Employment & Labor Law Outline

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FALL 2005

EMPLOYMENT OUTLINE

Introduction to the Modern Employment Relationship
I. INTRODUCTION
II. THE COMMON LAW AND THE ASSERTION OF ER PREROGATIVE
1. Struggle to Determine: During this period, the courts struggle to understand and define the
employment relationship. The courts attempt several approaches:
a. Per Se Tort: Plaintiff EEs attempt to assert a per se tort.
i. Definition: An act that is wrong in itself, for which there is no public or other
justification states a cause of action.
ii. Declined to Apply in Payne: The Court in Payne declined to acknowledge a
per se tort.
b. Master-Servant Relationship: The courts attempt to analogize to the master-servant
relationship.
i. Servant is Agent: Because the servant often lived under the roof of the master,
the servant was considered at most times to be an agent of the master.
ii. Control of Servant: An ER of a domestic servant had the prerogative to dictate
to the servant where to shop or with whom to associate, as an extension of
authority over the household.
iii. Payne: The Court in Payne analogizes to the master-servant relationship
without recognizing that the EEs are not living “under the roof of” the railroad
and where they shop is outside the scope of the employment.
c. Terminable At-Will:
i. American Rule: At Will: Either party may terminate the service for any cause,
good or bad, or without cause and the other could not complain, and was a
rebuttable presumption.
1. Rate of Pay Abandoned: The “rate of pay” (duration of salary taken to
be the hiring period)rule has been almost totally abandoned and
eclipsed by business practice
ii. English Rule: All employment was presumed to be of fixed duration, and this
was a rebuttable presumption.
2. Payne v. The Western & Atlantic Railroad Co.
a. Summary: No cause of action where Payne owns a store near the railroad and the EEs
of the railroad are forbidden from shopping there under penalty of dismissal. The
railroad owns its own store and wants its EEs to shop at the company stores. Payne
trying to use per se tort. Later became interference with prospective economic
advantage.
b. Rationale:

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i. At Will: An EE who is not employed for a fixed duration may be dismissed for
any cause, good or bad, or without cause, and the other cannot complain.
ii. Analogy to Domestic Servant: The master of a domestic servant can determine
with whom that servant may deal. Therefore, an ER can determine with
whom an EE may deal.
iii. Contract: The law leaves ER and EE to make their own contracts, and court's
job to enforce them or else judicial tyranny.
iv. Dissent: The dissent is concerned with the extent of the free market principles

c. Analysis of the Case:
i. Attempting to Configure Employment Relationship: The court is attempting to
deal with a changing employment relationship and so analogizes to domestic
servants. Moving from a family relationship to a mass employment
relationship
ii. Immoral wrong not mean there has been a legal wrong

III. THE PERSISTENCE OF THE “AT-WILL” RULE
1. Murphy v. American Home Products Corp.
a. Summary: Murphy alleged the reason for his discharge was his efforts at reporting to
officers and directors of the company accounting improprieties in the millions of $
that allowed high-ranking managers to reap unwarranted bonuses. When he returned
to his office for his stuff, he was publicly escorted from the building. Two weeks
later, he was again ordered from the building and his possessions dumped onto the
street beside him.
i. Now could use Whistleblower Act/Sarbanes Oxley
b. Holding: Under NY law, absent a constitutionally impermissible purpose, a statutory
proscription, or an express limitation in the individual contract of employment, an
ER’s right at any time to terminate an employment at will remains unimpaired.
c. Causes of Action:
i. Tort of Abusive or Wrongful Discharge: Hold ERs liable for dismissal of
EEs in retaliation for EE conduct that is protected by public policy
1. New Tort: The Tort of abusive or wrongful discharge does not exist at
the time and P in this case is trying to create it. The law imposes a
duty on all ERs not to discharge people for reasons that offend public
policy.
a. Protected Public Policy: P argues that for the same reasons we
have other laws protecting the integrity of the markets, we
ought to prevent ERs from discharging EEs who protect the
markets.
b. Application: P argues that he had a duty to report
2. Requirement: Positive Legal Duty or Recognized Public Policy
a. Disclosing illegal activities on the part of their ER
b. Service on Jury Duty

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c. Filing workers’ compensation claims
3. Reasons Abusive Discharge has been Recognized:
a. Bargaining Power: Individual EEs do not have the bargaining
power to negotiate job security
b. Harsh Results: The rule yields harsh results for those EEs who
do not have express contractual provisions
c. Conclusion: Leave to Legislature b/c this is a signif change in
the law and legislature has better resources to discover public
will, investigate impact, examine pertinent considerations
ii. Intentional Infliction of Emotional Distress:This case falls short of this
strict standard and EEs should not be allowed to evade that there is no tort of
abusive discharge by asserting IIED.
iii. Prima Facie Tort-- but no evidence that the discharge was without economic
or social justification
iv. Breach of Contract
1. Recognition of Duty of Good Faith and Fair Dealing: In consistent
with at will doctrine--would be incongruous to say that was a duty of
good faith and fair dealing in an at-will regime.
v. Compelled Self-defamation=White v. Blue Cross Blue Shield of Mass says
manager fired for allegedly revealing info about confidential settlement
between ER and a hospital cannot sue his ER for this even though has to tell
prospective ERs that's why he was fired. Court afraid this will become a sub
for just cause arg and circumvent at will doctrine. White should have
negotiated a contract for this—but most EEs don't have power to do this!
1. Could still bring action for interference w/advantageous relations
2. Some states have adopted compelled self-defamation however.

d. General Concerns of the Court About Imposing these Covenants
i. Respond to Market: The ability to discharge EEs without restriction means
that ERs can respond to the market
ii. Dangerous to Invest: If this law is adopted, outside investors may regard the
law as dangerous to their business and be unwilling to invest here.
iii. Flood of Litigation—would become like just cause requirement.
2. Hypotheticals
a. Physician who Reports: A physician is employed by a major NY newspaper. One of
her jobs is to examine EEs who have filed for workers’ comp. She reports her
findings to HR, and becomes convinced that HR is understating the severity of the
injuries. She complains to the state and is discharged.
i. Contract: Was there a contract, and if so what are the terms of the agreement?

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ii. Violation of Public Policy: Physician would have a cause of action under
Payne and Murphy if she had a separate statutory duty to report or the
discharge was in violation of public policy.
iii. Required Reporting Statute would trump at will
1. Potential Sources for Statutes:
a. Ethical Standards: Well known ethical standards may require
her to report
b. Licensing Laws: Physicians are licensed under a general act
governing the licensing of teachers, barbers, physicians.

b. Lawyer Reports to the Board: Lawyer wants to buy house and is at a law firm and has
associate represent her. Associate fails to adequately represent lawyer, and lawyer tell
partner. Lawyer says that she has an ethical obligation to report to the board of bar
examiners.
i. In NY: The lawyer has a special obligation that comes straight from the
Supreme Court who make the rules. So here there would be protection and
the discharge would be void as against public policy.
c. Section 1981 Claim—if there is contract and ER fires EE b/c of race, can file § 1981
claim. If at will relationship, courts split about bringing § 1981 claim.

IV. THE EMERGENCE OF THE MODERN EMPLOYMENT RELATIONSHIP
1. Do We Really Have an At-Will Regime?
a. Good Grounds for Discharge that Trump Discrimination (same as Germany):
incompetent, behavior probs like working w/others, economic grounds
b. Discrimination as Cause: The civil rights acts have largely become ways of
challenging discharges for highly compensated EEs near the end of their careers b/c
they have enough money to sue & not matter much that bad career move to sue.
c. Use of Litigation: Employment litigation is used to get a letter of recommendation
and help in finding a job.
i. An unchallenged discharge makes it very difficult to find a job.
ii. Bargain: Litigation is a bargain tool ~ bargain for money, benefits, help in
finding another job, letter of recommendation
2. Would We be Better Off if We had a Good Cause or Works Council Requirement?
a. Change Focus of Litigation: If the US were to adopt a good cause requirement, the
landscape would not drastically change. Instead of alleging discrimination, the focus
of litigation would be on whether the ER had good cause.
b. German Approach:
i. Works Counsel: Under German law, every ER w/ 5 or more EEs is required to
have a works counsel, not Unions b/c don’t set the terms of EM, counsels
must be consulted but they cannot stop an ER from doing what they want.
ii. For a Discharge to Be Effective:
1. The works counsel must be informed that an EE is going to be
terminated, has the right to hear the reasons; if works counsel agrees

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with the ER (they typically do), the EE can still sue in Fed. Labor
Court, but the chances of winning are about 6%.
iii. The System Achieves the Following:
1. EE: What most people want prior to a discharge is a hearing
2. ER: Ensures that the ER has grounds to discharge. Requires the ER to
investigate prior to the discharge, and acts as an internal jury.
3. Society: The rate of employment litigation is low

Establishing Employment and Its Terms
II. SCREENING
1. Ability Testing: Expressly regulated by Title VII insofar as statutorily protected classes are
disproportionately disabled from securing employment by test results and the test is not
effective in achieving its lawful functional objective.
2. Medical Screening:
a. In General: ERs may seek to hire EEs who will minimize the costs associated with
medical insurance, life insurance, absenteeism, and workers comp
b. Americans With Disabilities Act (ADA)
i. Prohibition: The ADA prohibits discrimination in employment of persons
with disabilities who are otherwise qualified for the job if a “reasonable
accommodation” can be made without undue hardship to the ER.
1. Disability:
a. A physical or mental impairment that substantially limits one
or more of the individual’s major life activities;
b. A record of such an impairment
c. Being regarded as having such an impairment
ii. Medical Examination OK BUT: The ADA allows an ER to require a medical
examination (or an inquiry as to medical condition), but only after an offer
of employment has been made AND only if the examination or inquiry is
“shown to be job-related and consistent with business necessity.”
iii.
If Not a Disability: then the ADA would not prohibit an ER from denying
employment on that basis even if the EE were fully qualified for the job.
iv. Record-Keeping: ADA requires that info obtained be “collected and
maintained on separate forms and in separate medical files and . . . treated as
confidential medical record.” Means health records can only be accessed by
those who have a need for them
c. Pre-Employment Physical: An ER may not send out a potential EE for a preemployment physical unless:
i. Conditional Offer of Employment has been made
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ii.

“It has to be consistent with business necessity”
1. The standard is less stringent that a bona fide requirement of
employment
2. Business Necessity: The business could not otherwise operate unless
the EE could do the function
3. Genetic Screening:
a. Genetic Monitoring v. Genetic Screening:
i. Genetic Monitoring: Ascertains whether the genetic material of the group of
individuals has altered over time.
ii. Genetic Screening: (In 1988, only 3% of ERs used it) A process to examine
the genetic makeup of EEs or job applicants for certain inherited
characteristics
1. Counts as med test under ADA so can't give until conditional offer
2. Looks for gene that renders applicants susceptible if exposed to certain
agents, or heritable condition
3. Benefits: excludes EEs from hazardous workplaces, saves costs,
makes sure EEs are fit for employment
4. Con—creating genetic underclass who can't get work.
4. Drug Testing:--has been growth in EE drug testing
a. What is Tested?: Psychotropic agents that affect behavior or psychological state:
a. Opiates, Depressant, Stimulants, Hallucinogens, Pot
b. Why Do ERs Test?
i. Reduce Costs: To reduce costs resulting from lower productivity, accidents,
absenteeism, reduce costs of medical care, however, this is theoretical
ii. Reduce Illegal Activity: To reduce theft or other illegal activity in the
workplace associated with drug trafficking;
iii.
Morale: To improve EE morale associated with working in a “drug free”
environment
1. Moral Standard: To set a standard of moral behavior of the larger
community by dampening the use of unlawful substances
2. Corporate Image: To bolster the corporate image
3. Legal Obligations: To comply with external legal obligations that
impose or commend a drug testing policy
c. ADA Regarding Drug Testing:
i.

