Employment Law and Labor
Regulations
Chapter 16
Chapter Issues
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Employment at Will
Substance Abuse
Worker Safety and Health
Workers’ Compensation
General Regulation of Labor
Markets
Major Labor Relations Acts
The National Labor Relations
Board
Unionization
Collective Bargaining
Employment-At-Will
Employers: Can hire and fire who
they want. Employees: May workat-will or quit when they want.
Contractual limits to at-will
• Exceptions:
Refusing to commit an illegal act
Important public duty (jury duty)
Public right (filing for workers’
compensation)
“Whistle Blowing”
Contracts in violation of public
policy, i.e. exculpatory
agreements
Brown v. Soh
• Brown worked for Skip Barber Racing School
• School offered advanced driving classes for the
public
• Driving took place in restricted area
• Everyone, including instructors, signed liability
waiver to hold school harmless for any injuries
incurred.
• Was a consideration to be able to work and
covered “all liability”
• Client, Soh, driving with an instructor
• Ran into Brown in restricted area, waving flag
to signal drivers
• Brown sued school and others involved in his
injuries.
Brown v. Soh
• Trial Court granted summary judgment to
school since he had signed a liability waiver.
Brown appealed.
• HELD: Reversed and remanded.
• Exculpatory agreements are almost always
rejected in the employment context due to
public policy considerations.
• Here employer had advantage in bargaining
strength against employee – take it (the
adhesion contract of exculpation) or leave it
situation for employment.
• If employers allowed to have broad waivers of
liability, incentive by employers to manage risk
at the workplace is removed
Noncompetition Agreements
• Employees sign not to leave
employment and compete directly
with employer.
• Different states differ
• Some allow them absolutely
• Others – common law governs,
allowing if restraints are
reasonable in time and extent of
coverage.
• Other states, like CA, say that
almost every contract that
restrains anyone from lawful
business is void.
• Employers must pay attention to
individual state law in this area.
Substance Abuse
• Alcohol the most common
• 13.6% of all adults have
experienced alcohol
addiction or abuse in their
lives
• 8% of workers are serious
alcohol abusers
• Another 3-8% of adults
abuse or addicted to illegal
or improperly dispensed
drugs
• One in eight of workers have
substance abuse problem
Consequences of
Substance Abuse
• Reduced productivity & higher insurance expenses cost
employers over $250 billion per year
• Safety Issues ~ workers under influence of alcohol or
other drugs are 3.6 time more likely to be injured or to
injure another
• Insurance costs are about double for families with an
alcoholic
• Issue Spotter: “What Attitude Toward Drinking and the
Office?” – Re: office parties and other festivities
• Exxon Valdez Case--1989 oil spill off coast of Alaska
– Billions of dollars in clean-up costs and losses to the
environment (AND Exxon’s reputation)
Drug-Free Workplace Act
• Requires all companies of more
than $25,000 worth of business
with the federal government to
certify they have “drug-free”
workplace:
– Publish policy statement
– Establish drug awareness
program
– Make known availability of
program
– Require employees to notify
employers of any drug related
convictions
State Standards May Vary
• Specific restrictions on
substance testing.
• MN: Only employees in
safety-sensitive positions
may be drug tested.
• ME: Employee must be
notified if fails drug test
and given another test
before employer is
notified.
• Employers must comply
with particular state’s
rules.
• Issue Spotter, “How Does an
Employer Handle an Employee
Who Flunks a Drug Test?”
Elements of Substance
Abuse Policy
• Pre-employment screening usually OK (many states
say testing after job offer is extended)
• Safety sensitive jobs
• Notification; make policy clear
• Voluntary nature--employee knew of policy
• After accidents--OK
• Reasonable suspicion--document this well in
employee file
• Use Certified labs for drug testing results
• Give all employees copy of company policy and keep
a signed receipt from employee
• Check with attorney or specialist in drug testing
Worker Health & Safety
• Occupational Safety and Health Act of 1970
(OSHAct) created Occupational Safety and
Health Administration (OSHA)
• Safety Inspections
• 4th Amendment prohibits searches without
warrant (but warrants are usually easy to get)
– Marshall v. Barlow’s Inc. (OSHA inspectors routinely
obtain administrative warrants that don’t require show
of probable cause; the warrant requirement is not
difficult.)
• Penalties can be stiff for violations!
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See R. Williams Construction Co. v. Occupational Safety & Health
Review Commission
R. Williams Construction Co. v.
Occupational Safety & Health
Review Commission
• Williams dug a 12’ deep trench at construction site.
Employees regularly cleaned up submersible pump at
bottom of trench.
• Palomar and Aguiniga entered trench with no supports.
