Employment Law Outline

Employment Law Final Outline
Case Overviews
Fall 2010

I. Employer/Independent Contractor/Employee
A. C/L Reid Test (IC or EE)
i. Court will consider the following:
1. the hiring party’s right to control the manner and means by which the product is accomplished;
2. the skill required;
3. the source of the instrumentalities and tools;
4. the location of the work;
5. the duration of the relationship btw the parties;
6. whether the hiring party has the right to assign additional projects to the hired party;
7. the extent of the hired party’s discretion over when and how long to work
8. the method of payments;
9. the hired party’s role in hiring and paying assistants;
10. whether the work is part of the regular business of the hiring party;
11. whether the hiring party is in business;
12. the provision of EE benefits;
13. the tax treatment of the hired party;
ii. who exercises CONTROL? Artistic? Creative? Hiring? Assistants?
B. Clackamas 6 Factor Test (rejecting Economic Realities) – ER determination
i. Ct. will make determination after looking all incidents of the relationship, with NO ONE FACTOR being decisive.
ii. Ct. will consider the following:
1. whether the organization can hire or fire the individual or set the rules and regulations of the individual’s work;
2. Whether and, if so, to what extent the organization supervises the individual’s work;
3. Whether the individual reports to someone higher in the organization;
4. whether and, if so, to what extent the individual is able to influence the organization;
5. Whether the parties intended that the individual be an EE, as expressed in written agreements or contracts;
6. Whether the individual shares in the profits, losses and liabilities of the organization;
C. Joint ERS?
i. Economic reality test – totality of circumstances (Mobil)
1. CONTROL of a worker’s duties;
2. the payment of wages;
3. the right to hire, fire and the right to discipline;
4. the performance of the duties as an integral part of the ER’s business towards the accomplishment of a common goal;
ii. Triangular ER relationship is permissible
iii. Who controls/operates business?
D. Federal Statutes Definition, if NOT C/L provides answer
i. Under FLSA, individuals may be liable; congress intended to pierce the corporate veil b/c incentives to violate FLSA are great
ii. ERISA defines EEs and intended for dual status individuals who are both EE and ER
1. accordingly, ERISA is applicable in one EE firm and protects pension assets from creditors
iii. C/L will fill in gaps where congress is silent, see Clackamas.
E. Contingent EEs – Who Exercises CONTROL???
i. Economic Reality Test: Ct. will consider the following:
1. the degree of control exercised by the ER over the workers
2. the workers’ opportunity for profit or loss and their investment in the business
3. the degree of skill and independent initiative req’d to perform the work
4. the permanence or duration of the working relationship ; and
5. the extent to which the work is an integral part of the ERs business
ii. no one factor is dispositive; the “ultimate concern” is whether, as a matter of economic reality, the workers depend upon someone else’s business for the opportunity to render service or are in business for themselves”
iii. the existence and degree of each factor is a question of fact and the legal conclusion to be drawn from those facts is a question of law.
iv. ER does NOT need to look over his ERs shoulders everyday in order to exercise control