In General: The ADA does not prohibit discharging or refusing to hire
people b/c they are actively using drugs or actively alcoholics
1. Past history of drug/alcohol abuse (like recovered now) is protected
under the ADA, BUT can refuse to hire b/c of criminal background
2. Could challenge as disparate impact, but it would be difficult
3. Note: Dept of Labor regs under OSHA make elaborate provision for
EE access to his med records indirectly or through a designated
representative

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d. Public Employment: Constitutional Constraints --focus of the constitutional law has
been on the closeness of the connection b/w the job and the reason for the drug testing
i. Skinner v. Railway Labor Executives Ass’n
1. Summary: The Court upheld, against a 4th Amend challenge, rules
requiring blood and urine testing of railroad crews involved in major
accidents and authorizing the railroads to require such tests where EEs
have violated certain safety rules.
2. Reasoning: Although the tests are an encroachment on privacy, EEs’
expectation of privacy lessened by pervasiveness of safety regulations
in railroading anyway, vs. gov’s interest in testing w/out a showing of
individ suspicion deemed “compelling’
ii. National Treasury EEs Union v. Von Raab
1. Summary: The Court sustained, against a 4th Amendment challenge, a
program of the U.S. Customs Service requiring drug testing of customs
agents who apply for a position involving drug interdiction or related
law enforcement, and of agents who apply for a position requiring the
carrying of firearms. Diminished privacy expectation & compelling
interest.
iii.
Chandler v. Miller—Focus on connection between job and reason for test
1. Summary: The Court held unconstitutional under the 4th amendment a
Georgia statute that required all candidates for public office to pass a
drug screening test.
e. Private Employment: Many Courts have found no legal infirmity in the discharge of
an at-will EE either for refusing to take a drug test or testing positive.
i. State Approaches:
1. West Virginia & New Jersey: Public policy for privacy so have
restricted the ER’s ability to test only in those jobs that implicate a
concern for personal or public safety
2. Massachusetts: Applying the state’s statutory guarantee of privacy,
have restricted the ER’s prerogative to test only in those jobs that
implicate a concern for personal or public safety
a. If the ER has a substantial interest in safety, then privacy will
be outweighed by safety concerns
b. Example: Defense contractor adopts drug policy and fed gov
requires drug-free workplace which extends to contractors.
MA based company decides to test all EEs for drugs.
i. Or when EE drives company cars, there is a safety
concern
ii. Versus Technical Writer: No justification for writer of
safety manuals b/c there are layers of supervision
3. Alaska: The SC of Alaska found a valid concern for safety to allow
drug testing as a matter of public policy, but required that the test be
‘reasonably contemporaneous with the EE’s work time and that the

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EEs be given adequate notice of the test – to quit, contest the policy
negotiate, or prepare for the test
4. Pennsylvania: The 3rd Circuit, applying PA law, held that the state’s
public policy would prohibit a drug test where submission to the test
would constitute a tortious invasion of privacy.
5. Illinois: it’s ok for ERs w/contributory health ins. premiums to pass the
additional cost on to the EE’s portion of the premium if the EE is uses
tobacco even on own time on own premises

f. Private Employment: Statutory Provisions
i. Federal Law:
1. The Federal Omnibus Transportation EE Testing Act of 1991, 49
U.S.C. App. § 1984 (aviation), 431 (railroading), 277 (trucking),
makes elaborate provision for the testing of EEs in these industries in
each of the following cases:
a. Pre-employment; on reasonable suspicion of drug use; on a
random basis; after accidents
2. The federal Drug Free Workplace Act of 1988, 41 U.S.C. §§ 51515160 (1990), requires federal contractors and grantees to prohibit use
or possession of any controlled substance in the workplace
g. Hershberger v. Jersey Steel Co.
i. Summary: P obtained employment with Def, placed on 60 days probation
and required to submit to and pass blood and urine tests for alcohol and drug
use, was positive and considered to have resigned, paid for own even more
reliable retest which was negative but not rehired, told that if he was able to
secure from lab a document evidencing that it had done something wrong,
he could be considered down the road.
ii. The Stakes of a False Positive
1. The immediate job
2. The stain on the EE’s record: he has been hired and discharged.
3. Subsequent ERs
a. If on the next application, he does not put this down, it would
be a misrepresentation=like compelled self defamation
b. He will have to list the job and why he was discharged
4. He wants ER to give him a letter saying they fucked up
iii.

Against Hospital/Lab
1. Negligence:
a. Duty to Retest
i. Some experts say that should retest, and most labs will
retest.
ii. Look to the standard of the industry
h. Current EE v. Applicant

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i.
ii.

CA: The longer a person’s tenure, the more significant the grounds have to
be for drug testing or discharging
Germany: The longer a person has worked for an ER, the more job
protection they have. This is because the ER has observed the EE for an
extended period of time, and should have gotten rid of them earlier.

i. HIPPA
i. The lab or physician may not report information to a person unless he or she
was sent there as part of (worker’s comp), and must sign a waiver.
5. Psychological Testing-- To extent a personality test provides evidence of a med disorder or
impairment, considered a med test gov’d by the ADA
a. Personality Testing--attempt to develop a picture of one’s emotional make-up.
i. Purpose: Correlate the personality profile from the pattern of response that
emerges against the profile of a normative group
a. Professional advocates are cautious about the use of personality
inventories in employment screening.
b. Might be good for high stress jobs like firefighters
b. Honesty Testing—predictive validity controversial
i.
ii.

In General: Purport to measure the test taker’s honesty or the further
propensity for deviant workplace behavior, such as drug use, through hypos
Self-reporting is based on the assumption that one who has stolen from an
ER in the past is likely to do so again, which stupidly assumes truthfulness
in the answer
1. Institutional v. Individual Predictions: These tests may be useful for
institutional predictions but less so for individual predictions
2. Criticism: If these tests produce a high rate of false positives, as the
appear to do, then create underemployed "dishonest" class

c. Handwriting Analysis—criticized as lacking basis, artificial test taking setting
i. Why It is Used: It is easy and relatively inexpensive to secure a reading,
doesn't become obsolete b/c of outdated or culturally discrim questions, not
even matter what lang, not invasive, can't outsmart

III. DISCLOSURE: INTERVIEWS AND FORMS
1. EE Disclosure

a. In General: (From Fn. 9 of Cort) In the area of private EM there may be inquiries of
a personal nature that are unreasonably intrusive and no biz of the ER and that an EE
may not be discharged for failure to answer such questions
i. Maryland: ER may not require job applicants to answer questions about
physical, psychological, or psychiatric conditions unless they bear a direct,
material, and timely relationship to job capacity

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ii. California: The SC of CA has suggested that the amendment regarding
privacy is directed in part against “overbroad collection and retention of
unnecessary personal information by business interests”
iii. Massachusetts: GLC 214 § 1B “A person shall have a right against
unreasonable, substantial or serious interference with his privacy. The
superior court shall have jurisdiction in equity to enforce such right and in
connection therewith to award damages.

b. Balancing Test:
i. ER's Interest w/Degree of Intrusion: The degree of intrusion on the rights of
the EE is the most important
1. In Considering Reasonableness of Intrusion: The nature of the EE’s
job is significant.
a. High level EE should reasonably be expected to disclose
information broader in scope and more personal in nature than
a low level EE
c. Cort v. Bristol-Myers Co.
i. Summary: Bristol-Myers hired the 3 at will salesmen who objected to certain
questions on questionnaire as highly personal, offensive and not related to job
performance. Each P answered the question but failed to answer, or gave
frivolous answers to certain questions.
ii. Rationale: More personal questions will be permitted for a high level confidential
EE. Here, the salesperson’s characteristics are relevant to job performance. Also
each of the EEs had filled out a questionnaire when they were hired and then
failed to disclose any information here.
d. Public ERs: Restrictions on the authority of public ERs seeking information from
public EEs are greater than those imposed on private ERs
i. Shelton v. Tucker, 364 US 479 (1960): Right of association, protected by due
process clause, violated by statute requiring public school teachers to disclose
all organizations to which they have belonged in the previous five years
ii. D.DC: government violated First Amendment privacy and associational rights
in inquiring of religious, social, political, educational, and fraternal
associations of EEs their spouses, minor children and dependents
e. After-Acquired Evidence
i. The Evidence: After the P alleging discrimination brings suit, the ER conducts
a thorough background check and learns that the plaintiff made a
misrepresentation in the hiring process
ii. Federal Level: Evidence that might justify the EE’s discharge but that was not
known (and so not relied on) at the time is relevant to the issue of damages,
not to the viability of the cause of action says McKennon v. Nashville Banner
iii. State Level: Two questions remain at state level following McKennon
1. Whether “after acquired evidence” is a total bar to an EE’s bringing a
claim of wrongful discharge in violation of state or public policy, or

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whether it constitutes only a partial limit on damages, as it is on
federal claims
2. Whether after-acquired evidence is a total bar on a claim of wrongful
discharge based on express or limited contract, promissory estoppel or
other source of private law
f. Required Disclosures:
i. Jewish Center of Sussex County v. Whale, 432 A.2d 521 (1981): The Court
held that a rabbi’s resume, which had indicated that he was in Jerusalem for a
seven year period when he was actually in jail for mail fraud, worked a
misrepresentation justifying his termination
2. Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681t (1997):
a. Brief Outline (from Prof)
i. When Implicated: The FFCRA is implicated any time an ER pays a third party
to conduct pre-employment screening, which includes checking references,
forensic accountant: where a private investigator is used to do a background
check
b. Changes to § 611(o) and (x)
i. Veil Letter: Prior to the modifications, if an ER brought in a third party to
investigate, the FCRA is implicated, which meant that the person being
investigated had to be informed. Now it excludes workplace investigations
where a violation of the law may have occurred.
3. ER Disclosure

a. Berger v. Security Pacific Information Systems
i. Summary: D, SPIS, actively recruited Berger even though knew substantial
prob that new service would be discont'd. P specifically asked about the
financial status of the corporation, and was told that the co. was doing very
well. P left her prospects, moved to Denver and began work. Her program
discont'd in 7 wks. Management told her she would always have a job. P
bought a house, was fired, and defaulted on her loans.
ii. Rationale: In these circumstances, a substantial, known risk that Recovery
Plus would be discontinued in a few wks was a fact that “in equity or good
conscience” should have been disclosed. Management made statements saying
she was secure=false impression.
1. At-Will: This does not undermine the at-will doctrine nor create an
undue risk that competitors will find out information.
2. Punitive damages were appropriate as the claim is one of fraud.

b. MacKenzie v. Miller Brewing Co. No duty to disclose to current ER that company
reorganization may cause him to lose his job. At-will doctrine derives its vitality
from fact that the future is unknowable. If allow this action, then would also requires

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EEs to disclose when they are looking for other jobs, which traps EEs. Contract and
promissory estoppel causes of action still available.
c. Michigan Case: P had been given the 1991 annual report, but the court held that
there was no way that the company should have known that he would rely upon it
because he didn't ask for 1992 report.
d. Causes of Action
i. Duty to Disclose:
1. Restatement: One party to a business transaction has a duty to disclose
to the other “facts basic to the transaction, if he knows that the other is
about to enter into it under a mistake as to them, and that the other,
because of the relationship between them, the customs of the trade, or
other objective circumstances, would reasonably expect a disclosure of
those facts.”
2. Distinction between fraudulent inducement to enter EM—which,
presumably, could be actionable—and fraudulent inducement to
continue EM b/c latter occurs in context of an at will relationship
already entered on.
3. Requirements:
a. Disclose facts basic to the transaction, if the party knows that
the other is mistaken as to that fact
b. Because of relationship, customs of the trade, or other, would
reasonably expect disclosure
ii. Fraudulent Concealment
1. Requirements:
a. The defendant’s concealment of a material existing fact that in
equity or good conscience should be disclosed
b. The defendant’s knowledge that the fact is being concealed
c. The plaintiff’s ignorance of the fact
d. The defendant’s intent that the plaintiff act on the concealed
fact
e. The plaintiff’s action on the concealment resulting in damage

IV. ESTABLISHING TERMS OF EMPLOYMENT
1. ER Policy Manuals and Handbooks
a. Central Issue: Whether an ER, through a handbook, or some other representation
given to an EE, can bind itself to promises it makes in those representations.
i. Grounds for denying contractual status to ER manuals or handbooks
1. Lack of Consideration (“Bargained-for” exchange)
a. Argument (from Toussaint): A promise by an ER to discharge
only for an obviously determinable cause represents such a
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departure from firmly established doctrines of contract
formation that it should require separate and distinct
consideration.
2. No mutuality of obligation:
a. EE Free to Quit, ER Must Follow: the EE is free to quit at any
time, but the ER, if it wishes to discharge, would be required to
afford progressive discipline or show just cause
b. Unilateral Modification: the handbook can be abandoned
unilaterally by the ER at any time
ii. Requirement Where Contract Found: the provision governing job security
must be sufficiently definite to constitute a contractual commitment.

b. Disclaimer:
i. Woolley: a clear and prominent disclaimer would negate the contractual status
of ER rules
1. Most courts agree
a. Posner in 7th Cir: At will is the norm. An EE therefore has no
reason to presume that he has tenure, and a disclaimer that a
handbook creates a contract is a clear statement that if he is
fired he can’t sue for breach of contract.
ii. Cal. 2000: “The more clear, prominent, complete, consistent, and allencompassing the disclaimer language set forth in the handbooks, policy
manuals, and memoranda disseminated to EEs, the greater the likelihood that
workers could not form any reasonable contrary understanding.”
c. Lytle v. Malady (Mich. 1998)
i. Summary: When P was hired, received an EE handbook that set forth all of
the ER’s employment policies and procedures, which included a disclaimer.
Handbook also provided that no EE would be terminated without proper
cause. Later amended to read: “the company reserves the right to terminate
EEs w/o assigning cause; therefore, the EE serves at the will of the ER.” P
knew about the revision b/c she distrib the new contracts.
1. Disclaimer: The contents of this booklet are not intended to establish,
and should not be interpreted to constitute any contract b/w company
and any EE or group of EEs
ii. Courts have recognized three ways P can rebut at will presumption: (1)
contractual provision for a definite term of employment or a provision
forbidding discharge absent just cause, (2) clear unambiguous express written
or oral agreement, or (3) Implied Contract, where an ER’s policies and
procedures instill a “legitimate expectation” of job security in the EE
1. Two Step Inquiry:
a. What did ER promise?

