Employment Law Outline

Employment Law Outline- Basics of Employment Law

o What is an employee? Provides services For another individual or entity In return for remuneration Contractual Employer- profitable business

o Effect of “employee” label Primarily contracts Agency law Respondeat superior Torts Property law- non-compete agreements, IP

o Sources of Employment Law Federal statutory law

Chapter 7 Anti-discrimination law Anti-retaliation

State Statutory law Constitutional Law

Employee benefits Preemption Individual rights- both fed and state constitution

o Due process, speech, property, privacy

EMPLOYMENT LAW, THE BASICS

- DISTINGUISHING “EMPLOYEE” AND “INDEPENDENT CONTRACTOR”o Basics

Employee: Typically derive test from Rest. Of Agency definition of employee or servant

Master/employer: a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.

Servant/employee: an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master

Independent Contractor: one who contracts with another to do something for him

but who is not controlled by the other nor subject to the

other’s right to control with respect to his physical conduct in the performance of the undertaking.

Rest. 220 Definition of Servant- Factors Extent of control Whether or not the one employed is engaged in a

distinct occupation or business The kind of occupation- and whether in that locality its

typically done with/without supervision Skill required Who supplies the location of work and the tools Length of time Method of payment- by time or by job Whether work is part of regular business of employer Belief of parties Whether principal is in business

o Why it matters Employee:

Advantageso Worker’s comp= limited damageso Increased fiduciary dutieso Greater degree of control over worko Preference of workers matters in competitive

marketo Economies of scale and efficiencyo Worker morale creating stakeholders

Disadvantageso Respondeat superior

Ind. Contractor Advantages

o Significantly reduced vicarious liabilityo Greater flexibility for independent contractoro Avoid Immigration Reform and Control Act-

cannot hire employees without checking paperwork, so outsource it

Disadvantageso Limited fiduciary duties

o Respondeat Superior and Independent Contractors Underlying premise is protection third parties and the public

Exceptionso Torts principal intendedo Certain non-delegable duties

Nonetheless, strong incentive to outsource dangerous worko Impact of contract

Due to the economic realities test, parties cannot completely contract into a certain relationship

However, can contract out of certain default rules that pertain to relationship

Cannot bargain in or out of some federal ruleso Problem with common law test:

Designed to deal with respondeat superior, doesn’t really apply to other instances when court needs to determine if person employee: discrimination, wage/hour

Common law focus on control, this concern doesn’t make sense in other contexts

o Cases McCary v. Wade

Facts: injured when the van they were riding in hit a lumber truck owned by company that supplies lumber to Georgia Pacific

Used similar test to Rest., focused on question of control- indep. contractor

o Paid by piece, not by wageo Obligation to work-

permission required to not work Contract is what makes independent

contractor come to worko Ownership and maintenance paid by contractor-

he controls the means of productiono Portion of day- is it during scope or course of

employment? Normative- using indep. contractor passes savings on to

consumer, but what about undercapitalized indep. contractors?

o Unstated element of dangerous nature of business?

Logging truck v. nuclear power plant Certain areas may be necessary to apply

fed. guidelines But this IS different than negligence claim

against ownero DOES THIS COME FROM SOMETHING?

Fitzgerald v. Mobil Facts: driver fell off truck, trailor owned by truck

company, leased to Mobil. Tractor owned by third party leased to Mobil. Mobil wants driver to be employee to get exclusivity of worker’s comp, but contract disclaims employee relationship

Economic realities

o Really just an examination of control factors + whether activity is an integral part of business

o Here Control

Provided assignment Wages, indirect but enough Controlled duties Hire and fire

o Mobil’s approval necessary Didn’t own, maintain truck

Economic reality: he was hauling oil Why not apply estoppel?

o Double edged sword- Mobil liable for employee’s torts now

Natkin v. Winfrey Facts : freelance photographers photographing show Work for hire doctrine:

o default rule: artistic rights vests with artisto but if work done for an employer, employer gets

copyright- DISTINGUISHING “EMPLOYER” AND “EMPLOYEE”

o Basics Lack of negotiating power is a strong incentive to give primacy

to private ordinary Different benefits for different designations: pick one or the

other Fear of enforcing private ordering is to, in consideration

of employment, would have employer waive rights Strong contract deference, but not complete

o Clackamas Gastroenterology Associates v. Wells Facts: employee sued under ADA for discrimination, clearly an

employee, the question was whether the doctors were also employees and thus qualify for ADA

If court rules partnership: not employees, but employees if corporation

Doctors want court to look past fact that they designated professional corporation in articles

ERISA must call selves employees to qualify

applied 6 factor test suggested by EEOC focusing on control- pg. 29 they control the operation of clinic, share profits, and

are personally liable remand

Dissent

Focuses on right to contract- wanted to be employees for ERISA, let ‘em

Usually a pro-employer argument-- “CONTINGENT” LABOR

o Basics No uniform definition of what a “contingent worker” is No independent legal significance to status Simply less permanent relationship May prefer for

Flexibility Competition among workers Labor savings Tax advantages Lower liability

Typically receive lower wages, fewer benefits-avoidance of FLSA is often motivator

o Fair Labor Standards Act Most strict employment act Most litigation focuses on coverage, as application is straight-

forward Whether workers are employees or not Whether employees exempt Whether defendant firms are employers, joint

employers or non employers if first two meto Ansoumana v. Gristede’s Operating Corp.

