Employment Law Outline
Professor Avery, Before Fall 2007
Preliminary Questions:
1. 1. Source of Law
2. 2. Who is covered?
3. 3. Procedural rights?
4. 4. Substantive Rights?
5. 5. What forum?
6. 6. Who pays?
7. 7. Employer’s defenses?
8. 8. Employee’s remedies?
9. 9. When did injury/ breach occur?
10. 10. Is Plaintiff an employee?
11. 11. Is Defendant an employer?
I. Work and Law
A. A. Work & Society
B. B. Legal Intervention
Wagenseller v. Scottsdale Memorial Hospital: (Ariz.1985) p.10
Facts: Group of ee’s go on rafting trip and engage in lewd activities (drinking,
mooning, public urination). P refuses to participate. Ee is subsequently promoted and
then discharged.
Issue: What can an er require as a condition of employment?
Holding: Not clearly stated, but the case examines what an er can ask an ee to do
as a condition of employment. If er can discharge ee for refusing to participate, it seems
like a condition of employment.
Always look at how long ee was employed by er before action in question occurs.
The longer the employment, the greater the “interest” the ee has in the job.
II. Development of Employment Law
A. Foundations of Employment Law
1. 1. Master-Servant
2. 2. Employer-Employee
Lemmerman v. A.T. Williams Oil: (N.C. 1986) p. 19
Facts: Mom brings child to work, child does odd jobs while mom works, child
slips and falls and is injured on the job. Child wants to bring tort action, so he argues that
he is not an ee so that he could bring the claim as a tort action.
Issue: Was child an ee for purposes of workers compensation recovery?
Holding: Child is an ee for purposes of workers compensation.
Although child did not fill out tax forms, was not on payroll, the court looked to
objective facts of the situation (he had tasks and was paid) and determined that by
allowing child to work, he was deemed an ee.
Components of a Contract for Employment:
(1) (1) duration
(2) (2) provisions for termination/ notice of termination
if no duration is specified, then K is treated as employment at will
er can terminate ee at any time for good reason, bad reason, or no reason
employment-at-will is a k, but with no duration
reinstatement is not a remedy under a pure breach of contract action, limited to
compensatory damages (reinstatement would be a remedy under Title VII, ADA, ADEA,
NLRA)
3. Employment-at-Will
Clarke v. Atlantic Stevedoring (EDNY 1908) p. 28
Facts: After going to work for Atlantic (D) in response to a letter he received from
Atlantic’s superintendent, which appeared to guarantee continuous work, Clarke(P) and
96 black longshoreman were later discharged and their places filled by white
longshoreman.
Issue: Does promise of continuous work without a definite term enough to provide ee’s
with Just Cause protection?
Holding: A contract of hiring, indefinite with respect to the term for which the contract
shall run, is at most a contract terminable at will.
Court prefers to find at-will employment, unless a term is proven by P
“permanent employment” does not imply just cause protection—at will only
Civil Service
--begins to change the at will rule, civil service bribed ee’s to work for a lower wage in
exchange for job security
substantive and procedural protections are provided to civil service workers
identify the fact that ee is not an independent contractor and bill of rights issues need to
be identified ASAP
there is no term, but you are protected from arbitrary discharge
discharge decisions are review by gov’t commissions—must exhaust these channels
before going to court
tenure implies a property interest—Constitutional issues 4th and 1st Amendment issues,
due process and equal protection
elected officials and policy makers are not a part of civil service
B. Sources of Modern Employment Law
1. 1. Civil Service/Public Employment:
McAuliffe v. Mayor & City of New Bedford (Mass. 1892) p. 31
Facts: When he was removed from Police force for allegedly violating city
regulations forbidding solicitation of money for political purposes, P sought to be
reinstated in his job.
Issue: Shall a member of the police dept. be allowed to solicit money or aid for
any political purpose whatsoever?
Holding: No. Ee has a constitutional right to free speech, but no constitutional
right to be a policeman. Implied in his employment contract with the city is an
agreement by P to suspend his freedom of speech . Nothing in Constitution or
statute that forbids city from making compliance with statute a condition of
employment.
Rutan v. Republican Party (S.Ct. 1990) p. 37
Facts: P protested employment decisions made by governor based solely on a
state ee’s affiliation or non-affiliation with the Republican Party, the party in
power.
Issue: Does the 1st Amendment forbid gov’t officials from promoting,
transferring, recalling or hiring public ee’s solely on the basis of their support of
the political party in power, unless party affiliation is an appropriate requirement
for the position?
Holding: Yes.
Assertion that at-will ee’s have no entitlement to continued employment was
rejected by S.Ct; to hold otherwise would place an undue burden on ee to support
all activities of er (political or otherwise) and this impinges upon first amendment
rights
2. 2. Collective Bargaining:
Wright v. Universal Maritime (1998) Supp. p. 2
Facts: Longshoreman brought worker’s comp. claim and received settlement for
$250,000 for permanent disability (medical bills and future lost wages). A few
years later, he goes back to work as a longshoreman. Someone realizes it’s the
same person who received disability. Er claims they have a contract right not to
hire Wright under the CBA. If he works and gets paid, he would be getting paid
double. Wright then claims protection under the ADA and takes er to district
court. D claims P failed to exhaust all remedies under the CBA, so the
forum/jurisdiction is at stake.
Issue: Did Wright, through his membership in the Union, waive his right to go to
court for redress?
Holding: No. CBA does not contain a clear and unmistakeable waiver of covered
ee’s rights to a judicial forum for federal claims of employment discrimination.
Any such requirement to arbitrate must be particularly clear.
Not resolved: Whether such a waiver would be enforceable.
Union cannot waive substantive rights or federal forum rights on behalf of
an employee under federal law
P prefers to go to court b/c of juries and the likelihood that they would be
sympathetic to his claim and evidentiary protections
Gilmer (p. 4 of supp.) (1991) holds that an ee who signed an agreement to
arbitrate all claims did waive his right to a federal forum
Distinction: In Gilmer, the ee signed the form himself, in Wright the issue was
whether or not the union could waive this right on behalf of its ee’s.
There is a presumption of “arbitrability” in that arbitrators are in a better position
to interpret the agreements than the courts. If the claim, therefore, involves a
federal statue rather than simply the CBA, federal courts are more likely to hear it.
3. Government Regulation of Employment
4. Nondiscrimination
5. Judicial Modification of the At Will Rule
6. Other Sources
C. The Changing Economic and Social Setting
1. 1. Demographics
Workforce is aging and becoming more diverse—illegal immigration
2. 2. New Work Arrangements:
Donovan v. DialAmerica (S.Ct. 1985) p. 81
Facts: D was paying less than minimum wage to two groups of workers which it
considered independent contractors. P filed suit alleging violation of the FLSA
minimum wage requirements for ee’s.
Issue: Were these workers ee’s for purposes of the FLSA?
Holding: Researchers were ee’s
Researchers who also distributed were not ee’s
Sureway Cleaners test for an ee:
(1) (1) the degree of the alleged employer’s right to control the manner in which
the work is to be performed; (2) the alleged ee’s opportunity for profit or loss
depending upon his managerial skill; (3) the alleged ee’s investment in
equipment or materials required for his task or his employment of helpers; (4)
whether the service rendered requires a special skill; (5) the degree of
permanence of the working relationship; and (6) whether the service rendered
is an integral part of the alleged employer’s business
Neither the presence or absence of any particular factor is dispositive, courts
should examine the “totality of the circumstances”
If the employer in question was removed, would the alleged ee still be in
business?
Vizcaino v. Microsoft (S.Ct.1998) p. 93
Facts: Freelance workers employed by Microsoft brought a class action suit
seeking the receipt of pension and welfare benefits on the basis that they satisfied
the statutory definition of common law employees. Freelancers signed an
agreement stating that they are IC’s.
ICs were fully integrated into the workforce, but they were not on the payroll, no
taxes withheld, not allowed to participate in the welfare and pension benefit plans.