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b. Is that promise is reasonably capable of instilling a legitimate
expectation of just cause employment?
i. Not here b/c there was disclaimer and terms and P can't
point to specific terms of an implied contract—can't
really square with Woolley and Toussaint
2. "Capable of Instilling a Legitimate Expectation of Just Cause
Employment": Less Likely If:
a. Disclaimer:
b. No Detailed Discharge Procedures
c. Not received in course of employment negotiations

d. Toussaint v. Blue Cross & Blue Shield (Mich. 1980)—Just case can't be contrary to
public policy b/c is the case for CB or contract for a definite term. Toussaint inquired
re: job security when hired. They were told they would not be fired so long as they
were doing their jobs. Then later handed a manual of personnel policies which
reinforced the oral assurances of job security by stating that it was policy to fire “for
just cause only.”
i. Holding: A provision of an employment contract providing that an EE shall
not be discharged except for cause may become part of a contract either by
express agreement, oral or written or as a result of an EE’s legitimate
expectations grounded in an ER’s policy statements
ii. NOT Permanent Employment: Rather indefinite employment, terminable by
either party.
1. Plus, many of these representations were made to prevent unionization
so ER is getting benefit
iii. Requirements of a Contract—Existence of one=fact question for jury:
1. Consideration: ER getting loyal orderly workforce, EE getting job
security
2. Knowledge of the Policies not necessary: EE not even have to know
of the particulars of the ER’s policies and practices when hired, could
have just been hired yesterday and implied contract still applies to
him! Workplace culture created!!! Means policy need not refer to the
specific EE, his job description or compensation, and means ER may
unilaterally change policies and practices w/out notifying EE, could
tell EEs the policies are subject to change.
a. ER's unilateral contract so need not have been negotiated
b. Rationale: The contract of at-will is continually being offered
and accepted. The ER is unilaterally making an offer and the
EE accepting the potentially altered policies
iv. Jury's Role: If the jury is permitted to decide whether there was (1) contract &
also (2) good cause, there is the danger that it will substitute its judgment for
the ERs.
1. Option to Avoid Jury Review= make contract for definite or indefinite
EM to discharge only for just cause AND ARBITRATION

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e. Kreimeyer v. Hercules (D. Utah 1994) During course of P’s employment he never
even saw or read any of company’s policies regarding deductions in force!
i. Contract Requirements:
1. In General: Utah courts recognize that an EE may use an ER’s written
policies, bulletins, or handbooks as evidence of an implied-in-fact
contract, but it must meet requirements of an offer of a unilateral
contract.
2. Requirements: Elements of an implied-in-fact contract:
a. The defendant required the plaintiff to perform the work
b. The plaintiff expected the defendant to compensate him or her
for those services
i. For policies regarding termination: Plaintiff would
show that he expected the ER to follow certain terms of
the policies. A plaintiff who is unaware cannot make
that showing.
c. The defendant knew or should have known that the plaintiff
expected compensation
3. Acceptance of Offers: An EE accepts the offer of a unilateral contract
in a policy handbook or manual by remaining in his employment with
knowledge of the terms of the offer
a. Knowledge Required: Performance completed before the offer
comes to the offer.
f. Woolley v. Hooffmann-La Roche, Inc. (N.J. 1985) Woolley was hired and in a few
months later received and read the personnel manual on which the claims are based.
Fired. Woolley claimed that the express and implied promises in the ER’s
employment manual created a contract under which he could only be fired for cause,
and then only after following procedures outlined in the manual. Knowledge of the
manual beforehand not required b/c work culture had been created and ER benefited.
i. Why Not Follow At-Will: It was in interest of ERs, EEs, and the public to
limit the common law rule of at will employment.
ii. The Contract: unilateral, not with a particular EE but gen agreement b/c
work culture created, offer was getting handed the manual, acceptance was
EE's continuing to work when he wasn't obligated to. Inconsistent with Doyle
v. Holy Cross Hospital saying cont'd EM not adequate consideration.
1. Modification: The ER’s ability to change its terms does not negate the
contract, but instead shows that the ER wanted to keep it up to date.
iii. Promises in Manual Upheld: Absent a clear and prominent disclaimer, an
implied promise contained in an employment manual that an EE will be fired
only for cause may be enforceable against an ER even when EM is at will
iv. ADVISE Disclaimer: If the ER wants to prevent a contract, then all that needs
to be done is to include in a very prominent position an appropriate statement
that:
1. There is no promise of any kind by the ER contained in the manual

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2. That regardless of what the manual says or provides, the ER promises
nothing and remains free to change wages and all other working
conditions unilaterally;
3. That the ER continues to have the absolute power to fire anyone with
or without good cause

g. Guz v. Bechtel National, Inc (Cal. 2000)): Longevity of service, favorable reviews,
promotions per se do NOT mean ER has relinquished at will rights=does not create
implied contract of just cause EM to counter at will presumption. However, not
irrelevant to what EE reasonably believed=goes toward whether the ER's words or
conduct on which EE reasonably relied, gave rise to that specific understanding.
2. Promissory Estoppel—JDs are Split
a. Grouse v. Group Health Plan--Pharmacist quit current job on the promise of another
job by a new ER; the recovery will be limited to the cost of reliance, not the expected
income from the new job. Based on § 90 of Restatement of Contracts Meaning need
actual reliance
b. Courts Divided: Courts about evenly divided on whether withdrawal of an offer for
an at-will job on which the offer EE has detrimentally relied, is actionable.
i. Slate v. Saxon, Marquoit: No cause of action was stated by a law clerk whose
job offer was withdrawn after he took and passed the Oregon bar exam as
agreed.

V. CHANGING TERMS OF EMPLOYMENT
1. 2 Approaches to Modification of Policy—Note how BOTH use traditional contract law!
a. One Approach=New Consideration Required: Once an ER makes an agreement,
the law of contracts requires NEW consideration.
i. Damasse v. ITT Corporation
ii. Doyle v. Holy Cross Hospital (Ill. 1999)
1. Summary: Four nurses began working in a hospital, and were provided
an EE handbook, which provided policies for termination. Over ten
years later, the ER added a disclaimer.
2. EE Handbooks: An EE handbook or policy statement may create
contractual rights if the traditional requirements for contract formation
are satisfied
3. Requirements for Contract:
a. Must contain (1) a promise clear enough that an EE would
reasonably believe that an offer has been made & (2) be
disseminated an EE in such a manner that the EE is aware of
its contents and reasonably believes it be an offer, & (3) EE
must accept
4. Holding: The ER’s unilateral modification not binding on the plaintiffs
b/c cont'd EM not enough.

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a. ER was seeking to reduce rights enjoyed by plaintiffs under the
handbook so are required to provide consideration for the
modification. Disclaimer added no value for the plaintiffs.

b. 2nd Approach—New Consideration NOT required
i. Asmus v. Pacific Bell (Cal. 2000) Pacific Bell promulgated a policy ensuring
Management of their jobs, but when market conditions changed they
rescinded the policy
1. Unilateral Change Permitted to Unilateral Contract: An ER may
unilaterally terminate a policy that contains a specified condition, if
a. the condition is one of indefinite duration, and
b. the ER affects the change after a reasonable time, on
reasonable notice, and
c. without interfering with the EE’s vested benefits
2. New Consideration Required for Bilateral Contracts Only because of
mutuality of obligation but w/ unilateral contract, consideration and
acceptance (cont'd employment) are the same!
Advice to ERs making handbooks: very clear waiver lang, train supervisors not to engage in
actions or making of promises that seem to suggest through parole evidence that EEs have a just
cause agreement, get a separate writing from EEs agreeing to mandatory arbitration clause to
avoid juries, and sign agreement saying ER may change policies at any time

VI.

NLRA EMPLOYER DOMINATED LABOR ORGANIZATIONS

1. Essential Provisions of the National Labor Relations Act (NLRA)
a. § 8(a)(2): Forbids ERs from dominating or interfering in the formation or
administration of a statutory “labor organization” or to contribute financial or other
support to it.
b. § 2(5): Labor Organization: “Any organization of any kind, or any agency or EE
representation committee or plan, in which EEs participate and which exists for the
purpose, in whole or in part, of dealing with ERs concerning grievances, labor
disputes, wages, rates of pay, hours of employment, or conditions of work.”
2. E.I. Du Pont De Nemours & Co. Whether 6 safety committees and 1 fitness committee were
ER dominated labor organizations
a. Elements of a Labor Organization:
i. (1) EEs participate
ii. (2) The org exists, at least in part for the purpose of “dealing with” ERs
iii. (3) These dealings concern conditions of work, grievances, labor disputes,
wages, rates of pay, or hours of employment
b. Dealing With broader than Collective Bargaining:
i. Broader than collective bargaining in that is bilateral mechanism b/w two
parties, which ordinarily entails a pattern or practice in which a group of EEs,
over time makes proposals to management, management responds to those

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proposals by acceptance or rejection by word or deed, and compromise is not
required.
1. Group must make proposals, frequency of which is not isolated
2. More than brainstorming, sharing info, suggestion box, etc.
c. In this case: management could veto on the committee level proposals which showed
that the ER was interfering, opposite of Crown Cork
3. National Labor Relations Bd. V. Cabot Carbon Co.(Yes dominated labor org)--ER
established EE committees at each of their plants that meet to discuss and proposes
grievances lots of aspects of their EM like wages, safety, hours, etc., rejected some and
granted others. Unions found them barriers to unionization so filed the charge. EEs had
actually liked them!
a. Holding: The broad term “dealing with” is not synonymous with CB. Therefore, ER
still DID dominate or interfere with the creation or operation of labor orgs in violation
of § 8(a)(2). Plus, 1st Amendment claim that holding prevented EEs and ERs from
discussing matters of importance rejected.
4. Crown Cork & Seal Co. v. Rodriguez(No, not dominated labor org)--ER uses Socio-Tech
system w/purpose to delegate to the EEs authority to operate the plant in teams, management
reps are on the teams but no more authority than the EEs. "Decide and do" things like
production, quality, training, absenteeism policy, safety and "social contracts" w/EEs to
modify behavior, short of discipline and discharge.
a. Holding: They are NOT labor organizations b/c their purpose is to perform
essentially managerial functions and thus they do not ‘deal with’ the ER within the
meaning of §2(5) of the act. No bilateral mechanism/dealing, rather the committees
ARE management. Was just the lower management recommendation making its way
up to higher management for review.

Obligations of EEs
II. DUTY OF LOYALTY
1. In General: In every employment contract, there is an implied duty that an EE must act
solely for the benefit of his ER in all matters within the scope of his employment.
a. There is NOT a reciprocal duty on the part of the ER
2. Leaving the ER:
a. Freedom to Search for another job.
b. Inducing your circle of friends to leave is OK=fact based inquiry
c. Inducing Others: EEs may not systematically induce other EEs to if their purpose
of enticement is to destroy an integral part of the ER’s business.
3. Quality Systems, Inc. v. Warman (D.Md. 2001)
a. Summary: Warman worked for QSI, QSI competes with Windmere. Warman
supervises 6 other managers known as the “friends of Dave.” Warman quits QSI
for Windmere and within 6 wks, six managers and 31 technical EEs left QSI for
Windmere.

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b. Holding: B/c they were in the same circle of friends, it was not a breach of
loyalty.