Facts: defendants (Hudson-Chelsea) are labor brokers for Duane Reade, contingent delivery workers hired from defendants but also had them do menial tasks around stores

Applied economic realities test to determine if they are employers

HCo Control test

Ability to hire and fire Workers have financial investment-

usually irrelevant Skill required Duration of employment

More difficult for workers here But argue physically demanding

job Gets at whether workers have

other optionso Economic realities: work is the only thing HCD

does

o These factors get to whether employee is dependant on employers largesse

Principals of HCDo Typically in fed. employment statut, individaual

not directly liableo Under FLSA, if an individual makes wage

decision, they can be held liable

THE “AT-WILL” DEFAULT RULE AND ITS LIMITS

- BACKGROUNDo For cause: can only fire for just cause as defined by common lawo Argument over whether a rule or presumption, but most courts hold

it as a rule- JOB SECURITY AND THE PRINCIPLE OF AT-WILL EMPLOYMENT

o Hanson v. Central Show Printing Company Facts: skilled pressman, given written promise to be given

work “40 hours a week thru out the entire year each year until you retire” although its seasonal work, terminated two years later

If a promise does not have a definite end date, then its unenforceable

Additional Consideration: Traditional rule: at will absent additional consideration Many states require for modification of contract

Some courts conceive of employment contracts as renewing each day- supports modification

If employer had requested non compete? Clear situation of additional consideration

More on this day???????????????????????????o Greene v. Oliver Realty

Facts: worked below union scale in exchange for “life

employment” in oral agreement made at beginning of employment

original employer bought out and purchaser says “all contracts will be honored”

Brought to attention of management because oral Laid off 9 years after change of employer, 24 years after

original agreement At will presumption can be overcome by intent of parties Policies underlying at will presumption

Freedom of contracto Establishes a default rule, then allows groups to

contract regarding this provision

o For employees- better default rule is just cause, but consider bargaining power differential

Mutuality of obligationo At will imposes on each side same duties,

remedies availableo Mutuality not required by contract law- more of

a fairness justificationo (Remember the justification behind

consideration= evidence of contract) Usually the expectations of parties

o Empirical evidence questions this justificationo Counteracts with actual employer activity:

progressive discipline Procedural protection against meritless lawsuits

o But then jury sympathy is on the employee side Fairness and equity

o Employer can rarely sue the employee- turnips Additional consideration

Good way to prove intent of parties, but not necessary Any evidence can rebut at will presumption

o Greene, On Remand Oral contract

Statute of fraudso One year limitationo Not for specified term, but lifeo At any rate, part performance would overcome

as well Evidence: hard to procure here—so old Additional consideration-

o Worked below union rate, working at all is regular consideration

o Unjust enrichment argumento Thus, additional consideration may be the only

thing Greene can argueo Pay raise and new negotiation

If giving a raise, explicitly state that additional pay is not consideration for “at fault” relationship

Danger is the relinquishment of other job offers Avoid making general statements about “life

employment” or “you will always have a job”o Wrongful Discharge Act

Conceived as a tradeoff, only wrongful discharges, but limited damages

- ORAL AND IMPLIED CONTRACT RIGHTS TO JOB SECURITY

o RELIANCE ON OFFERS OF EMPLOYMENT Courts have held that employees have a right to assume a good

faith opportunity to perform Promissory Estoppel

Elements:o Representation that is intended or foreseeably

will induce reliance (or a promise)o Reasonable relianceo To the recipient of the representation’s

detriment Recovery:

o Limited, not the benefits of the bargaino Instead, the successful plaintiff is put in the

position that would have been in absent detrimental reliance: “reliance damages”

Goff Hamel v. Obstetrician Facts: given offer of employment to leave current job Analysis of elements

o Statement likely to induce relianceo She quit job= reasonable reliance

On exam: try to focus on this- way to make unreasonable- leaving higher paying job for less, only oral promise, ect.

Reasonableness o Courts that reject promissory estoppel cause of

action find that it is impossible to assert reasonableness of reliance on an at will employment

Damageso Based on prior employment

Proof of relianceo Most convincing are those that relocate or incur

significant costs for new job Schoff v. Combined Insurance

Facts: employment contingent on bonding, concerned that charged with felonies

Worked for awhile, then quit- since at will must find quasi contractual principle for cause of action

Analysis of Elementso Statement: assurance of employer

“only felonies convictions matter” convictions that you do have don’t matter compounded by fact that employer filled

out applicationo reasonableness

employer didn’t have all the information, so it is hard to rely on their statements

separate assurances: but courts sidestep and require more definite promise, not just a statement regarding his “impression of the facts”

not the real question really should look to see if Schoff’s

reliance was reasonable Distinctions between Goff and Schoff

Temporal distinctiono How long must one work before promissory

estoppel is foreclosed?o Difficult to show while preserving at will rule

In the end, even though many courts recognize the promissory estoppel claim, bar set very high

o ASSURANCES OF CONTINUED EMPLOYMENT Shebar v. Sanyo

Facts: o employee was promoted, but given negative

evaluations, hires headhunter, gets offer from Sony and resigns

o they say – his leaving is a personal insult, resignation not accepted, he is “married to company,” and they never fire manager

promissory estoppel claimo intended to induce reliance, did rely, reasonable

could be fraud: making a promise with the intent not to perform

court analysis: contracto offer for lifetime employment

rejects literal lifetime contract, though from words that is what he is offering

instead it’s a contract for employment with only just cause termination

Impact of cultureo Must prove terminated without just cause and

faces evidentiary problem: negative evaluationo Look to other employers evaluations, try to

argue its pretext Pugh v. Sheebar

Facts: works for 32 years with assurances job is secure, also evidence of unofficial policy of not firing manager without just cause

