BUSINESS LAW TODAY
Essentials 9th Ed.
Roger LeRoy Miller - Institute for University Studies, Arlington, Texas
Gaylord A. Jentz - University of Texas at Austin, Emeritus
Chapter
18
Employment Law
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1
Learning Objectives
 What is the employment-at-will
doctrine? When and why are exceptions
to this doctrine made?
 What federal statute governs working
hours and wages?
 Under the Family and Medical Leave Act
of 1993, under what circumstances may
an employee take family or medical
leave?
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2
Learning Objectives
 What are the two most important federal
statutes governing immigration and
employment today?
 Generally, what kind of conduct is
prohibited by the Title VII Civil Rights
Act, as amended?
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3
Employment-at-Will
 Historically, employment law was
governed by the common law doctrine of
“employment at will” where either
employer or employee could terminate
the relationship at any time, for any
reason.
 Today employment law is heavily
regulated by state and federal statutes.
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Employment-at-Will
 The doctrine of employment-at-will
allows the employer and the employee
to terminate employment at any time,
for any reason, without liability.
 Some states recognize one or more
judicial exceptions to this rule, while
some states recognize none. 
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Exceptions to At-Will
 Contract Exceptions:
An implied
contract exists between employer and
employee. Oral agreements may
become part of the implied contract.
 Tort Exceptions: Wrongful discharge,
defamation may be actionable.
 Public Policy Exceptions
(Whistleblowing).
 Wrongful Discharge.
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Wage and Hour Laws
 Child Labor.
Fair Labor Standards
Act (1938) prohibits
oppressive child labor
practices. Provides
regulations for work,
depending on the age of
child.
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Wage and Hour Laws
 Wages and Hours.
Davis-Bacon Act -- the prevailing wage act.
Walsh-Healey Act -- the beginning of
minimum wages.
Fair Labor Standards Act (FLSA) -- an
extension of wage and hour regulation to
workers in interstate commerce.
 Overtime Exemptions.
Certain employees (usually executive,
administrative, and professional) are exempt
from overtime.
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8
Layoffs
 Worker Adjustment and Retraining
Notification Act.
Intended to give employees advance notice in
the event of a “mass layoff.”
Mass layoff: during 30 day period, loss of at
least 33% full-time and 50 employees, OR
Loss of 500 hundred employees.
Remedies for Violations: $500/day, plus back
pay, medical benefits.
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9
Family Medical Leave Act
 The FMLA requires employers with over

50 employees to provide unpaid leave to
employees who need to care for a spouse,
child, or parent suffering with a serious
medical condition.
The employee cannot be terminated for
taking leave under the policy, and has the
right to restoration to the same or a
similar position upon return to work.
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10
The Occupational Safety and
Health Act (OSHA)
 The fundamental federal law aimed
toward safety in the workplace.
 Enforcement is by OSHA, NIOSH, and the
OSHRC.
 Procedures and Violations: Employers
with 11 or more employees required to
keep records.
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11
State Worker’s Compensation Laws
 These laws reduce employer liability to


