Gilian Lester – Employment Law Outline (Spring 2010)
I. Introduction
A. Themes in Employment Law
1. Law is secondary to the workforce relationship
a. Indiv employers and employees estab relationship and most of its terms by agreement
b. Secondary to the actions of employers in the aggregate labor market
(i) Employment legislation is enacted when society, or at the least some segment of society, is dissatisfied with the level of wages, sageft, or job security produced by the labor market. Employment leg attempts to change these outcomes by influencing the workings of the labor market.
c. Why are we covering some employees and not others?
d. Labels v. Realities
(i) Giving people a “title” doesn’t necessarily mean that’s what they are
2. Immutable v. Default Rules
a. Immutable Rules
(i) Parties cannot change by agreement
(ii) Pros
· Makes up for the balance of information asymmetries
· People can’t always properly assess risks/hazards
· Third party effects externalized on system: health care costs passed on
(iii) Cons
· Presmptively undesirable bc it can frustrate the interest of workers and employers, deciding what the “should” contract about
· Disrupts freedom of liberty
b. Default Rules
(i) Pro
· Reflect presumed intentions of most of the potential parties
ü Avoid transaction costs
· Encorage parites who prefer to K around al egal rule to voice their true preferences
ü PROBLEM: assumes baseline knowledge
· Furhter a result seen as socially desirabl
B. Legal Boundaries
1. Employees v. Independent Contractor Coverage under FLSA
a. “Economic Realities Test”
(i) Purposive: “employees are those who as a matter of economic reality are dependent upon the business to which they render service.”
· How the employment relationship is described contractually is considered but not dispositive
(ii) Multi-Factor Test that doesn’t look at a particular isolated factor
· Nautre and degree of the alleged employer’s control as to the manner in which the work is to be performed
ü Depends on whether a whole operation (Laurentzin) v. just task at hand (Brandl)
· Alleged employee’s opportunity for profit or loss depending on managerial skill
· Investment in equipment or materials required for task (capital investment)
ü Less of an investment in operation, more likely an employee
· Whether service requires special skill
· Degree of permanency and duration of the working relationship
ü Court in Laurentzin found that seasonal work not dispositive to precluding a finding of “emplyoyee
· Extent to which the service rendered is intergral part of the alleged employer’s business
· Economic dependence
ü “Touchstone” of the test for certain circuits, questioning whether personel are “so dependent on business” or are sufficiently independent
b. Alternate RST (tort) test
(i) Does employer have the right to control physical performance of the job?
· Looks at behaviorl control, financial control, type of relationship
· More suited to the purposes of tort law and vicarious liability
· Critiques: interdeterminate, rigid and too one size fits all
(ii) Easterbrook recognizes that the purposes of the IC/employee distinction in tort law aims at different goals
· With the FLSA, the object is to defeat contractual arrangmentsments.
c. Look to purposes of the act? (Easterbrook)
(i) Correct and rapidly as practical elimainte the labor conditions detrimental to the maintainence of them inimum standard of licing necessary to helath, efficiency, and general well-being of workers.
d. Impact of distinction
(i) Differing tax obligations and how payment is calculated
2. Employee under FLSA and other statutes
a. Establishing that a person qualifies as an “employee” under FLSA does not inextricably result in coverage under other statutes.
(i) Ex: Despite potentially meeting the definition for “employee”, temporary employee not entitled to company’s ERISA benefits which specifically limited to certain types of employees. (Wolf)
b. Core v. contigent workers
(i) Core workers: implicit contract w/employers, employeers invest in them
(ii) Conteignet: weak affliation with a specfici employer, no stake in company
3. Covered Employers
a. Should firms be exempted from coverage by employment law? How do we determine which is the employer that affects employees?
b. Joint Employers: Individuals can be “employed” by more than one employer simultanenously. Arises in the case of subcontracter.
(i) Use an “economic realities test” derived from Rutherord
· Whtehr work is used on employer’s premises or with equiopment
· Does subcontractor shift employees as a unit?
ü Focus here is on whether the sub is really a cover
· Did Ps perform a discrete line-job integral to production process
ü Look to industry custom (subs usually used)
ü Histoircal practice (is it used to avoid labor laws)
· Responsible under the K could pass from one sub to another?
ü Are employees tied to the entity or the sub?
· Degree to which employer supervises?
ü Needs to be supervision outside the subK
(ii) Purpose
· Not to subsume typical outsourcing relationships, but to expose outsourcing that lacks a substantial economic prupsoe, but is not manifestly intended to bring normal, strategically oriented K schemes within the abmit of the FLSA
c. Small Business Exemptions
(i) Pro
· Don’t have the resources for the paperwork
· Need small business
(ii) Con
· Don’t want businesses violating the underlying policies under the act?
· They are capable of compliance
· They don’t grow into big employers
I. Introduction
A. Historical Footing
1. Law relationship developed from one where employers had certain obligations to employees(i.e. job security) to a laissez-faire view that employment relationship is contractual in nature and terminable at will
a. Employment K beomes a w
2. Implied in Fact: Totality of Circumstances Approach
a. All the surrounding circumstances suggest the parties did not intend the employment to be “at-will” and that some level of cause required
b. Relevant factors in assessment implied in fact (Pugh)
(i) Personnel polices
(ii) Commendations and promotions
(iii) Longetivity of service
· The longer an employee has worked for an employer, the more the employee is dependent on the employer because the ties are stronger and the employee’s work history is based on that specific company (firm-specific human capital). Investment (high productivity, low wages while young)
· Why not dispostive?
ü Don’t want to not encourage retention of emploees
(iv) Actions or communications
(v) Practices of industry
c. Relevant factors in cause (Pugh)
(i) Higher standard for explicit v.implied promise
(ii) “fair and honest cause or reason regulated by good faith” while not interfering with management discretion
(iii) Responsibilities of the particular employee
3. Good Faith or Just Cause
a. Even if implied in fact K is found, how much security should be implied
b. Assessing “cause’
(i) Some courts require only subjective good faith/reasonable grounds to believe that employee erred (CA, Coltran)
(ii) Others require objective showing that employee engaged in behavior deeming termination just (Alaska)
(iii) Churchill (public employees)
· Plurality opinion: employer must make reasonable efforts to determine the true facts, what employer though was said (Reasonable good-faith test)
· Scalia: don’t need to conduct investigation, subjective good faith
· Stevens: objective good faith,
D. Reliance based on Add’ Consideration
1. Employer gives the employer sufficient consideration in addition to the services for which he was hired
a. Ideas is that employee affords “substantial benefit” other than the series for which employee is hired to perform or undergoes subsntail hardship
(i) Used as an interpretation rather than validation device
b. Determining the reasonableness of reliance
(i) Some focus on whether it was proper to rely
· Other courts look to whether steps would habe been taken without assurances?
(ii) Unlimited K not implied…only to textension o when consideration would be reaonsalbe
(iii) VARY by JX: Some courts only treat it as an evidentiary tool to unearther whether there is an implied in fact promise for some form of continud employment