Two legal triggers: do good job, and be loyal to company

Just cause?o Tough guy to work with, problem is it appears to

be post hoc justificationo Don’t need a good reason to fire for cause, just

must have a reason This is an implied in fact contract

o Not promissory estoppel or oral contracto Look to the totality of the circumstances to fid a

contractual righto Whether the circumstances are judged based on

the individual or the entire work force depends on context- here individual, in handbook cases, the workforce

Totality of circumstances hereo Work culture: managers not firedo Assuranceso Worked for 32 years, moved his way from the

bottom up Compare to handbook cases:

Shifting Burdens Plaintiff asserts prima facie, defendant responds with

legitimate business reason Plaintiff must then prove that the Legitimate business

reason is pretext for a forbidden reason Most often pretext argument based on opportunistic

firing: the wage/productivity curveo Actually unproductive: that is a common law

acceptable justification for terminationo Difference with discrimination cases: prima facie

case is that a contract exists, not discrimination The degree of the fall in productivity that supports

termination depends on the job: McDonalds cook v. nuclear reactor inspector

o EMPLOYEE HANDBOOK CASES Basics

One factor in implied contracts is “employer practices and policies”

Policies has a more formal connotation- and is more and more frequently given directly to workers via a handbook

Wooley v. Hoffman-La Roche Facts: no written employment agreement, hired to

inspect property, and after he found a problem and reported it, was fired

Listed reasons for keeping on an employee, but conspicuously absent was termination without cause

o Remember to have terms that benefit employer, not just employees

Fair process put in manuals to prevent unionization Changes to manual

o Occurred several times here, each with more favorable terms for employees

o Courts will NOT require additional consideration—the manual is to keep employees free to leave

Binding Nature of manual:o Covers all employees- even those that haven’t

read/ have ito No disclaimer- important to have in many places,

bold, and with some acknowledgement o Reasonableness:

Reasonable to see that employer is creating rights for employees (changes)

Reasonable for employee to believe that the terms will be followed

o Reliance: presumed Conner v. City of Forest Acres

Facts: manual includes disclaimer Language however overcomes this- mandatory

language of “shall” or “will were practical” Disclaimers further damaged by use of legalistic terms

and terms of art Because of these problems- question of FACT

Contractual right to job security v. procedural rights in event of cause termination

Conner and Hoffman La-Roche- assert job security Possible to assert the latter as well

o MISSED CLASS? PG 115

WRITTEN CONTRACTS AND EXPRESSLY NEGOTIATED TERMS OF EMPLOYMENT

- JOB SECURITY AND CONTRACT AMBIGUITYo Tropicana v. Speer

First: was there a contract? There is one, there is a difference between a contract for

employment, and contract for certain things Contract for employment evidenced by the fact he was

working Second: was there a breach?

Constructive discharge: way around just cause provision

Here, it is a question of degree, not kind. Shoulda been a jury question, but court misunderstands- if he had a right to those employees, would have been an actual breach

Could seek restitution: not a contractual argument, would have to find reasonable value of services and employer would get credit for wages paid

o Parol evidence and contracts Must find ambiguity: allows for potential interpretation with

outside info Process to incorporating parol evidence:

Is agreement complete integration?o Yes, then no parol evidenceo Merger clause strong evidence of complete

integration Find an ambiguity

o Be wary of listso Many courts ignore the clause “but not limited

to” Parol evidence must relate to ambiguity

o Can’t be contradictory to languageo Must be prior to contract

See problem 3-1 for exampleso Cave Hill v. Hiers

Facts: five year term agreement, VA rule: if for indefinite term, at will, but presumption flips if for term

Contract doesn’t include cause provision, just notice Court rebuts averse presumption?

Finds unambiguous contract Notice provision contradicts presumption (but not 5

year term) Notice refers to at will right

Notice makes it a 30 day term agreement- remedy is for damages of notice period

PROBABLY NEED MORE HERE GO BACK TO BOOK FOR CONTRACT WRITING PORTION

o Esbensen v. Userware International Facts: for term, but tried to get out of just cause provision Better language for the employer, but goes the other way-

Looks to see if document ambiguous at the beginning of analysis (VA court operated with presumption of unambiguity)

“for any reason” what does it refer to?

o Terminate for any reasono or if terminated for any reason

HOW TO AVOIDo Cause and no cause termination clauseo Just cause paragrapho Subordinate clause:

Upon termination, which may be for any reason

Insert substantive right in procedural paragraph??????

RULE: basic contract rule: construe contract against drafter, but many states unwilling in employment context

RETURN TO CASE FOR DRAFTING QUESTION- JUST CAUSE TO TERMINATE

o Benson v. AJR Facts: deadbeat son case, three specific conditions of

termination: dishonesty, conviction of felony, and voluntary termination of the agreement by deadbeat

Lies regarding cocaine use but terminated for using cocaine Ambiguity in contract, make sure you look at contract before

you fire someoneo Severance pay and term contracts

Consider fixed term not as a guarantee of employment, but a guarantee of pay

Limits opportunistic firing Puts cap on employer liability So basically, a liquidated damages clause

Sometimes, companies fire without cause even though they must pay severance

Avoid liability and bad PR Leave amicably But could be subject to derivative suits

o Unitah Basin v. Hardy Facts: 90 day termination notice, and dr. understood the

agreement to mean he would have opportunity to match economic reasons for termination

Valid reason to terminate: cheaper doctor Indefinite term, economic reason ok for just cause

o What just cause includes: Opportunistic economic reasons?

