Agency
The key to . . . something
Agency is a relationship
• Consent shown to one person (agent)
• Act on behalf of the other (principal)
– Agent is subject to control by principal
– Agreement subject to consent by agent
• Principal thus agrees to be responsible for acts
of agent
– Contracts
– Torts
Respondeat superior
“Let the boss answer”
Principals act through agent
• Principal may do almost anything through an
agent
• Some principals may only act through agents
– Corporations
– LLCs
– Cooperatives
– You get the idea
Relationship depends on consent
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Principal’s consent
Express or implied
Lets principal have control over agent
Does not always depend on intent of parties
– Motive of agent, for individual actions
– Dealings with third parties
Consent may be inferred from conduct
• Ratification by principal
– Approval after the fact
– Accepting benefits
• Actions
• Course of dealing
• Circumstantial evidence
Principal only responsible for acts
done within authority of agent
• “Scope of authority”
• Express
– Explicit delegation of authority
• Implied
– To do what is necessary of express authority
Apparent authority
• Not “real” authority
• Actions outside scope of authority
– Actions accepted by principal
• Third parties rely on past dealings
– Reliance on what looks like authority
Principal’s liability
• Acts done within scope
of authority
• Intent to benefit
principal
• Unauthorized acts that
are ratified
– Not disavowed
– Benefits retained
Employment Law
Issue number 1: Who is an
employee?
Why do we care?
• Employees have certain rights
– Including tax withholding
• Non-employees (contractors) have rights
through agreement
• Employers mischaracterize employees as
contractors
• Not just temporary vs. permanent
Different, but similar, definitions
• State common-law
– Depends on control over worker
• US Department of Labor
– “Is this worker’s principal source of income?”
– Wage and hour laws
– Pensions and benefits
– Not most common test
– DOL not proactive
• Depends on complaints
The most commonly used definition is
from your friends:
IRS tries to make sure employees are
not wrongly called contractors
• Unpaid withholding
– “Contractors” pay too much
• Proactive
– Does not rely on complaints
– Gets too many 1099 forms
• Test developed
– Series of factors looked at
IRS factors fall into three groups
• Behavioral control
• Financial control
• Relationship
Behavioral control
• When/where to work
• Tools equipment to use
• Where to purchase
– Tools
– Supplies
• Who does what work
• Order/sequence to follow
• Whom to hire to assist
Financial control
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Unreimbursed expenses
Extent of worker’s investment
Marketing of worker’s services
How/when worker is paid
Profit or loss
Relationship
• Written contracts
• Employee benefits
– Insurance
– Pension
• Permanent/indefinite
• Services essential part of business
– What does employer sell to public?
All factors are considered; no
one is the most important.
Internships
Rules for unpaid internships with
private employers
1. Training similar to educational environment
2. Experience for benefit of intern
3. Intern does not displace regular employees;
works under close supervision
4. No immediate advantage to employer
5. Intern not necessarily entitled to job at end of
internship, and
6. Employer and intern understand intern is unpaid
Exceptions
• Government agencies
• Non-profits
• Charitable volunteers
Rights of employees
It’s not an oxymoron.