III. TRADE SECRETS AND CONFIDENTIAL BUSINESS INFORMATION
1. What is a Trade Secret?
a. The information must have independent economic value that is not readily
ascertainable to others
b. Reasonable efforts must be made to maintain the information’s secrecy
c. Duty to keep a trade secret can last forever, unless modified by agreement
d. A whole process or way of running biz can be one, like pizza cheese
e. At-will EE can usually be discharged for refusing to sign a covenant not to
compete or an agreement to not solicit customers or co-workers
2. Customer Lists:
a. Can Be a Trade Secret: “A list of people who have already purchased a product is
substantially more valuable than a list of people who might only be interested in
purchasing.”
i. Independent Economic Value: The more effort, money and time it takes to
develop the list (especially if a weird product) the more likely the court is
to deem the list a trade sec
ii. Fact based jury question
iii. Remedy: injunction against former EE or damages in $ former EE has
made
3. Maintaining Secrecy: Courts have considered several factors
a. Whether the parties had a written agreement not to compete
b. Whether knowledge was confined to any restricted group of EEs
c. The extent of the measures to guard access to the information
d. ADVISE—have EEs sign non compete agreement, password protect list, tell EEs
it's secret, keep potential EEs on separate list
4. Dicks v. Jensen (VT 2001)
a. Summary: Ps owned a lodge in Vermont that operated bus tours. Ds were hired to
manage and market the Lodge and bus tour biz. Securing groups to the Lodge
required extensive efforts via mass mailings and direct phone calls. 6 years later
Ds left the Lodge to open their own competing Lodge, and contacted many of P's
customers.
b. Holding: B/c P has adduced no evidence that he took reasonable efforts to
maintain the secrecy of the customer information, the customer list is not a trade
secret as the information was left on the bulletin board.
5. Alteration: Union Pacific Railroad v. Mower (9th Cir. 2001)
a. Summary: UP employed Mower who investigated/resolved occupational illness
claims. UP and Mower entered into agreement and later Mower agreed to testify
against UP

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b. Holding: Parties are permitted to alter by negotiation duties that would otherwise
be governed by state law (that duty of loyalty would last forever after EE leaves).
The Resignation Agreement limited its protection for 3 years. After that date,
Mower was no longer subject to its restrictions.
c. Freedom of Employment: Absent lawful non compete agreement, EEs free to
devote their skill and knowledge developed at old job to the benefit of a
competing ER

IV. COVENANTS NOT TO COMPETE
1. In General
a. NO implied obligation not to compete in the future
b. The interests balanced in covenants not to compete
i. Freedom of contract & Limit overreaching by ER vs. Individuals' ability to
engage in his occupation, to develop his or her skills, & public interest
2. The Prevailing View—Covenant will be enforced if…
a. …Supported by consideration, justified by legit biz interest of the ER, and is
reasonable in scope (activities, geo, temporal), considering the public interest.
b. Remedies: ER can enjoin former EE from working in violation of the terms, or sue
former EE for tortious interference with contractual relations if can make out
elements and ER must have “clean hands”.
3. Legitimate Business Interest
a. ER Goodwill
i. Weber v. Tillman—Dermatologist covenant not to practice w/in a 30 mi
radius of his ER’s clinic for 2 years DID reasonably protect ER’s investment
in establishing his practice and building its goodwill over a 17 year period; the
EE-physician had had no prior contact in the comm, and clientele reduced lots
b. Customer Contacts/EE's Innate Ability
i. West Group Broadcasting v. Bell
1. Held: Affirmed a refusal to enforce a covenant not to compete entered
into with a radio announcer that would have precluded her
employment by any competitor w/in a 65 mile radius for 180 days
c. Training Costs:
i. Heder v. City of Two Rivers:
1. Summary: A firefighter's MOA w/ the city that provided for training as
a paramedic, & if he quit w/in 3 yrs, he would repay the city for the
cost of training, unenforceable b/c required repayment of wages (even
though called liquidated damages) in violation of FLSA, and was not
amortized.
2. Test: REASONABLE (like non compete agreement test) to protect
ER’s interests and commensurate w/the training benefits the EE got?
a. Such agreements subject to contract rules, like
unconscionability, duress, & consideration.

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d. The Public Interest: EG, Weber v. Tillan—limiting consumer choice and med
services?

V. INVENTIONS & WORKS OF AUTHORSHIP
1. 3 Common Law Categories
a. EE Hired to Actually Make An Invention: Then EE may be compelled to assign the
patent to the ER
b. Non-Inventive EM, but On ER’s Time: Where an EE engaged for non-inventive
purposes develops the idea on the ER’s time using the ER’s facilities and labor, EE
may retain ownership of it but must give the EE a “shop right"=non-exclusive license
for its use
c. Non-Inventive Purpose & On EE's Own Time: If an EE engaged for non-inventive
purposes develops an idea on his own time and using his own facilities, he may have
the entire ownership of it even though the conception of the invention flowed from
the exposure, knowledge, and skills acquired in the employment and even if the
patent improves upon or supercedes a device or process of the ER.

Termination
1. Discharge Under Contracts for a Stated Term
a. Existence of a Written Contract: A written contract means that the ER must have
just cause to terminate=jury question, fact specific
i. One test of just cause=Whether the act is so inconsistent w/the ER-EE
relation as to be good cause for discharge
ii. Factors: (1)Type of occupation, (2) Customs regarding given policy (eg
tardiness) of the ER and in the industry &, (3) If policy is known to the EE
iii. Change in Policy: Must notify the EEs before subjecting them to discharge
b. Krizan v. Storz Broadcasting Co
i. Summary: P was a DJ for Def ER under a written contract for a fixed
term, lax and informal about their tardiness policy, EE fired b/c arrived 45
minutes late after working later for Def.
1. Rule: Whether tardiness constitutes ground for termination of
employment is dependent upon the facts and circumstances of each
individual case, inc factors above.
2. Holding: The firing not based on just cause b/c EEs not notified of
policy change to start being strict with tardiness, and EE not given
indication that a failure to call in when being late would result in
dismissal.
c. Constructive Discharge: When an EE under contract of stated duration is given a
task that it virtually impossible to perform, or given nothing to do.
d. Reinstatement as Remedy: The common law rule rejects it b/c usually doesn't
work out anyway and hard to police, BUT is available remedy under: CB
arbitration, Labor Management Relations Act, OSHA, Title VII
2. Dismissal Under EE Handbooks
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a. Cotran v. Rollins Hudig Int’l Inc.
i. Summary: Senior VP has IMPLIED contract not to be discharged w/out
just cause, fired for sexual harassment, 2 EEs interviewed and said they’d
been sexually harassed, VP says consensual, EEs say no sex.
ii. Standard: An ER’s decision to terminate will be upheld if the factual basis
on which the ER concluded a dischargeable act had bEEn committed was
reached honestly, after appropriate investigation, and for Reasons Not
Arbitrary or Pretextual. NOT MATTER IF ACTUALLY TRUE, more like
due process standard.
iii. Focus on the ER’s response to allegations of misconduct.
iv. Policies: deference to managerial decisions, not want ER to have to get
eyewitnesses and sworn accounts to turn workplace into court, shouldn't
be judgment for jury b/c not there in context like investigating EE was, not
have same training and experience.
3. Common Law Limits on Discharge from Employment Without a Stated Term
a. Boyle v. Vista Eyewear, Inc.—mitigates harshness of at will rule
i. Summary: P threatened to go to FDA & OSHA and eventually did b/c
Vista not testing lenses for resistance to breaking/shattering, and she tested
even though told not to, later fired for allegedly telling on her supervisor
for drug use.
ii. Rationale: The relevant federal regulation was a clear mandate of public
policy, which imposed on D as well as P an affirmative duty. P would
thus be allowed a cause of action
b. Public Policy Exception to At Will Rule: Although ERs generally free to
discharge at-will EEs with or without cause at any time, they aren't free to require:
i. EEs on pain of losing their jobs to commit unlawful acts or
ii. Acts in violation of a clear mandate of public policy expressed in the fed
and state constitution, statutes, regulations,
1. Possibly ethical codes, & stuff public policy would encourage like
jury duty or running for public office (split among the JDs)
c. Types of Public Policy Exceptions (Boyle v. Vista is both):
i. EEs who are fired b/c they declined to obey directions to commit a crime
or to act contrary to public policy
1. Example: Fired for refusing to commit perjury, or prostitute herself
ii. EEs who report wrongdoing or violations of the law or public policy by
their ERs or fellow EEs=Retaliation
1. Example: Fired for threatening to report to the state board of health
division violations of a nursing home patient’s rights
4. Sarbanes Oxly
a. Purpose: Whistleblower statute that provides protections against discharge for
EEs who report violations
b. Coverage: Publicly traded companies including officers, directors, EEs, if your
contractor or sub is covered, you are too, foreign registered companies
c. What is Protected: An EE of a covered entity is protected by statute if:

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i. The EE acts in the public interest by providing info or causes such
information to be provided, or cooperates with an investigation conducted
by the feds
ii. The information must involve misconduct that the EE reasonably
believes constitutes a violation of federal securities law
d. Procedure: (similar to OSHA whistleblower procedure)
i. Complaint: File complaint w/ Dept of Labor w/in 90 days of adverse EM
action
ii. Investigation: Dept of Labor has delegated to OSHA the responsibility to
investigate. W/in 60 days of filing complaint, OSHA must investigate and
find whether there is reasonable cause to believe that the EE was retaliated
against.
1. Note--OSHA will not conduct an investigation unless there's a
prima facie showing that protected conduct was a contributing
factor to the discharge
iii. Remedies: OSHA may enter an order reinstating the EE at same level of
seniority and benefits, back-pay, interest, litigation costs like expert
witness & atty's fees, NOT PUNITIVE DAMAGES
iv. If a final decision is not issued w/in 180 days, the EE may file action in
federal court. P must prove by a preponderance that she was retaliated
against.
e. Arbitration: Allegations of violations can be subject to arbitration—ADVISE
THIS TO ERs.
5. Covenant of Good Faith and Fair Dealing
a. What is it? Requires the parties to a contract to fulfill the reasonable expectations
of those parties.
b. Contentious Issue: Whether or not there is an implied covenant of good faith and
fair dealing in the employment relationship and, even if there is, what its precise
contours are.
i. Policy: It would erode the at-will doctrine and bring up the Toussaint
problem of having courts inquire into every discharge and potentially
substitute their own judgment=satisfaction contract
1. Why treat EM different than all other contracts and contracts for
sale of goods under UCC? Unpaid insured screwed but EE can find
another job so not necessary to have covenant?
c. Survey of the Law:
i. Majority: There is NO implied covenant of good faith and fair dealing.
ii. Public Policy Exception: An EE cannot be terminated if to do so would
violate public policy
iii. Sometimes Applied: There is a covenant of good faith and fair dealing not
to impair a right to receive a benefit an EE has already earned.
1. Fortune v. National Cash Register: P had sold an enormous
contract for national cash register and was terminated just before
he was able to get the pay-out—CAN'T discharge EE to prevent
them from getting an already earned benefit.

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2. Two States: Montana and Alaska have found an implied covenant
in the employment setting
iv. YES There IS a gen implied covenant of good faith and fair dealing.
1. Limitation on Damages View: There is an implied covenant, but
any damages are limited to a contract measure, not a bad faith, tort
remedy
2. MT and Alaska have found an implied covenant in the EM setting
6. General Law of Wrongful Dismissal
a. Theory: We need a fed statute b/c patchwork of state, common, & anti-discrim
law + CB Agreements -ADVISE CLIENTS TO CHECK STATE STATUTES
b. Model Employment Termination Act (NOT ADOPTED by any state )
i. Coverage: ERs who employ 5+ EEs in 20 or more calendar wks b/c the
smaller ERs could not afford litigation
ii. Scope: Replaces common law claims except under state or federal statute
iii. Prohibited Terminations:
1. Good Cause Required-- means reasonable basis related to individ
EE's EM considering specific facts, exercise of biz judgment, good
faith on part of ER
2. Requires 1 year of employment
iv. Statute of Limitations: 180 days
1. Why so Short? Preserve witnesses b/c employment is fluid, an ER
should not be left questioning, keeps back pay down
v. Unlike Montana, EE can require arbitration, limited discovery, atty's fees
even if offer to arb wasn't declined
c. Montana’s Wrongful Discharge from Employment Act (WDFEA)
i. 3 Ways to Make Claim for Wrongful Discharge:
1. Discharge violates public policy,
2. OR, not for "good cause",
3. OR, if the ER violates an express provision of its own written
personnel policy
ii. Coverage: Does NOT apply to EEs covered by individual EM contracts or
CB agreements, just left over at will EEs
iii. However, to avoid liability ER can make the probationary period really
long to put off the claim, and sign short-term employment contracts & not
renew them
iv. Remedies: Up to 4 yrs in lost wages and fringe benefits, and punitive
damages if the EE can show by clear and convincing evidence that the ER
engaged in fraud or malice in the discharge
v. Arbitration: Makes arbitration an option which either party may propose,
but neither must accept, and no discovery in the arbitration
1. If I propose arbitration and am declined, I can get atty's fees.
d. Federal False Claims Act, 31 USC Sec. 3729, offers substantial financial
incentives for an EE who whistle blows on an ER that obtains payments from the
fed gov through deceit or fraud
EE REPUTATION, PRIVACY AND DIGNITY