Type of contract important Term: econ reason not enough Indefinite: ok, allows for layoff

o Three Approaches to Just Cause Deference approach:

Employer states legit reason, and court accepts Burden of production, and court accepts larger minority

Proof Approach State reason for termination and prove reason actually

existed Hardly ever used

Good Faith reason supported by facts reasonably believed to be true by employer

Majority approach State good faith reason, believe this reason, and this

belief must be objectively reasonable Involves burden shifting

o CONTRACT WRITING Problem 3-3 pg 158 Extensive notes in notebook

o Causes for termination Layoffs

Most often based on seniority- first in last out Poor results

Question is, just how bad is the performance Often turns on specifics of case- circumstances of hire,

performance expectations, and terms of contract Actual cause v. reasonable decision making

When alleging misconduct, courts generally hold that the employer bears the burden of proof

What they have to prove is undecidedo Procedure and just cause termination

Some courts impose a procedural requirement in just cause terminations

Ex. Employees conduct egregious enough for reasonable discharge, and the employee had fair notice, express or implied, that such conduct could result in discharge

o Satisfaction contracts Promises employment as long as employer “satisfied” Generally held to be less protective of employee than just cause

agreement Ultimately depends on language of the agreement

- SPECIAL COMPENSATION ISSUESo Interpreting Express Compensation Agreements

Frequent litigation around whether the employer had contractual entitlement v. contingent right or expected right based on employer practices

Guggenheim Non specific bonus based on performance

Consider what part of the contract is actually discretionary

Court finds non-discretionary, eligibility for bonus a material inducement for bargaining

Implied in fact terms to contracto Pay bonuso 10% bonuso cap doesn’t apply to her

Nadherny Facts: opening new office in Boston, the vesting

problem Should have had language about extinguishing, expiring,

or terminating Ambiguous- kick it back to consider:

o Look at contract itself o Extrinsic evidence

Employee expectations: “common understanding and common usuage”

Similarly situated employees in similar industries

o Parol evidence Ambiguous Clearly not complete integration

Partnero Co-ownership and share profits- most states it’s

a rebuttable presumptiono Participation interest comes AFTER wageso However, likely rebuttable- intend not to form

partnership evidenced by the at will langugeo “other compensation”- just part of wages

o Implied Duty of Good Faith and Fair Dealing Fortune v. National Cash Register

Facts: at will employment, receives commission, regardless if he actually sells item

Terminated day after sale, but told to stick around- really just changed only title

Opportunistic termination: after sale but before commission is due, big real estate issue

Contract gives no right on face, but he gets to jury on implied term: good faith

Implied Good Faith Significant court resistance Generally restrict recovery to the value of benefits

accrued through past performance Some explain via unjust enrichment

THE PUBLIC POLICY EXCEPTION TO THE AT-WILL DOCTRINE

- COMMON LAW PUBLIC POLICY EXCEPTIONo EXPECT AN EXAM QUESTION ON THIS!!!!!!!!!!!!!!!!o Basics

Tort in complete flux, no state agrees with another Difference from above discussion: everything based on

contract or quasi contract Four Categories as defined by Restatement

Refusing to commit act that the employee reasonably and in good faith believes would require the employee to violate a law or code of ethics protecting the public interest

Fulfilling an obligation that is imposed by the lawo Jury duty, military serviceo Fed statute protects military, state usually

protects jurorso Must be a legal, not moral duty: car accident case

Claiming a legal right- such as workers comp though they usually have a retaliation clause

Complying with investigation, or reporting in good faitho Basically, whistleblowingo Usually have statuteo Employers want internal compliance covered as

well- otherwise go straight to external source and look bad

Other categories Tort related to termination but before termination: ex.

False imprisonment Defame former employee on reference Personal injury and workers compensation? Intentional infliction of emotion distress/invasion of

privacy Important note: termination must occur

Wrongful discipline- very small minority of jurisdictions recognize

o Peterman v. Teamsters Facts: closed shop environment, was going to testify against

teamsters, encouraged to commit perjury Wrongful discharge under public policy Termination had effect of suborning perjury- violation of

public policyo Foley v. Interactive Data

Facts: ratted on new employee Not actionable- only serving company policy, not public policy

o Murphy v. American Home Facts: employee reports on fraud, would be covered by

Saxbane – today as its publicly traded company NY denies:

Doesn’t implicate public policy Don’t want to create court based on claim deriving from

company policy- kick it to the legislature Nowadays, impact on public has greatly expanded

Still have to show some third party harmed Claim employee an embezzler v. was embezzling

NOTE: Sarbanes (and federal law) appear to overrule ethical codes

o Fitzgerald v. Salsbury Facts: fatal accident, lawsuits followed- Kelly testified, then

terminated and sues in response. Karash testifies for Kelly, has incident. Manager to Fitzgeral: “you should decide what team you are on”

Proof structure Garden variety public policy tort:

o Protected acto Discharge (discipline)o Causal connection

Borrows proof structure for discrimination cases Preponderance of the evidence, absent another

provision More advanced:

Clear public policy tort (clarity) Dismissal of employee under circumstances alleged in

case would jeopardize public policy (jeopardy) Public policy conduct results in termination (causation) Absence of justification

Difficulty of proving Reliance on what employer was thinking Judge determines the what a public policy is

Sources for determining public policy State Constitution- why relevant when cannot use

directlyo Evidence of systematic interest of stateo If could sue on constitution, cannot use public

policy torto Statutes, judicial decisions, federal statute

Factors Clarity:

o Clearly defined, not overly broad

o Court even unwilling to find good faith doctrine applies

o Arg. For Oppose wrongful termination

Clear in discrimination cases Here, no facts to support- he just

says he should be kept around Didn’t oppose wrongful

termination, just termination Truthful testimony

Two step reasoningo Perjury- clear public policyo Negative implication:

encourage truth in judicial process

o Some courts require statute!

