1. Chapter 22 (Unit 2 – Legal Environments of Business
Employment Law
Chapter 22 (Unit 2 – Legal Environments of Business

2. Essential Questions What is employment?
What is employment at will?
How are employment contracts terminated?
What are some duties of an employer?
What are some duties of an employee?
What is the fair labor standards act? (FLSA)

3. Terms Employment Employer Employee Independent contractor
Employment at will
Wrongful discharge
Discharge without cause
Unemployment compensation
Discharge with cause
Payroll deductions
Worker’s compensation
Duty of obedience
Duty of reasonable skill
Duties of loyalty and honesty
Duty of reasonable performance

4. Standards
BMA-LEB-7 Categorize, evaluate, and assess specific statutory/regulatory schemes impact on a business.
7.1 Describe and discuss the impact on a business of the various aspects of bankruptcy including Chapter 7, Chapter 11, Chapter 13, involuntary, and voluntary Differentiate among the types of intellectual property and discuss the remedies for infringement of each type (i.e., copyright, trademark, and patent). 7.3 Research and summarize the major federal consumer protection laws and how they are enforced including but not limited to Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Consumer Product Safety Improvement Act (CPSIA), Consumer Credit Protection Act (CCPA), and Federal Trade Commission Act (FTCA). 7.4 Describe and discuss the major federal laws regulating a business’s impact on the environment including but not limited to Clean Air Act (CAA), Clean Water Act (CWA), Resource Recovery and Conservation Act (RCRA), and Endangered Species Act (ESA).
7.5 Demonstrate an understanding of the employment-at-will doctrine and its exceptions.
7.6 Describe and discuss the major federal laws regulating business employment practices including but not limited to Title VII of the Civil Rights of 1964, Age Discrimination in Employment Act (ADEA), Americans with Disabilities Act (ADA), Family and Medical Leave Act (FMLA), Fair Labor Standards Act (FLSA), Occupational Safety and Health Act (OSHA), Immigration Reform and Control Act, and National Labor Relations Act (NLRA).

5. 22-1 making and terminating employment contracts

6. How are employment contracts made?
Employment – a legal relationship based on a contract that calls for an individual to be paid for working under another’s direction an control.
Employer – party who pays someone in order to direct and control that person’s activities.
Employee – party who is paid by the employer to serve under the employer’s direction and control.
Independent contractor – agrees to produce a specific work product without being supervised and controlled by the other contracting party.

7. Terms of the employment contract
Express agreements between the employer and the employee
Implied agreement between the employee and the employer
State and federal laws

8. Implied agreements
Most employment agreements encompass terms that are not expressly stated but are implied, e.g., length of employment.
Employment at will – doctrine where either the employer or employee can legally terminate the employment relationship at any time. No one is liable for termination.

9. Terms imposed by law
State and federal laws impose many terms into each employment contract whether or not the employer and employee wants them to.
Examples include Terms requiring the payment of minimum age and the hiring of racial and other minorities over the more qualified applicants.

10. How are employment contracts terminated?

11. Contracts are generally terminated by:
By Performance (of a specific job or period)
By Termination at the will of one or both of the parties
Result of material breach
*terminated employees may be eligible for government assistance during their subsequent unemployment.

12. Wrongful discharge- there are limitations on tis power to terminate an at-will employee without cause.
Firing because of race, religion, gender, age, disability, pregnancy, veteran status, or national origin is job discrimination and is illegal.
Federal law also prohibits an employer from dismissing an employee for engaging in unionizing activities.

13. Most states now deny the power to terminate at will when It is used to retaliate against those who:
Refuse to commit perjury at the requests of the company
Insist on filing a worker’s compensation claim
Report violations of law by the company
Urge the company to comply with the law
When an employer fires an at-will employee for one of the above reasons, it commits the tort of wrongful discharge.

14. Violation of contract terms - employers who make promises orally or in a company documents such as employee handbooks to “treat employees fairly” may cause the promise to become part of the employment contract.
When such terms are part of the contract, the employer cannot fire an employee without a fair reason.

15. Government Employees – aka public employees; are entitled to due process before being discharged.
They are entitled to notice of the reasons for the discharge along with a hearing.
In a hearing, they are given the opportunity to present their own evidence to challenge the claims of the governmental employer.
For this reason, it is more difficult to discharge public employees than private sector employees.