Issue: May a company properly exclude Independent contractors (who were
common law employees) from the receipt of welfare and pension benefits
provided to its other employees?
Holding: No. IRS recognized the IC’s as ee’s and held that they must be
considered ee’s for all purposes, including benefits and profit-sharing plans.
Court treated the IC agreement as mutual mistake.
III.
III.
The Hiring Process
A. A. Introduction
Kotch v. Bd. of River Port Pilot Commissioners (S.Ct. 1947) p.104
Facts: Disparate impact/rational relation case. Nepotism practices used in
appointing new river pilots. After he was denied appointment as a sate
river pilot, although seemingly qualified, P filed suit against D alleging
violation of 14th amendment in the state’s method of appointing new river
pilots.
Issue: Does the practice in nepotism in appointing new state river pilots
under applicable state statutes violate the Equal protection clause of the
14th Amendment?
Holding: No. Nepotism does not violate the 14th Amendment. States
have the full power to regulate the pilotage of certain vessels due to the
unique nature of river piloting . Some states do have statutes forbidding
nepotism, Louisiana does not.
But see, Backlund v. Hessen p. 108—an applicant for a firefighter
position with the highest test score was passed over in favor of three
lower ranking candidates who were related to fire dept. ee’s and the
8th Circuit found that this violated 14th Amendment. Distinguished
Kotch b/c the “unique nature of river piloting” was sufficiently
important to justify the nepotism policy there. No such justification
here.
EEOC v. Consolidated Service Systems (7th Cir. 1993) p. 109
Facts: Korean-owned cleaning service hired ee’s through word-of-mouth
recruiting and the result was that 81% of the new ee’s were Korean,
though they comprised less than 1% of the workforce in the county.
Issue: Whether the circumstantial evidence compels an inference of
intentional discrimination or disparate impact?
Holding: NO. No duty to inform entire labor pool of job openings. This
would put small business owners out of business. Er is not doing anything
affirmative, no intentional acts, case emphasizes the er’s passive
recruitment style. Word-of-mouth hiring was not considered an
“employment practice” in the 7th Circuit, thus the disparate impact claim
had to be dropped.
If word of mouth hiring is an employment practice, (disparate impact
claim lives) you must balance the advantages of the practice against the
possible discriminatory effect when the er’s workforce is already skewed
along racial or other disfavored lines.
B. B. Legal Restrictions on Access to Jobs
1. Residency Requirements
Wardwell v. Bd. of Ed. (6th Cir. 1976) p. 117
Facts: City School District required all new teachers to est. residency
within the city school district w/in 90 days. P lived outside district and
challenges the resolution.
Issue: Can school district constitutionally require ee to live in the school
district without violating constitutional right to travel and equal
protection?
Holding: Yes, based on rational relation (review) to interest of the school
district. Strict scrutiny only invoked when discrimination is on the basis
of a protected class. District’s reasons for requirement include (1) aids in
hiring highly motivated and deeply committed teachers (2) more likely to
vote for district taxes and less likely to engage in illegal strikes (3) more
likely to be involved in school and community activities; contact with
students and community leaders; (4) more likely to gain sympathy and
understanding for the racial, social, economic and urban problems for the
kids they teach (5) keeping with the goal of integration in society and in
the schools. Private employer would not be subject to this review;
important that this is a Public employer.
2.Undocumented Aliens:
Collins Foods International v. INS (9th Cir.1991) p.122
Facts: INS charged Collins with violations of IRCA for hiring an
illegal alien
unauthorized to work in the United States for a job
at Sizzler. Ee showed a fake social security card.
Issue: Did er have knowledge or constructive knowledge that ee was
unauthorized to work in the US?
Holding: No. As long as document appears satisfactory to a
reasonable person, er is off the hook. Only impose duties on er’s that
they can fulfill efficiently.
IRCA (Immigration Reform and Control Act) imposes a duty on er
to ascertain whether an ee is authorized to work, thus imposes a
policing duty on the state. This must be done very carefully so as
not to discriminate on race or national origin. Er cannot ask
questions relating to national origin before the offer of hire, but
must ascertain work authorization within 3 business days of offer.
C. C. The Employer’s Information-Gathering Process
General information: 8th Grade teacher hypo.—teacher exposes himself
to student, school district requires his resignation. When his prospective
er called 1st school district to get referral, they gave a false glowing
recommendation. Is district liable for misrepresenting his credentials?
Three Problems associated with poor information-sharing:
1) 1) Mismatching: ee’s may get hired for jobs they are not suited
for
2) 2) Churning: unproductive turnover
3) 3) Scarring: Since er’s do not have good info, good ee’s may get
branded when er’s are not willing to give references
Three Categories of Information
1) 1) False negative: tell prospective er false negative statements
about ee
2) 2) activity level: er does not give any info. except for dates
employed and title held
3) 3) False positive: er says untrue positive statements about ee
(school teacher)
1. 1. Interviews
Lysak v. Seiler Corp. (Mass. 1993) p. 135
Facts: During an interview pregnant woman voluntarily told President of
Co. that she had no intention of getting pregnant, but unbeknownst to Pres.
she was pregnant at the time.
Issue: May an er discharge an ee based on an unsolicited, untrue,
statement made during an interview?
Holding: Yes. Volunteering an untruthful statement on an illegal topic
may provide grounds for termination. The issue is not her pregnancy, but
her honesty and credibility. Jury believed er that he felt betrayed and did
not believe P.
2. 2. Applications
Sullivan v. US Postal Service (WDNY 1996) p.129
Facts: P alleged violations of the Privacy Act as a result of the postal
service’s disclosure to his current er that he had filed an application with
postal service in disregard to his denial of permission to contact current er.
He is fired by current er and not hired by postal service.
Issue: Did postal service intentionally and willfully disclose a protected
record which resulted in P’s termination? Is calling an employer
considered a disclosure?
Holding: Yes. Telephone call was considered a disclosure of employment
application. This moves case to second prong, which is proximate cause.
3. 3. References
Chambers v. American Trans Air (Ind.App.1991) p. 138
Facts: Defamation action. EE resigns, seeks new employment and has
difficulty finding a job, she suspects a false negative. She has her mom
call and pretend to be a prospective er and her fears are confirmed.
Elements of a defamation:
-defamatory imputation, malice, publication (or compelled publication)
and damages.
-defendant must have been at least negligent
-defamation per se does not require showing of damages
-defenses to defamation claim: truth, qualified privilege, no publication
(but, be aware of compelled self-publication, Lewis)
Qualified privilege defense:
applies to a “communication made in good faith on any subject matter in
which the party making the communication has an interest or in reference
to which he has a duty , either public or private, either legal, moral, social,
if made to a person having a corresponding interest or duty.” (See page
140 for common examples)
How privilege may be lost:
1) 1) communicator was primarily motivated by ill-will in making the
statement 2) excessive publication of defamatory statement or 3)
statement was made without belief or grounds for belief in its truth
qualified privilege doctrine exists to facilitate the free-flow of information
Lewis v. Equitable Life Insurance (Minn.1986) p.144
Facts: After being discharged for gross insubordination, P’s filed claim
for self-compelled defamation.
Issue: In an action for defamation, may the publication element be
satisfied where P was required to publish a defamatory statement to a third
person if it was foreseeable to the D that the P would be so compelled?
Holding: Yes. Compelled self-publication holds the originator of the
statement liable where 1) the originator knows, or should know of
circumstances whereby the defamed person has 2) no reasonable means of
avoiding publication of the statement or avoiding the resulting damages.
Privacy torts:
1) 1) Injurious falsehood: publication of a false statement (known
to be false) harming another resulting in pecuniary loss
2) 2) Public disclosure of embarrassing private facts: (e.g. when
disclosing medical matters, info. must be true (mastectomy,
impotence)
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4. NEGLIGENT HIRING: When is an E/er Liable?