Minimum wage
• State (Minnesota)
– $6.15 per hour
– If employer has annual receipts <$625,000, $5.25 per
hour
– No tip credit
• Federal
– $7.25 per hour
– Tip credit
• More than $30 per month in tips
• Must pay at least $2.13 per hour
If there is a conflict between state
and federal minimums, higher
wage controls
Overtime pay
• All “non-exempt” employees
• 1 ½ times regular hourly rate for every hour
over 40 in a week
– Week=168 consecutive hours
– No averaging for multiple week in pay period
– No lump-sum payment
– No waiver
– 1 ½ times employee’s regular pay, not minimum
Non-exempt employees
• Entitled to overtime
• All employees presumed non-exempt
– Exemptions must be proven
• Any employee paid <$455 per week
Exempt employees
• Not entitled to overtime
– Not covered by minimum wage
• Employee must be paid a salary
– At least $455 per week
• Focus on job description
– Primary duties of job
Categories of exemptions
• Executive
• Administrative
• Professional
– Learned
– Creative
• Computer
• Outside sales
Learned professional
• Primary duty is work
requiring advanced
knowledge
– Discretion and judgment
• Knowledge in a field of
science or learning
• Knowledge acquired
through advanced
education
Creative professional
• Primary work requires
invention, imagination,
originality, or talent
• Recognized field of
creative endeavor
Worker’s compensation
• Covers all employees
• Absolute liability for workplace injuries
– Injury arises out of employment relationship
– No showing of fault
• No right to sue for injuries
– No common-law defenses for employer
• Schedule of benefits
Worker’s comp benefits
• Medical expenses
– Past
– Future
• Lost wages
– Percentage
– Defined period of time
• Payment for loss of limb/death/disability
– According to schedule
• Retraining
OSHA
• Occupational Safety and Health Act
• Workplace free of identified hazards
• Does not give a right to sue
– Evidence of negligence
Unemployment insurance
Unemployment insurance
• Funded by employers
– Premium based on employer’s experience
• Covers employees who lose their jobs
– No fault of their own
– Good cause attributable to employer
• Ineligible
– Voluntary quits
– Fired for misconduct
Benefits
• Percentage of wages
– Based on yearly average
– Paid for thirteen weeks
• Other assistance
– Retraining
– Job search help
• Employee must show good faith efforts to get
a job
Employee leave
• Time off
– Unpaid
– Continue insurance
– Keep seniority, if possible
• Certain obligations/activities
– Military service
– Jury duty
– Voting (Minnesota, not in Wisconsin)
– School activities
Family-medical leave
State
• State employees
• Employers with more than
21 employees
• Birth or adoption of a child
only
• Six weeks in one year
• May be added to sick time
or vacation time
– Cannot be combined with
federal time
Federal
• Federal employees
• Employers with more than
50 employees at one site
• Birth, adoption, serious
medical condition of self or
family member
• Twelve weeks in one year
Drug-alcohol testing
• Required for some jobs
• Any employer may
require
– Written policy
– Analysis done by
licensed lab
– Positive results
confirmed by retest
Miscellaneous rights
• No polygraph testing
• Wages paid at least
monthly
– Paid within 24 hours of
demand, if you’re fired
• Rest breaks
• See your personnel file
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Every 6 months, or
Once after you leave
Make request in writing
Explain disagreements in
writing
– Disagreement must be
included in file
Not rights
Contrary to what you may think, there
is no absolute right to:
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Holidays
Vacations
Fringe benefits
Severance pay
Notice before firing
Privacy
– Employer may monitor work-related calls
– May monitor other areas for security
Employment at Will
“They can’t fire you for . . .”
Yes, they can.
• General rule
• Employees may be hired or fired for any
reason or no reason
• Assumed that employees are at will
• Exceptions to rule are limited
Contract
• May prevent firing except for good cause
• Collective bargaining agreement
– Sets out steps for discipline
• Civil service jobs
• Academic tenure
• Employment handbooks
– Older cases found handbooks were contracts
– Handbooks rewritten by now
Public policy
• Some law forbids firing for certain reasons
• Policy that we want to encourage employees
• Retaliation
– Whistleblowers
– Cooperate with investigation
– Worker’s compensation claims
Good faith/fair dealing
• Recognized in some states
• Forbids firing except
– Just cause
– Not for spite or malice
Discrimination
Anti-discrimination laws
• Exception to employment-at-will doctrine
• State and federal law
– State
• Minnesota Human Rights Act
– Federal
• Civil Rights Act
• Age Discrimination in Employment Act
• Americans with Disabilities Act
Prohibits
• Taking action relating to employment
– Including benefit of employment
• Based on membership in a protected class
Employment-related action
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Hiring
Firing
Pay
Classifications
Transfer
Promotion
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Training
Benefits
Retirement or leave
Harassment
Retaliation
• Recall
• Recruitment
– Advertising jobs
• Testing
• Use of facilities
Protected classes
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Age (over 40)
National origin
Sex
Religion
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Disability
Pregnancy
Race
Sexual preference (MN
only)
Clarifications/explanations
National origin includes:
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Ethnicity
Naturalization
Legal immigration status
Accent
Native language
Most important point:
Discrimination not unlawful if not based on
membership in protected class!!!
