1
Creating an Agency
Relationship
Agency is a relationship in
which the agent agrees to
perform a task for, and
under the control of, the
principal.
2
CREATING AN AGENCY
 To create an agency, there must be:
 A principal,
 An agent,
 Who mutually consent that the agent will
act on behalf of the principal, and
 Be subject to the principal’s control,
 Thereby creating a fiduciary relationship.
3
REQUIREMENTS FOR AGENCY
Consent,
Control
A fiduciary relationship
4
NOT REQUIRED FOR AN AGENCY
RELATIONSHIP
 A written agreement
 A formal agreement
 Consideration
5
DUTIES OF AGENT TO
PRINCIPAL
 Duty of Loyalty
 Obey her principal’s instructions
 Must act with reasonable care.
 An agent with special skills is held
to a higher standard.
 Must give accurate information.
6
PRINCIPAL’S REMEDIES WHEN
THE AGENT BREACHES A DUTY
 The principal can recover damages
caused by the agent’s breach.
 The agent must refund any profits
made from the agency, if he breaches
his duty of loyalty.
 The principal may rescind a
transaction with an disloyal agent.
7
DUTIES OF PRINCIPAL TO
AGENT
 Duty to Reimburse the Agent for
Reasonable Expenses
 Torts Committed by the Agent
 Contracts Entered into by the
Agent
 Duty to Cooperate
8
TERMINATING AGENCY
 Five ways an agency relationship
is terminated by the parties:
By completion of term.
By completion of the purpose.
By mutual agreement.
In an agency at will, either party
can terminate at any time, for any
reason.
 Wrongful termination.
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9
OTHER CAUSES OF
AGENCY TERMINATION
 Principal or Agent Can No Longer
Perform Required Duties
 Change of Circumstances
10
EFFECT OF TERMINATION I
Termination of the agency
ends the agent’s power to
act on behalf of the
principal.
11
EFFECT OF TERMINATION II
Principal’s duty to reimburse
expenses of the agent ends
with the end of the agency.
12
EFFECT OF TERMINATION III
Confidential information
remains confidential and
unusable, even after the end
of the agency.
13
POWER COUPLED WITH AN
INTEREST
RARE-only agent can
terminate.
Principal has no rights under
this form of agency-is
created by law
14
EMPLOYEE AT WILL
 Without a contract, a worker
is an employee at will.
 An employee at will can be
fired for a good reason, a
bad reason or no reason at
all.
15
NATIONAL LABOR RELATIONS ACT
 NLRA
 Created the National Labor Relations
Board to enforce labor laws
 Prohibits employers from penalizing
workers who engage in union activity
 Requires employers to “bargain in
good faith” with unions.
16
FAMILY AND MEDICAL
LEAVE ACT
The Family and Medical Leave Act
(FMLA), guarantees both men and
women up to 12 weeks of unpaid
leave each year for childbirth,
adoption, or medical emergencies
for themselves or a family member.
17
WRONGFUL DISCHARGE
Wrongful discharge
prohibits an employer from
firing a worker for a bad
reason.
18
PUBLIC POLICY RULE
The public policy rule prohibits an
employer from firing a worker for a
reason that violates basic social
rights, duties, or responsibilities, such
as:
 Refusing to Violate the Law
 Exercising a Legal Right
 Performing a Legal Duty
19
WHISTLEBLOWERS
Employees who disclose
illegal behavior of their
employers.
20
FALSE CLAIMS ACT
Protects those who refuse
to sign inaccurate
reports.
21
THE CIVIL SERVICE REFORM ACT
Along with Whistleblower
Protection Act protect Federal
employees who report
wrongdoings.
22
SARBANES-OXLEY ACT
The Sarbanes-Oxley Act of
2002 protects employees of
publicly traded companies who
provide evidence of fraud to
investigators.
23
OTHER PROTECTION FOR
WHISTLEBLOWERS
 State Statutes protect
whistleblowers from retaliation from
employers in all fifty states.
 Common law typically prohibits the
discharge of employees who report
illegal activity that relates to their
own jobs.
24
TRUTH IN HIRING
 Oral promises made during the
hiring process can be
enforceable.
 Employers may be liable for
promises that they cannot keep
or for failure to disclose
important information in the
hiring process.
 An employee handbook creates a
contract.
25
COVENANT OF GOOD FAITH &
FAIR DEALING
In some cases, courts will imply a
covenant of good faith and fair
dealing in an at-will employment
contract.
26
DEFAMATION
Employers may be liable for
defamation when they give
false and unfavorable
references about a former
employee.
27
INTENTIONAL INFLICTION
OF EMOTIONAL DISTRESS
Employers who condone cruel
treatment of their workers face
liability under the tort of
intentional infliction of
emotional distress.
28
WORKPLACE SAFETY
 Sets specific health and safety
standards.
 Obliges employers to keep
workplace “free from recognized
hazards.”
 Requires records of all injuries and
accidents.
 Allows inspection of workplaces and
fines for unsafe conditions.
29
EMPLOYEE PRIVACY
 In many places, off-duty conduct
cannot be regulated by the employer.
 Alcohol and drug testing is allowed
sometimes.
 Employers may not require or even
suggest the use of lie detector tests,
except in investigations of crimes.
30
ELECTRONIC MONITORING
OF THE WORKPLACE
The Electronic Communications
Privacy Act of 1986 (ECPA)
permits employers to monitor
workers’ telephone calls, e-mail
messages, and even “instant
messages” if:
31
ECPA
the employee
consents,
32
ECPA
the monitoring occurs
in the ordinary course
of business, or
33
ECPA
in the case of e-mail,
the employer provides
the e-mail system.
34
FINANCIAL PROTECTION
 Fair Labor Standards
 Workers’ Compensation
 Social Security
 Pension Benefits
35
EMPLOYMENT DISCRIMINATION
 The Equal Pay Act
 Title VII of the Civil Rights
Act of 1964
36
DEFENSES TO CHARGES OF
DISCRIMINATION
 There are three possible
defenses for a charge of
discrimination:
 Merit
 Seniority
 Bona Fide Occupational
Qualification
37
SEXUAL HARASSMENT
 Involves unwelcome sexual
advances, requests for sexual
favors, and verbal or physical
conduct of a sexual nature.
 Hostile Work Environment
 Pregnancy
38
AMERICANS WITH DISABILITIES
ACT
A disabled person is someone
with a physical or mental
impairment that substantially
limits a major life activity, or
someone who is regarded as
having such an impairment.
39
AGE DISCRIMINATION
 The Age Discrimination in
Employment Act (ADEA) of
1967
 Forced retirement at a certain
age is prohibited
40