 When it is foreseeable that a third party may be injured from a false statement
– the maker of the statement is liable (i.e.: school teacher, maker of “glowing”
recommendation is liable)
 Not liable for all representations, just those that may foreseeably cause injury
to third party
 There is NO AFFIRMATIVE DUTY to tell the truth; making it difficult to
obtain negative or unflattering information about an applicant.
Malorney v. B&L Motor Freight (Illinois 1986)
  FACTS: Violent sex offender applies for position of truck driver,
employer inspects his prior vehicle and traffic record – but not general
criminal record, he gets the job and commits a sexual offense in the truck.
  ISSUE: Is D liable for negligent hiring of this man? Did they have a duty
to look at his general criminal record, or did they satisfy their duty by just
checking for vehicle infractions?
  RULE: Balancing test. Balancing the cost of checking the criminal
records of all applicants against the potential utility of doing so. Here, the
court did not find the burden to be unduly expensive or inconvenient to
prevent them from imposing such a duty on an employer. Big issue was that
of foreseeability, which the court thought was too close to call and therefore
left it for the fact-finder to determine.
  Catch 22 for e/ers = don’t want to pry too much and invade someone’s
privacy, but have to find out enough so that you don’t hire someone totally
unqualified for the job.
D. Truth-Detecting Devices & Psychological and Personality Testing
Soroka v. Dayton Hudson Corp. (Calif. 1993)
  FACTS: Target is psychologically screening security guard applicants &
they claim their state protected privacy right has been violated.
  ISSUE: Is there a sufficient NEXUS between Target’s rational basis
interest in not having their security guards flip out and the means they
employed to protect the interest?
  RULE: Target violated both constitutional and state rights to privacy by
asking questions about the religious beliefs and sexual orientation of the
applicants. There was not a sufficient nexus to justify the screening practices.
 The injury in this case is the disclosure by the applicants of personal
information that had no relevance to the job.
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 This is a landmark case applicable only to California employers because it
dealt with a state privacy statute.
  Lyle v. Mercy Hospital (SD Ohio 1995) – SHE DID NOT COVER
THIS IN CLASS!
  FACTS: Group of employees at hospital was questioned about a theft on
hospital premises, all were told that they may be subjected to a lie detector
test at some time in the future. Upon search of P’s locker, hr director asked
for his views on polygraphs, P stated that he was against them. P was fired.
Memo regarding his termination stated that he was anti-polygraph. Friend
tried to smooth over the termination and was given impression by hr director
that submission to a polygraph could make this whole thing disappear.
STATUTE: Employee Polygraph Protection Act (EPPA) forbids an employer
from requiring, requesting, suggesting or causing (in any way) an employee to
submit to a polygraph. It goes on to further prohibit an employer from
discharging, disciplining, discriminating, denying employment or promotion
or threatening any of these actions based on submission to a polygraph. This
is a Federal Statute codified as 29 U.S.C. 2002 et seq.
  ISSUE: Is hospital e/er liable for violating the EPPA?
  RULE: If an e/er discharges someone even partially because of their
attitude against polygraph’s – the question of credibility is one for the jury to
decide. Just because there were other reasons articulated for the discharge
doesn’t mean the employer is insulated from liability imposed by the EPPA.
D. D. Medical Screening
1. 1. Purpose
2. 2. Medical Questionnaires:
Griffin v. Steeltek (10th Circuit 1998) [Supplement]
 FACTS: P filed suit asserting that D’s application process violated the ADA
by asking whether applicant had ever received disability or worker’s
compensation and by asking if applicant had any physical defects limiting the
kind of work to be performed. P is not disabled, but files suit because the ADA
prohibits e/er from asking such questions and then not hiring him because of how
he responded.
 ISSUE: Does a plaintiff in an ADA claim need to be, or need others to
perceive him to be, disabled in order to assert a prima facie claim? Are improper
medical questions actionable under the ADA if asked of a non-disabled applicant?
 RULE: The court allowed the claim as per the following reasoning: if
improper medical questions were only improper when asked of disabled persons,
then disabled persons would have to identify themselves as such so that e/ers
know what they can and can’t ask. That just doesn’t make any sense; therefore,
the court allows the claim to stand.
 When can e/ers ask what?
 Distinction made between “pre-offer” and “conditional-offers”
 Pre-offer
  Can’t ask any questions requiring applicant to disclose disabilities
  Can ask “can you do this job?” & that’s all
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 ADA applies to all hidden physical and mental incapabilities
 Griffin represents that any violation at this stage can be remedied on
behalf of non-disabled persons
 Urinalysis is NOT a medical test for ADA purposes; they are the only type of
“medical test” permissible at this stage according to Congress – all others are
prohibited
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Conditional Offer
 Usually involve some medical screening
 Permissible so long as it is administered evenly among all similarly situated
candidates
Problem: Refusing to Hire Smokers
City of North Miami v. Kurtz (Florida 1995)
  FACTS: Employment policy of Miami required all job applicants to sign
affidavit promising that they haven’t used tobacco in the year immediately
preceding their application for employment. Once hired, employee is free to use
tobacco products.
  ISSUE: Whether applicants seeking government employment have a
reasonable (and state constitutionally protected) expectation of privacy with
regard to their smoking habits.
  RULE: No privacy violation because applicants have no reasonable
expectation of privacy with regard to their smoking habits when applying for
government jobs. If such an expectation were acknowledged, the court would
have to next determine whether D had a compelling interest to justify the
intrusion. With the compelling interest – same outcome; without it – policy may
be struck down.
  NB: NY Constitution protects e/ees’ right to privacy of political activity,
legal use of consumable products….etc.; Federal Constitution has enumerated a
penumbra of rights under the umbrella of privacy – smoking is not one of them.
New York Labor law section 201-d (in mimeo)
3. Medical Examinations
Green v. Walker (5th Circuit 1990) I HAVE NO CLASS NOTES ON THIS CASE
  FACTS: Annual thorough physical performed by company contracted
doctor is condition of continued employment; P was examined and classified
as “employable without restriction”; 1 year later diagnosed with lung cancer
requiring extensive treatment, surgery and medications.
  ISSUE: Did doctor performing work physical have a duty to e/ee-patient
to perform the physical with due care? Does a dr/patient relationship exist in
the context of a work physical?
  RULE: The doctor/patient relationship exists because the doctor held him
out to be a skilled practitioner and it’s reasonable to assume he would warn of
any incidental dangers discovered during his examination.
F. TESTING
1. Drug Testing
National Treasury Employees Union v. Von Raab (Supreme Court 1989)
  FACTS: US Customs Service instituted an employment practice of drugtesting individuals before they could be promoted or transferred into positions
involving: direct involvement in drug interdiction and enforcement, carrying
of firearms, or handling classified documents. E/ees testing positive without
satisfactory explanation are terminated.
  ISSUE: Whether the 4th Amendment is violated when the US Customs
Service requires a urinalysis from e/ees who seek transfer or promotion to
certain positions.
  RULE: A urinalysis is a search for 4th Amendment purposes. Have to
weigh compelling state interest v. expectation of privacy. Court said e/ees
have a lowered expectation of privacy with regard to drug testing for
employment purposes and therefore upheld the constitutionality of the
employment practice.
Oct. 17, 2000 Case Book 221-44; Supp. 15-16, Stat 38-55
IV. Discrimination
Faced with many candidates who have relatively = qualifications , the e/er will
have to find some criterion on which to base the final selection: more education, high test
scores, experience, family connections etc. Such unregulated selection methods has
resulted in identifiable groups such as women, blacks and other minorities being left out
of the most desirable aspects of the workforce.
  Title VII of the Civil Rights (CR) Act of 1964 was enacted to
eliminate employment discrimination on the basis of race, religion, color,
sex and national origin
  The most important § of Title VII is 703 which states that it is
unlawful for an e/er to (1) fail to hire or discharge an individual or to
discriminate against an individual with respect to compensation, terms,
conditions or privilege of employment due to race, religion, color, sex or
national origin, (2) to limit, segregate or classify his e/ees in any way
which would deprive them of employment opportunities or otherwise
adversely affect his status as an e/ee due to race, color, etc.
