· Seiner – Individual Employment Law
· Fall 2009
· Chapter 1 – Themes of Employment Law p. 3
· -Individual Employment Law: it is different from employment discrimination law because employment discrimination law is based on treated employees differently because of something (race, sex, religion, etc.), whereas employment law is broader, that deals with anything in the employment relationship.
· -for example: minimum wage laws, drug testing, defamation, political expression, etc. are all issues covered in this class.
· -Hypo: possible causes of action
· ®gender discrimination (Title 7 of the civil rights act of 1964 or equal pay act: same for federal and state law in South Carolina), defamation, freedom of speech (bush pres. sticker), at will employment vs. oral contract for life, invasion of privacy because of drug test
· -You work at McD in Va as a fry cook. Your boss terminates you because you were born in January, and he doesn’t like Capricorns.
· ®Biggest concept in the class: Employment at will
· -in most states, and employer can make take an employment action in any case as long as there is not a contract that states otherwise.
· -most if not all countries are not employment at will: the arbitrary reason to fire people does not exist in those countries.
· -vast majority of workers don’t have an employment contract, and can be terminated for any reason at all.
· -focus on the exceptions to employment at will: political protections and title 7 (cannot terminate because of race, gender, or religion).
· -other factors: does the employee manual create a contract, and is there a contract which changes the default rule of at will employment.
· Chapter 2 – Legal Boundaries of the Employment Relationship p. 13
· A. Employees vs. Independent contractors
○ Focuses on the question of who becomes an employee.
■ This is very important because it affects how the employee is bound to treat you, and what rights you have.
○ Very technical definitions under different statutes and common law.
○ Secretary of Labor v. Lauritzen (1987) p. 13
■ Migrant workers work for Lauritzen as pickle harvesters. Question is whether the fall under the definition of employees under the Fair Labor Standards Act (FLSA) of 1934.
■ Migrant workers are paid based on how many pickles they pick, and if they are doing poorly their may be a bonus to keep them picking. The migrant workers have control over how to pick and how to manage the picking families, but the land is owned by the defendants.
· The land is divided up by the defendant.
■ Question of the case: are these migrant workers employees under the FLSA.
· FLSA defines employee as: any individual employed by an employer.
¨ Statute goes on to say that to employ means that you suffer or permit to work.
¨ Courts have interpreted this to require an “economic reality” analysis, which has six criteria:
² Control: court says pickle pickers don’t have enough control to be an independent contractor.
² Profit or loss opportunity: court says migrants don’t invest in the business, so they don’t have much opportunity for loss.
² Investment in equipment or materials (capital investment): only had to buy gloves
² Special skills required: only takes 5 minutes to learn to pick a pickle
² Permanency: court says that this is a fuzzy issue: many repeat pickle pickers.
² Integral part of business: important part of business.
· Court holds that this is an issue for a jury, but are probably employees.
■ Easterbrook Concurrence: hates this economic reality 6 part test. He still thinks they are employees, but that we should look at the statute, and decide as a judge whether they fall within congress’s definition of employee in the FLSA.
· He says it is not the judiciary’s place to make the statute better, it is their job to enforce the statute as it exists.
■ Most important factor is almost always control.
· So the initial question in any employment case is: Was the person an employee?
■ IRS Definition: instructions? Training? Provides materials? There are 20 factors under the IRS employee definition.
○ Considerations where employee status is important:
■ Tax withholding: IRS regulations
■ Tort Liability/Workers Compensation: Agency law
■ Social Security withholding: IRS regulations
■ Eligible to employee benefits: ERISA
■ Process for discipline: Collective Bargaining Agreements or Employee manuals
■ Employment discrimination laws: Title 7 or other statute
○ Wolf v. Coca Cola (2000) p.30
■ Two requirements for participation under ERISA: you must be an employee or former employee, and eligible to receive the benefit under the plan.
· Court uses a 14 factor analyses on page 31-32 to define employee. Court concedes it is possible that the person was an employee, but that the particular individual DOES NOT fall under the plan.
· Even if you are an employee, you don’t necessarily get ERISA benefits. There are still other steps to prove you are covered, and that the statute was violated.
■ Employers can treat independent contractors less favorably then employees.
○ What are the benefits to an employer keeping a small group of employees, and hiring out the rest via independent contractors.
■ Liability for workers compensation, don’t have to pay ½ of social security, don’t have to provide benefits. Gives you great flexibility to manage the workforce and you see fit.
■ Detriments to independent contracts instead of employees.