employees for workplace injuries, and
provide a measure of assurance that
workplace injuries will be compensated,
regardless of the solvency of the employer,
by:
Requiring that injured employees make a
claim against the employer’s workers’
compensation insurance policy, instead of
suing the employer.
Requiring most employers to carry workers’
compensation insurance.
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12
Income Security
 Social Security and Welfare.
 Medicare.
Federally funded health insurance for people
aged 65 or older.
 Private Pension Plans.
Employee Retirement Income Security Act
(ERISA) gives employee a vested right to
receive pension benefits at a future date when
she stops working.
 Unemployment Insurance.
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13
COBRA
 COBRA prohibits the discontinuance of
insurance benefits of workers who have
voluntarily or involuntarily been
separated from work, unless the
involuntary separation was on the basis
of gross misconduct.
 Employers must comply if they have
more than 20 employees.
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14
Employer-Sponsored
Group Health Plans
 Health Insurance Portability and
Accountability Act (HIPAA)
Does not require health coverage but does
establish requirements for those that do.
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15
Employee Privacy Rights
 Electronic Monitoring in the Workplace.
Employee Privacy Under Constitutional and
Tort Law. Personal right to privacy may not
apply to work computers, especially if there is
a policy manual.
Electronic Communications Privacy Act.
Stored Communications (part of ECPA).
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16
Employee Privacy Rights
 Other Types of Monitoring.
Lie Detectors.
Drug and Genetic Testing.
What about preemployment screening
procedures?
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17
Immigration Law
 Immigration Reform and Control Act of
1986.
Amnesty to certain groups of illegal aliens living
in the United States.
Sanctions for employers.
Criminal and Civil Penalties.
Antidiscrimination Provisions.
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Immigration Law
 Immigration Act of 1990.
 I-9 Employment Verification by Employers.
 I-551 Alien Registration Receipts.
 H-1 B Visa Program.
 Labor Certification.
 H-2, O, L, and E Visas.
 CASE 18.1
Castellanos-Contreras v. Decatur
Hotels, LLC. (2009). Guest workers are liable for
their own recruitment, transportation, and visa
expenses if incurred without employer’s
knowledge.
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Title VII of the Civil Rights Act of 1964
 Title VII prohibits discrimination in
employment on the basis of race, sex,
color, religion, and national origin.
“Sex” now includes pregnancy.
 In addition to prohibiting religious
discrimination, employers must
reasonably accommodate an
employee’s religious practices.
 Enforcement of Title VII by EEOC.
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Intentional vs. Unintentional
Discrimination
 Intentional (“Disparate-Treatment”)
Discrimination. For prima facie case,
applicant must prove:
She is member of a protected class;
Applied, qualified and rejected for job; and
Employer continued to seek applicants.
 Unintentional (“Disparate Impact”)
Discrimination.
No-protected applicant sues Employer who
tries to integrate members of protected
classes into workplace.
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Discrimination Based on Race,
Color, and National Origin
 Title VII prohibits employment policies or


intentional/ negligent discrimination on basis
of race, color or national origin.
Company policies that discriminate are
illegal, unless (except for race) they have a
substantial demonstrable relationship to
realistic qualifications for job.
Reverse Discrimination: discrimination
against “majority” such as white males.
 See Richi v. Destefano (2009) involving white New
Haven firefighters who were discriminated against by
fire department be throwing out a promotion test.
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22
Discrimination Based on Religion
 Accommodation:
Employers must
“reasonably accommodate” the
“sincerely held’ religious practices of its
employees, unless to do so would cause
undue hardship to employer’s business.
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23
Discrimination Based on Gender
 Title VII prohibits employers from classifying



jobs as male or female or from advertising
such, unless employer can prove gender is
essential to the job.
Plaintiff must show gender was determining
factor in hiring, firing or lack of promotion.
2009 “Lilly Ledbetter Fair Pay Act” Equal Pay
Legislation: removed time limits to file suit.
Constructive Discharge.
 Voluntarily leaves because conditions “intolerable.”
 Applies to all Title VII discrimination.
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Sexual Harassment
 U.S. Supreme Court has interpreted
Title VII’s prohibition against sex
discrimination to include a prohibition
against sexual harassment.
 There are currently two forms of
recognized sexual harassment:
Hostile Work Environment. 
Quid Pro Quo.
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Hostile Work Environment
 Hostile environment occurs when
workplace is “permeated” with
discriminatory intimidation, ridicule,
insult so severe to alter the conditions
of the victim’s employment.
 The conduct in the workplace must be
offensive to a reasonable person as
well as to the victim, and it must be
severe and pervasive.
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Quid Pro Quo : Harassment
by Supervisors
 Involves demands for sexual favors by a
supervisor from a subordinate, in
exchange for some workplace benefit.
 Must have “tangible employment action”
for employer liability.
 Ellerth/Faragher Affirmative Defense. 
 Retaliation by Employers: 2006:
employer’s retaliatory actions may be
evidence of harassment. 2009: protection
for speaking out about another’s complaint.
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The Ellerth/Faragher
Affirmative Defense
The Ellerth/Faragher cases (1998) gave
employers a defense against sexual
harassment claims that absolves them
from liability IF the employer can prove:
1. The employer has taken reasonable care to prevent
and promptly correct any sexually harassing behavior
(by establishing effective antiharassment policies and
complaint procedures, for example), AND
2. The plaintiff-employee unreasonably failed to take
advantage of any preventive or corrective
opportunities provided by the employer to avoid harm.
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Sexual Harassment Issues
 Co-Workers: employer generally liable only
if it knew, or should have known, about
harassment and failed to take immediate
action.
Employee notice to supervisor is notice to
employer under agency law.
 Non-Employees: employers may also be
liable for harassment.
 Same-Gender harassment also violates
Title VII.
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Remedies under Title VII
 Liability may be extensive. Plaintiff may
receive:
Reinstatement.
Back Pay.
Retroactive Promotions; and
Damages.
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Discrimination Based on Age
 The Age Discrimination in Employment Act