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I. Investigation, Interrogation, and Search
1. Surveillance
a. Brazinski v. Amoco Petroleum Additives
i. Summary: Female EEs claiming violation of right to privacy b/c ER used
locker room to change from st clothes to work clothes, ER installed a
camera trained on the door of the locker room after theft allegations.
ii. Tort: The court assumed that a well-motivated but unavoidably
indiscriminate effort at surveillance was actionable on behalf of the person
non-target who's accidentally taped, BUT P did not submit evidence that
she in fact used the locker room, and that the camera was actually trained
on the inside of the locker room and not just the door
iii. Requirement: At a minimum P must've been in the place of surveillance or
else the whole world would have standing to challenge the surveillance of
a single telephone booth or toilet stall!
2. Interrogation
a. Hall v. May Department Stores Co
i. Summary: P's claim of IIED (def's intent plus actual harm to EE) b/c
security guy called in EEs whose cash registers were off, told that there
were shortages, that he knew she was stealing, had proof & warrant for
arrest, pounded on desk
ii. Rationale: The jury could decide that the method of interrogation was an
extraordinary transgression of contemporary standards of civilized
conduct towards an EE b/c Employment Relationship imposes more
demanding obligations to refrain from inflicting mental or emo affronts
b/c EE dependant on ER=not a very high bar

3. Insistence on Representation: A worker in a unionized workplace has right to have union
steward present in an investigative interview.
4. Polygraphs
i. Criticism: lots of false positives, esp during screening process, which is
why at least 25 states have legislated to prohibit or regulate the use of
polygraphs or other lie-detection mechanisms
b. Employee Polygraph Protection Act (EPPA)
i. § 2002: Prohibits private ERs from using polygraph tests for preemployment screening or random testing during employment
ii. Private sector ERs forbidden to require, request, suggest or cause an EE or
applicant to submit to a lie detector, to use, accept or even inquire of the
results of such test, or to discharge or take any other action for failing to
submit or b/c of the results
iii. §2005 Private right of action against ERs for lost wages, reinstatement, etc
iv. Exemptions: Public ERs, certain defense or intelligence functions,
mapping jobs, private security companies and manufacturers of controlled
substances

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v. An ER is entitled to administer a polygraph test if:
1. The test is given in connection w/ an ongoing investigation
involving economic loss or injury to the ER’s business, like
theft, embezzlement, industrial espionage or sabotage, AND
2. The EE had access to the property in question, meaning, there
was opp for EE to cause, or to aid or abet in causing, the specific
economic loss or injury under investigation
3. The ER has a reasonable suspicion that the EE was involved in
the incident, meaning some basis for belief that the particular EE
was involved in or responsible for the economic loss
4. The ER signs a statement containing certain required information
and provides it to the EE at least 48 hrs prior to the proposed
test=NOTICE TO EE
a. Must set forth w/ particularity the specific incident or
activity being investigated and the basis for testing that
partic EEs, AND
b. Must contain an articulation of all of the requisite elements
of the test
5. BUT: no adverse EM action w/o additional supporting evidence
(can be what led to the reasonable suspicion)
6. Burden Shift from Wiltshire: P has to 1st establish prima facie
case that he was asked to take a polygraph and that adverse
employment action followed, then ER to satisfy the above
vi. Policy: Statute is remedial so coverage is broad and exceptions narrow
c. Wiltshire v. Citibank—fraudulent wire transfer case. P only one who met the
description, asked to take a polygraph, declined & then fired.
i. Holding: after P meets burden of showing he was fired after refusal, ER
needs to make out ALL elements of exception above, inc. notice
w/particularity, need to say what the econ loss was
5. Drug Testing and Other Searches
a. In General: Drug testing may be conducted on reasonable suspicion of drug use
on the job or on a random basis as a deterrent
b. O’Connor v. Ortega—14th Amend challenge, use standard of
REASONABLENESS, not probable cause, reasonable grounds for suspecting that
the search will turn up evidence that the EE is guilty of work-related misconduct,
or that the search is necessary for a noninvestigatory work-related purpose such as
to get a file.
c. When Confronted w/ Search by ER:
i. Public ER subject to the 4th Amendment protections against unreasonable
searches and seizures, but Private ER not subject to 4th Amend.
1. Check states, eg, everyone in Mass has right to privacy.
ii. Private ER: Use sliding scale of how personal the searched items are.
Have to look at whether the expectation of privacy was reasonable based
on facts like who else had access to the area, and who owns it.
1. May be diminished expectation if ER provides notice.
2. Less intrusive way to achieve ER's goal?

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iii. Balance ER's interest, eg, in drug testing company driver vs. testing EE
who writes the company's manuals.
II. Monitoring EEs
1. Policy: Unlike surveillance, monitoring is not geared to partic incident or suspect, but
trying to improve productivity or quality of service.
2. Electronic Interception
a. Wiretap Act: protects against unauthorized interception of electronic
communications, ie, after message sent but before received by intended recipient
(Fraser v. Nationwide Mut. Ins. Co.=after email already read=no violation)
i. Defenses:
1. Consent: may rest on sufficient notice of the ER’s policy to
monitor but knowledge that the system is capable of being
monitored does not alone=consent
2. Ordinary Course of Biz: Use by the subscriber or user of
electronic communications service in the ordinary course of
business, meaning (1) for a legitimate business purpose, (2)
routine, (3) with notice.
b. Stored Communications Act: protects against unauthorized “access” to “electronic
communication while it is in electronic storage” BUT it is limited to protection for
private communication only during the course of transmission, not after like
Wiretap Act (Fraser=post transmission storage=no violation)
III. Control of EEs
1. Personal Relationships
a. Rulon-Miller v. International Business Machine Corp.
i. Summary: female IBM manager fired by male superior for having
romantic relationship with competitor's manager, IBM already knew about
the relationship, kept being promoted, IBM's policy that they would not
inquire into an EE’s off the job behavior so long as the activities did not
interfere w/ the work of the EE not broad enough to cover romantic
relationships, she had no confidential info
ii. IIED: Duty not to degrade EEs, Yes b/c supervisor "made the decision for
her"=kinda dumb
2. Political SpEEch and Association
a. Novosel--Novosel was discharged for refusing to join in the company’s effort to
support a “No-Fault Reform Act” then up in PA legislature
i. Violative of Public Policy: ADVISE=CHECK STATE STATUTES/CON
1. PA Constitution: contains a free speech clause that is drafted as a
grant of power to all individs, not as a limit only upon government
2. Holding: The protection of an EE’s frEEdom of political
expression is compelling societal interest
3. State Poli Protection--Many states forbid employment
discrimination where the purpose is to influence how EEs vote,
right of EE to seek/hold public office, 6 states protect EE

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engagement in “political activity”, while LA & SC protect the
holding of political opinions
3. Workplace Speech and Association
a. Personal Gripe v. Discussing to Gain Support
i. NLRA § 8(a)(1) protects an EE’s speech to other EEs regarding a
grievance for the purpose of seeking their aid and support, BUT does NOT
protect “the right to gripe”=complaining
ii. Unfair Labor Practice: §8(a)(1) makes it an unfair labor practice to
interfere with, restrain, or coerce EEs in the exercise of the rights
guaranteed in section 7 of the Act, inc. right of EEs to engage in concerted
activities for the purpose of mutual aid or protection
b. NLRB v. Coca-Cola Co. Foods Div.
i. Summary: Geer felt unjustly removed from training program, supervisor
said “If any talk gets around out there on that floor about this grievance
and what it pertains and this meeting, I’m coming after you”=violation of
NLRB § 7 b/c supervisor prohibited Geer from even thinking about
discussing the grievance to gain support
4. Grooming and Dress:
a. Dress and grooming rules have been challenged on sex discrimination grounds w/
low success
b. Policy: Company image is key is highly competitive biz environment
c. NLRA: Display of union insignia or messages on protest on T-Shirts, hats, etc.
protected unless safety, discipline, customer contact, or other special
circumstances require a narrowing of this right
IV. Abusive Work Environment
1. Pratt v. Brown Machine Co.
a. Summary: Pratt’s wife received obscene phone calls for 18 months, at company
picnic, she ID the voice as Griffore’s, an upper level manager, later the co
discovered that Griffore did make the phone calls and conditioned Pratt’s return to
work on apologizing to Griffore, agreeing not to discuss the calls on or off the job,
work directly for Griffore, and attend church and pray w/ Griffore.
b. Holding: Yes, IIED b/c despite the knowledge that Griffore had harassed Pratt’s
wife and threatened to rape her, his EM conditioned on above.
i. Contrary Theory: IIED has no place in EM setting b/c all employment
involves some distress, personality conflicts, receiving reviews,
transfers=possibility of floodgates of EE litigation.
V. Disclosure of Information
1. Defamation & Privilege
a. Defamation
i. Publication: The statement must be made to one other than the defamed
b. Qualified Privilege to Coworkers: Allows an EE to escape liability for a
defamatory statement about coworker if publisher acted in good faith & ER/EE

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either correctly OR reasonably believes that a plaintiff’s co-workers are entitled to
be advised of the nature of the misconduct
2. Ponticelli v. Mine Safety Appliance Co: that P's direct supervisor told 5-6 coworkers on
the production line that she was fired for inflating her production figures OK b/c the
supervisor correctly or reasonably and in good faith believed that the interest he to protect
his ER from fraud required that he tell the coworkers so they don't do the same thing, &
b/c the supervisor had a common interest, any malice was incidental.
3. Job References
a. ERs fear liability from defamation suits by past EEs over less than glowing
references, but perhaps unfounded b/c standard for defamation by an ER is
already pretty low, need recklessness or malice.
The Arbitration Cases
I. Introduction
1. Evolution of Arbitration:
a. Common law arbitration agreements not allowed b/c seen as avoiding JD of the
court, which could put weaker party at risk
b. Federal Arbitration Act of 1925:
i. Purpose: Reverse the longstanding judicial hostility to arbitration
agreements and to place arbitration agreeements on the same footing as
other contracts
ii. Exempted--Section 1: “Nothing herein contained shall apply to contracts
of employment of seamen, railroad EEs, or any other class of workers
engaged in foreign or interstate commerce.” B/c of ltd scope of commerce
clause at the time.
1. Circuit City Stores v. Adams: This provision does not exclude all
employment contracts but only those that directly touch
transportation
iii. Interpretation: The FAA should be broadly interpreted (from the
Mitsubishi Trilogy) and preempts state laws in this area
c. Arbitration in the Organized Labor Context:
i. CB Agreement=b/w management and labor representatives that creates a
generalized code that covers all aspects of the employment relationship=
private law.
ii. Labor Concerns for Arbitration: If they were compelled to arbitrate, they
would lose the right to strike and engage in collective bargaining
iii. Relationship to Toussaint: said that if ER did not want to be bound by the
implicit promises in the handbook, could agree to arbitrate
2. General Rules:
a. Statutory Claims: FAA says statutory claims may be the subject of arbitration
agreements, eg, RICO, ADEA, Sherman Act
i. Do Not Forgo Legal Rights: By agrEEing to arbitrate a statutory claim,
not forego substantive rights, just change in forum
b. Bargain: Having made the bargain to arbitrate, the party should be held to that
bargain unless:

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i. Congress itself has evinced an intention to preclude waiver of judicial
remedies for the statutory rights at issue as shown by (1) text of statute, (2)
legislative history, OR (3) inherent conflict b/w arb and the statute's
underlying purpose
c. Burden of Proof: The burden is on the party arguing against arbitration to show
that Congress intended to preclude a waiver of judicial forum (Gilmer)
1. Then shifts to the ER b/c the ER knows the reason for the
discharge and has the documentation
d. Cost of Arbitration: Where a party seeks to invalidate an arbitration agreement b/c
arbitration would be prohibitively expensive, that party bears the burden of
showing the likelihood of incurring such costs=Green Tree Financial Corp.
3. Arbitration in Employment
a. Difference between Corporate/Union and Employment Arbitration
i. Bargaining Power: A corporation or union is in a greater position to
bargain for concessions and fair arbitration
1. FAA indicates that mere inequality in bargaining power is NOT a
sufficient reason to hold that arbitration agreements are never
enforceable in the employment context.
b. Criticisms of Arbitration
i. Panels will be biased, but FAA says courts may overturn arbitration
decisions where there was evident partiality or corruption in the arbitrators
ii. Limited Discovery in interest of speed and informality, but statutory
claims will be harder to prove
iii. Arbitrators will not issue written opinions=lack of public knowledge of
ERs’ discriminatory policies, lack of precedent, inability to obtain
effective appellate review, and a stifling of the development of the law.
c. Positives of Arbitration: clear docket, courts aren't good places for these fact
specific inquiries, should just go by private law made by the parties
II. The Cases
1. Gilmer v. Interstate/Johnson Lane Corp.—Securities rep agreed to arbitrate claims arising
between him and Interstate which inc. claims arising out of the employment or
termination of employment. Gilmer terminated when he was 62 yrs old, filed ADEA
claim w/ the EEOC
a. Holding: Gilmer has not met burden of showing that Congress, in enacting the
ADEA, intended to preclude arbitration of claims under that Act (text, legislative
history, underlying purpose).
b. Wright says for a union to waive a right in a CB arg, it must be clear and
unmistakable. Union unlikely to do this, so in CB setting, EEs have double
protection of right to bring statutory claims to court and just cause language!
2. Cole v. Burns International Security Services
a. Payment of FEEs: If we are really just substituting forums like Gilmer says, EEs
cannot be required to pay for the services of an arb in order to pursue their
statutory rights just like EEs don't have to pay judges in court! Rather, ER must
pay the arb.