Jeopardy o Must show that employers action will have

chilling effect- not just employee but others as well

o Appears to be part of pattern- Fitzgerald has the weakest case, but strong inference

Causationo Jury question, employer may assert justificationo Train managers to shut upo Proving Causation

Temporal proximity Formulistic view: judge made time

limit Realist/instrumentalist: totality of

the circumstances Extend to discipline

In discrimination, this is ok Managerial prerogative: how many decisions are

subject to judicial review? o Law and econ: bad bado But dicipline can chill behavior as well

o Tape Recording Most states not illegal Ethical? Yep Litigation:

Everything discoverable, can help opponent Will think manufacturing claim

Work product?

No legal analysis, but is fact work processo To discover fact work process- must show that

no other way to get info Work done at attorney’s direction qualifies

o Must be in anticipation of claim- looking for a claim more difficult

o Contract v. tort Some courts find public policy discharge to be contractual Benefits of tort

Mental distress Punitive damages

Benefit of contract For employer- limited damages Longer statute of limitations

o Sources of Law Rackley

Manager of nursing home receives request not to cash out check for patient

Framing public policyo Defendant will want very narrow public policy

so its harder to find clearly explicit definition of public policy

Must be clear and substantialo Here, clear but not substantialo Based on admin code- supposed to be a nimble,

policy shifting organization Rest. And Source of Law

Very expansive view of potential sources- even professional code of ethics!

Four hooks for public policy tort- see above State statute

Some states try to capture whole field, and preempt common law claims

NY, MN- STATUTES CREATING PUBLIC POLICY CAUSES OF ACTION

o State Approaches Conscientious Employee Protection Act (CEPA) (NJ)

Pg 204 Reasonable belief standard

o Internal or external reporting (disclosureo Participate in investigationo Catch all clause- object to participate

Must give employer 30 days notice to cure Retaliation explicitly illegal Broader and narrower than common law

o Does not seem to protect employee from reprisal for claiming employee benefit

o Participation clause seems to go far beyond illegal activities-- public health, safety, or welfare

MN statute Report- good faith standard Refuse to participate- objective basis, with immediate

notice Report- (health care)- good faith Doesn’t seem to cover legal testimony

Some state statutes operate with “at employee’s peril” approach- no reasonable/objective standard

What to do with CEPA statute? Establish independent hotline, with different avenues

depending on who is callingo Roach v. TRW

Facts: Roach drafts ethics language, must report unethical conduct of others, tries to call hotline but ignored, everyone in department fired, everyone but Roach immediately rehired

Litigated under CEPA, jury finds disclosure and participation violated, not objection

Disclosure CEPA requires written notice, but court finds hotline

fills this need But CEPA only requires written notice to outside body

Other potential causes of action: Implied in fact contract claim

o Was following code of conduct- FEDERAL WHISTLEBLOWER PROTECTION

o SOX: Series of fraud protection provisions Requires employees to report conduct in conflict with

laws/accounting principles Includes retaliation protection Procedure

90 day statute of limitations Give notice to OSHA, who have 180 days to begin review Must give 15 days notice to OSHA, if nothing happened,

then can bring suit in federal courto Choice of law or equity

If OSHA does act but don’t like ruling, can appeal on abuse of discretion standard

UNRESOLVED: decision at administrative level after suit filed

Affirmative defense for employers: would have fired anyways regardless of protected activity

o See problem 5-1, and answers in noteso Collins v. Boozer Homes

Facts: gets hired in context of internal conflict Alleged issue: deal laden with conflicts and kickbacks Makes report, then complaints arise over her makes more serious complaints, higher up the food

chain 90 day probationary provision helped fire them

How SOX triggered Rules of SEC covers internal accounting procedure, not

how good they are but whether they are followed in retaliation context

Contributing factor: lower standard than motivating factor Not but for causation but affirmative defense creates

but for causation in the end Conduct protected?

Court yes, but “close case” Though its not

Employer aware of protected conduct? HR saying this is serious problem is enough

Sole decisionmaker issue Shaffer named sole decisionmaker, as he didn’t really

know what was going on Common strategy Had legit reasons

o Presentation pooro Didn’t get along with employeeso Personality conflict with employers

Temporal proximity Court finds sufficiently close

o Remedy in SOX Often order reinstatement as signal to other employees that

they will be protected Response for good lawyer:

Settle and have term that they may not be rehired Settle so you can control the remedy, even if you are

going to wino False Claims Act

Authorizes any individual to bring a claim in the name of the US against any entity that submits false or fraudulent claim for payment to feds

Procedure, pg 226

TRADITIONAL TORTS IN THE EMPLOYMENT RELATIONSHIP

- INTENTIONAL INTERFERENCE WITH THE EMPLOYMENT RELATIONSHIPo Basics

Traditionally asserted by employers to protect their employers from being pirated by others

Most courts have found at will contracts within the tort- it’s a contract claim

Privilege to interfere broader if at will Restatement §766

Intent Non-privileged (competition is privileged) Interference with performance

o Breacho Non-performanceo Perspective business relationship o (dependant on state)

Third party Cause non performance Pecuniary loss

Common law (or is this just restating the Restatement, more coherently?)