Title VII did not originally apply to gender based discrimination out of fear that it would
not be passed because of the gender discrim. provision.
§703 also contains provisions as to when discrimination may be permitted. These
circumstances include:
1) religion, sex or national origin (but not race) is a BFOQ reasonably necessary to the
normal operation of the business.
2) the e/er acts pursuant to a bona fide seniority or merit system, or measures earnings by
quantity or quality of production
3) the e/er acts on the results of a professionally developed ability test that is not
designed, intended or used to discriminate because of race, color, religion, sex pr national
origin
4) differences in pay based upon sex are authorized by the Equal Pay Act of 1963
Title VII has been amended three times: The Equal Employment Opportunity Act of
1972, the Pregnancy Discrimination Act of 1978, the Civil Rights Act of 1991
State Fair Employment Practice Laws
§708 specifically permits parallel state regulation of employment discrimination as long
as it doesn’t interfere with Title VII. Most laws are patterned after Title VII with 2
distinctions:
1)state fair employment practice doesn’t exempt small businesses as Title VII
does
2) some states have gone beyond federal guidelines and have added proscriptions
based on race, color, religion, sex, and national origins (title VII), age (ADEA), disability
(ADA)
Fourteenth Amendment & Civil Rights Statutes
§1 – Privileges and Immunities Clause p. 228 in CB
§5 – Equal Protection Clause
§1981 – actions may be brought up in fed. or state ct. p. 229
§1983- civil action for deprivation of rights p. 230
§1985- conspiracy to interfere with civil rights p. 230- state action is required before a
violation of §1985 can be found. This section cannot be used against federal officers or
private discrimination cases.
Executive Order 11246
The key provision is §202 which prohibits employment discrimination by government
contractors. – p.231
2. What is unlawful Discrimination?
Griggs v. Duke Power Co. (401 US 424 (1971)). p. 232 in CB
Facts: On July 2, 1965, the day Title VII became effective the Company enacted a
policy of testing for placement in any department but the labor department. The
labor department paid significantly lower wages than the other departments. The
policy of testing was enacted when the Company ended their previous policy of
confining blacks to the Blacks to the Labor Department.
Issue: Is an e/er prohibited by Title VII from requiring a high school degree or
passing of a standardized IQ test as a condition of e/ment or a transfer of jobs
when (1) neither standard is shown to be significantly related to successful job
performance, (2) both requirements operate to disqualify blacks at a substantially
higher rate than whites and (3) the jobs in question were previously held only by
white e/ees as part of a longstanding practice of preferential treatment for whites?
Holding: The intent of the Co. was not discriminatory but tests must measure the person
for the job and not the person in the abstract. The judgment of the Ct of Appeals was
reversed.
a. Disparate Treatment – CB 244-75, Supp 16
Plaintiff’s Prima Facie Case Must Consist of Either:
1. 1. Circumstantial (Indirect) Evidence
a. a. Must demonstrate that they’re a member of a protected class,
AND
b. b. That they applied and was qualified for job, AND
c. c. They were rejected from employment, AND
d. d. After they were rejected, the job remained open
**** This Creates a Presumption of Discrimination ****
e. e. Once this burden is met, E/er must DEMONSTRATE (not
prove) that P was not hired for some other non-discriminatory
reason
f. f. Then, P must disPROVE e/er’s “legitimate reason” by
attacking the credibility, finding contradictory examples of how
they treated others in the past
g. g. Burden of Persuasion is ALWAYS on Plaintiff
2. 2. Direct Evidence
a. a. PriceWaterhouse v. Hopkins (Supreme Court 1989)
  FACTS: woman not promoted because of her
appearance and demeanor.
  ISSUE: did e/er violate Title VII because refusal to
promote was based on e/ee’s sexuality. (ie: her lack of
femininity)?
  RULE: if sex is a “motivating factor”, then the
action it motivates is discriminatory, according to the
CRA of 1991.
  E/er can attempt to defend the direct evidence
produced by P by asserting the “same decision defense”
a. a. They must PROVE that they would
have made the same decision regardless of
sex in a parallel situation
b. b. Must be PROVEN by a preponderance
of the evidence (higher std than circum evid
cases)
c. c. If E/er fails to prove SDD = they lose;
game over
d. d. If E/er succeeds in proving SDD =
they’re still liable, only P’s recovery is now
limited.
CB 276-304; Supp 17-22
The BFOQ Defense
Wilson v. Southwest Airlines (517 F. Supp. 292) p. 277
Issue: Is femininity, or more accurately female sex appeal a bona fide occupational
qualification for the jobs of flight attendant and ticket at SW Airline?
Facts: SW used sex appeal to sell seats to businessmen. There was an assumption that all
business customers are male and that only women flight attendants are sexy. SW saw the
need to hire only females for public contact positions but there are many men who would
like this type of employment opportunity. This is a BFOQ exception to Title VII.
Test applied to Ct to determine if sex is necessary under Title VII
1) Does job relatedness require that worker is only of one sex?
2) Is this reasonably necessary for business?
Holding: Since the primary goal of an airline is to transport passengers from one point to
another safely, serve beverages and provide safety instructions both men and women are
suited for this task.
Ct. relies on Diaz defense which states that thy hire only women, it’s a BFOQ, women
are more psychologically suited for this work..
Taxman v. Board of Education 91 F.3d 1547 (3d Cir 1996) (en banc), cert.
dismissed, 118 S. Ct. 595 (1997)
Facts: 2 e/ees hired on the very same day, one white and the other black, to work. One
e/ee had to be laid off.
Issue: Did the Board of Ed. violate Title VII when it made race a factor in selecting
which e/ee to lay off?
Holding:The district court properly concluded that the affirmative action plan applied by
the Board of Ed to lay off Taxman is invalid under Title VII and that the District court
did not err in calculating Taxman’s damages or in dismissing her claim for punitive
damages. Affirmed the judgment of the district court.
V.
Conditions of Employment
A. A. Work Environment
1. 1. Grooming and Dress: To what extent can an employer regulate
behavior/dress on the job absent a K, what can an employer do to
determine dress ON THE JOB.
Private v Public employers:
A. A. Public: Protected by constitution
Not STRICT SCRUTANY. Burden on P to show that regulation is
arbitrary and capricious. Presumption of legitimacy, i.e.
uniformity or safety standards for dress.
Standard is RATIONAL SCRUTANY.
Private: EMPLOYMENT AT WILL allows employer to set the
terms.
No constitution protection
Title VII argument will usually fail when it comes to grooming
(b/c they are more for promoting opportunity and based on
immutable characteristics).
Kelley v Johnson (US 1976): PUBLIC EMPLOYER Police officer
brought clam that requiring hair grooming standards violated the officers
rights under the 1st Amendment for freedom of expression and 14th
Amendment for due process and equal protection.
Holding: Court says that P must show that the regulation is so arbitrary
that and therefore deprives the P of their liberty interest under the 1st and
14th Amendments. The court held that having hair grooming standards for
police officers is RATIONAL because it makes them recognizable to the
public and established an esprit de corps. NO LIBERTY INTEREST
VIOLATED.
EEOC v. Sage Reality (SDNY 1981): PRIVATE EMPLOYER Claim
under Title VII. P was required to wear a revealing uniform to work. She
was harassed, received lewd comments and gestures and was
propositioned on several occasions. When she refused to wear uniform,
she was fired.
Holding: An employer does not have the right to make an employee wear
any uniform they want. P must show that i. Term or condition placed on
P and ii. That term or condition was based on sex. Court looked to
BONA FIDE OCCUPATIONAL QUALIFICATION (bfoq) as a test for
uniform. While it is okay for an employer to require an employee to wear
certain uniforms (here bicentennial garb), but not okay to make them wear
revealing stuff which causes discrimination based on SEX.
REMEMBER BFOQ test: Okay to require Playboy Bunnies and Exotic
Dancers to wear revealing uniforms (no Title VII).
