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Employment Law
Rutgers University, Newark School of Law
DiChiara, Michael R.

Employment Law DiChiara Fall 2014

Introduction to Employment Law

A. Historical Overview (Ch. 1 Text Book): (not important / refer to casebook if necessary)

Legal Boundaries of the Employment Relationship

1. Legal Boundaries of Employment Relationship

A. The Idea of Employment Status

Most employment laws protect only employees.

This distinction also matters for the IRS for payroll reasons, social security reasons, and medicare taxes

2 kinds of classification when working:

1. Employee


1. Lack of independence in the workplace

2. Unfair share of profits

2. Independent Contractor (I.C.)

Benefits: Reasons ppl consider I.C:

1. More freedom to set your own schedule

2. Pay checks don’t get deducted w/ taxes.(tax benefits)

3. Opportunity to make more money


1. No benefits

2. No Workers comp.

3. Inconsistent work flow/ inconsistent income

4. Employment laws normally don’t protect ICs

A. The Idea of Employee Status:

i. Employee v. Independent Contractors: (On the exam if the question states it’s an employee, then do not go through analysis. If it states the person works somewhere, then proceed.)

– Two Tests in Determining Employee Status:

1) Control Test: Courts generally look to the following factors(who tells you what to do) [totality of the circumstances analysis]:

· Duration of the employment (no duration = at-will employee)

· Location of the work (is it at the employer’s place of business?)

· Whether employer has right to assign additional assignments (yes leans toward employee;

· The method of payment (salary vs. single check?)

· The role of the hiring party in paying assistants (if yes then employee);

· Whether the work is part of the regular business of the hiring party;

· The provision of employee benefits; and

· The tax treatment of the hired party.

· Degree of alleged employer’s right to control the manner in which the work is to be performed;

· Alleged employee’s opportunity for profit or loss depending;

· Alleged Employee’s investment in equipment or materials required for his task;

· Whether the service rendered requires a special skill;

· The degree of permanence of the working relationship;

· Whether the services rendered were an integral part of alleged employer’s business

2) Economic Realities Test: (NLRB v. Hearst)- (attempts to correct the deficiencies of the Control test) Designed specifically for the employment law context – (when a business argues that a particular statute does not apply because a worker is an IC rather than an EE.)

· Only some employment statutes use this test

· If you are tied down or unable to exercise discretion you are most likely an employee

· ERT defines employee as – An employee based on each factor (below) follows the usual path of an employee and is dependent on the business which he serves.

· 6 Factors / Economic Realities Test:

o 1. A limited amount of the workers investment in facilities and equipment

o 2. Nature and degree of control retained or exercised by the company

o 3. The worker’s limited opportunity for profit and loss

o 4. Small degree of the worker’s independent initiative, judgment and foresight in open market competition with others required for the success of the operation

o 5. A high degree of permanency of the work relationship (employee); and

o 6. The broad extent to which the services are an integral part of the company’s business

Employees v. Independent Contractors Case Law:

NLRB v. Hearst (economic realities test): Issue: Whether newsboys are employees or independent contractors under the NLRA (National Labor Relations Act). Holding: The court held that newsboys were employees under the NLRA. Rule: The Court agreed with the reasoning of the NLRB and found that the designated newsboys work continuously and regularly, rely upon their earnings for the support of themselves and their families, and have their total wages influenced in large measure by the publishers, who dictate their buying and selling prices, fix their markets and control their supply of papers. Their hours of work and their efforts on the job are supervised and to some extent prescribed by the publishers or their agents. Much of their sales equipment and advertising materials is furnished by the publishers with the intention that it be used for the publisher’s benefit.

Nationwide Mutual Insurance Co. v. Darden (Control Test): Issue: petitioner insurance companies sought review of a decision from the 4th Cir. that vacated the district court’s grant of summary judgment to petitioners on respondent agent’s claim for benefits under the Employee Retirement Income Security Act of 1974 (ERISA). Holding: The court reversed and remanded. Rule: The Court reversed because the traditional master-servant relationship as understood by common-law agency doctrine was the test that should have been applied. The Court remanded for a determination of whether respondent qualified as an employee under the common law definition.

