EMPLOYER-EMPLOYEE RELATIONS
Professor Secunda, Spring 2005
THEMES OF EMPLOYMENT LAW
Models of Employment
Life-Cycle Model of Wages.
Two problems with this model:
The less sophisticated employee is now working at a dead end job or getting outsourced. The more sophisticated employee is moving around a lot more: more mobility, less loyalty.
Contingent workers don’t fit into this model because they don’t have to be paid benefits.
Currently, employment law is in between models.
Analysis Guidelines
Five issues that arise in employer-employee relations:
Should these relationships be privately ordered or highly regulated?
Who should have the authority in the e-e relationship?
Is there a tension between simple employment rules and effective employment rules?
What should be the structure of the legal response to problems in the employer-employee relationship? Should the federal courts step in or should it remain in the state domain? (Federalism concerns.)
What should be the relief that is provided if there is a violation of the substantive law? Injunctive relief, contract damages, tort damages, etc.
Two Types of Rules
Immutable rules. These rules cannot be contracted around.
Pros:
There may be informational problems between the employer and the employee.
There may also be an assessment problem.
The employee may not be capable of making the fully informed choice that he or she should make to take a certain position.
Third party effects: all people pay when the risks actually come home.
Cons:
Inspired by “nosy preference” or paternalism.
Default rules. (At will employment.)
Cons:
The employer might not consider or even be aware of his other options.
It is hard to contract around a default rule, especially if you don’t have bargaining power.
Som
ty looks to 7 factors to determine if the workers were employees:
Control
Profit and loss
Capital investment
Degree of skill required
Permanency
Integral part of business
Dependence (on e’yer)
Employees are those who as a matter of economic reality are dependent upon the business to which they render services.
HELD: Migrant workers are e’ees under FLSA
Concurrence (Easterbrook) would look to the amount of human capital a worker has to offer. The more human capital you have to offer, the less dependent you are. This is a brightline, but not perfect, rule.
Partners are owners, not employees. (See Weider, Bohatch, and Hishon.)
Volunteers are not employees because they are not compensated. (Payroll test.)
