants with a “disability” who are otherwise qualified for the job they hold or seek. The duty of reasonable accommodation ends at the point at where it becomes an undue hardship. Discrimination Based On Disability

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 31ADA To prevail on a claim under ADA, plaintiff must show she: –Has a “disability.” –Is otherwise qualified for the employment in question; and –Was excluded from employment solely because of the disability. –Workforce must be more than 15 employees Plaintiff must first exhaust administrative relief with EEOC.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 32 ADA: What is a “Disability”? ADA defines disability as: –Physical or mental impairment that “substantially limits” one or more of major life activities; or –A record of such impairment; or –Being regarded as having such an impairment. Determination is decided on a case-by- case basis.

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 33 If an employee with a disability can perform the job with reasonable accommodation, without undue hardship on the employer, the accommodation must be made. –Examples: wheelchair ramps, flexible working hours, improved training materials. (Does not include carpel tunnel syndrome.) Job Applications and Pre-Employment Physical Exams. Hostile-Environment Claims. ‘Reasonable Accommodation’

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 34 There are four basic types of defenses to employment discrimination claims. –Business necessity.  –Bona fide occupational qualification.  –Seniority Systems.  –After-acquired evidence of employee misconduct.  Defenses to Employment Discrimination

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 35 The business necessity defense requires the employer to demonstrate that the imposition of a job qualification is reasonably necessary to the legitimate conduct of the employer’s business. Business necessity is a defense to disparate impact discrimination. Business Necessity Defense

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 36 The bona fide occupational qualification defense requires an employer to show that an particular skill is necessary for the performance of a particular job. The BFOQ defense is used in cases of disparate treatment discrimination. B.F.O.Q. Defense

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 37 A seniority system is one that conditions the distribution of job benefits on the length of time one has worked for an employer. A seniority system can be a defense only if it is a bona fide system, not designed to evade the effects of the anti-discrimination laws. Seniority System Defense

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 38 After-acquired evidence refers to evidence of misconduct, committed by an employee who is suing an employer for employment discrimination, that is uncovered during the process of discovery conducted in preparation for a defense against the suit. While it may serve to limit employee recovery, it does not act as an absolute defense for the employer. After-Acquired Evidence

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 39 Affirmative Action Affirmative action programs go one step beyond non-discrimination: they are designed to “make up” for past patterns of discrimination by giving preferential treatment to protected classes. AA has led to “reverse discrimination” cases which violate equal protection. –University of California v. Bakke (1978). –Adarand Constructors v. Pena (1995). –Hopwood v. State of Texas (1996). –Recent Supreme Court decisions 

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 40 Gratz v. Bollinger (2003). Awarding 20 points to underrepresented minorities violated equal protection clause. Grutter v. Bollinger (2003). Considering race as a flexibile ‘plus’, however, is constitutional. Distinction: Grutter was flexible, not mechanical. 2007: Parents Involved in Community Schools v. Seattle School District: racial classifications in student assignment plans was necessary to achieve diversity. Latest Supreme Court Decisions

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 41 Online Harassment Company systems. Company chat rooms. Posting sexually explicit images on company computer systems, screen savers, etc. Employees will generally not be liable if prompt action taken.