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Chapter Key Points Identify importance of classification as employee or independent contractor Understand employer liability for employee actions … both.

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Presentation on theme: "Chapter Key Points Identify importance of classification as employee or independent contractor Understand employer liability for employee actions … both."— Presentation transcript:

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2 Chapter Key Points Identify importance of classification as employee or independent contractor Understand employer liability for employee actions … both vicarious liability and based on employer’s own negligence Familiarity with basic issues of worker selection, privacy, termination and various labor laws, including wage and hour, health and safety, workers compensation, employee benefits and immigration 12 Employment Law I: Employee Rights

3 Employment-Related Lawsuits  53% of responding employers in a 1999 national survey had been sued within the preceding five-year period.  Primary areas of litigation:  Discrimination (42% of claims)  Wrongful termination (33%)  Sexual harassment (12%) Source: “Lawsuits Continue to Plague Employers,” Human Resources Management—Ideas and Trends, July 14, 1999, p. 1 McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

4 Employee or Independent Contractor?  Dominant factor in determining classification: Degree of control exercised by employer (e.g., where, when, how job to be done).  Consequence of employer being able to classify worker as independent contractor:  Employer generally does not have vicarious liability for acts of worker.  Employer may not have to provide employee benefits.  Employer need not withhold employee income taxes and need not pay FICA, workers compensation and unemployment compensation. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

5 Issues with Selection of Employees  Resume fraud:  80% misleading  20% listed fraudulent degrees  13% of college students lied on their first resume  Background checks: Employers have a legal duty to provide a safe workplace.  Impermissible questions: Primarily an issue of potential discrimination.  Noncompete clauses: Used to protect legitimate employer interests, such as client lists; must be reasonably limited as to time, geography and prohibited activity  Arbitration agreements: Enforceability generally upheld if legitimate purposes and equitable provisions.  References: A two-edge sword—New employers need to check references in light of resume fraud and workplace safety issues. But former employers reluctant to provide information in light of defamation threats. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

6 Employer’s Vicarious Liability  Employers often are held responsible for employees’ accidents or wrongs under the doctrine of respondeat superior.  This is also referred to as vicarious or imputed liability.  Determining issue: Whether employee was acting within the scope of employment.  Example: Mary M. v. City of Los Angeles (Cal. 1991) McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

7 Employer’s Liability for Negligence in Hiring/Retention/Training/Supervision  An employee may be in a position to cause harm to a third party because of the employer’s own negligence in hiring, training, supervising or retaining that particular employee whom the employer knew or should have known to be dangerous.  Example: Yunker v. Honeywell (Minn. App. 1993) McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

8 Fair Labor Standards Act  Major Objectives:  Establishes a minimum wage, to be contrasted with a “living wage.”  Establishes a ceiling on weekly hours and overtime pay standards.  Protects against child labor abuses by specifying employment restrictions by age.  Establishes equal pay for equal work regardless of gender. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

9 Occupational Safety and Health Act (OSHA)  Overall duty: To provide a workplace free of “recognized hazards causing or likely to cause death or serous physical harm to employees.”  Achieved through: Promulgation of and adherence to specific standards.  Variances: Temporary or permanent variances for particular standards may be available to employers under appropriate circumstances. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

10 OHSA Information Requirements  Right to Know: Employers must label all chemical containers so that employees will know about the chemical and its dangers and must educate employees about chemical hazards and how to deal with them.  Records: Businesses must maintain records listing and summarizing injuries, illnesses and deaths on the job, a summery of which must be posted at the job. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

11 OHSA Enforcement  Unannounced on-site inspections  Cooperative programs such as provision of educational materials and OSHA’s Voluntary Protection Programs  Citations issued if violations are discovered during the inspection process  Court orders to restrain immediate, serious threats  Fines  Imprisonment McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

12 Workers’ Compensation  State laws providing automatic compensation when an employee is injured or dies  Recovery requires a showing that injury arose out of employment and in the course of employment  Employees have no right to sue employer for compensation, except in unusual circumstances, such as the employer’s gross negligence  The law specifies the monetary benefit to be provided for different injuries  About 90% of workers are covered  Example: Quaker Oats v. Ciha (Iowa 1996) McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

13 Drug Testing  In general, employment-based alcohol and drug testing occurs in six circumstances: (1) pre-employment screening, (2) routine physical examinations, (3) “reasonable suspicion” testing, (4) post-accident testing, (5) random testing and (6) follow-up testing.  Objections to testing include: (1) reliability of tests, (2) employee privacy, (3) lack of correlation to actual job impairment.  Drug-Free Workplace Act of 1988: Applies to employers who have contracts of $100,000 or more with the federal government; they are required to develop an anti-drug policy for employees, provide drug-free awareness programs, acquaint employees with available assistance and warn them of the penalties that accompany violation of the policy. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

14 Employee Benefits and Income Maintenance 1993 Family and Medical Leave Act: Provides up to 12 weeks of unpaid leave in any 12-month period for family needs such as birth, adoption, caring for a child or parent, or for the employee’s own serious illness. Unemployment Compensation: Compensates laid-off workers so long as they are ready and looking for work and not otherwise disqualified; has a specified maximum period, usually 26 weeks Worker Adjustment and Retraining Notification Act: Requires firms with 100 or more employees to provide 60 days notice if they lay off 1/3 of their workers at any site employing at least 150 workers, drop 500 employees at any site or close a plant employing at least 50 workers Employee Retirement Income Security Act (ERISA): Regulates pension funds to help ensure their long-term financial security by reducing fraud and mismanagement. Current law did not, however, protect the employees of Enron, WorldCom, or other failed corporations. McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

15 Termination  Most Americans work without benefit of an employment contract for a specified period of time. They are at-will employees, that may be fired or quit at any time.  Employee may sue for wrongful discharge based on:  An express or implied contract,  An implied covenant of good faith and fair dealing, or  The tort of violating an established public policy.  Example: Barrera v. Con Agra, Inc. (8 th Cir. 2001) McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.


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