Intent Interference (needs to be third party, can’t interfere

with own contract that’s a normal breach) No justification Causing non performance Pecuniary loss

o Kumpf v. Steinhaus Facts: Steinhaus consolidates company, gives self cash, at will

employment so he sues Steinhaus personally 3rd party?

Separate entities, so pierce the corporate veil? Induced breach of contract:

o But then no longer third partyo Plead in alternativeo I have NO IDEA what I am talking about here

The problem here: Justified ?

o Steinhaus: move was to improve companyo Problem with argument

Actual impropriety Weak economic argument for getting rid

of WI market Just assumed away??

o Impropriety and Motivation Sole motivating factor Motivating factor Predominate factor

Easterbrook- Ignores the law, and basically applies business

judgment rule This requires an unconflicted manager, which is not

present here His approach however, it the majority one

How to succeed if Easterbrook the judge? Prove impropriety more clearly

- DEFAMATIONo Basics

Factors False statements that are purportedly factual, not

opinion That tend to damage the reputation of the subject of the

statement Implied factors

Somewhat public Unprivileged statements

o Known or should have known false= actual malice

o Should have known- reckless, not negligent standard

THAT DOESN’T MAKE SENSE Largely comes up in media issues, but can come up in

references Advice to give to employer, pg 247-8!!!

o Factors for analysis Falsity

In US must be false, not so in UK and France Most common defense: statement true Must be asserted as a purported fact, not opinion

Publication Has to be made known to someone who’s opinion of the

reputation of the subject matters Defamatory

Note, separate element from falsity Damages reputation of subject of statement Business or personal reputation

Non-privileged Technically an affirmative defense But think about an element as it will need to be proved

Again, competition privileged (Damages)

whether it has to be proven dependent on type of defamation

o some categories, damages presumed- defamation per se: ex. business reputation

o don’t need to prove damageso slander or libel

common law, slander less serious libel- published, but includes radio, tv slander- impermanence

o interest in hearing material must be objective interest in hearing info, beyond just morbid

curiousityo GMR v. Jackson

Facts: Jackson hired as CEO finds out finances are terrible and Pujols stealing 3 mil. Reaches sales goals, but fired for “losing 3 mil”. Gets hired immediately at competitor, but has to take lower job for a few months after Pujols reaches out to them

Should have had a non-compete, especially at this level, and is trying to do it illegally

Privilege and Actual malice: Would be good argument in this case, but doesn’t

matter because of actual malice, which is required when:

o Privilege (qualified)o 1st amendment (public figure)o punitive damages

Proving actual malice:o Knowledge that statement falseo Reckless disregard

Absolute privilege cannot be overcomeo Statements made in accordance with judicial or

quasi judicial proceeding Privilege superseded if telling people that have no need to

know Statement judged on community- here the business

community “mismanaged business”: sounds like opinion, but

implied facts will make it defamatory “tremendous amount of money”: opinion gloss on

factual statemento Defamation and Damages

Very very lucrative, in GMR v. Jackson- 200k for breach, 6 mil. For defamation

Remittur- judicial reduction on the value of the awardo Civil procedure attack on pleadings in defamation context

State versions of Fed. Rule 9: must plead defamation and fraud with particularity

Identify exact statement that is allegedly defamatory Reciprocal to this challenge: proof at trial must relate to

statement alleged Evidence issues:

Double hearsay Looking at statements for effect, not truth

RULE: must be substantially similar, not identical (GMR) Furthermore, can amend the complaint all the way

through as long as it doesn’t delay trialo Actions as statements

May be by actions, if false and malicious and meaning plaino Recommendations

Liability may be imposed if recommendation so overly favorable that it amounts to an affirmative misrepresentation presenting a foreseeable and substantial risk of physical harm to third person

Limit supervisors from talking about former employers, regardless of whether they were good or bad

Saying “ I don’t do references: probably wont protect youo Compelled self publication

Some courts have found defamation when plaintiff himself publishes the defamation

o Falls v. Sporting News Downswing case How do you draw the line between fact and opinion? Part of statement verifiable: still going to as many events?

o Shannon v. Taylor AMC Facts: prior to immediate facts, manager wanted him gone, he

is after all stupid- sets up private sting operation Fired for participating in stolen parts, and told all

customers about it Privilege

Want to prevent customers from thinking that they dealt in stolen parts, but never a situation before

If customer asked, must have bona fide reason- reciepent must have a real interest, not some morbid curiousity

Overcoming privilege Actual malice- see above

o Knew falsity, or reckless disregard of the truth Lying clearly destroys privilege

WORKER SAFETY AND HEALTH

- WORKERS COMPENSATIONo Basics

History Original Doctrines which limited compensation

o Fellow servant doctrineo Assumption of the risko Contributory negligence

As these doctrines started to soften, both employers and unions went to the legislatures

Basic structure “arise out of”- causation “In course and scope of employment”: at work

Benefits to Employee Strict liability Certain compensation

o Independent contractors almost never get coverage

o Temporary workers more difficult- but if statute silent, get covered

Benefits to Employer Exclusivity Limited damages

Benefits to courts system Admin system administers Less expensive, quicker, and easier

o Standard Benefits given to employer Medical expenses coverage Lost wages, to a statutory cap Excludes pain and suffering damages and some emotional

distress Permanent disability benefits

Scheduled disabilities- statutorily adopted benefit Unscheduled benefits

o Refer to those injuries not listed in the scheduleo Based on loss of earning capacity, capped at

statutory maximum Vocational rehabiltation services Death benefits

Based on percentage of the employee’s average weekly wage tied to the number of dependents- statutory cap, statutory period