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b. Judicial Review: Nearly unlimited deference paid to arbitration awards in CB
context not appropriate here b/c arb not just applying the private law. Arbitration
awards are subject to judicial review sufficiently rigorous to ensure compliance
with statutory law.
i. MAJORITY OF JDs REJECT THIS: Instead judicial review of arbitration
awards is very limited to when arbitrator ignores/refuses to apply well
defined, explicit, clearly applicable law to the case
3. Green Tree Financial Corp. v. Randolph
a. "Final Decision": District court's compelling of arbitration was "final decision
w/respect to an arbitration" acc. to FAA § 16(a)(3) when it compelled arbitration
and dismissed rest of her claims on the merits, and is therefore appealable.
b. Rule for Burden of Proving Too Costly: Agreement was silent as to costs. Where
party seeks to invalidate an arbitration agreement on the grounds that arbitration
would be prohibitively expensive, that party bears the burden of showing the
likelihood of incurring such costs. Otherwise, the risk is too speculative to
justify invalidation of an arbitration agreement.
4. Ingle v. Circuit City Stores, Inc.
a. Law: FAA says agreements to arbitrate shall be enforceable to same extent that
any other contract is enforceable at law, meaning state contract law things like
offer, acceptance, consideration, unconscionability, duress, etc. apply.
b. Holding: this contract was wholly unenforceable b/c procedurally &
substantively unconscionable, so many terms were one sided and there was
absence of meaningful choice,
i. ADVISE: Need to look at contract law of individual states, eg, California
here had particularly low standard for a finding of unconscionability.
c. Substantively Unconscionable One Sided Terms= only EEs required to arbitrate
but not ERs, SOL took away continuing violation doctrine, cost-splitting, ER's
unilateral power to modify or terminate the agreement, prerequisite to
employment=DON'T PUT THIS STUFF IN AN AGREEMENT!
Federal Labor Standards Act -- Regulation of Pay and Hours
Scope: Act presently covers 80-90% of all privately employed non-supervisory, non agricultural
persons and a significant number of agricultural and state/local gov EEs.
1. Extension of statute to EEs of state and local govt upheld. (Garcia
v. San Antonio Metro Transit).
2. Act is NOT PREEMPTIVE: states can have better min wage, or
less maximum hours, stricter child labor standards, so ADVISE,
LOOK AT STATE LAW.
3. Act is remedial, so coverage interpreted broadly, and exceptions
narrowly
Policy:
1. W/out some kind of min. wage, some parts of the country & some industries would pay less
than what is needed to live on;
2. Intended to protect the most vulnerable of EEs and increase employment

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3. Intended to put money into the hands of those who would most be likely to spend everything
they’ve got,
4. Intended to provide equal pay to both women and men.
Coverage
To be entitled to FLSA benefits, an EE must either be:
1. Specific Individual EE:
1.Individual EE directly by the statute like § 206(f) Employees in domestic service
2. § 3(r) EE of Enterprise: Engaged in interstate commerce, Engaged in production of goods for
interstate commerce, which includes work closely related and directly essential to the production
of goods for interstate commerce as long as the gross volume of annual biz meets certain dollar
levels or it's a biz operating w/in one of a list of industries.
§3(e): EE: includes any individual employed by an ER.
I. Employees or Independent Contractors? JDs all over the place!
A. Baker v. Flint Engineering—Rig welders were EEs, not independent contractors.
1. Economic Realities Test: Focal point is whether the individual is economically
dependent on the business to which he renders service, or is, as a matter of economic fact,
in business for himself.
a. Factors: 1) Degree of control exerted by the ER over the worker (when
work is due, how to do it, supervision, who sets the terms of pay); 2) the EE’s opportunity for
profit or loss (share in profit?); 3) the EE’s investment in the business (own equipment?); 4) the
permanence of the working relationship; 5) the degree of skill required to perform the work (opp
to use the special skills?); 6) the extent to which the work is an integral part of the ERs business
(inc. do they displace regular EEs?). None of the factors alone is dispositive; instead, the court
must use a totality of the circumstances approach.
b. Sec’y of Labor v. Lauritzen—pickle farmers were EEs, not independent
contractors b/c they are dependent on the farmer’s investment and business
activity for their continued livelihood.
c. Beliz v. WH McLeod & Sons Packing--Migrant Farm workers WERE
EEs b/c the farm owner set the piece rate per bucket of crop harvested, assigned
work locations on a daily basis, determined work schedules and checked for crop
damage.
II. TRAINEES--§ 214(l) says trainees can be paid subminimum wages
A. McLaughlin v. Ensley Workers in training to drive a route truck to restock snacks in
vending machines. Trainees drove w/ experienced route men & performed duties as route men.
B. Test: Whether the EE or the ER is the primary beneficiary of the trainees' labor? Here,
it was ER.
1. Consider: Transferable or ER specific skill? All trainees usually hired?
Actually hindering normal operations?

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§3(g) Employ: to suffer or permit to work.
** The SC has emphasized that the striking breadth of this definition stretches the meaning of EE
to cover some parties who might not qualify as such under a strict application of traditional
agency law principals. (Baker v. Flint Engineering).
Tony & Susan Alamo Foundation v. Sec’y of Labor—Can't volunteer for profit making
enterprise
*Non-profit religious org. that employed ex-cons derived its income from 38 businesses in 4
states including motel, retail outlet, pig farm, etc. Workers received in-kind benefits but no pay,
& violation of the FLSA found b/c workers weren’t really volunteers but EEs, b/c they worked in
contemplation of compensation, & business met all three prongs of enterprise requirement. NOT
MATTER IF WORKERS CALL THEMSELVES VOLUNTEERS!
§3(d): ER: includes any person acting directly or indirectly in the interest of an ER in relation to
an EE and includes a public agency, but does not include any labor org. (other than when acting
as an ER) or anyone acting in the capacity of officer or agent of such labor org.
§3(s) defines type of enterprise:
- enterprise that produces or handles goods produced for, moved in, or that have moved in,
interstate commerce so long as:
1. the gross volume of annual business is $500,000 or more or
2. it is a business operating within one of the a list of industries (like schools & hospitals) or
3. enterprise that is an activity of a public agency.
§3(r) defines enterprise (3 parts) to Aggregation: Common Biz Purpose
1. Related activities=similarity in activity (restaurants), Complimentary activities (motel &
adjoining restaurant)
2. Performed through unified control, like common management and shared personnel
3. By any person or persons for a common business purpose. Common source of income,
record keeping?
AGGREGATION
Brennan v. Arnheim & Neely, Inc.**Exemplifies definition of enterprise. EEs worked for a mgmt
corp. that mged buildings owned by various individuals and companies around Pittsburgh. All 3
parts of enterprise test met: 1) the activities in all bldgs. were virtually identical 2) all mgmt was
done out of a central office through a fully integrated mgmt corp. 3) Common business purpose,
managing commercial properties for profit, also exists here.
Wirtz v. Savannah Bank & Trust--Held office rentals in common building to be “related
activities,” b/c the rent helped the bank spread the high costs of occupying a downtown location,
which helped enhance the bank’s status in the community.
§6(f): excludes certain household EEs from minimum wage provisions
§ 7 Types of Workers Exempted

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**§7(i)-(p): partially exclude from overtime pay provisions various categories of workers.
§7(k): excludes duty tours of firefighters and law enforcement personnel from overtime pay so
long as 216 hrs are not exceeded in a 28 day period.
§7(o) -- allows public agencies to avoid premium pay for overtime by allowing them to grant,
w/in specified parameters, compensatory time off.
§13: Exemptions from minimum wage and overtime
Exemptions from the FLSA—3 Sources:
1. Explicit statutory exemption
2. Inc in regulations issued by Secretary of Labor
3. Court's interpretation of the Act
§13(a)(1): Exemption includes “administrative, executive, and professional,” “outside salesman,”
and elementary & secondary school teachers.
** Bona Fida exec: regularly directs the work of 2 regularly employed EEs, & has
hiring/firing, advancement, promotion power or recommendation matters
*Requirements for White Collar Exemption:
1. Must be paid on a salary basis, for at least $455/wk.
2. EE can’t be docked pay for disciplinary or other purposes, but today the regs permit
docking of pay of professionals for full day absences due to causes that are not sickness,
w/out failing the salary basis, if the ER keeps written rules for discipline.
a. Auer v. Robbins where police officers WERE entitled to overtime pay b/c not
"exec, admin, or professional EEs" even though their pay gets reduced for disciplinary
infractions.
.
§13(a)(17):Computer programmers exempted so long as they are paid more than $27.63 / hr.
§13 (a)(3): Includes seasonal & recreational or educational operations
§13(a)(6): Includes certain agricultural workers,
& certain casual EEs.
§13(a)(15): Exemption for EEs employed on a casual basis in domestic service employment to
provide babysitting services or Companionship services for individuals who because of age or
infirmity are unable to care for themselves. Does not apply to care and protection of the aged and
inform which require and are preformed by trained personnel like a registered or practical nurse,
and housework can be included but must be incidental, i.e. does not exceed 20% of the total wkly
hrs worked. (McCune v. Oregon Senior Services Division, cleaning, cooking, hygiene, &
medical care found only to be incidental).
Policy: these people are not regular breadwinners or responsible for their families’
support, and we want old and infirm people to be able to afford these services.
*Case shows that exceptions are to be read very narrowly* (Walling case)
b. FLSA Procedures and Administration:
1. FLSA gives Sec’y of Labor administrative power, & rulemaking authority to exempt
certain executive, administrative and professional EEs from coverage. This also removes
overtime requirement.

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2. The Administrator of the Wage and Hour Division of the DoL is appointed by the pres.
and is in charge of the investigation and discovery of wage and hour law violations.
a. Upon finding a violation, the investigator prepares an estimate of the amount of
back wages that are due.
b. If agreement is reached respecting the correct amount due, and if the ER is willing
to make voluntary payments, a notice offering the agreed amount in full
settlement of the EE’s claim is sent to the worker by the W&H Division, and
acceptance of such payments bars any further action by the EE.
c. Otherwise, EE has a right to bring suit in fed or state court to collect back wages.
§6: Minimum Wage: not less than $5.15/hr.
** The FLSA does not define work or employment, but the US SC has held the FLSA to
embrace “physical or mental exertion controlled or required by the ER and pursued necessarily
and primarily for the benefit of the ER and his business (Barrentine).
Defining Compensable Time
Barrentine v. Arkansas-Best Freight (safety check time case)
EE truck-drivers were required by law to do safety checks on their vehicles and if
necessary wait while it is being repaired before starting their trip. The ct held that time spent
doing the safety checks was compensable b/c the ER had control and responsibility for these
safety checks, even though they were legally mandated, and b/c the ERs benefited from the
inspection procedure.
Waiting to be Engaged vs. Engaged to Wait: EE who voluntarily arrives 15 minutes early
to set up desk is not compensable vs. an EE who arrives on time but must wait b/c there is no
work to do b/c of a machine malfunction is entitled to compensation b/c he is engaged to wait.
§ 4(a) of Portal to Portal Act relieves ERs of back wages under FLSA for "activities
which are prelim to or postlim to the principal activity or activities which such EE is employed
to perform, which occur either prior to the time on any partic workday at which such EE
commences or subsequent to the time on any partic workday at which he ceases, such principal
activity or activities." But this work was integral and indispensable.
IBP v. Alvarez—donning/doffing of specialized protective gear that is performed either before or
after the reg work shift, on or off the production line, is compensable under the Portal to Portal
provisions of the FLSA if those activities are an integral and indispensable part of the principal
activities for which covered EEs are employed and are not specifically excluded by § 4(a)(1).
Donning and doffing unique gear is integral and indispensable, but not very common safety gear
like hardhats and safety goggles. Donning and doffing in the place like the locker room is
compensable, but walking between locker room and production area may or may not be
compensable based on circumstances how integral and indispensable to the principal activities.
Time spent waiting to put on/don the clothes prior to beginning work is NOT compensable.
Time spent waiting to take off/doff the clothing IS compensable (still part of workday).
§3(m) “Wage” Paid to any EE includes the reasonable cost ... to the ER of furnishing such EE
with board, loding, or other facilities, if such board, lodging or facilities are customarily
furnished by such ER to his EEs.