16. By material Breach
If obligations of the employment contract are not fulfilled, breach of contract occurs;
If breach is material, it extinguishes the obligation of the other party to the contract.
EXAMPLE: If an employer fails to pay the employee an agreed-upon monthly check; breach of contract results; employee would be justified quitting or in abandoning the job without liability.
Similarly, if the employee fails to perform the daily required tasks for which hired, the employer may treat the contract as terminated and discharge the employee without liability.

17. Unemployment compensation
Workers how have been terminated despite having complied with all the terms of their employment contract are said to have been discharged without cause.
Discharge was not the employee’s conduct.
An employee who is discharged without cause is entitled to unemployment compensation (money paid by the government or a private insurance fund to workers who have lost their jobs through no fault of their own).

18. Workers who have been discharged for cause, however, are not eligible for unemployment compensation.
Felonious conduct, participating in unlawful strike, starting a prison sentence of longer than 30 days, disqualification under federal or state mandatory drug testing and engaging in willful misconduct in disregard of the employer’s interest are all considered appropriate bases for being discharge for cause by the U.S. Department of Labor.

19. Unemployment compensation payments are made by the states in cooperation with the federal government under the Social Security Act of 1935.
Usually 1-2 weeks of termination before payments begin; percentage of regular wage is being paid to the unemployed person every week for a limited period of time.

20. Employment Contract

21. Duties of Employers and employees
22-2

22. Duties owed to Employees
Reasonable Treatment
Safe working conditions
Fair labor standards (FLSA)
Payroll deductions
Military service
Voting
Family and medical leaves

23. Duties owed to minors
Both State and federal governments have prescribed employer duties aimed at protecting minors from overextended working hours and dangerous working conditions. May vary but based on the following principles:
Person’s early years are best used to obtain an education
Certain work is harmful or dangerous for young people
Child labor at low wages takes jobs from adults.

24. State Laws
Every state government regulates the conditions and types of employment permitted for persons under 18 – child labor laws.
When state child labor-labor laws have stricter standards than federal laws, the state laws control.
States usually specify a minimum age for employment; All states places a limit on the number of hours a young person may work.
In calculating the maximum number of hours, the school hours often are combined with the hours on the job while school is in session

25. Some states have child labor laws that:
Set the maximum number of working hours in one day
Prohibit night work
Prescribe the grade in school that must be completed before being able to work
Set the required age for certain hazardous occupations
Restrict the hours of work between 5 A.M. and 10 P.m.

26. Federal law
The Fair Labor Standards Act (FLSA) sets the minimum protection for most young workers.
FLSA exempts from its coverage youths delivering newspapers, making crafts in the home, and working as actors or actresses.
Minors under 16, if working in a business solely owned and operated by parents can work any time of day and for any number of hours in an occupation other than mining and manufacturing or other jobs declared hazardous by the Secretary of Labor.

27. The FLSA makes it illegal for people under 14 years old to work.
14 and 15 year olds are only permitted to work limited hours after school in non-hazardous jobs.
Unless modified by state law, 16 and 17 year olds can work unlimited hours in non-hazardous jobs.

28. Duties owed to those injured by employees
If an employee, acting within the scope of employment, commits a tort, the employer is liable for the damages.
It is immaterial (of no importance) that the employer did not authorize the act.
If an employee commits a tort but is not acting within the scope of the employer’s business, the employee alone is liable for any resulting injuries.

29. What are an employee’s duties?
Duty to Fulfill the Employment Contract
Duty of Obedience
(employee has a duty to obey the reasonable orders and rules of the employer)
Duty of Reasonable Skill
(requires those who accept work possess the skill, experience, or knowledge necessary to do the job)

30. Duties of Loyalty and Honesty
(employee is obligated to look out for the employer’s best interest)
Duties of Reasonable Performance
(obligation to perform the job tasks with competence)

31. Summary 22-1 Making & Terminating Employment Contracts
An employment relationship, an employee is paid for working under the direction and control of an employer.
If there is not contract to pay for work, or there is no direction and control, the relationship between parties is not one of employment.
Express employment contracts may encompass terms agreed to orally or in writing. These may be augmented by terms implied from the work setting, environment, and applicable state and federal laws.
Many employment contracts are terminable at the will or either the employer or employee.

32. Summary 22-2 Duties of employers and employees
An employer’s primary duties are to treat the employee reasonably, provide safe working conditions, and comply with applicable laws and the contract of employment.
Both federal and state governments have child-labor laws that regulate conditions and types of employment for persons under age 18.
An employee must adhere to the fiduciary duties prescribed by law and comply with the contract of employment.
Employees have duties that include fulfilling the employment contract, obedience, reasonable skills, loyalty and honesty, and reasonable performance.