- INJURIES SUSTAINED “IN THE COURSE OF” EMPLOYMENTo Kindel v. Ferco Rental

Facts: killed on the way home from work, employer driving

him home drunk, stopped at a bar for hours policy against drug and alcohol use

why turn to workers comp? tort system not kind to workers driver is a turnip, and to sue the employer have to make

responeat superior claim- need to show within employment

direct liability for employer?o Negligent hiring, negligent retention (driver had

DUIs) Employer would have traditional tort defenses: fellow

servent rule, ect Contributory negligence state-forget about it

Effect Kindel was drinking None, passenger had no liability, and no evidence he

increased chance of accident Strict liability anyways here, but most states restrict

workers comp if intoxicated Nor proof that drinking caused death of Kindel

Effect of company policy No intoxication, no driving drunk, no personal use of

vehicle Violation of company policy goes to the course and

scope question Irrebuttable presumption

When employee injured, assumed to be conferring benefit to employer- without irrebuttable component, would be a fault component

Course and scope only a question of if at work Driving to work

Going and coming rule: usually not included Exception: employer decision to make part of workday

or necessity of employer “frolic or detour”: most old cases would find this to be

on detour while in bar, but then returned to work- and that’s what makes the difference

Personal comfort doctrine Common sense inquiry, and dependant on employer’s

view of what is natural deviation from work Very mch a judgement call

o Squib cases

Angleton: pulled over to smoke week, hijacked Hijacker testimony not reliable- so its workers comp

Woodring Went to meeting, guy wasn’t there, had drinks, drove

home and crashed Abandoned business errand

Calloway Deviate: no longer can claim workers comp, but can if

return to work Substantial deviation: assume abandoned business

purpose, even if return to work (drinking for 12 hours) Rainear

Nothing fixes an arbitrary limit for the number of hours to constitute deviation

o Clodgo v. Rentavision Facts: Stapler horseplay case Injury occurred during dissent Employees will amuse self if downtime Laid out factors to consider in deviation case (not necessarily

majority approach, but courts will look to something like this) Extent and seriousness of the deviation Completeness of the deviation (whether the activity was

comingled with performance of a work duty or was complete abandonment

Extent to which activity the activity had become an accepted part of the employment

Extent to which the nature of the employment may be expected to include some horseplay

Majority: no commingling of work and horseplay= substantial deviation

Dissent Probably right- this is a de minimus deviation Shows some states more strict than others in re:

horseplayo Extra-curricular activities

Difficult area, see pg. 813 for discussion Rule really just one of reasonableness

- “ARISES OUT OF” EMPLOYMENTo basics

three categories of injury causing risks personal risks: not compensable peculiar risks- direct risk of employment- always

covered “mixed” risks- fact specific

o peculiar : toughest, almost the same as increased

risk typical to work place but not elsewhere

nobody uses this sometimes though use this term but

applies another testo increased

employment increases risk most common

o actual easiest, all that must be shown is that it is

a risk that is present when employed few use this lenient of a test

o positional but for being at work, injury wouldn’t

have happenedo proximate cause

foreseeable injury and the causal chain unbroken

difficult to tell the difference between positional and increased

increased risk: intentional harm by employer? No- Alaska fishermen

exclusivity: only way for employee to get out of this is finding action was intentional in most cases

more than just normal work, but forcing employee to clean tank without equipment

o Odyseey Americare of OK v. Worden Facts: fell and hurt self leaving to visit patient Course of employment?

Not at issue- coming and going part of job Arising out of employment

Often result depends on test applied Used increased risk

o Slipping on grass can happen anywhereo Milledge v. Oaks

Facts: unexplained accident Already in parking lot- going and coming not as relevant

Some states will not apply this liberally- some require to be in building (Fair Labor Standards Act test)

Court chooses positional risk test But for conditions at employment: parking lot

o Shows leniency of testo In this case, solving course and scope also solves

arises out of o Not many this lenient

o Workplace Assaults Usually solved at “course and scope”-

Often deviation If focus on temporal- usually very de minimus

Arising under- Arguing about business? Maybe Arguing about personal? No Courts have found if, at minimum, the risk of an assault

is increased by the nature of the job or the work setting or it it was precipitated by a work related dispute

Some courts, however, have found an assault in workplace by a co-worker is enough on its own- Wal-Mart rape case

Assault exception to workers’ compensation coverage is sometimes separately codified rather than variation of arising out of

o Street Risk Doctrine Street or highway related injuries for employees- delivery and

sales- whose duties increase their exposure to the hazards of the street arise out of emplyment

o Interplay between “course and scope” and “arising out of” examination

One treatise suggested that sliding scale may exist between two- when scope question weak, can be overcome through strong arising out of

- “Accidental” or “By Accidento most states require injury to be accidental or by accident

accidental: key inquiry is unexpectedness “an unlooked for mishap or an untoward event which is not expected or designed

in many jurisdictions: “accidental” also includes element that injury must be traded to a definite time, place and occasion or cause, at least within reasonable limits

highly controversial basically, read “accident” to mean there is a

requirement for “an accident”o so what is unexpected?