II. If EE, is there a written agreement? Is there NO formal contract?
A. Where EE has No formal contract, then at-will employment and EE is terminable for good cause, bad cause, no cause but NOT for discriminatory or against public tort reasons
i. Did ER make any assurances/promise to EE
1. If not, then at-will and
2. If yes, are promises/assurances in writing or oral?
a. If oral,
i. Did ER promise EE something?
1. Promissory estoppel is permitted in at-will employment to protect EE from ER who does NOT uphold implied promise to give EE a chance
a. PROMISE must be definite, clear and unambiguous NOT a representation of ERs understanding, but an actual enforceable promise
b. Did EE rely on ER promises?
i. Was EE reasonable in relying on promises?
ii. Was reliance foreseeable?
c. did ER know or should have known that EE would reasonably rely?
d. HIGH standard of proof for Promissory Estoppel so as NOT to allow any EE sue ER for possible job offer
e. EE can only get what he lost NOT future earnings
2. Promise of lifetime employment agreement requires additional compensation and court will always construe against this interpretation
a. despite words of ER, at-will relationship is construed absent
i. additional consideration for lifetime agreements
ii. mutuality consideration
iii. EXTRAORDINARY AND RARE
b. MINORITY of jurisdictions, state that additional consideration is ONE factor to consider which is MORE consistent with modern contract law where unilateral promise is enforceable and NO mutuality consideration required.
ii. Did ER assure EE of for cause only termination?
1. oral assurances may become implied terms of employment
a. just cause termination
i. look at EEs reasonable expectations b/c of ER statements/policies, practices
b. life time contract (EXTRAORDINARY)
i. additional consideration required for lifetime employment contracts
b. if assurances/promises are in writing, are they in employment manual?
i. Assurance of ER to EE can transform at-will to just cause employment
1. court will look at totality of circumstances to determine parties intent
2. just cause determination will require court to look at surrounding circumstances
3. agreement may be shown by acts and conduct of parties over years and interpreted in light of the subject matter and the surronuinding circumstnaces
ii. IMPLIED-IN-FACT terms into manual where Court will uphold any promises that an EE could reasonably rely upon in an employment manual
1. ER intent to be bound may be demonstrated by surrounding circumstances and written contract/EE manual
a. ER is known for being generous to benifts
2. EE manual are promises of benefits to ER
a. EE need NOT be aware of promises for contract the promise to be enforced
b. Court will enforce ER promises/decision to offer benefits
3. court will construe provisions in accordance with EEs reasonabely expectations
a. if EEs reasonable expectation creates belief that termination will be for cause, then court will determine using SUBJECTIVE TEST, whether ER had a reasonable good faith belief that he had sufficient cause to terminate EE
iii. unilateral modification without bargained-for consideration renders modification unenforceable,
1. court will determine whether EE assented to modification with knowledge of modification
2. modification requires ER given notice to EE of change
3. modification of employment requires additional consideration from EEs, NOT just continued employment
a. EEs may be given $ to sign
b. otherwise, EE would have to quit to continue working under old EE manual
iv. HOWEVER, properly written DISCLAIMER and manual may dispel any expectations EE may have to just cause termination.
1. Jury will decide clarity of disclaimer, and if unclear then just cause termination provision is enforceable and Court will determine whether ER had a reasonable good belief and cause for termination
B. EE has formal written contract,
i. Enforceability of ORAL K
1. is SOFs applicable? If cannot be completed within a year, needs to be in writing
2. where K NOT completed, is there clear evidence of parties intent to be bound
a. Performance after oral agreement evidences intent to be bound, but later acts demonstrate lack of intent
b. contract = offer + acceptance + consideration
c. lifetime agreement requires additional compensation and court will always construe against this interpretation
3. oral K NOT enforced unless clear evidence NO other reasonable interpretation
ii. enforceability of written K
1. enforceable for term of notice provision in contract (30 days) even if K term is for 5 years
2. Ct will NOT imply just cause provision if NOT in contract
a. Williston jurisdiction looks only to 4 corners of K and
b. excludes parole evidence b/c contract is always unambiguous
c. MERGER clause ensures that K is complete
3. HOWEVER, some Courts (Corbin jurisdictions) will look at contrary evidence (parole evidence) of oral agreement first to see if it would NOT NATUARLLY have been excluded and
a. Court will interpret the K as supplementary to partially completed K, and may uphold K just cause term despite notice provision of 30 days notice;
iii. Written K which explicitly defines JUST Cause
1. look at Contract, what is stated, did ER fire for those reasons, if NOT EE gets remaining $ on his contract
2. what is just cause
a. business efficiency balanced against EE interest in employment
i. layoffs b/c of financial exigency or failure to perform
ii. change in production, cancelling production lines, consolidating operations, etc.
b. non-performance related reasons
i. job related misconduct (assault on co-EE or profanity (NOT always)
ii. off the job conduct?
1. usu., CANNOT and court will uphold challenges to reasonableness of regulating off-the job conduct, HOWEVER
a. some ERs may have legitimate interest in EEs off the job conduct
b. LOOK at EEs reasonable expectation based on ERs policies, practices, manuals, memos
c. performance related reasons
i. inadequate job performance (objective evaluations)
3. absent just cause definition, Court will interpret the term broadly to allow ER all reasonable justifications

III. EE has K for employment
A. Compensation benefits determined by looking at K
i. Ambiguity construed against drafter
ii. Look at industry/trade usage and definitions of ambiguous terms
iii. Words are construed as part of K, NOT independently
iv. BONUSES are gratuities
B. in written K, Express or Implied DUTY of Good Faith and Fair dealing
i. ER cannot disclaim duty of GF and FD but can disclaim specific acts that would constitute good faith and fair dealing (like you may be fired day before commissions are due and NO commissions will be paid)
ii. Court will interpret and enforce specific terms of contract
1. duty of GF and FD cannot ove