· Loyalty, permanency, training costs, accountability,
■ What about law firms: partners vs. associates? EEOC case about forced retirement age for partners; as part of the consent decree, they agreed the partners were employees.
○ Zheng v. Liberty Apparel Co. (2003) p. 35
■ 26 garment workers sued to claim that they had 2 employers: their contractor employer and then they claimed the garment company was a joint employer.
· Assembly line did everything but the final step; the final step was performed by these workers.
· Because the factory is no longer in business, and plaintiffs cannot find them to sue them, they are seeking to make liberty a joint employer under the FLSA (fair labor standards act).
■ 4 factor test: applied by the district court
· power to hire and fire
· supervise and control work
· determining rate and method of payment
· maintained employment records
■ Economic Reality Test: 6 part test they should have applied
· degree of control
· workers opportunity for profit or loss and investment in business
· degree of skill required
· permanence or duration of the work relationship
· extent to which the work is an integral party of the employer’s business
¨ this case is not conclusively resolved, it is sent back to district court.
¨ Different requirements of employee’s you need to be covered by certain statutes:
² There is some definition of who is an employee, and how many you must have to be an employer who falls under the act
§ Title 7: 15 employees
§ FMLA: 50 employees
§ FLSA: monetary threshold: 500K of annual sales
■ Part Time workers: 14 workers and 1 worker that works 4 days a week. Does this make him an employee and make the employer fall under Title 7.
· Supreme Court held that they are employers, and made the rule: look at the payroll, and if you fall on the payroll then you are an employee. So Title 7 uses a payroll test.
· Chapter 3 – Employment at Will p. 47
○ Unique concept to American law; doesn’t exist in Western Europe.
■ Proposition that someone without an employment contract can be terminated for any reason at all, and they can quit for any reason.
· Bargain b/w the employee and the employer to have complete freedom.
○ Origins of Employment at Will
■ Statute of Labourers: If you are under 60, and don’t own your own land or business, they mus
² Law always reads in a just cause rationale for firing an individual.
² Law worries about “moral hazards”; if you have an agreement that cannot be broken, there is a huge disincentive for productivity, and the morals of the employee can go down the drain, and they still owe him money.
¨ Is it better to have a definite term contract or an indefinite term contract?
² Eyes of the law: if you have a definite term contract, the law says that you are still entitled to damages if you are terminated for economic conditions. But if it is indefinite, your employer can terminate you because of a business downturn, which is considered just cause.
¨ What would justify a just cause termination?
² Disloyalty to the company (giving away trade secrets), insubordination, attendance, criminal activities, substance abuse, quality and quantity of work, avoidance of conduct either at or away from work which would interfere with the carrying on of an effective business.
¨ What if you have a contract, and leave early, can the employer sue you for damages?
² Probably wouldn’t make someone stay and work. But there are damages.
§ Costs associated with replacement, training, etc.
· There are legal consequences, and practical consequences as well.
² Cases are few and far between: usually teacher/short term contract cases. Anything beyond two years is probably not going to happen.
· Hetes v. Schefman And Miller Law Office (1986) p. 74
¨ Plaintiff was receptionist for law firm for under a year. She was assured she had a job “as long as you do a good job.”
¨ P alleges employment K breached because she was terminated without just cause.
² Trial court granted summary judgment. Court of Appeals held that a jury could reasonably have construed the oral representations as a promise to discharge only for good or just cause.
² Don’t employers say that all the time.
² Called satisfaction contracts: employer says as long as you perform satisfactorily, you can stay employed with us.
² 3 ways to treat these satisfaction k’s
§ Cannot fire without just cause (objective)
§ Not really a contract (majority view: too broad)
§ Good faith belief that the employee was not performing within the terms (Subjective)
¨ Rowe v. Montgomery Ward p. 75 – note case: person fired for being missing from store for 4 hours without explanation.
² Manager told her originally that as long as salespeople generated sales and were honest, they had a job at Wards.
² Is this the same as the Hetes statement?
§ More generalized language. Court held no contract created because it was not an individualized statement.
² Why not just require it in writing?
§ Maybe too easy to coax with oral promises.
² Some courts will treat the contract as one for just cause, but even Michigan backed up.
· Ohanian v. Avis Rent a Car System, Inc. (1985) p. 76
¨ P worked for Avis. Convinced him to leave his division, and only agreed to come to a new division with a promise that his employment was no longer at will “unless he screwed up badly, there is no way he was going to get fired …he would never get hurt here in this company.”