2. 2. Harassment
Ellison v. Brady (9th Cir. 1991): PUBLIC Title VII claim filed by P for
sexual harassment by a fellow EE. Harassing EE wrote love letter to P. P
complained and harasser was transferred. But 6 months later he came
back. P complained and IRS dismissed suit. ER did nothing else to
dissuade harasser’s actions.
Holding: 2 issues presented: 1. Should the test under Title VII be for a
reasonable person or a reasonable woman. The court held that the test
should be for what a REASONABLE WOMEN would consider
sufficiently severe or pervasive to alter the conditions of employment and
alter the work environment.
2. What remedial actions can shield ER from liability for the actions of
EE. Court holds that ER remedies should be REASONABLY
CALCULATED to end the harassment. Court also notes that EE should
not have to transfer because of the actions of a harasser. Court says that
ER must send a strong message to harasser.
See also Farangher v. City of Boca Raton an ER is vicariously liable for
the sexual harassment of a supervisor. An ER may defend by showing
that they exercised reasonable care to prevent and correct sexual
harassment and that the harasser unreasonably failed to take advantage of
the opportunity or to avoid harm otherwise.
Harris v. Forklift Co. (US 1993): PRIVATE Title VII claim for sexual
harassment. P claimed that boss made her the target of lots of sexual
innuendoes, i.e. only a real man can use a forklift and called her a
dumbass women and lots of other stuff. Boss promised to stop but didn’t
then P quit.
Holding: Was an abusive work environment created under the
requirements of Title VII. Court takes a middle of the road approach to
determining the standard for abusive work environment . Reaffirms
standard that mere utterance of epithet which offensive feelings is not
enough to create a hostile work environment and reasonable person
standard used to determine if environment is abusive. Victim must also
perceive environment to be abusive. Psychological injury to P not
required. Look at all situations in circumstance.
Title VII STANDARD: So long as environment would reasonably be
perceived(objective) and is perceived as abusive or hostile(subjective), no
need to show psychological injury. The standard also holds that
harassment must be reasonable abusive to an objective person and
subjectively abusive to victim.
Oncale v. Sundowner Offshore Services (US 1998): PRIVATE Title
VII claim for sexual harassment by a MAN. P worked on offshore oil
platform. Was sexually harassed and threatened with rape by other male
workers.
Holding: Does Title VII bar a claim for sexual harassment when both P
and D are same sex. Court holds that Title VII does not bar same sex
claims, no presumption that ER will not discriminate against own sex.
Objective severity of harassment should be judged from perspective of a
reasonable person in the plaintiff’s situation considering all the
circumstances.
3. 3. Privacy
Bodewig v. K-Mart (Or.App. 1981): PRIVATE Tort action for
outrageous conduct. Case of the missing four 5 dollar bills. Manager took
P into restroom and told her to disrobe and strip-searched her. She did and
the money was not found. Next day she did not have her own register and
quit.
Holding: Unless there was the type of SPECIAL RELATIONSHIP
between P and K-Mart justifying recovery for outrageous conduct, which
was not deliberate, but reckless to its predictable effect. Court concludes
that ER’s relationship with EE was a SPECIAL RELATIONSHIP and
liability may be imposed if conduct is reckless and beyond social
toleration.
Golden (lady who yelled about her 20 being stolen): Different standard,
conduct must be socially intolerable and deliberate to cause emotional
distress.
Bus see McDonnell v. Hunter (8th Cir. 1987) strip search of correctional
officer justified if reasonable suspicion exists based on specific objective
facts and rational inferences.
Vega – Rodriguez v. Puerto Rico Telephone (1st Cir. 1997): PUBLIC
Privacy Right claim and an unreasonable search and seizure under the 4th
Amendment b/c P was under constant surveillance at work by cameras.
Holding: Business premises have a lesser privacy expectation than do a
person’s residence. Intrusion must violate i. Subjective – P’s expectation
of privacy and ii. Objective – is that expectation reasonable. EE’s have a
reasonable expectation to privacy as to searches of their body, but t he
nature of the workplace requires certain infringements of their privacy
rights. Court held that here no reasonable expectation of privacy existed
b/c action is in plain view and vantage-point is lawful. Also, look to
motivation of intrusion, here purpose was an efficient workplace.
Court points out factors to determine if an intrusion is lawful. See
O’Conner v. Ortega (US 1987): area under EE exclusive use, extent to
which others had access to workplace, nature of employment and if EE
knew of policy at work where they were subject to intrusion. In O’Conner
court found that 4th Amendment violated when ER took P’s files.
Smythe v. Pillsbury (ED Penn 1996) PRIVATE Wrongful discharge
claim in an employment at will state. ER fired P for inappropriate emails
over the company’s email system, despite assurances that email was
confidential.
Holding: Court notes that there is generally no wrongful discharge claim,
but there are circumstances where it is invoked (when it violates a clear
mandate of public policy and strikes at heart of EE rights, duties and
responsibilities). Here, no reasonable expectation of privacy in emails
despite assurances that everything would be confidential. Thus no privacy
interest and no wrongful discharge.
Court does note that if this was a urinalysis things might be different.
McClaren v. Microsoft (Tex.App. 1999) Tort action for intrusion upon
the P’s seclusion or solitude or into private affairs. P’s employment was
suspended b/c of allegations of sexual harassment. P fired and sued ER
for breaking into his personal files on computer where he had some of his
emails stored and released them to third parties.
Holding: Does P have a right to privacy in his email. Court compares this
to an EE who has a locker with their own lock. Here, reasonable
expectation of privacy.
But in email, no reasonable expectation of privacy b/c on their system and
company’s interest in preventing inappropriate activity (P accused of sex
harassment) would outweigh P’s privacy interest.
Compare to O’Conner where court held that files taken violated a 4th
Amendment violation.
4. 4. Freedom of Expression
Rankin v. McPherson (US 1987): PUBLIC 1st Amendment Claim for
freedom of speech. P discharged from position as a deputy of Harris
County where she performed only clerical duties. She was fired for saying
that she hoped that next time there is an assannation attempt on the
President, she hopes that they get him.
Holding: Can an ER discharge an EE for engaging is speech that may be
categorized as constituting speech on a matter of public concern. B/c
court determined that statement was a matter of public concern (killing
pres.) a balancing test is required. Test balances i. P interest in making
the statement and ii. Interest of state in promoting efficiency of public
services it performs through EE. In balancing test look at manner, time,
place, if statement is disruptive at work or is detrimental on close work
relationships, or impedes performance of workers duties. State interest
focuses on effective functioning of the ER’s workplace. Here, ER
interests do not outweigh EE’s freedom of expression due to the nature of
their job (clerk) and no danger in EE’s private speech. But if EE was in a
policy making, confidential or public contact role, things might be
different.
Dissent: Scalia says this kind of speech is wrong and she should be
disciplined and taught not to do this. B/c this is a law enforcement office,
her speech should not be protected.
Smith v. Fruin (7th Cir. 1994): PUBLIC P complained b/c he was
given a “sham” assignment because he complained about people smoking
at work (there was a law limiting smoking at work).
Holding: Is P entitled to protection under the 1st Amendment. Court holds
that EE’s statement does not reach the threshold of protected speech,
despite the fact that it may be a matter of public concern. P is raising an
individual issue/grevence, not protected by 1st Amendment.
Novosel v. Nationwide Insurance (3rd Cir. 1983) PUBLIC Tort claim
for wrongful discharge based on important public policy or rights
conferred on EE as a member of the citizenry at large. P refused to
participate in ER’s lobbying effort regarding the No-Fault Reform Act
before the state legislature. P was fired.
Holding: Does P have a cause of action where termination abridges a
significant and recognized public policy. Because no plausible an
legitimate reason for terminating employment were disclosed, EE’s
discharge would appear to violate public policy. ER has no legitimate
interest in this area of an EE’s life (politics) and can’t coerce them by
threat of firing. Court suggested these elements for wrongful discharge:
1. 1. Whether because of speech, ER is prevented from efficiently
carrying out its responsibilities
2. 2. Whether speech impairs the EE’s ability to carry out his own
responsibilities
3. 3. Whether speech interferes with essential and close working
relationships
4. 4. Whether the manner, time, and place the speech occurs interferes
with business operations.
