Business Law Notes: Employment Law


course notes from my core MBA business law class covering employment law
Subject: Business Law

Employment Law Issues

Discrimination deals with the laws regulating employment relations.

Employment at Will – Either party can terminate an employment contract at any time for any reason (unless the contract specifically provides to the contrary or if it violates a federal or state employment Statute): Exceptions:

  • Implied employment contract: if fired outside the terms implied, employee may succeed in a breach-of- contract (i.e. employer must follow the company’s manual)
  • Public policy: an employer may not fire a worker for reasons that violate a fundamental public policy of the jurisdiction (i.e. serving jury duty, refusing to perform an illegal act)
  • Whistle blowing: when an employee tells a government official, upper management authority or the press that his/her employer is engaged in some unsafe or illegal activity.

Whenever an employer discharges an employee in violation of the law, the employee may bring an action for wrongful discharge.

  • Exceptions based on Tort Theory: the discharge of an employee may give rise to an action for wrongful discharge under tort theories. For example, abusive discharge procedures may result in intentional infliction of emotional distress or defamation.

Statute Protection for Whistleblowers: encourage workers to report employer wrongdoing, a number of states & the federal government have enacted whistleblower statutes to protect them from retaliation.

  • Federal False Claims Reform Act of 1986 & Whistleblower Protection Act of 1989 offer whistleblowers monetary rewards & protect against retaliation. Most states also offer incentive for whistleblowers to disclose suspicious employer acts.

Privacy Rights of Employees:

  • Lie-Detector Tests: The Employee Polygraph Protection Act prohibits certain employers from
    • Requiring or causing employees or job applicants to take lie-detector test
    • Using, accepting, referring to, or asking about lie-detector test results
    • Taking or threatening action against employees based on test results or refusal to take test.
    • Exceptions: federal, state, & local government employers; certain security service firms, drug companies.
  • Drug Testing
    • Laws relating to private-sector vary from state to state.
    • Constitutional limitations apply to the testing of government employees.
    • Drug tests have been held constitutional when there was a reasonable basis for suspecting government employees of using drugs or when drug use in a particular job could threaten public safety.
  • AIDS Testing
    • Some state laws restrict AIDS testing.
    • The Disabilities Act of 1990 prohibits discrimination against those with disabilities, which has been broadly defined to include those with AIDS.
    • Generally, most laws prohibit the discharge of employees based on AIDS tests, but don’t restrict the ability of employers to require the test.
  • Performance Monitoring
    • Telephone conversations – Listening to employees’ telephone conversations may violate the Electronic Communication Privacy Act of 1986. Some courts have ruled that an exception to this rule is made for business calls on the employer’s phone.
    • Electronics Communications – To date, courts have allowed employers to monitor computer files, voice mails, e-mail, & other electronic communications.
  • Screening Procedures: a key factor in determining the legality of prescreening procedures is whether there is a nexus between the questions & the job.
  • Health & Safety Protection
  • OSHA
    • At the fed level, the 1970 Occupational Safety & Health Act is the primary legislation for employee health & safety protection & provides specific workplace standards.
    • As criminal penalties for violation of OSHA are limited, states laws often have harsher penalties.
    • Employees cannot be discharged for filing an OSHA complaint or refusing to work in a high-risk area if bodily harm or death might result.
  • State Workers’ Compensation Laws
    • State workers’ compensation laws establish procedures for compensating workers on the job.
    • Instead of suing, an injured worker files a claim for compensation.
    • Usually, employers can purchase insurance from private insurers or a state fund or allow them to be self-insured.
    • The right to recover benefits is predicated wholly on the existence of an employment relationship & the fact that the injury was accidental & occurred on the job or in the course of employment, regardless of fault.
    • An employee’s acceptance of workers’ compensation benefits bars them from suing for injuries caused by the employer’s negligence.
  • Retirement & Security Inc.
    • Designed to protect by covering financial impact of retirement, disability, death, hospitalization, & unemployment
    • = old age, survivors & disability insurance, Medicare, private retirement plans, unemployment compensation.
    • Cobra & other employment laws: consolidated omnibus budget reconciliation (1985) prohibits the elimination of worker’s insurance (all) upon termination (all). 60 days to decide to continue coverage.

Discrimination (“D”) Federal Legislation

Title VII of the Civil Rights Act of 1964 – Provisions

  • This act prevents employment or union membership “D” on the basis of Race, Color, National Origin, Religion, & Gender.
  • Compliance with the act is monitored by the Equal Employment Opportunity Commission. To file charges first a victim must file a claim with the EEOC which investigates the facts, attempts to achieve a voluntary agreement on the part of the employer & employee. If such an agreement isn’t reached the EEOC may sue the employer. If the EEOC doesn’t sue the victim may sue the employer.
  • Title VII prohibits both intentional & unintentional “D”.
    • Disparate Treatment “D” – Intentional “D”
    • Disparate Impact “D”- A criteria for hiring or employment is inherently discriminatory against a protected class.
    • Burden of Proof: plaintiff must prove a prima facie case – i.e. meet an initial burden of proof.
      1. She is member of a protected class
      2. She applied & was qualified for the job in question
      3. She was rejected by the employer
      4. The employer continued to seek candidates or filled the position with someone outside the protect class
    • Defenses: defendant must then present a reason other than “D” for the non hiring. Defenses include:
      1. Business necessity defense – Can be used to defend a Disparate Impact Case (i.e. there exists a definite connection between the criteria for hiring & job performance. For instance, those with MBA’s are the only ones who can perform the job.)
      2. Bona Fide Occupational Qualification – e.g., a men’s fashion magazine might hire only male fashion models.

Types of “D” Protected Against under federal laws.

  • Gender
    • Employers are prohibited from classifying jobs as male or female & from advertising in help-wanted ads designated for either male or female.
    • This is covered under the Title VII of the Civil Rights Act of 1964.
    • Under the Pregnancy “D” act of 1978, which amended Title VII of the Civil Rights Act of 1964, expanded gender “D” to include pregnancy. Women affected by pregnancy, childbirth, or related medical conditions must be treated – for all employment related purposes – the same as other persons not so affected but similar in ability to work.
  • Sexual Harassment Types
    • Quid pro quo harassment – Occurs when job opportunities, promotions, & the like are exchanged for sexual favors.
    • Hostile environment harassment – occurs when employees are subject to comments, jokes, or physical harassment which is perceived to be offensive.
    • Proof: the Supreme Court has adopted the standard that the alleged conduct must be abusive both objectively (as perceived by a reasonable person) & subjectively (as perceived by the victim).
  • Age
  • The Age “D” in Employment Act (ADEA) of 1967 prohibits the “D” of individuals on the bases of age for those forty years of age or older.

  • Americans with Disabilities Act of 1990 prohibits employers from refusing to hire disabled persons who are otherwise qualified. It also means that an employer may have to make some reasonable accommodations for a disabled applicant, such as the installation of ramps.

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