Religion—special rules
• Reasonable accommodation for religious
practice
– No undue hardship for employer
• Other expression allowed
• Religious organizations may require following
doctrine
– If related to job
Disability—special rules
• Includes perceived disability
• Disability is a limitation on major life activity
• No discrimination if employee can do job with
reasonable accommodation
– “Reasonable” depends on employer
– Cost-effective
Proving a discrimination case
Prima facie case
• Membership in protected class
• Qualified for benefit
– Not necessarily best qualified
• Rejected
• Position/benefit either
– Remained open, or
– Went to non-member of class
Burden shifts to employer
• Bona fide occupational qualification
– “BFOQ”
– Only person not of class can do job
• Essential, not preferable
– Read very narrowly
Legitimate business purpose
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Most common defense
Other person better suited for job
Decided not to fill job
Can be rebutted by showing pretext
– Sham purpose
– Statistical pattern of discrimination
Mixed motive
• Motive not entirely discrimination
• Would result have been the same without
discrimination?
Harassment
• Special type of discrimination
• Can be actions of employees, if employer did
not stop it
• Quid pro quo sexual harassment
– Exchange of favors
– Employer always liable
Hostile environment
• Offensive remarks or
conduct
• Severe and pervasive
• Management was
aware of it
Offensive
• Not necessarily directed at a particular person
• Objective standard
– Reasonable person
– Joining in will show person wasn’t offensive
• Non-consensual
Severe and pervasive
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No escaping
Constant
Not just isolated incident
Continues after complaints
Management aware of it
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No liability without knowledge
Did nothing after complaints
Did nothing effective
No complaint process evidence of awareness
Employer knew of quid pro quo
References
Employers may disclose, without
liability:
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Duties of employee
Compensation, wage history
Job description
Training, education provided by employer
Acts that resulted in firing, discipline, resignation
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Violence
Theft
Harassment
Illegal conduct
May disclose, with written permission
• Written evaluations and response
• Written disciplinary actions
– In the last 5 years
– Written response
• Written reasons for separation
• All must be sent to employee at the same time
Agreements not to compete
Common-law duty
• Duty of loyalty
– No competition
– No steering business away
• Duty ends when employment ends
• Duty may be continued by contract
Non-compete agreements set out
post-employment duties
• No competition
– New business
– Work for competitor
– Solicitation of customers
– Confidentiality
• May be enforced against independent
contractor
• Fired employee, if contract says
Consideration
• It’s a contract, after all
• New hires
– Getting the job is consideration
• Existing employees
– Keeping job not enough
– Raise, new duties
– Keeping job after merger/sale of company may be
enough
Must be reasonable in scope and time
• Depends on individual case
• No longer or wider than necessary to protect
employer
– Lifetime-worldwide not reasonable
– Ten year may be ok, for person selling business
– For employees, usually no more than 2 to 3 years
Interpreted against employer
• Minnesota courts will revise unreasonable
clauses, unless whole contract is unreasonable
• Wisconsin courts will toss whole contract if
unreasonable
• North Dakota courts do not enforce
• South Dakota courts limit enforcement to 2
years
• Specifically enforceable
Trade secrets
Uniform Trade Secrets Act
• Defines trade secret
• Information that
– Is valuable because it is not generally known
– Subject of reasonable efforts to maintain security
Notice of secrecy not required
• If person who acquired know or should know
of secrecy
• Circumstances
Taking a secret may be enjoined
• Injunction ends when secret no longer exists
• May require payment of royalty
• Money damages also available