• One side collapsed--killed Aguiniga and seriously
injured Palomar.
• OSHA inspected: Cited company for 1) failing to instruct
employees about safety and 2) failing to properly build
and maintain trench.
• 3 serious violations ($7,000 each); 1 willful violation
($70,000) = $91,000 total in fines.
• ALJ held hearing; heard employees testify of minimal
safety training and little control over the trench.
• Managers claimed there was adequate safety.
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(Continued On Next Slide)
R. Williams Construction Co. v.
Occupational Safety & Health
Review Commission
• ALJ downgraded willful violation to serious and
reduced total fines to $22,000 because company had a
good history.
• Williams appealed to the commission, which was
denied.
• Williams appealed to Appeals Court.
• HELD: Affirmed.
• Williams failed to instruct employees in proper safety
measures. Williams made no effort to ensure
employees not to enter trench on day it collapsed.
• Employees should not be expected by management to
take greater care to avoid placing themselves in
danger. If this kind of risk is placed on employees, it
“misconstrues the purpose of the OSHA safety
standards.”
OSHA’s Toxic
Substance Standards
• Covers asbestos, vinyl chloride, cokeoven emissions, and other industrial
carcinogens
• “Must adequately insure to the extent
feasible... that no EE will suffer material
impairment of health or functional
capacity”
• OSHA must have scientific evidence that
there is “significant health risk” before it
can regulate
• See Exhibit 16.1 – Ten Most Common
Workplace Safety Violations
Hazard Communication
Standard (HazCom)
• “Worker-Right-To-Know Laws” re: employee
exposure to hazardous chemicals
• Chemical producers and users conduct a
“hazard determination” of chemicals they
use/produce
• Written Communication Standard
• Labels for chemical containers
• Material Safety Data Sheets (MSDS)
• Employee Training Programs
– Concerning requirements under the law
– Training to detect hazards and protect
themselves in emergency actions
Workers’ Compensation
• States enact worker’s comp laws to
provide employer paid insurance for
work-related accidents
• Gives employers immunity from tort suits
by employees
Objectives:
1) provide benefits to work-accident victims regardless of fault
2) provide a certain remedy; relieve hassles of tort litigation
3) protect public and private charities from undue burden
4) reduce fees to lawyers and expert witnesses
5) encourage ER safety w/accident rating based premium
6) provide open communication of accident for future safety
Juarez v. CC Services, Inc.
• Juarez worked for Westarz Homes at construction sites for 5
years. Bever was a superintendent at the sites—supervised subcontractors and moved trash.
• Bevers presented himself as an independent contractor under the
name of T. Bever Construction.
• Westarz provided Bever a truck to move trash. Truck insured by
Westarz’s insurance company, Country Insurance.
• Bever was backing truck up at site, and hit Juarez.
• Crushed his left arm and shoulder, leaving him unable to work.
• Juarez filed for workers’ compensation.
• Westarz paid no workers’ compensation premiums, claiming it
only used independent contractors and had no employees.
• Site was investigated; determined Juarez was an employee.
• Juaraz awarded workers’ compensation benefits from a Special
Fund for such circumstances.
• Juarez also sued Bever Construction for negligence for Bever’s
hitting Juarez with the truck.
Juarez v. CC Services, Inc.
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Country defended, saying Bever and Juarez were both employees of
Westarz, and workers’ compensation was the only remedy.
Jury held Bever was an independent contractor and awarded Juarez
$600,000 for negligence by Bever (which was covered by the insurance
policy on the truck).
Country moved for summary judgment that it would not have to pay
the claim.
HELD: Country’s motion for summary judgment is granted. Country
does not have to pay the $600,000 claim.
There is a master-servant relationship between Westarz and Bever.
– Westarz had control over Bever’s activities; Bever furthered interest
of Westarz; Westarz provided materials for Bever’s job; Westarz
dictated where Bever would work; Bever and Westarz had 4-year
exclusive relationship; Bever was paid a set amount each week;
Bever provided vital service to Westarz’ Business.
Juarez and Bever were co-employees.
Juarez already sought workers’ compensation benefits.
Therefore, Arizona law precluded Juarez from bringing suit against
Bever for additional compensation, and Country Insurance doesn’t
have to pay for any claim.
Issue Spotter: “Reducing
Risks and Improving Looks”
• To save workers from being injured;
reduce likelihood of OSHA violation; and
reduce # of worker’s compensation
claims:
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Impose dress code?
Code covers safety and looks?
Improves professionalism of workplace?
Can employers do what they want?
Does this change nature of work contract
with workers?