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**ERs may take a wage deduction for the cost to them of food and lodging “customarily
furnished” to EEs provided ERs mEEt Wage & Hour division requirements that:
1. the in-kind service or goods must be furnished for the worker’s primary benefit;
2. The in-kind goods or services must be voluntarily accepted by the worker;
3. The furnishing of the goods or services must be customary to the type of business or
occupation.
Caro-Galvan v. Curtis Richardson, Inc.
Seasonal nature of fern industry permits indigent farm-worker EEs to earn more than min
wage part of the year, & the other part of the year did other maintenance work to earn just min.
wage, from which housing costs of $150/month was deducted for living in farmer’s trailers
(which was required to obtain work on farmer’s farm), resulting in take home pay falling below
min wage or to nothing at all. The ct held in favor of EEs, b/c the ER had no documents to
support reasonableness of lodging deductions.
§206(a)(5) requires ERs to pay agricultural workers min wage, which, under §203(m),
can be adjusted to include the reasonable cost to the ER of furnishing the EE with board, lodging
or other facilities, if such is customarily furnished by such ER to his EEs. Thus, the ER may
lawfully deduct from an EE’s pay the reasonable cost of ER provided housing, even if that
deduction results in the EE’s cash pay falling below the statutory min. **Reasonable cost can’t
excEEd the ERs actual cost.
** Once the EE proves that the wages received were less than the statutory min, the
burden shifts to the ER to prove with proper records the reasonable cost of the housing it
furnished.
** However, Sec’y has persuaded some cts that the deduction ought to be available only
when lodging is furnished for the convenience of the EE, not when the EE is required to live on
the work site by the ER. (Donovan v. New Floridian Hotel, Inc.).
2. Tip credit: §3(m) permits an ER to take a credit against wages due to a tipped EE of up to 50%
of min wage
Other compensable/non-compensable:
- §254(a) time spent changing into and out of work clothes and washing at the beginning
and end of the work day is compensable time under the FLSA if such activity is required by the
ER, by law or by the nature of the work, or if established under collective bargaining or
established practice. (IBP case).
- meal periods generally must be at least 30 min & must frEE EE of all work duties to be
excluded from compensable time, but EEs can be prohibited from leaving premises.
- rest periods are non-compensable time if they are longer than 20 min and the worker is
frEE to leave the work station. Shorter periods are for ER and EEs mutual benefit and therefore
are compensable.
- §254(a) Time spent commuting is not compensable until the EE reaches the point of
being required to perform a job duty. But travel to different work sites during the course of the
work day is compensable work time.

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§7: Overtime
Policy: spread available work among more workers, & improve working conditions b/c added
benefit for worker is offset by sacrifice of worker’s ability to enjoy normal amount of rest.
- Requires time and a half of EEs regular rate be paid for each hour over 40 in a workwEEk.
-§7(e): If not paid regularly hourly rate, requires splitting the EE’s gross paychecks into thrEE
parts.
** EXCLUDED from calculation: gifts, including Christmas Bonus (Minizza v. Stone
Container); idle-time pay; reimbursements for expenses; discretionary bonus; profit-sharing &
savings plan payments; radio and t.v. talent fEEs; welfare plan contributions; and vacation and
illness pay.
Defining Compensable Overtime
Davis v. Food Lion, Inc. (Actual or Constructive Knowledge of ER)-Effective Scheduling Case
Action: to recover overtime comp under § 207(a)(1) (in excess of 40 hrs EE gets time and a
half), and 216(b) (for atty's fees).
Law: EE, has to prove Food Lion's actual or constructive knowledge of his overtime work as an
element of prima facie case because § 203(g) def of employ as to "suffer or permit to work" has
been consistently interpreted to mean with the knowledge of the ER.
Holding: Not enough that system was unrealistic so required off the clock work. Food Lion
enforced no off the clock policy. Kohler thinks should have been enough to prove constructive
knowledge, and other ERs have gotten in trouble (e.g. b/c of disparate impact on aging EEs).
Owens v. Local No. 169—Policy—are we encouraging ERs to hire more EEs or not?
Mechanic EEs were not entitled to overtime under § 207(1)(a) for time required to be
available by telephone for on-call activities. EEs were required to accept a fair share of call-ins,
and they could select which call-ins to take. Engaged to wait or waiting to be engaged ?
1) Degree to which the EE is free to engage in personal activities-2) The agreements between the parties—here CB agreement inc. call-ins, and by continuing to
work, EEs accepted the policy—Compare to handbook cases
Personal Activities factors: Not exhaustive, no one factor determinative.
1. On-premises living requirement? 2. Excessive geo restrictions? 3. Frequency of calls unduly
restrictive? 4. Fixed time limit for response unduly restrictive? 5. Can on-call EE easily trade oncall responsibility? 6. Could use of pager ease restrictions? 7. Did EE actually engage in
personal activities during call-in time?.
Versus Armour firefighters required to live on premises, Renfro firefighters called back multiple
times/day; Cross v. Arkansas, forestry EEs restricted b/c had to be reached by radio 24hrs/day.
AgrEEments betwEEn the parties
Donovan v. McKissick Products (Belo Plans as an AgrEEment betwEEn the parties)
ER compensated EEs according to individual agrEEments that guarantEEd a wage which
was paid regardless of how many hours were actually worked up to a contractually agrEEd

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minimum. Niether plans in this case met the §7(f) requirements, though, b/c the only flutation in
working hrs occurred in overtime hours, & no EE worked less than 40 hrs/wk.
An ER and a union can agree in writing to allow EEs to work more than 40 hrs/wk w/out
overtime premium if the EE:
1. Is guaranteed between 1840 and 2080 hrs of work over 52 consecutive wks,
2. Receives overtime pay for hrs worked in excess of the annual guaranty,
3. In no event is employed more than 2240 hrs during the 52 wk period.
Gaining Effective FLSA Protection
§15(a)(3): Retaliation: It is unlawful for any person to discharge or in any other manner
discriminate against any EE b/c such EE has filed any complaint or instituted or caused to be
instituted any procEEding under or related to this chapter, or has testified in any such
procEEding, or has served on an industry committEE.
Travis v. Gary Community Mental Health Center, Inc (Retaliation & Investigation)
Facts: Travis was a (helpful) witness at the trial for another EE claiming a violation of the
FLSA, and discharged while on leave expecting a child.
Law: FLSA § 215(a)(3) forbids retaliation for invoking your rights under the FLSA.
Remedies: ER who commits retaliation is liable for legal and equitable relief, inc employment,
reinstatement or promotion and the payment of wages lost and an additional equal amount as
liquidated damages.” JDs split as to punitive damages.
c. Damages and Penalties
§216(a): Fines and Imprisonment. Criminal sanctions are available for willful FLSA
violations, fines of up to $10,000 and (for repeat offenders) 6 months in jail
§216(b): Action for Damages by EE (including class actions), can inc. liquidated (double
damages) in addition to back pay
§216(c): Action for Damages by Sec’y of Labor. If Sec’y brings enforcement suit, that action
supersedes/suspends any suit brought by EE. Unions cannot bring them in rep capacity!
§216(e): special provisions for child labor violations
§260 of P2P: Definition of liquidated damages
-Either Sec’y of Labor or EE can request under §216(b) & (c): reinstatement, back wages,
statutorily defined damages (equal to back wages), reasonable atty’s fees and costs, for an EE
who was discharged or discriminated against for instituting any proceeding or testifying under
the FLSA.
Lynn’s Food Stores v. U.S. (Compromised Claims)-ER can't settle claims with EEs when the
Sec'y has brought the action for them.
2 ways to settle back wage claims under the FLSA:
1. § 216(c): When Sec'y brings the action, he's authorized to supervise payment to EEs of
unpaid wages owed to them. If EE accepts the settlement, then waives his right to bring suit for
both the unpaid wage and for liquidated damages.
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2. § 216(b) (when EE himself brings suit directly against his ER to recover back wages).
If they settle with the ER, district court may enter a stipulated judgment after scrutinizing the
settlement for fairness.
**Policy: This settlement wasn't in the adversarial context where EEs repped by lawyers, so less
likely to reflect a reasonable compromise; overreaching by ER.
§55(a): Statute of limitations: dating from the time the wages became due and payable to the
EE. 2 years normal, 3 yrs for willful violation.
McLaughlin v. Richland Shoe (Standard for “Willful)=the ER either knew or showed reckless
disregard for the matter of whether its conduct was prohibited by the statute. Use dictionary def
meaning "voluntary", deliberate, and intentional.
§17: Sec’y of Labor (only, not EEs) can bring action for injunctive relief, but both can get $
Advise: Injunctions helpful to the gov b/c W&H Division not have to prove violations each
time, just violation of the injunction
Should Injunction Be Granted? 3 Dunlop factors from Funtime case)]:
1. The previous conduct of the ER, 2. The dependability of his promises for future compliance—
sucked in Funtime b/c 100s of them, 3. Current compliance—didn't make up for 1&2 in Funtime
§11: ER Record Requirements—-Requires ERs to maintain payroll records which
constitute principal evidence of how long an EE worked in a given week. DoL can come in
and request to see them at any time.
Sec’y of Labor v. deSisto (Docking Pay) School had a practice called “firing” which involved
docking the wages of EEs who were found to have violated a school rule but cont'd to perform
normal duties.
**Mt. Clemens Pottery Burden Shifting Doctrine: The burden on the EE isn’t heavy -they just have to show that they performed work for which they were improperly compensated,
or show the amount and extent of that work as a matter of just and reasonable inference. Precise
amount not required.
Burden then shifts to the ER to show precisely what the hours actually were worked or
evidence against the reasonable inference above (if no records, get other EEs as witnesses), and
if can’t, the court may then award damages to the EE, even though the result may be only
approximate.
Child Labor
§3(l) Oppressive Child Labor: a condition of employment under which (1) any EE under 16 yrs
is employed by an ER (other than parent or person standing as parent) in any occupation or (2)
any EE between 16-18 yrs is employed by an ER in any occupation which the DoL finds is
particularly hazardous.
§212: Child Labor.

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§215(a)(4): It is unlawful for any person to ...violate any of the provisions of §212.
Martin v. Funtime, Inc. ER’s responsibility for child labor approaches strict liability, & an ER
can’t avoid liability by arguing that its supervisory personnel were not aware of the violation, or
that parks didn't know about other parks' violations.
§203(l) permits the Sec’y to promulgate regulations defining what shall constitute oppressive
child labor of children between the ages of 14 & 16 yrs. .
§216(e): Civil Penalties for Child Labor violations: any person who violates the provisions
§12 or §13(c)(5) ...shall be subject to a civil penalty of not to exceed $10,000 for each EE who
was the subject of such a violation. Any person who repeatedly or willfully violates §6 or 7 shall
be subject to a civil penalty of not to exceed $1000 for each violation. In determining the amount
of any penalty sunder this subsection, the appropriateness of such penalty to the size of the
business of the person charged and the gravity of the violation shall be considered...

Occupational Safety & Health Act: Regulation of Safety and Health in the workplace.
Purposes:
1. Give EEs a safe workplace;
2. Allow the Sec’y to promulgate standards & enforce its provisions in 4 areas: (1) Maritime
and longshoreing, (2) General industry like most manufac, (3) Construction, (4) Agriculture
3. § 651(b)(11) Encourage states to make own safety programs.
4. Encourage further development by private parties of workplace safety and health techniques
and their application
5. Establish ANSI
6. Encourage EEs to be active participants in safeguarding themselves=empowerment—EG, Can
walk around with the compliance officers, Can challenge the standards made by the Commission
Policy Questions--How should costs of workplace safety/health risks should be allocated
between the ER and the EE at risk? How safe is safe enough? ERs can’t provide entirely risk free
workplaces, just those "feasible" (Policy of the Benzene Case). Penalties enough of a deterrent?
Are we allocating enough resources for enforcement?
§651: Congressional statement of findings and declaration of purpose and policy:
§651(a): Congress finds that personal injuries and illnesses arising out of work situations impose
a substantial burden upon, and are a hindrance to, interstate commerce in terms of lost
production, wage loss, medical expenses, and disability compensation payments.
(b): the act’s purpose and policy is declared to be ... to assure so far as possible every working
man and woman in the Nation safe and healthful working conditions.
COVERAGE
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§652 (5): Definition of ER: a person engaged in a business affecting commerce who has EEs,
but does not include the US (not including the Postal Service) or any State or political
subdivision of a state. Extremely Inclusive!!!