Clackamas Gastroenterology Associates v. Wells (Control Test): Issue: Whether the four director-shareholder physicians in this case should be counted as employees. Holding: Because the District Court’s findings appear to weigh in favor of concluding that the four physicians are not clinic employees, but evidence in the record may contradict those findings or support a contrary conclusion,” the Court remanded the case for a determination under the new standard. Rule: Six Factors: According to the EEOC, each of the following six factors is relevant to the inquiry whether a shareholder-director is an employee: (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 employee, as expressed in written agreements or contracts; and (6) whether the individual shares in the profits, losses, and liabilities of the organization. These six factors need not necessarily be treated as “exhaustive.”

Vizcaino v. Microsoft Corp. (Employment Status not Waivable by K): Issue: Workers alleged in a class action that they were entitled to participate in certain pension and welfare plans but when they first worked they signed agreements that provided they were independent contractors and were not entitled to benefits offered to appellee’s employees. However, the IRS determined that appellants were employees, after which they sought to participate in benefit plans. Rule: The court reversed and held that appellants’ agreements regarding their status as independent contractors was not a waiver of their rights to benefits once it was determined that they were actually employees.

Connor v. Pier Sixty (Joint Employers / Control Test) Issue: Temporary servers claimed that they worked at special events held by the employers and that, even though the employers imposed mandatory gratuity charges to their customers at the events, they never received any portion of the charges. The employers claimed that the servers were merely workers who were assigned by a temporary service agency to act as servers at the employers’ events. Holding: The court found that the extent of the employers’ control was a matter that had to be explored in discovery and was not an issue that was amenable to a

ympathy and understanding of urban problems, encourage integration, and less likely to engage in illegal strikes. The court held that there was a rational basis for the rule and that, therefore, it did not violate appellant’s constitutional right to travel.

Collins Food Intern., Inc. v. INS (Illegal Aliens): Issue: Collins, through a store manager, hires an employee from Sizzler’s in California to work at a Sizzler’s in Phoenix. When employee shows up to work he doesn’t have his working documents so he is not allowed to work. The next day he returns and presents driver’s license and fake SSI card. INS fines Collins for hiring an alien to work. Holding: Offering alien a job prior to verification of documents could not support finding of constructive knowledge, and employer complied with verification requirement. Rule: Employers need not verify documents prior to extending an offer to work but must before commencing employment (designed to avoid discrimination suits).

ii. Employer Information Gathering: (Employee Claims: Tort Theories)

a. Interviews:

Lysak v. Seiler Corp (False Info Given Voluntarily to Employer is Basis for Discharge): Issue: In interview woman tells employer without solicitation that she is done having children. She is terminated after she discloses that she is pregnant. It comes out that she was pregnant—and knew of it—during the interview. P brings sex discrimination suit against employer. Holding: Employer was entitled to discharge employee on basis of her unsolicited and false statement at time of interview when she knew she was pregnant Rule: Employer can terminate employee for giving knowingly false information on an interview.

b. Employment References:

Black-Letter Law

a. Defamation imposes liability for publication of false statements that injure the reputation another. In order to prove, plaintiff must show:

i. Elements: (1) False statement of fact (2) concerning plaintiff communicated to (3) another person or persons (publication) (4) with malice (only for suing a public figure). There needs to be damages

ii. Defenses: (1) the statement was true (2) conditional privilege (3) show it wasn’t negligent

1. Qualified (conditional) Privilege Employer defense: employer can have qualified privilege to publish information if it is required for (1) business function, (2) made in good faith, and (3) a duty to tell (i.e. telling other employees that plaintiff was fired for suspected theft). (telling someone who has a mutual interest [perspective employer, former employers])

a. Qualified privilege is lost if:

i. Employer acts with malice or ill will;

ii. Publishes information excessively (common interest);

iii. Statement is made without a basis for believing it is true / reckless disregard for the truth.

2. Defamation by self-publication: publication requirement is satisfied if plaintiff was compelled to publish defamatory statement to a 3rd person, and it was foreseeable by employer that employee would be so compelled, defendant employer could be liable for defamation.