Employment Law – Carlson – Fall 2007
Chapter 1 – Overview of Employment and the Law
Alternative Legal Systems for Regulating Employment Relations
Contract is the primary basis for determining the terms and conditions of employment.
ERs and EEs can include express terms about job security but in the absence of an express agreement, the default rule is employment at will.
Employment at will means that employers and employees can terminate a contract at any time for any reason or no reason at all provided it is not an illegal reason.
An ER must not discriminate or retaliate for reasons prohibited by federal and state anti-discrimination laws.
There are also additional tort and public-policy restrictions on an ER’s right to discharge.
Unions provide EEs with more experienced and informed contract negotiation.
National Labor Relations Act
– System for determining the validity of a union’s claim to represent a group of EEs
– System for selecting between unions if there is more than one candidate.
– The act requires that ERs bargain with the union in “good faith.”
– EEs decide to accept or reject union representation by majority vote conducted by the NLRB.
– Prohibits an ER from discriminating against or interfering with EEs who support, try to organize, or engage in reasonable activity in support of unions.
– ER may not discharge EEs who engage in legitimate strike activity, but an ER may permanently replace such EEs and these replaced strikers may not be able to return to their jobs until new openings arise.
Public sector ERs are subject to the limits of the state and federal Constitution.
ERs cannot make decisions regarding EEs that affect constitutional rights.
Many terms and conditions of employment of public sector EEs may be set by statute rather than contract/
Private sector ERs are not subject to these limits.
Some employment laws, like ERISA, do not apply to public ERs.
Complications Created By Employment For Indefinite Duration
ERs and EEs need to be able to change the parameters of the employment relationship over time. It is against contract law for ERs to receive acceptance of new employment rules/restrictions from the silence and/or inaction of EEs.
However, continuance of work by the EE after notice of the change constituting acceptance is not the same as silence or inaction.
Consent by continuing to work must be voluntary to be proper acceptance.
Just because the decision to accept by continuing to come to work (in lieu of termination) is difficult, does not make it duress or coercion.
Continued employment cannot be consideration in at will employment. This is illusory.
There must be something more. The employee must get something truly of value.
Example: ER’s agreement to submit to arbitration. (In re Halliburton)
Chapter 2 – Who is An Employee and Who is An Employer
The Employee/Independent Contractor Problem
Before Hearst, control was the key element.
ER controlled the details of the work done by the EE.
Independent Contractor If:
ER only controls end result of work done.
Telling Who Controls:
– Look at Express Contract
– Look at Surrounding Circumstances
Under respondeat superior ERs liable for EE actions but not ICs.
Hearst Economic Realities Test:
ERs control by the exercise of economic power and by control of a unitary enterprise by which the workers’ labor is integrated.
– Identify enterprise and define it
Is there a unitary enterprise and what constitutes that unitary enterprise
– Determine if worker is integral to the enterprise as defined
Is the worker essential to that unitary enterprise
The Statutory Purpose Angle:
Is the statute at issue intended for this kind of worker?
Post-Hearst Three Angles:
– The Control Angle
– The Economic Realities Angle
– The Statutory Purpose Angle
Darden rejects statutory purpose and validates control plus economic reality factors.
Worker Status Checklist
– Check the contract
There will often be terms regulating control of the work. The contract standing alone cannot be decisive.
– Check the statute that is in question
Statutes frequently create exemptions for particular types of EEs.
– Check if the decision is one for federal or state law
Different courts use different tests for determining status of worker.
Texas uses common law control test.
– Check how work is controlled
Factors Determining Extent of Control (Darden):
– Worker’s ability to grow business and control rates/prices
– Worker’s risk if business bad
– Worker’s risk of loss
– Worker’s integral relation to business
Is worker’s task peripheral to line of business of employer
Is worker’s task part of line of business of employer
– Extent worker is supervised
– Who owns tools/equipment
– Worker’s freedom to choose means
– Worker’s ability to work for others
– Worker’s mode of compensation
Payroll = EE
Units of Time = EE Units of Tasks = IC
– Worker’s ability to hire others
– Worker’s scope and duration of employment
– Whether worker receives benefits
– Check economic factors
– Does worker has independent business of own.
Would it exist apart from the employer
– Does worker own/control principal assets from work.
– Does worker have opportunity for growth/profit.
Can worker work for other clients.
– Is worker’s work integrated in employer
Any individual employed by an ER and employed as to suffer or permit to work
Extends beyond common law test
Under this test, an IC could be an EE.
Test to Determine of EE Entitled to Protections of FLSA:
Whether the EE or the ER is the primary beneficiary of the labor
Who is the work directly for, and what is its purpose
Note – These are fact intensive questions.
Other Child Labor Issues
If a child gets injured, courts have often said that the family of the child may choose between:
– workers’ compensation and
– common law tort remedies.
However, parents may be at fault for allowing child to work.
Capacity to Contract
Contracts created with minors are voidable for lack of capacity. A minor may disaffirm a contract.
Employer Duties In Hiring (8 U.S.C. 1324a)
Immigration Reform and Control Act (IRCA)
IRCA establishes an employment verification system. The statute prohibits a person or entity from hiring for employment, an alien not authorized to work.
Hiring – Actual commencement of employment of an EE for wages or other remuneration.
ERs are required to examine an EE’s documentation and complete I-9 within three days of hire.
The statute prohibits the hiring and continuing to employ an alien while knowing the alien is not authorized to work.
Good faith verification supports the presumption that you did not know
Reasonable appearance of validity grants presumption.
Burden of proof of knowing switches to government.
Government can argue constructive knowledge
This is circumstantial evidence that ER had notice and therefore had a duty to inquire further.
If good faith document check, then usually no constructive knowledge
This is separate and distinct from the duty to verify documentation.
The statute requires that an ER must verify status of every new EE under IRCA without regard to the ER’s certainty that an individual is a resident, citizen, or otherwise authorized to work.
Pre-employment inquiries concerning a job applicant’s race, color, religion, national origin, or citizenship status may constitute evidence of discrimination prohibited by Title VII.
ER has burden of proof that such inquiries were not used in making hiring and placement decisions in a discriminatory manner.
Examine work documents after offer made, but contingent on authorized status.
IRCA is balanced to serve the goal of preventing unauthorized alien employment while avoiding discrimination against citizens and authorized aliens.