Court also suggested a balancing test for weighing these issues:
1. 1. nature of actor’s conduct
2. 2. actor’s motive
3. 3. interests of the other with which the actor’s conduct interferes
4. 4. interests sought to be advanced by the actor
5. 5. social interests protecting the freedom of action of the actor and
the contractual interests of the other
6. 6. proximity or remoteness of the actors conduct
7. 7. relationships between parties
B.
Regulation of Off-Work Activity
1. 1. Personal Associations: Can have Title VII and Disparate Impact issues
Private EE – Get constitutional protection through Public Policy Tort
Rulon-Miller v. IBM (Cal.App. 1984): PRIVATE Tort claim for wrongful
discharge and intentional infliction of emotional distress. Romantic relationship
between P and boyfriend who worked for a competitor. P told to stop dating her
boyfriend or loose her job. Policy in place at IBM regarding conflict of interest.
Holding: Can ER terminate EE under the company’s guidelines for Conflict of
Interest for dating an EE of the competitor. Court holds that record does not show
that IBM’s policy interprets Conflict of Interest as dating. No evidence of
sensitive information being passed. ER’s defense could be pretext for unjust
firing.
Ozer v. Borquez (Colo. 1997). PRIVATE Claim under Gay Rights Statute for
wrongful discharge and invasion of privacy tort. P found out that his partner had
HIV. He told his ER and within 2 days everybody at law firm knew he was gay
and partner had HIV. 1 week after disclosure, P was fired. ER claimed he was
fired b/c firm was having financial trouble.
Holding: 1. Was there a wrongful discharge tort. Court established 3 elements
for claim: i. P was dismissed by Defendant, ii. P not dismissed BUT FOR his
sexual orientation, iii. P suffered damages as a result.
2. Was there an invasion of privacy tort claim. Court says such a claim exists
and is based on unreasonable publicity given to one’s public life. Elements are: i.
facts must be private in nature, ii. disclosure must be made to the public, iii.
must be highly offensive to a reasonable person, iv. facts disclosed cannot be of
legit. Concern to the general public, v. Defendant acted with reckless disregard of
the private nature of the facts disclosed.
2. 2. Political Activity
Nelson v. McClatchy Newspapers (Wash. 1997). PRIVATE (Constitution
involved b/c state statute attempts to regulate freedom of press) P was a lesbian
writer for the newspaper. ER told her to stop being so political, but she refused to
stop demonstrating etc. P demoted from her writing position at paper to copy
editor. P was denied reinstatement to her prior position.
Holding: Is state statue that denies a newspaper of its editorial discretion
unconstitutional and in violation of 1st Amendment. Court holds that in any job
EXCEPT the PRESS, the statute would be fine. Generally, P would be covered
and not dismissed b/c of political affiliation under statute. But b/c of unique
nature of the press, statute is unconstitutional in application in this particular
situation.
3. 3. Lifestyle
Chambers v. Oklahoma Girls Club (8th Cir. 1987): PRIVATE Title VII claim
for disparate impact and disparate treatment. After P became pregnant, she was
fired from her job at the OK Girls Club. Club had an established “role model”
rule that no single pregnant women could work as an instructor.
Holding: 1. Does the rule violate Disparate Impact. EE must show that neutral
employment practice has adverse impact on protected group. Burden then shifts
to ER to show justifiable business necessity. Court held that “role model” rule
was justified business necessity
2. Does rule violate Disparate Treatment. P establish prima facie case, then ER
must show a legit., non-discriminatory reason for practice (bfoq). Then P may
show that bfoq was pretext. Court looked to essence of business operation
undermined w/o challenged employment practice, safety w/o challenged
employment practice and manifest relationship. Court held that rule was a bfoq.
C. Seniority
2 kinds of seniority:
i.
i.
Benefits seniority: EE’s eligibility based on length of service.
ii.
ii.
Competitive seniority: more continuous type, involves bidding
systems for job transfers, layoffs, etc.
Does EE have a property interest in job (tenure)?
D. Promotions
Title VII prohibits discrimination in promotions based on race, color, religion, sex
or national origin.
Namenwirth v. Board of Regents (US 1986): PUBLIC Title VII sex
discrimination claim. P denied tenure by University. Says it was b/c of sex and
provides statistics that show few tenured women at University.
Holding: Mere qualification for tenure does not guarantee P that she will receive
it. Here there was evidence that she might not have the promise that the academic
dept. required. No Title VII.
Autry v. North Carolina Dept. of Human Resources (WDNC 1987) PUBLIC
Title VII claim for employment discrimination. P, black female, not promoted by
ER. Claims that it was because of her race.
Holding: Was she discriminated against. Court requires that P establish that i.
That person hired was not qualified for job and, ii. P was not as qualified for job
as a result of her experience, college education, etc. Other person promoted was
qualified and P offered no direct evidence of discrimination. ER and hired
employee (white women) seemed to be friends prior to the employment decision,
but the court says this does not matter.
VI.
VI.
Discharge
Justifiable reasons for discharge include: theft, dishonesty, falsification of
records, fighting on company premises, possession or use of alcohol or drugs
while on duty, insubordination, use of profane or abusive language to a
supervisor, sleeping on the job, etc.
While the at-will rule continues to dominate employment relationships, it is
viewed as unduly harsh on ee’s since the er’s threat of discharge is a serious one
for ee’s, while the relative fungibility of workers in low-level jobs means that the
ee’s threat of quitting places few constraints on er’s.
What rights should employers and employees have in employment?
A. A. Freedom of Contract/ Fairness in Employment
In response to the inequity of the at-will rule, a “for cause” standard for discharge
was created through unionization and collective bargaining.
98% of all Collective Bargaining Agreements provide a “just cause” standard for
discharge or disciplining
Just Cause defined: Whether a reasonable man, taking into account all relevant
circumstances, would find sufficient justification in the conduct of the ee to
warrant discharge; proper cause.
Elements of a prima facie case of just cause for disciplinary action:
1) 1) Management must first show that its interests were significantly affected
by the ee’s conduct; OR 2) management may show that even though the ee is
unlikely to repeat the wrongful conduct, it is important to deter other ee’s
from such conduct and that discharge is the only effective form of deterrence.
To rebut this showing, a union must prove that management failed to give the ee
industrial due process or industrial equal protection, or failed to consider
mitigating factors.
B. B. Judicial Erosion of Employment at Will
The first few wrongful discharge cases:
Petermann v. Teamsters Local 396: Ee was discharged for refusing to perjure
himself as instructed by his er. Court recognized a cause of action for wrongful
discharge and noted that the right to discharge an ee under an at-will contract
could be limited by statute or public policy.
Similarly, in Frampton v. Central Indiana Gas Co., a public policy exception
was cited as the reason for refusing to allow the discharge of an ee for filing a
worker’s compensation claim. Ct. stated that when an ee is discharged for the
exercise of a statutorily conferred right, an exception to the at will rule must be
found.
1. Public Policy
Gantt v. Sentry Insurance (Cal. 1992) p. 914
Facts: Gantt complained to D about the repeated sexual harassment of Bruno, a
female co-worker. Harassment continued, Gantt made a second complaint. P was
ridiculed for his support of Bruno. The in-house attorney (Fribance) for Sentry
wants Gantt to change his story about the harassment to protect the co. and
threatens to change his performance reviews if he refuses to comply. Fribance
also hints to the DFEH investigators to check out Gantt for sexual harassment.
Gantt is subsequently demoted and the court treats it as a constructive discharge.
(Note: Constructive discharge is presumed when conditions have been made so
intolerable that a reasonable person would see no choice but to leave the
employment.)
Issue: Whether an ee who was terminated in retaliation for supporting a coworker’s claim of sexual harassment may state a cause of action for tortious
discharge against public policy.
