12
Employment Law I: Employee Rights
McGraw-Hill/Irwin
©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter
12
Employment Law I:
Employee Rights
Key Points
• Identify importance of classification as
employee or independent contractor
• Understand employer liability for employee
actions, both vicarious liability and negligence
• Familiarity with basic employee rights
Employment-Related Lawsuits
• Employee litigation has increased
• Contributing factors:
• Expansion in employee protections
• Decrease in union membership
• Volatile economy and downsizing
Employee or Independent Contractor?
• Dominant factor in determining classification: Degree
of control exercised by employer (e.g., where,
when, how job to be done).
• Consequence of classification as independent
contractor:
• Employer generally does not have vicarious liability
for acts of worker
• Employer may not have to provide employee
benefits
• Employer need not withhold employee income
taxes or pay FICA, workers compensation or
unemployment compensation
Issues in Hiring Process
Resume fraud:
• 80% misleading
• 20% listed fraudulent degrees
• 13% of college students lied on their first resume
Background checks: Criminal and credit checks
Inappropriate questions
Non-compete clauses: To protect legitimate employer interests,
such as client lists
Arbitration agreements: Enforceability generally upheld if
legitimate purposes and equitable provisions
References: A two-edge sword—New employers need to check
references in light of resume fraud and workplace safety
issues, but former employers reluctant to provide
information in light of defamation threats
Employer’s Vicarious Liability
• Employers often responsible for employees’
accidents or wrongs under the doctrine of
respondeat superior
• Referred to as vicarious or imputed liability
• Determining issue: Whether employee was acting
within the scope of employment
Example: Mary M. v. City of Los Angeles (Cal. 1991)
Negligence
An employee may be in a position to cause harm to a
third party because of the employer’s own
negligence in hiring, training, supervising or
retaining that particular employee, whom the
employer knew or should have known to be
dangerous
Example: Yunker v. Honeywell (Minn. App. 1993)
Fair Labor Standards Act
Major Objectives:
• Establishes a minimum wage (contrast a “living
wage”)
• Establishes a ceiling on weekly hours and
overtime pay standards
• Protects against child labor abuses by specifying
employment restrictions by age
• Establishes equal pay for equal work regardless
of gender
Occupational Safety and Health Act
(OSHA)
Overall duty: To provide a workplace free of “recognized
hazards causing or likely to cause death or serious
physical harm to employees”
Achieved through: Promulgation of and adherence to
specific standards
Variances: Temporary or permanent variances for
particular standards may be available
OSHA Information Requirements
Right to Know: Employers must label all
chemical containers so that employees will
know about the chemical and its dangers; must
educate employees about chemical hazards and
how to deal with them
Records: Businesses must maintain records
listing and summarizing injuries, illnesses and
deaths on the job; summary must be posted at
the job
OSHA Enforcement
• Unannounced on-site inspections
• Citations issued if violations are discovered
• Court orders to restrain immediate, serious
threats
• Fines
• Imprisonment
Example: Jose Alatorre
Workers’ Compensation
State laws provide automatic compensation when an
employee is injured or dies
• Recovery requires showing that injury arose out
of employment and in the course of employment
• No right to sue employer for compensation
except in unusual circumstances (e.g.,
employer’s gross negligence)
• Law specifies monetary benefit for different
injuries
• About 90% of workers are covered
Example: Quaker Oats v. Ciha (Iowa 1996)
Drug Testing
Employment-based alcohol and drug testing occurs in six
circumstances: (1) pre-employment screening, (2)
routine physical examinations, (3) “reasonable
suspicion” testing, (4) post-accident testing, (5) random
testing and (6) follow-up testing
Objections include: (1) reliability of tests, (2) employee
privacy, (3) lack of correlation to actual job impairment
Drug-Free Workplace Act of 1988: Applies to employers
with contracts with the federal government; they are
required to develop an anti-drug policy, provide drugfree awareness programs, acquaint employees with
available assistance and warn of penalties for violation
of the policy
Monitoring
• 75% of major U.S. companies monitor their
employees
• Employees should acknowledge in writing
company’s e-mail usage rules and employer’s
right to monitor
Example: Smyth v. Pillsbury (E.D. Pa. 1996)
Employee Benefits and Income
Maintenance
1993 Family and Medical Leave Act: Provides up to 12 weeks of
unpaid leave in any 12-month period for family needs such as birth,
adoption, caring for a child or parent, or serious illness
Unemployment Compensation: Compensates laid-off workers so
long as ready and looking for work and not otherwise disqualified;
has specified maximum period, usually 26 weeks
1988 Worker Adjustment and Retraining Notification Act (WARN):
Requires specified firms to provide 60 days notice if they lay off 1/3
of their workers, drop 500 employees at any site or close a plant
1974 Employee Retirement Income Security Act (ERISA):
Regulates pension funds to ensure long-term financial security by
reducing fraud and mismanagement
Termination
• Most Americans work without benefit of an
employment contract; they are at-will employees, that
may be fired or quit any time
• Employee may sue for wrongful discharge based on:
• Express or implied contract
• Implied covenant of good faith and fair dealing
• Violation of established public policy
Example: Barrera v. Con Agra, Inc. (8th Cir. 2001)