General Regulation of
Labor Markets
– Family & Medical Leave
– Hiring Immigrants
– Federal Minimum Wage Requirement
– Occupational Licensure & Regulation
– Warning Employees of Plant Closings
– Employee Retirement Plans
Family & Medical Leave
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Family & Medical Leave Act (FMLA)
Private ER’s with 50+ employees
All government jobs
Pertains to “serious health condition”
12 weeks unpaid leave
– after childbirth or adoption
– care for seriously ill child, spouse, parent,
or self
• Exempts “key” employees--10%
highest paid that would cause
economic harm to ER
Callison v. City of Philadelphia
• Callison worked for city for two years.
Diagnosed with deep anxiety reaction caused
by stress at home and on the job.
• Used a lot of sick leave; was place on Sick
Abuse List.
• Required to get medical certification for all
sick days; subject to penalties for violations of
policy.
• Employee on sick leave must call a hotline if
they leave home.
• Sick leave investigator calls homes to see if
employees are there.
• Callison took 3 months FMLA leave.
• City checked on him. He often was not home.
• Suspended for failure to follow policy.
Callison v. City of Philadelphia
• Callison sued, saying he was not subject to
discipline while on FMLA leave. Said discipline by
the City was retaliatory.
• Trial court held for City. Callison appealed.
• HELD: Affirmed.
• City did not engage in prohibited acts through their
policies.
• There is no right in the FMLA that employee is “left
alone” when under the act.
• Employers may check to ensure employees on leave
do not abuse their leave, especially if they are on
the employer’s Sick Abuse list.
• Internal call-in policy does not diminish protections
of the FMLA.
Restrictions On Immigration
• For every person hired,
employer must have an I-9
form on file.
• Documents must be
presented for proof of
identity and employment
eligibility.
• Can’t hire illegal immigrants
• Fines & criminal Penalties
• Policy: Protection of US
workers
• Policy: Reduce governmental
costs
• See www.uscis.gov
Federal Minimum Wage
Requirements
• Initiated in 1938 as
part of Fair Labor
Standards Act
• Averages about 50%
of the average
manufacturing wage
• Minimum wage of
$7.25/hour as of
2009.
• Employers must also
pay Social Security
tax of 7.65%
Occupational Licensure
and Regulation
• Licensing requirements at federal and
(mostly) state level
• Usually a state commission determines
entry criteria
– I.e. formal education
– Sometimes apprenticeship
– Testing
• Ability through certificate to practice as
lawyer, doctor, nurse, dentist,
veterinarian, barber, architect,
psychologist, dog groomer, beekeeper,
massage parlor operator, etc. etc.
Warning Employees of Plant
Closings
• Worker Adjustment and Retraining Notification Act (WARN)
• Employers with 100+ full-time employees must give advance
notice of plant closing or mass layoff if 50+ employees
affected.
• Notice given directly to each affected EE 60 days in advance
of closing or layoff.
• Notices also sent to collective bargaining agents, local
elected officials, and state labor departmental officials.
• Notices must be for permanent termination and reduction in
work time of 50% or more for 6 months or longer.
• EE’s who do not receive proper notice may sue for up to 60
days back pay, benefits, interest & attorney’s fees.
• Local government may sue company for up to $500/day for
each day there was no notice.
• Some states have plant closing requirements beyond federal
requirements.
Retirement Plans
• Employee Retirement Income
Security Act (ERISA)
• Guarantees expectations of
retirement plan participants-protects benefits after reasonable
length of employment
• Vesting requirements –
participants receive benefits after
certain length of employment
• Mandatory vesting – 3 different
options established by ERISA
• Protects workers in case of closing-will still get their benefits
• Issue Spotter: “How Do You Count Hours
for Telecommuters?”
Major Labor Relations
Acts Unions in America
• 1932 Norris-La Guardia Act:
• Federal Courts can’t issue injunctions in
nonviolent labor disputes--insures right
to strike, picket, quit work, etc.
• Prohibits “yellow-dog contracts”
(requiring employees to agree not to
join a union; if they do, they are fired)
National Labor Relations Act (NLRA)
• 1935 Wagner Act (NLRA): Right of workers to unionize;
created National Labor Relations Board (NLRB)
• 1947 Taft-Hartley Act ~ Labor-Management Relations Act:
(Amended NLRA) Employers have right to go to NLRB protects employers. Unions are prohibited from:
– 1) coercing employees to support union
– 2) refusing to bargain in good faith with employers
– 3) carrying out certain kinds of strikes “secondary boycotts,”
charging “excessive” union fees, or “featherbedding”
– 4) going on strike during 30-day “cooling off” period or during
60-day period ordered by the President.
