Employment Law Outline

Brad’s Employment Law Outline

I. Introduction to Employment Law

1. General Themes for Regulating/Not Regulating (Employment Law):
· Economic Rationale
o Inefficient for Government to intervene
o People as rational beings know what is in their best interest
· Imbalance of information between employer and employee
o Employer may know that work is much more dangerous than the EE believes it to be
· Power Imbalances
o EE may have no other choices
o ER’s have more bargaining power in general
· People believe that the worst will not happen to them and thus sometimes act irrationally

2. Legal Boundaries of the Employment Relationship

A. EE’s v Independent Contractors (IC)
EE’s are those who as a matter of economic reality are dependant upon the business to which they render service (Sec. of Labor v. Lauritzen—Pickle case)

Under FLSA the courts look at the following factors in total to determine the nature of the employment relationship

Control – nature and degree of the ER’s control as to the manner the work is performed

i. Does ER exhibit pervasive control over operation as a whole

Profit and Loss – The worker’s opportunity for profit/loss depending upon his managerial skills

i. Concerned about losing entire investment, not about earning less from poor picking

Investment – Equipment or materials required for task of workers

i. Gloves are not enough (what about lawyers—what are their tools?)

Skill – Does the service require a special skill

i. Like all skills it increases by doing the work

Permanency – Degree of permanency and duration of working relationship

i. IC can return year after year or work for a long time—an EE at McDonald’s may only work there for a few days

Integral Part – Service is an integral part of ER’s business (IC would be side project)

i. Unless pick cucumbers there would be no pickles

Dependence of worker on ER – (Key Consideration)

i. Majority—EE’s depend on ER’s land, crops, expertise, equipment and marketing
ii. Easterbrook—If the EE chose not to work there would be other jobs available
Different Statutes have different tests- Most same criteria
ABC test for purpose of state unemployment law:

Lack of control over worker
Service by worker is outside of usual course of place of business
Worker is customarily engaged in independent trade/business/profession

B. Covered Employees
Employment statutes often exempt part time, home, leased and “contingent” workers
The following case addresses whether a company can avoid paying benefits to some workers (classified as independent contractors) while offering benefits to its core workers.

Vizcaino v. Microsoft (Workers were EE’s even though signed an IC agreement)

Class action brought by workers who were hired as independent contractors to be included in retirement plan and stock option program
IRS said that the workers were not independent contractors, but employees

MS changed policies to conform—hired some of the workers and let others work through temp agencies

Workers all signed agreement which said they were independent contractors and responsible for their own taxes and benefits—were not employees of MS and were not guaranteed future employment

Court found that workers were employees and were in fact eligible for benefits—the label of independent contractor in the agreement was a mutual mistake and therefore the workers did not agree to be less than EE’s
Court protected workers beyond the rights that they had contracted for

Dissent: Workers did not rely on the benefits that they now want as they believed they were IC’s. Also, workers were paid a higher amount than regular MS EE’s who received benefits

C. Covered Employers
Should some ER’s be exempted from employment laws, and should some ER’s be included even though they are not technically the ER.

Liu v. Donna Karan International

P’s worked in garment factory owned by the “Chens” which primarily produced clothing for DK.

P’s allege 80 hour workweeks, no overtime and that they made less than minimum wage
P’s probably sued DK because deeper pockets and doesn’t want bad PR

FLSA

ER= any person acting directly or indirectly in the interest of an employer in relation to an EE
EE= any individual employed by an ER

Both parties agree that the court should look at the economic realities presented to the court in determining if DK was a joint ER
According to DK:

DK cites Carter v. Dutchess Community College (Carter test for ER)
Did the alleged ER:

i. Have power to hire and fire EE’s
ii. Supervise EE work schedules and conditions of employment
iii. Determine rate and method of payment
iv. Maintain EE records

DK says they did none of these

According to P’s:

During time frame the factory production was 60-100% DK
DK had representatives at the factory daily
DK set hours by requiring large output
DK set wages by offering low prices
P’s cite Lopez v. Silverman

i. Judge in Lopez rejected the Carter test—“would rarely permit a finding of joint ER status
ii. Would virtually never hold a manufacturer liable for factory conditions
iii. Direct control not necessary—enough that:
1. Great majority of work done for one customer
2. Frequent quality control inspections by manufacturer
a. Seen as supervising EE’s

Court found that there was enough for the question to be sent to a jury to determine if DK acted