Vast majority have found some sudden mechanical or structural change in body is unexpected, even if it results from often repeated activity

Others require that their be a showing that some kind of unusual or abnormal exertion or exposure(including fall) caused the injury

o Work-place assaults, revisited:

Not necessarily excluded, intentional on part of perpetrator, but not necessarily on other party

o Sexual harassment and discrimination Frequent question: covered by workers comp, or excluded as

intentional or quasi-intentional conduct If no physical injury, not covered If is physical injury, unresolved

o Diseases from work Cause/ result issue

Not unexpected at all- black lung Definitiness

o Hard to show one incident gave disease time element

o delayed manifestation, raises proof and other problems

- Mental Injurieso Four General Categories

Physical stimuli causing physical injuries Mental stimuli causing physical injuries (so called mental-

physical) Stress induced heart attack

Physical stimuli causing mental injuries (physical-mental) Psychological issues arising from injury

Mental or nervous injuries caused by mental stimuli (mental mental)

o Categories 2&3 compensable, general agreement May be limits on proof that restrict applicability

o Category 4 Some allow, some do not Concerned with

Floodgates Causation and diagnostic problems Question of proof

Some require no greater showing than for physical injuries Others require showing that a sudden stimulus caused the

psychological or mental injury Others require showing mental stress unusual Others increase proof

o Impact: while it would help many, exclusivity would prevent other from utilizing tort law or other state law theory

- Exclusivityo Whether workers comp exclusive remedy usually depends on various

scope questions Whether the worker is covered employee

Whether the injury or illness arose in the course of and out of employment

Whether the injury was accidental or illness was otherwise covered occupational disease

Whether type of injury compensable Some cases, have found that exclusivity extends beyond

scope of covered injuries, but very controversial approach

o Even if exclusive vis a vis employees and employers, still can pursue claims against third parties with deep pockets: manufacturers, ect

o A few courts have found employers are third parties and subject to tort under “dual capacity” doctrine: employer caused or aggravated injury while acting in non employer capacity

OCCUPATIONAL SAFETY and HEALTH ACT

- Basicso Types of standards

Emergency: cannot wait Interim: lowest common denominator assessment, basically

decided by industry while OSHA supposed to set permanent standard

Permanent standard: “substantial evidence”, higher bar than preponderance

of evidence For some, even higher? NOT SURE WHAT THIS MEANS

REALLYo Public Citizen Research Health Group v. Chao

Facts: Chromium case, clearly bad, interim rule 100mg/m, public citizen wanted .5

Court saw issue twice: private citizens can force government to act

Typically, government can be only restrained, here is one of the few areas where government compelled to act

mid 1990s court gave deference to agency to allow further analysis

of evidence reality: OSHA stalling, not sure they can meet

substantial evidence standard as they know they will be challenged- and if too lenient, public interest will attack

here orders agency action

And if they refuse Hold Sec. of Labor in contempt

No private right of action, enforcement of OSHA on Sec. of Labor’s shoulder

Alternative to rule making? Collective bargaining Torts

o Don’t worry too much about this, only generalized OSHA issues on exam

COMPETITION, EMPLOYEE LOYALTY, AND THE ALLOCATION OF WORKPLACE PROPERTY INTERESTS

- Basics:o Tort and Agency Law protection:

Duty of loyalty: applies to agent only Tortuous interference: applies to agent and third parties

o Statutes: Misappropriation of trade secrets

o Contract Protection: Non competition agreement:

Restrict actions after leaving employer Non solicitation agreement:

Former employer’s employees and customers Non-disclosure/ confidentiality agreement

Frequently restrained from using info as well

FIDUCIARY DUTIES OF CURRENT EMPLOYEES

- Duty of Loyaltyo Scanwell Freight v. Chan

DUTY OF LOYALTY: cannot act against interest of principal when agent

Violating the duty of loyalty: Taking confidential information Assets

“Made arrangements” not breach

MISSED CLASS??????

- NON COMPETE AGREEMENTo REM METAH V. ZOGAN

Employee protected by freedom of contract Practical effect of non compete:

Must be enforced right away Can seek ex parte injunction: temporary restraining

order or (and lasts until)

Preliminary injunction (lasts until trial) Both often require bond

o TWO BASIC Standards First: (majority of feds)

Reasonable likelihood of success on merits Goes through elemental process Legit interest

o Reasonable restrictiono Scope: geographic and time

Reasonable likelihood of irreppearable harm Second:

Serious questions on merits Balancing of hardships of parties What is an irresparably harmed?

o Stealing customers ( and no damages)o If stealing project quantifiable

Stealing goodwill Disclosure of confidential information

Some courts add public policy Both standards applied to both reliefs

o Enjoined and no bond, then at trial succeed? Wrongful injunction: prove injunction was not justified, proven

by who wins at trial Not frivolous lawsuit, still have damages Some states: require more stringent showing such as frivolity

However, most states have bond, and even then usually settlement

o CTI Case Covenant not to compete and trade secrets VA – has adopted Uniform Trade Secret Act, unfavorable view

of non compete Highly technical business: always want non compete Confidentiality agreement- all employees have, head employee

also non compete Employee left and started own company, could have potential

breach of loyalty agreement as they started working on new business prior to departure

Court doesn’t find trade secret: no independent economic value from not being generally known- have a consultant

o Assuming established trade secret, then analyze missapropriation Use or disclosure How to prove: short development time, no documentation

o Non compete for hawkes Must prove business interest

If no trade secret, are there still interests

Yes K can provide protection outside trade secret statute

Nationwide market? Evidence they were looking further

o