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Employment Law
Rutgers University, Newark School of Law
Hyde, Alan

Employment Law Outline Spring 2014
Professor Alan Hyde
Introduction to Employment Law
1)      Employment Statutes
a.       Employment Retirement Income Security Act: ERISA is a comprehensive federal law that regulates the provision of employer-provided pension and welfare-benefit plans to private employees
i.      Preemption: ERISA preempts any state legislation and makes the whole subject federal. If an ERISA case is plead, the case will immediately be removed to federal court
ii.      Claims for Benefits: An employee can bring a claim for benefits under ERISA if the employee was denied employee benefits under the benefits plan.
iii.      Vesting: After relatively short periods of time, the employee’s pension plan must be vested or non-forfeitable in ERISA.
1.       Before Vesting: Before the plan vests, there is a percentage schedule for ERISA.
b.      Fair Labor Standards Act: The Fair Labor Standards Act is a federal statute that regulates the minimum wage and overtime compensation of employees.
2)      Flowchart of Analysis:
a.       Employment Relationship: Is the individual an employee and is the hirer an employer, allowing the hirer to be liable?
b.      Type of Employment Action:
i.      Discharge: See whether limitations are in place
1.       Express Contract: Look at the terms
2.       Implied Limitations:
a.       Just Cause
b.      Employee Handbooks
c.       Implied in Fact
d.      Promissory Estoppel
e.      Good Faith
ii.      Retaliation: Did the employer retaliate against the employee?
1.       Common Law: Wrongful Discharge
a.       4 public policies
2.       Statute:
a.       NJ CEPA
b.      NLRA Concerted Action
iii.      Right to Privacy: Did the employer violate the employee’s right to privacy
1.       Searches: Did the employer perform a search
a.       Constitution
b.      Tort
2.       Surveillance: Did the employer intercept any communication?
a.       Wiretap Act
iv.      Discrimination: Did the employer discriminate against the employee?
1.       Discrimination Against Protected Class:
a.       Title VII: Race, Sex, Religion
b.      ADEA: Age
c.       ADA: Disability
d.      NLRA: Union Membership
2.       Modes of Proof
a.       Disparate Treatment: Direct, Indirect, Statistics
b.      Disparate Impact
3.       Defenses?
a.       BFOQ
b.      Religious Exemptions
c.       Employee’s Duties to an Employee
i.      Common Law Duty of Loyalty: Is there an implied duty of loyalty?
1.       Pre-Termination Conduct:
a.       Competition
b.      Solicitation
c.       Trade Secrets
2.       Post-Termination Conduct: See if there were misappropriation of trade secrets
ii.      Express Term of Employee Duty: Is there an express term limiting employment?
1.       Non-Competes
2.       Inventions and Holdover Clauses
d.      Remedies Issues
i.      Injunction? – Argue involuntary servitude
ii.      Liquidated Damages? – Argue enforceability
The Employment Relationship
Tests for Employee Status
1)      The Effect of the Employment Status: The common law and statutory protections afforded to workers only apply if the workers are employees and if the duties are owed by employers.
a.       Independent Contractors: Independent contractors are not employees
b.      Example of ERISA: ERISA’s protection only extends to employees, and not to workers who are not employees
i.      Independent Contractor: A plaintiff that is an independent contractor is not covered under ERISA and he will argue about the non-compete (Darden)
2)      Determination of Employee/Employer Status: The Courts determine an employee’s or employer’s statuses based on both the fact-based circumstances of a given work relationship and the particular employment law statute at issue.
a.       No Judicial Status Presumption: Even though the Court found that a type of worker or putative employer in a particular case is an employee, there is no presumption based on status and the Court must determine the issue again based on the circumstances.
b.      No Employer Deference: The putative employer is not free to decide the line between employees and independent contractors; and a Court can state that the employer misclassified the worker.
i.      Liability for Withheld Taxes, Not Benefits (Vizcaino v Microsoft): An employer that misclassifies employees as independent contractors may be liable to pay taxes that it should have withheld, but it is normally not required to include misclassified employees in its own benefit plans.
c.       State Legislatures: State law can do whatever they like and define employment relationships within their statutes
d.      Problem Cases in Employment Relationships:
i.      Employee Examples: Hyde noted some problem cases, including: Insurance agents (Darden), interns (Glatt), consultants (Microsoft and Virginia), truck and taxi drivers, migrant farm workers, volunteers, and the student athlete
ii.      Employer Examples: Triangular Relationships (Subcontractor) and Outsourcing
e.      Hyde’s Advice: Tell the fact-specific story, explain what the job does and educate the job of the circumstances.
