LAW699 Employment Law Outline
Avery_EmpLaw_Fall_2011.docx
I. Regulating Work & Origins
· 3 categories: (1) employment law (2) labor law (3) employment discrimination
· What does employment mean? – wages $, identity, status, health & disability insurance
· Many workers have zero job security
Blackstone 1765 England
· He described 3 domestic relations [all 3 are status relationships]
o Master-servant
o Husband-wife
o Parent-child
· Left-side is the authority figure while right-side is the subordinate
· Historically the father was the master, husband, and parent, and had full control
· Master-servant is the law of agency
In America the status relationship of master-servant has transitioned to contract
· “free-labor” contrary to popular belief the U.S didn’t have free labor i.e. slavery
· Involuntary servitude & slavery exists in the U.S today despite its prohibition
· Free-labor:
Lochner v. New York
· The employer was a bakery and the employee was a baker. NY passed a law prohibiting bakers from working more than 60 hours/week. The union pushed for the legislation so that non-union bakers couldn’t have an advantage by working more. NY also claimed health issues stating bakers died early.
· NY Court of Appeals held the NY law invalid because the US Supreme Court ruled in Holden v. Hardy that a Utah law could not interfere with a mining company and miner’s contract to restrict the number of hours a minor could work.
Wage & Hour Laws
– There’s no limit on how many hours an employer can make you work
– Overtime is time and a half of your pay rate
Unions
– The court initially struck down protective legislation until the Great Depression of the 1930s
– The Union Movement grows in the 1930s
– Today: unions are down drastically but NY, Hawaii, Alaska, and Michigan still have high unionization rates while the Carolinas have the lowest
National Labor Relations Board v. Jones & Loughlin Steel Corp.
· This case is known for the regulation by the State of the workplace
· The opposite of Lochner; decided at a time during the mass strikes of the 1930s. The Wagner Act (part of the NLRA, National Labor Relations Act) was passed but employers thought it would be struck down by the courts
· Wagner Act prohibited employers from firing someone for being in a union or wanting to be in a union, which was common practice at the time
· The NLRB targeted Jones & Loughlin for violating the Wagner Act, the court agreed
Remedies for NLRA violations: plaintiff gets no damages but only reinstatement, mitigation is required thus no back pay, the NLRA remedies are thus very weak
Individual Rights Model
– With the decline of unions, substantive individual rights by the State are becoming more significant
– Collective Bargaining: employers (management) sit down with the union (employees) and reach and agreement à the STATE STAYS OUT!
II. Contemporary Era
· Slower workforce growth
· Diversification: gender, race, ethnicity
· Aging workforce
o Employers are letting go of senior employees because they are the highest paid workers
· Outsourcing (off shoring)/immigration
· Income inequality – union decline
o Gender wage-gap decreasing between men and women because service sector is taking over manufacturing
· Work time
Defined Benefits + Pension/Retirement à 2008 Recession à older workers now working even longer because they only have social security
– Owners/employers are always looking to reduce labor costs while employees are looking to maximize their work value i.e. time theft (not working on the clock)
Who’s an Employee?
Putative employer: a worker that enters into a contract but it’s not clear if they are an employee of the employer
Type of workers: employee (covered by Title VII etc.), independent contractor, volunteer/intern
Estrada v. FedEx (2007)
· Drivers for FedEx claimed they were employers and not independent contractors
· FedEx: bring your own truck and if you can’t afford it the company will give you a loan
· The court looked at the common law “right to control” test, where FedEx controlled the uniform worn by drivers, the FedEx logo on the truck, and the type of truck
· The California court held the drivers were employees of FedEx
FedEx v. NLRB
· Same set of facts as Estrada but the US court determined the NLRB had no jurisdiction over the drivers because they were independent contractors and not employees
· Why? The drivers could hire helpers or sell routes, the court didn’t pay too much attention to the wording of the contract, the drivers had an entrepreneurial opportunity (the ability to sell the route)
· Unlike Estrada where drivers only had 1 route, FedEx here had multiple routes for drivers
III. Individual vs. Collective
Individual Contracting
1877 Horace Woods treatise on at-will employment:
General Hiring = indefinite period of employment
English Rule -1 year presumption of a period of hiring (duration) with a general hiring
-notice required
American Rule -if it’s a general hiring then it’s indefinite
-the presumption is at-will (fire, quit whenever)
The Woods treatise/rule is based on “freedom of contract”, American courts say at-will employment is a default rule because without a statement indicating the length/term of employm
termination notice.
Loudermill rule only applies to public civil service jobs.
Express Agreements
Written Contracts
Guiliano v. Cleo, Inc.
Guiliano was hired as a senior marketing director for 3 years and given a yearly salary of $103,000.00. It was a term contract and thus not an at-will employment.
Material Breach? – if Guiliano stopped doing his job his company could fire him immediately without cause and sue him
Guiliano’s company shifted management around and informed Guiliano that his contract would not be renewed and attempted to make Guiliano quit before his contract was finished by removing all of his duties as VP of Marketing. The Court ruled there was a constructive discharge because by making Guiliano stay at home and removing his duties, the company essentially terminated his position at Cleo without cause.
Another company hired Guiliano while he was in “limbo”, Guiliano was still being paid by Cleo for the rest of his contract term (liquidated damages clause in his contract) and in fact the new company paid Guiliano a higher salary.
Liquidated Damages Two Perspectives: (1) reasonableness of the LD clause at the beginning of the contract and (2) reasonableness of the LD clause at the time of termination
If the LD clause is outrageous then it’s a penalty clause therefore unenforceable; here is was not.
Cleo should have negotiated with Guiliano for a release from the contract (buyout the rest of the term). Cleo should have paid the present value of his annual salary which in the end would have been less money than pursuing all the litigation.
Oral Contracts
Generally oral contracts requiring just cause for termination can be enforced but oral contracts face hurdles i.e. statute of frauds bars oral contracts not capable of performance within a year
Toussaint Case
§ About job security; as long as the mid-level manager did his job he would keep it
§ Promise?
o The manager won his claim for job security because he bargained orally with a high level member of his employer
Rowe Case
§ Sales clerk job kept as long as she kept her sales quota
§ Puffery?
o Rowe lose her case because she only talked with a low level employee who told her that she’ll keep her job as long as her sales quotas are met – no bargain took place