• 1959 Landrum Griffin Act ~ Labor-Management Reporting &
Disclosure Act: (Amended NLRA) Increased reporting,
regulation of internal union affairs; protects union members
from improper actions by leaders through:
monitoring leadership and union member bill of rights
National Labor Relations
Board
• Administrative agency
created to monitor
unfair labor practices
and assure that union
representation
elections are fair
• Jurisdiction: labor
dispute “affects
interstate commerce”
• About 30,000 cases a
year, most are unfair
labor charges
• “Unfair labor
practices” - actions
that impede the
goals of the NLRA
• See Examples of
Employer Conduct
That Violates the
NLRA (in text)
• see also
www.nlrb.gov
NLRB Remedies
• Posting a notice in the
workplace
• Issuing a cease and desist order
• Providing back pay for lost
wages
• Reinstating dismissed workers
• Issuing an order to bargain with
the union
“The Power of German Unions”
• Competitive U.S. economy has limited strength of
unions in U.S.
• In Germany competition among firms is limited:
– most workers belong to trade unions
– most employers belong to industry associations
– one collective bargaining agreement
traditionally covered all employees and all
employers - wages and conditions same at all
firms.
• German companies are now building plants in
countries with lower employment costs, including
the U.S.
Unionization
• Representation Elections
• Employees sign authorization cards - need 30% to
go to NLRB for an election
• Campaign - by union and management
• NLRB supervised election:
– more than 50% vote yes?
– If so, union is certified as exclusive bargaining
agent for all employees. If not, union fails.
• Can also have 30% call for election to decertify
union
• NLRB and courts do not permit access to company
property by outside organizers.
Right-To-Work Laws
• NLRA prohibits Closed Shops - Where employee must
be a union member before going to work
• NLRA prohibits Union Shops - Where employee must
join union as a condition of employment
• Agency Shops - Majority of employees vote to be
represented by Union
– members pay union dues
– non-members pay agency fees
– Unions give $ to support political candidates—may
do this under strict requirements
• States pass right-to-work laws that prohibit agency
shops. Have right to work without joining a union,
even if majority of workers voted for union
Collective Bargaining
• Union is exclusive bargaining agent for employees
• Collective bargaining covers whole process from initial
contract negotiations up through contract
administration
– Most collective bargaining agreements contain
dispute resolution clauses (grievance arbitration
clauses)
• Requires Good Faith Bargaining
– certain subjects mandatory, i.e.,
• wages, hours, other terms and conditions of
employment
– can back up positions with strike by union or
lockout by employer
Cyberlaw: “Employee Blogs”
• Large employers control e-mail, with policies that company has right
to access e-mails on company computers and accounts.
• Software scans e-mails for red flag words – sex, guarantee, social
security number, etc. Helps to reduce lost work time, litigation due
to harassment claims, and loss of secure information.
• Blogs now are a concern.
• Some employees have been dounced—fired—due to blogging.
• Since blog comments posted anonymously, it is difficult and costly
to track down the negative blogger.
• If firm can show defamation/trade secret infringement, then have
right to obtain discovery from court to uncover blogger’s trail.
• Courts do not wish to issue injunctions against blogs – 1st
Amendment freedom of speech issues.
• If blog is dedicated to complaining about company employment
policies, speech may be protected as a concerted activity under
national Labor Relations Act.
• Company policies concerning blogs have included financial
information of the company (securities laws and fiduciary
obligations), personnel matters (employee privacy rights), and
proprietary information (trade secrets).
• Employees who violate these company policies based on legal
rights of the company can be fired.
Concerted Activities
• To promote productive collective bargaining, Congress
provided certain activities to be protected.
• Protected Activities: Right to engage in concerted
activities for mutual aid or protection
– i.e. most union organizing efforts or refusal to work
due to unreasonable hazards or concerns re:
working conditions
• Unprotected Activities: Threats or acts of violence not
protected
– Employers may fire employees for insubordination,
disobedience or disloyalty unless activity is part of
protected concerted activity
– Primary boycott (strike against employer in
collective bargaining dispute) is legal
– Secondary boycott (when union uses economic
pressure to force others to stop doing business with
an employer not directly involved in primary labor
dispute) is illegal
Employer Economic
Responses
• Employers may not retaliate against employees for
engaging in protected activities
• Have right to use some economic pressure
• May lock out employees until dispute with union is
settled
– Legal if evidence of bad intent is not shown, such
as trying to break the union
– Lockout is usually a defensive move and okay if in
an effort to promote settlement
• Replacement of employees by non-union workers can
be okay
– If collective bargaining agreement expires with no
agreement to a new contract and union calls for
strike, the ER can hire new workers and keep using
existing union workers who cross picket lines.