3)      Tests for Employees and Independent Contractors:
a.       Common Law Tests
i.      Statutes: ERISA, Copyright, NLRA, Title VII, IRS’s 20 Factor Test
ii.      Control: Multi-factor Tests
b.      Economic Realities Test
i.      Statute: FLSA
ii.      Control
iii.      Multi-Factor Tests
c.       Restatement of Agency
d.      Purposive
4)      The Common Law “Control” Test (Nationwide v. Darden): Under the common law test, the Courts consider the level of actual and potential control an employer has in an employment relationship.
a.       Arguments for Control
i.      Employee’s Argument: The employee will argue that the employer had a large extent of control in the employment relationship
ii.      Employer’s Argument: The employer will argue that he has far less control than the employee alleges.
b.      Application in Statute: The common law tests applies to the statute in the following areas:
i.      Lack of Defining Term: When Congress uses the term “employee” to describe the conventional employment relationship without clearly defining the term, the common-law agency doctrine applies
1.       Congressional Purpose Irrelevant: To determine the term employee, the Court cannot look at Congress’s purpose or the legislative history.
2.       ERISA: ERISA, allowing the employee to receive retirement benefits, uses the common-law test.
3.       Other Statutes: Title VII and all anti-discrimination statutes, Copyright, NLRA, and IRS’s 20 Factor Test
ii.      Development in Tort Context: If the statute was developed in the tort context to determine the vicarious liability of another, the common law test applies
c.       Darden Factors for Employee Status: The Court looks at a non-exhaustive list of factors to determine employment:
i.      Skill: Required skill
ii.      Source of Tools: Source of the instrumentalities and tools
iii.      Location: Location of the work
iv.      Duration of Relationship: Duration of the relationship between the parties
v.      Right to Assign: Whether the hiring party has the right to assign additional projects to the hired party
vi.      Employer’s Discretion: Extent of the hired party's discretion over when and how long to work
1.       Supervision and Control of Conditions: The Court looks to see whether the employer supervised and controlled employee work schedules or conditions of employment
a.       Continuous Monitoring Irrelevant: The Court does not require the employer to continuously monitor its employees
2.       Employment Records: The Court may look to see whether the employer maintained employment records
vii.      Method of Payment: The method of payment
1.       Determination of Payment: The Court looks to see whether the employer determined the method of payment
viii.      Employer’s Rights in Hiring/Payment: The hired party's role in hiring and paying assistants
1.       Power: The Court looks to see whether the employer possessed hiring and firing power, but does not require the employer to exercise that power.
ix.      Employer’s Scope of Business: Whether the work is part of the regular business of the hiring party
x.      Business of Employer: Whether the hiring party is in business
xi.      Employee Benefits: The provision of employee benefits
xii.      Taxes: The tax treatment of the hired party.

s' work; and
a.       Extensive Supervision: An employer’s extensive supervision indicates an employment relationship if it demonstrates effective control of the terms and conditions of the plaintiff’s employment.
i.      Typical Arrangements: Supervision typical with subcontracting arrangements do not indicate an employment relationship
1.       Warranties: Supervision with respect to contractual warranties of quality and time of delivery has no bearing in the joint employment relationship.
6.       Exclusivity of Work: Whether plaintiffs worked exclusively or predominantly for the Defendants
a.       Exclusive Work: If a joint employer becomes responsible, among other things, for the amount workers are paid and for their schedules, there may be an employment relationship
i.      Majority Work Insufficient: If the employee performs merely a majority of its work for a single plaintiff , there may not be an employment relationship
b.      Difference from Factor 2 (Shifting):
i.      Exclusivity but Shifting: If an employee works for the defendant but had the ability to seek out other clients any time, exclusivity (factor 6) weighs in favor of joint employment but not factor 2.
ii.      Lack of Resources: If the employee works for two general contractors on the defendant’s premises without resources to work for any other employer, shifting (factor 2) weighs in favor of joint employment, but not factor 6.
iii.      Application of Factors on Remand: In analyzing the factors of whether the defendant is an employer, the Court assesses three determinations.
1.       Historical Fact Findings: There are historical findings of fact that underlie each of the relevant factors
2.       Findings of Existence and Degree: There are findings as to the existence and degree of each factor
3.       Conclusion of Law: There is the conclusion of law to be drawn from applying the factors that the entity is a joint employer.
iv.      Hyde’s Note: Hyde noted that the plaintiffs won with only THREE factors.
1.       Possible Issue: Retailers hiring the garment manufacturers!
6)      Restatement of Employment Law (Section 1.01) Test: The new Restatement of Employment Law §1.01 (Tent.Draft No.2, 2009), attempts a simpler definition of “employee” in place of the Court’s twelve or thirteen-factor Reid approach:
a.       Employee Test: In all cases except in cases of volunteers, controlling owners, and otherwise provided by law, an individual is an employee of an employer if:
i.      Service of Employer’s Interest: the individual acts, at least in part, to serve the interests of the employer,
ii.      Employer’s Consent: The employer consents to receive the individual’s services, and
iii.      Preclusion of Independent Business: The employer precludes the individual from rendering the services as part of an independent business.
1.       Independent Business Determination: An individual renders services as part of an independent business when the individual in his or her interest exercises entrepreneurial control over the manner and means by which the services are performed.
a.       Entrepreneurial Control Determination: Entrepreneurial control over the manner and means by which services are performed is control over important business decisions, including whether to hire and where to assign assistants, whether to purchase and where to deploy equipment, and whether and when to service other customers.