Holding: Any attempt to induce or coerce an ee to lie to a DFEH investigator is
in contravention of public policy of the State; rule is found in a California statute
stating it is a misdemeanor to interfere with a DFEH investigation. Er cannot
command an ee to commit a criminal act and then discharge ee for his refusal to
comply.
This claim was brought as a tort action b/c of the possibility of more money. If P
brought a claim under state statute, back pay and reinstatement would be the only
remedies.
California court and many other state courts are split: Narrow view holds that
there can be no tort recovery for wrongful discharge, while the broad view allows
tort recovery by resorting to statutes, state constitution, administrative rules,
regulations, etc.
Public policy violations generally fall into one of four categories:
1) 1) Refusing to violate a statute;
2) 2) performing a statutory obligation;
3) 3) exercising a statutory right or privilege; or
4) 4) reporting an alleged violation of a statute of public importance.
Murphy v. American Home Products (NY 1983) p. 920
Facts: Ee is an accountant who reports improprieties he finds in the books and is
fired. Brings a wrongful discharge action.
Issue: Does NY recognize a public policy tort for wrongful discharge?
Holding: No. Just to be different, as we always are, the court states that the
legislature is in the better position to impose such liability on er’s. Today, most
states recognize a public policy exception to the at-will employment rule, but not
NY! Avery says this is a weak argument by the court because the at-will doctrine
developed in the courts, so why shouldn’t the exceptions to the rule also be
judicially developed?
3. 3. Breach of Contract
a. Statutory “Good Cause”
Marcy v. Delta Airlines (9th Cir. 1999) (Supp. p. 53)
Facts: P worked as a Senior Customer Service Representative for Delta, generally
an outstanding ee. P submitted her payroll records with 3 incorrect entries which
would have resulted in her collecting $250 in unearned wages. Er claims the
records were left out for 3 days to see if P would correct the mistakes, she did not.
P claims that mistakes were unintentional.
Issue: Whether the Montana Wrongful Discharge from Employment Act
(WDEA) provides a cause of action to an ee discharged by her er for a reason
based on mistaken facts, but where er exercised good faith in making its decision.
Holding: Yes. Once P offered sufficient evidence to raise a genuine issue of
material fact that her recording errors were unintentional, the case properly went
before a jury.
The statute indicates that the stated reason for an ee’s discharge is not legitimate if
the reason for the ee’s discharge is 1) invalid as a matter of law under the WDEA;
2) is based on a mistaken interpretation of the facts; or 3) is not the honest reason
for the discharge, but is pretextual. D interpreted the statute to require bad faith
on their part, but it does not. P argued that if er knew real reason why these
entries were made they could not have fired her.
Montana is the only state with a wrongful discharge statute; er can defend claim
by showing a legitimate business reason for the discharge (legitimate business
reason is a reason that is neither false, whimsical, arbitrary or capricious, and it
must have some logical relationship to the needs of the business).
b. b. Written Contracts
Gorden v. Matthew Bender & Co. (ND Ill. 1983) p. 929
Facts: P has an employment agreement with D that contains no definite term (at
will employment), but he also has a letter sent to him by D that placed him on
probation, but states that if P met his sales goals, he would be restored to the same
status of acceptable sales performance as other ee’s (P contends this creates “for
cause” employment). P failed to meet his sales goals after his territory was
diminished but his sales goals remained the same.
Issue: Did these two documents constitute employment that required “just cause”
for termination?
Holding: No. This is a bit complicated, but here goes: “acceptable sales
performance” is a subjective standard—left up to the judgment of er, “just cause”
is an objective standard, therefore contract would not be considered employment
at will. Here, the court says that if er agrees to employ ee for an indefinite period
of time and to only discharge for cause, there must be additional consideration—
here there was none. Also important is that court notes you can read a satisfactory
or acceptable performance clause into nearly every employment contract—it is
not enough to transform at-will employment to just cause employment.
no definite term—employment at will
definite term—just cause employment, but court must be able to point to the
end of the contract by reference to the calendar or upon the occurrence of
some external event, brings us into the realm of contract law and breach
an oral contract that is incapable of being performed in one year must be in
writing or it violates the Statute of Frauds (note: a lifetime contract is ok
because one could die within one year)
A bit about how courts interpret contracts:
When a contract leaves terms out, you look to practices (ordinary course of
business) and past dealings between the parties to clarify the contract
Employment contracts require 1) mutuality of obligations (not mirror obligations,
but both parties must agree to be bound) and 2) additional consideration
Also, when ee establishes that she was discharged in violation of an employment
contract, burden shifts to er to prove good cause existed for the discharge
c. c. Implied Terms of Oral Contracts
Pugh v. Sees Candies (Cal.App. 1981) p. 932
Facts: P worked for D for 32 years and worked his way from dishwasher to Vice
President. After a business trip to Europe, he is fired. P sues for breach of
contract and public policy. Trial court grants D’s motion for nonsuit and this
appeal follows.
Issue: This is clearly an indefinite hiring, but is there something here that allows
the court to find an implied-in-fact contract?
Holding: Yes, the court says that because of the duration of P’s employment, the
number of promotions, the lack of direct criticism of his work, and the er’s
established practice of “just cause” termination, this relationship was instinct with
obligation. This practice essentially constituted an offer and P’s performance for
32 years was acceptance. Court here refuses to inquire into the adequacy of
consideration, thus ignoring the usual requirement of additional consideration
when employment is for an indefinite duration and for just cause.
Note: Pugh loses when case is remanded for trial (15 years after
termination) b/c evidence of criticism against him is introduced.
d. d. Employee Handbooks and Manuals
Woolley v. Hoffmann-LaRoche (NJ 1985) p. 938
Facts: P began to work for D in 11/69, he is promoted in 1976, and 77. In 3/78 P
is directed to write a report about piping problems in one of D’s buildings. P is
then asked to resign, but refuses. P is fired in 7/78. P claims breach of contract.
Issue: Whether employment at will may be modified by handbook provisions
providing that termination must be for cause.
Holding: Yes. It would be unfair to allow an er to distribute a policy manual that
makes the workforce believe that certain promises have been made and then allow
er to renege on those promises.
Language in the manual provided for the types of termination as layoff,
retirement, resignation, disciplinary discharge and discharge due to performance.
No category is set forth for discharge without cause.
Court finds an implied promise in the handbook, it is construed as a unilateral
contract
The double bind for employers with handbooks:
If er’s want to get benefits from handbooks, they must live up to their promises
and enforce them, but enforcing manuals reduces efficiency and may cause er’s to
retain incompetent ee’s—marginal ee’s are a problem
Without handbooks, er’s would have to negotiate individual contracts with each
ee, it would be difficult to induce ee loyalty, also lack of handbooks can be a precondition for unionization—many er’s use handbooks to prevent unionization
Courts are split on the issue of whether or not additional consideration is needed
when er’s unilaterally modify an ee handbook (implied contract)
General rule is that disclaimers in handbooks must be clear and conspicuous, but
even if they are, that may not be effective if promises of just cause employment
are also conspicuous
If an er wants to confirm employment at will status in the handbook, er should
clearly state that the employment:
1) 1) is terminable by either party;
2) 2) with or without cause,
3) 3) without notice
e. Good Faith and Fair Dealing
Fortune v. National Cash Register (Mass. 1977) p.947
Facts: Cash register salesperson made a $5,000,000 deal on 11/29/68 for the
delivery of cash registers to be completed over a period of four years (his
commission on this deal would be $92,000). P was employed under a written
employment contract that was terminable at will. Er sends P termination notice
on 12/2/68. P is talked into staying on, but his title is changed to sales support. 6
moths later, P receives 75% of the bonus due to him and is then fired 6 months
later.
Issue: Can the issue of “bad faith” termination of an employment at will contract
be properly submitted to the jury?