(ADEA) protects individuals over the age
of 40 from workplace discrimination that
favors younger workers.
Plaintiff must show:
He was member of protected age group,
Was qualified for the position from which he was
discharged, and
Was discharged under circumstances that inferred
discrimination.
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Discrimination Based on Age
 Replacing Older Workers with Younger
Workers.
 CASE 18.2 Sprint/United Management Co. v.
Mendelsohn (2008). Testimony of company’s attitude
towards age was not per se admissible and
inadmissible.
 State Employees Not Covered by ADEA. U.S.
Supreme Court cases:
 Kimel v. Florida Board of Regents (2000).
 Tennessee v. Lane (2004).
 Federal Employees Explicitly Covered by the
ADEA. Gomez-Perez v. Potter (2008).
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32
Discrimination Based On Disability
 The Americans with Disability Act
(ADA) requires employers to offer
reasonable accommodation to
employees or applicants with a
“disability” who are otherwise qualified
for the job they hold or seek.
 The duty of reasonable
accommodation ends at the point at
where it becomes an undue hardship.
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Procedures under the ADA
 To prevail on a claim under ADA,
plaintiff must show she:
Has a “disability.”
Is otherwise qualified for the employment in
question; and
Was excluded from employment solely
because of the disability.
Workforce must be more than 15 employees
 Plaintiff must first exhaust
administrative relief with EEOC.
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ADA: What is a “Disability”?
 ADA defines disability as:
Physical or mental impairment that
“substantially limits” one or more of major life
activities; or
A record of such impairment; or
Being regarded as having such an impairment.
 Determination is decided on a case-bycase basis.
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2008 Amendments
 2008 Congressional Amendments reverse prior
Supreme Court cases:
 Reverse Supreme Court’s restrictive interpretations of
disability, and
 Prohibit employers from considering mitigating
measures or medications when determining if an
individual has a disability. In other words, disability is
now determined on a case-by-case basis.
 CASE 18.3
Rohr v. Salt River Project
Agricultural Improvement and Power District.
(2009). Diabetes is a disability if it significantly
restricts an individual’s eating (a major life activity).
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ADA: ‘Reasonable Accommodation’
 If an employee with a disability can perform
the job with reasonable accommodation,
without undue hardship on the employer,
the accommodation must be made.
Examples: wheelchair ramps, flexible working
hours, improved training materials. (Does not
include carpel tunnel syndrome.)
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ADA Issues
 Reasonable Accommodation:
Job Applications and Pre-Employment
Physical Exams.
Substance Abusers (ADA only protects
former users).
 Association Discrimination.
Adverse actions based on stereotypes.
 Does ADA allow ‘Hostile
Environment’ claims?
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38
Defenses to Employment
Discrimination
 There are four basic types of defenses to
employment discrimination claims.
Business necessity. 
Bona fide occupational qualification.
Seniority Systems.
After-acquired evidence of employee
misconduct. 
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Business Necessity Defense
 The business necessity defense requires
the employer to demonstrate that the
imposition of a job qualification is
reasonably necessary to the legitimate
conduct of the employer’s business.
 Business necessity is a defense to
disparate impact discrimination.
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B.F.O.Q. Defense
 The bona fide occupational qualification
defense requires an employer to show
that an particular skill is necessary for
the performance of a particular job.
 The BFOQ defense is used in cases of
disparate treatment discrimination.
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Seniority System Defense
 A seniority system is one that conditions
the distribution of job benefits on the
length of time one has worked for an
employer.
 A seniority system can be a defense only
if it is a bona fide system, not designed
to evade the effects of the antidiscrimination laws.
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After-Acquired Evidence of
Employee Misconduct
 After-acquired evidence refers to evidence

of misconduct, committed by an
employee who is suing an employer for
employment discrimination, that is
uncovered during the process of
discovery conducted in preparation for a
defense against the suit.
While it may serve to limit employee
recovery, it does not act as an absolute
defense for the employer.
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