Holding: Yes. A termination by the er of a contract of employment at will which
is motivated by bad faith or malice constitutes a breach of the employment
contract.
the covenant of good faith and fair dealing is never an express term in a contract,
but it is implied by law (“in every contact there is an implied covenant that
neither party shall do anything which will have the effect of destroying or injuring
the right of the other party to receive the fruits of the contract…there is an implied
covenant of good faith and fair dealing in every contract”)
in these cases, the er’s interest in running his business as he sees fit must be
weighed against the ee’s interest in maintaining his employment and the public’s
interest in balancing these two
Foley v. Interactive Data Corp. (Cal. 1988) p. 953
Facts: P reported that he knew a co-worker (Kuhne) was under investigation by
the FBI. P was then told to forget what he heard about Kuhne. A few months
later, P was told he was being replaced for performance reasons, and that he could
transfer to another division or be demoted, but not fired. P is then given the
option of going on a “performance plan”, but before he could respond he is told to
resign or he would be fired.
Issue: Can breach of the implied covenant of good faith and fair dealing provide
the basis for an action in tort for employment contracts?
Holding: No. While such an action is recognized in insurance contracts, the court
here refuses to extend the doctrine to employment law. The covenant of good
faith is read into contracts in order to protect the express covenants or promises of
the contract, not to protect some general public policy interest not directly tied to
the contract’s purposes. The relationship of er and ee is not sufficiently similar to
that of insurer and insured to warrant judicial extension of the doctrine.
recognize that there is a distinction between good faith and fair dealing and
just cause employment
C. C. Other protections from discharge
1. 1. Common Law
Wilson v. Monarch Paper Co. (5th Cir. 1991) p. 964
Facts: Wilson is nearly 60 years old, he is the successful VP and Asst. to
the President of Monarch. He had recently completed a very successful
project. A new president is appointed and Wilson is ousted from his
position. He is given three options: 1) take a sales job for ½ his current
pay, 2) receive three months severance pay or 3) take job as a warehouse
supervisor at the same pay. Wilson chooses the third option and begins
working in Houston. However, when Wilson arrives at the new job, he is
placed in the position of entry level supervisor and is subjected to
harassment and verbal abuse by his supervisor, including references to his
age. Wilson’s duties at the new job basically include janitorial duties,
though he continues to receive his executive salary. A few months later,
Wilson begins to have respiratory problems and is eventually diagnosed
with bipolar disorder. He sues under the ADEA for age discrimination
and intentional infliction of emotional distress (IIED).
Issue: Did Monarch’s conduct reach the level of extreme and outrageous
so as to establish a claim for IIED?
Holding: Yes. Although the court expresses concern with extending IIED
to the workplace, it affirms the jury verdict of $3,400,000.
4 requirements for establishment of an IIED claim:
1) 1) that the defendant acted intentionally or recklessly;
2) 2) that the conduct was extreme and outrageous
3) 3) that the actions of the defendant caused the plaintiff emotional
distress; and
4) 4) that the emotional distress suffered by the plaintiff was severe
in this case, the er simply went too far—they paid ee the same salary to ensure
that he would stay on and sweep the floors
If Wilson would have taken the severance pay or if he was fired, there would be
no cause of action
2. 2. Discharge in the Public Sector: The Role of the Constitution
Goetz v. Windsor Central School District (2d Cir. 1983) p. 974
Facts: P is employed as a cleaner for one year by the defendant school
district. A series of thefts had occurred at the district office and P is
suspected. P was arrested during the day at the school and handcuffed
publicly. P was suspended by the school district b/c of his alleged
participation in the break-ins. The school district’s attorney sent a letter to
P requesting a written explanation of his involvement in the matter. He
never responded. P’s attorney later requested a hearing on the matter, but
the request was denied. P was terminated on 1/22/81.
Issue: Can Goetz recover under 42 USC 1983 (civil rights statute) for
deprivation of property and liberty interests?
Holding: No property interest found, but remanded for further factfinding on the deprivation of liberty claim. A relevant NY statute here
conferred a property interest for ee’s with five or more years of
employment, P had only been employed for one year, so he was not
protected.
Notes: there is no property interest protection in the U.S Constitution, ee
must look to state common law, state constitution or statutes for this
protection
General rule: Supreme court cases make it clear that an at-will ee has no
property interest in continued employment. In Roth, however, the court
noted that a person may possess a protected property interest in public
employment if contractual or statutory provisions guarantee continued
employment absent “sufficient cause” for discharge.
A liberty interest has been defined as the freedom to pursue a calling—
reputational interest. In order to show that one’s liberty interest has been
harmed, the er must have promulgated something to the world that is false
and in relation to a discharge that would prevent one from pursuing his
calling anywhere else (define relevant area as community or state)
Here, this claim survives summary judgment and if it is found that the
school board was responsible for disseminating the harmful information, P
will likely recover. The remedy here is a name-clearing hearing only, no
reinstatement because P had no property interest in the employment.
3. Overlapping & Conflicting Remedies:
Lingle v. Norge Division of Magic Chef---Avery says we are not
responsible for this b/c we never discussed it in class!!
VII.
VII.
Leaving a Job
A. A. Breach of Contract by Employee
Handicapped Children’s Educ. Bd. v. Lukaszewski (Wis.1983) p. 1007
Remember, ee is the defendant here!
Facts: P was hired in 1/78 as a speech and language therapist for the spring term.
She lives 45 miles from work, commutes 90 miles everyday for the entire term.
Sometime during this spring term, D signs a K for the next school year for an
annual salary of $10, 760. In 8/78, P is offered a job by Wee Care Day Care
which is located close to her home and for a salary of $13,000—obviously she
accepts. School District refuses to let her out of her K and she begins work for
them in 9/78. A few weeks later D visits her doctor who found that her preexisting hypertension was becoming serious and believed that she should not be
driving 90 miles everyday since it would be dangerous. D resigns subsequent to
the dr. visit. Then she begins working at Wee Care Day Care. School district
hires the only applicant for D’s position at a salary $1, 026 more than P’s due to
applicant’s higher qualifications.
Issue: 1) Did D breach her employment contract with the Board? And 2) If so,
did the Board suffer recoverable damages therefrom?
Holding: yes and yes. Basically, if an ee signs a contract and walks away for
reasons other than excuse or impossibility of performance, she will be required to
pay the cost of obtaining comparable services and foreseeable consequential
damages such as recruitment costs and difference in salary.
Avery emphasizes that courts encourage efficient breach of contract by
refusing to allow punitive damages in such cases. This case seemed to be an
effort by the School Board to discourage other teachers from breaching.
Would not have happened in the private sector, not worth er’s time or money
to attempt to recover $1500.
Dissent: has a problem with causation and making the medical decision that D
caused her own hypertension. Judge believes that D should have been excused
from performance because hypertension was pre-existing condition and therefore
foreseeable.
Er was under a duty to mitigate damages and court finds that they have done so.
This duty also limits the amount an er can recover against a breaching ee.
3. 3. Breach of Implied Terms
Mercer Management Consulting, Inc. v. Wilde (DDC 1996) p. 1015
Again, Avery said she will not give us facts like these, but here are a few
pointers!
Basically, this case discusses what a current ee may do in preparation for
leaving his job to start a competing one. We all understand that noncompete agreements, when reasonable in duration and geographic scope as
well as the restriction imposed are legally binding.
pp. 1019-20 have a great summary of how to interpret a contract—see last
paragraph
elements of an intentional interference with business relationship
claim, P must show:
1) 1) the existence of a business relationship,
2) 2) defendant’s knowledge of the business relationship,
3) 3) intentional interference with the relationship by d, and
4) 4) resulting damages.
5) 5) D’s interference must be improper
Not proven in this case because court finds that d’s were merely
engaging in competitive activity that was not accomplished by
improper means.
Business judgment rule: ee with sufficient authority must exercise a duty
of care that a reasonable person in similar circumstances would use. To
determine if there was a breach of this duty, courts do not question the
wisdom or judgment of the ee so long as the director or officer 1)had no
conflict of interest when he or she made the decision, 2) gathered a
reasonable amount of information before deciding, and 3) did not act
wholly irrationally.
Good luck!!