§652 (6): Definition of EE: an employee of an employer who is employed in a biz of his
employer which affects commerce. Economic Reality Test Not Apply!!!
--Covers professional EEs are covered unlike FLSA, agricultural workers, charities,
churches except for religious services
--Does NOT cover state and local governments
DUTIES OF EMPLOYERS—2 KINDS
Where no accident has occurred yet, ER may appropriately insist that OSHA identify what
preventative measures would be effective and feasible=ADVICE TO EMPLOYERS.
§654(a)(1) General Duty Clause: Shall furnish to each of his EEs employment and a place of
employment which are free from recognized hazards that are causing or likely to cause death or
serious physical harm to his EEs;
Elements for General Duty Clause Violation (from Pratt):
(1) There was a hazard in the workplace
(2) Which was a "recognized hazard", not reasonable foreseeable
a. Actually detectable or generally known in the industry
(3) Which was causing or likely to cause death or serious phys
harm—means that all general duty clause violations are "serious"
a. Remedial Policy: not need to show actual exposure b/c
trying to prevent the injury from occurring in the first
place.
(4) Feasible means to abate the hazard—technology forcing
(5) The ER failed to abate it.
§654(a)(2) Specific Duty or Standards clause: shall comply with occupational safety and
health standards promulgated under this chapter.
Pratt: Risk of death or phys harm must be "significant risk", more than a mere possibility. Sec'y
has to demonstrate the violation by preponderance of the evidence.
Elements of Specific Duty Violation-- Sec'y has to prove by preponderance of the evidence:
(1) The cited standard applies
(2) That there was an actual failure to comply with that standard
(3) That an EE had access to the area
a. EEs could have been the area, not that actually were
(4) ER knew or had constructive knowledge/could have known with reasonable
diligence that the condition existed.
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a. Secretary can show safety program sucked to show constructive
knowledge (NY State Electric & Gas Corp.) ER will meanwhile say
the safety program was adequate to make out UEM Defense.

§654(b): Each EE shall comply with occupational safety and health standards and all rules,
regulations, and orders issued pursuant to this chapter which are applicable to his own actions
and conduct.
**Willful violation: An OSHA violation is willful if it is committed with intentional disregard
for, or plain indifference to, the requirements of the statute. A willful violation is differentiated
from other types of violations by a heightened awareness of the illegality of the conduct or
conditions, and by a state of mind: conscious disregard or plain indifference. (Caterpillar case).
-Moral turpitude nor malicious intent are required.
- The OSHRC nEEd not prove that a given EE was actually endangered by the
unsafe
condition, but only that it was reasonably certain that EE was or would be exposed to the danger.
§666(k): Determination of serious violation: exists in a place of employment if there is a
substantial probability that death or serious physical harm could result from a condition which
exists, or from one or more practices, means, methods, operations, or processes which have been
adopted or are in use, in such place of employment unless the ER did not, and could not with the
exercise of reasonable diligence, know of the presence of the violation. All Gen duty violations!

Pratt & Whitney Aircraft v. Sec’y of Labor—2 Serious (1 Gen+1 Specific), 1 Non-Serious
General Duty violation: Common drain system posed a risk of fire, explosion or
hazardous chemical reaction that would create a lethal gas. Was a recognized hazard b/c one
DoL inspector had visited 3-400 plants which stored the same chemicals, only two used the same
common drain system and bothremedied the situation after being urged to do so.
Specific Duty violation b/c of common ductwork: Sec’y didn’t prove that the risk was
significant, and the ER’s witness even testified that none of the feared chemical was anywhere to
be found in the workplace, and that he had seen similar ductwork in other plants. Benzene
policy says risk has to be more than a theoretical possibility, so remanded to see if significant.
The Non-Serious Violation: Use general reasonableness standard, ie, whether a
reasonable person familiar w/the conditions of the industry would have instituted the protective
measure which the Commission claims the alleged violator failed to implement.
Nelson Tree Services v. OSHRC (Recognized Hazard) EE killed when tree fell on him. Nelson
said it shouldn't have to follow the practices of the logging industry, just the tree cutting industry.
Court said, no, everyone knows it's dangerous to walk under a notched tree, and employer's
actual knowledge of the hazard is sufficient to est. a recognized hazard.
Multi-ER Responsibility, §654(a)(2)
Multi-ER doctrine: an ER who controls or creates a worksite safety hazard may be liable under
OSHA even if the EEs threatened by the hazard are solely EEs of another ER. It may be
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responsible under §654(a)(2), but not § 654(a)(1) for safety standard violations it could
reasonably have been expected to prevent or abate by reason of its supervisory capacity,
regardless of whether it created the hazard or whether its EEs were exposed to the hazard.
ER subject to multi-ER responsibility if (1) you create a danger, (2) If your EEs create a danger,
(3) If you’re a gen contractor and another ER or another ER's EEs create a danger b/c you are
responsible for everything on the worksite, (4) If you're a sub you are responsible for taking
reasonable steps to protect your EEs from hazards your/they neither controlled nor created,
which may include directing your EEs to avoid the area if practical or ensuring EE safety by
alternative measures.
Universal Construction Company v. OSHRC
The ER was a construction company that had sub-contractor’s EEs working on its jobsite,
and an OSHA CO observed a sub EE violate two OSHA safety standards. The ER's field mgr and
foreman were at the jobsite and in a position to observe the violations, had authority to correct
the hazards or to direct the sub to do so, but didn’t. ER's citation was justified by its ability to
control the hazardous conditions that led to the violations, but unreasonably failed to correct or to
have the sub correct the hazard. Policy: the Gen Contractor may be the only on-site person with
authority to compel compliance and remedial purpose of statute.
DCS Sanitation Mgmt v. OSHRC swinging meat hooks case. Contractors refused to correct
safety violations when company who hired them to do the cleaning directed them to. Co not held
responsible under the multi ER doctrine for willfully failing to enforce the safety standard b/c
right to cancel its contract with the violators did not amount to control over the hazard. Kohler
says should have been liable.
STANDARDS
§655: Standards
§655(a) Promulgation by Sec'y of National Consensus standards and established Fed
standards
**B/c of the desire to establish national standards as soon as possible, the Sec’y of Labor was
authorized to adopt during the 1st two yrs of the statute any established Fed. Standard and any
national consensus standard w/out resorting to the lengthy rule-making procedures required by
§6 of the Administrative Procedure Act.
§652(8): Occupational Safety and Health Standard=a standard which requires conditions, or
the adoption or use of one or more practices, means, methods, operations, or processes,
reasonably necessary or appropriate to provide safe or healthful EM and places of EM."
§652(9): National Consensus Standard CHECK THIS NUMBER: Any occupational safety
and health standard or modification thereof which (1) has been adopted and promulgated by a
nationally recognized standards-producing org. under procedures whereby it can be determined
by the Sec’y that persons interested and affected by the scope or provisions of the standard have
reached substantial agreement on its adoption, (2) was formulated in a manner which afforded an
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opportunity for diverse views to be considered and (3) has been designed as such a standard by
the Sec’y, after consultation with other appropriate Fed. agencies. Most still in force!!!

§655 Standards
§ 655(a) National Consensus Standards (Universal Construction)
§655(b): Procedures for promulgation, modification, or revocation of standards
§ 655(b)(4) says "within 60 days after " completion of rule making hearing, the Admin
"shall issue a rule promulgating, modifying, or revoking and occupational safety or health
standard or make a determination that rule should not issue."
§655(c): Emergency Temporary Standards: provides for establishing temp emergency
standards effective for six months pending these procedures where there is a grave danger of
exposure to toxic substances or new hazards.
§ 655(g) The agency's setting of priorities is a complex matter which requires subjective and
policy judgments and is not intended to create any legal rights.
American Textile Manufacturers Institute Inc. v. Donovan—What is feasible for ERs?
Feasible, means capable of being done. Rejects Benzene Case cost-benefit analysis. Congress
intended Act to be "technology forcing". Benefit of worker health important. Some companies
will go out of biz, but the tech if feasible to the industry. Congress has already decided that the
benefits are worth the costs. Does NOT mean rules always survive—need to be supported by
"substantial evidence" under 655(f) Judicial Review.
Titanium Metals Corp. v. Usery (Recognized Hazard)—Policy of forcing technology
ER cited for violation of general duty clause after dust fire fatally burned an EE. ER said
industry too young to know what a "recognized hazard" was but court said lack of a precise
standard no defense, ER should have erred on side of caution, and taken the known feasible
measures, like more frequent sweep ups which would've reduced likelihood of fire causing death
or serious injury.
§655(f): Judicial Review: person who is adversely affected by a standard issued can within 60
days file petition challenging validity in Court of Appeals. Determination of the Sec shall be
conclusive if supported by substantial evidence in the record considered as a whole.
**Court to defer agency’s interpretation of its own standard & regulation so as long as it is
reasonable (Universal Construction)
AMERICAN IRON AND STEEL INSTITUTE v. OSH Administration—Review of Standards
** OSHA's standards will be upheld if supported by substantial evidence in the record
considered as a whole, meaning "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion." Reasonable that Administration can reopen the standards
adopted under § 655(a) National Consensus Standards in any order and chunks, and doesn't have
to follow the time limits it set on itself (Action on Smoking and Health Case). Policy: OSH
Administration best suited to determine priority, great deference.

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§658: Citations
(a): Authority to issue; grounds, etc.
§659: Enforcement Procedures
**Under these sections, enforcement is vested in the Sec’y of Labor but is administratively
located in the Occupational Safety and Health Admin. Enforcement is through inspection of the
work place by compliance officers. Inspections may be triggered by complaints of EEs, reports
from any source of imminent dangers of serious injury, or reports of fatal or multiple injuries.
Inspections are normally made by Compliance Officers w/out prior notice to the ER to
prevent an ER from covering up violations or complying only in preparation for an inspection.
Following the inspection, the CO makes a report to the Area Director who then issues
appropriate citations with abatement orders and proposed penalties. If the ER does not contest
the citation in fiftEEn working days, it becomes a final order and binding. If the ER files a timely
notice of contest, the case goes to the OSHRC (the review commission) and is assigned to an
Admin. Law Judge for a hearing and decision. Appeals from final orders of the Commission are
to the fed cts of appeal. Throughout the process, the Assistant Sec’y of Labor for OSHA acts as
prosecutor of the alleged violations.
**Standard of proof is upon Sec’y to demonstrate the violation by a preponderance of the
evidence. There is no strict liability. The Sec’y will have to show that there was some reasonable
way to abate the hazard.
**Note that individual EEs put at risk or injured by violations have no remedies under the
statute and have limited rights to participate in any of the procedures. Individuals must rely on
worker’s compensation instead, or they can bring an action against a third party, like a
manufacturer of a poorly designed tool.
§666: Civil and Criminal Penalties
§666(a) Willful or repeated violation: Any ER who willfully or repeatedly violates the
requirements of §654, any standard, rule or order pursuant to §654, or regs., may be assessed a
civil penalty of not more than $70,000 for each violation, but not less than $5,000 for each
willful violation.
**Note that the harm required is of death or serious physical harm since its willful.
Willful=committed with intentional disregard of, or plain indifference to, the requirements of the
statute (Caterpillar).
Caterpillar Inc. v. OSHRC
While repairing a forging press, a piece of metal broke off, striking an EE in the head
causing serious injury. The Sec’y issued a citation for a willful violation of the Gen. duty clause.
Was willful violation b/c knowledge of accidents, rejected/ignored the recommendations of the
person it had put in charge to eliminate the hazard. Fact that former supervisors had left did not
cancel its knowledge of the risks and its responsibility for their impact on future operations.
Policy: to hold otherwise would encourage corporate forgetfulness with possibly serious
safety consequences.
However, “Good faith efforts at compliance that are incomplete or not entirely effective
can negate a willfulness finding provided that they were objectively reasonable under the
circumstances.”

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§666(b) Citation for serious violation: Any ER who has received a citation for a serious
violation of the requirements of §654, etc., shall be assessed a civil penalty of up to $7,000 for
each such violation.
§666(c): Citation for Violation determined not serious: Any ER who has received a citation
for a violation of the requirements of §654, etc., and such violation is specifically determined not
to be of a serious nature, may be assessed a civil penalty of up to $7,000 for each such violation.
§666(e): Willful violation causing death to EE: Any ER who willfully violates any standard,
rule or order promulgated pursuant to §656, or any regs., and that violation caused death to any
EE, shall, upon conviction, be punished by a fine of not more than $10,000 or by imprisonment
for not more than 6 months, or by both; except that if the conviction is for a violation committed
after a first conviction of such person, punishment shall be by a fine of not more than $20,000 or
by imprisonment for not more than one year, or by both.
§666(j): Authority of Commission to assess civil penalties: The Commission has the authority
to assess all civil penalties in this section giving due consideration to the appropriateness of the
penalty with respect to the size of the business of the ER being charged, the gravity of the
violation, the good faith of the ER, and the history of previous violations.
** repeated in Caterpillar case.
§667: generally preempts state legislation where any fed standard is in effect, but it provides that
the Sec’y can cede jurisdiction over any area where the state submits a plan with standards
comparable to those of OSHA and enforcement mEEting certain criteria.
EMPLOYER DEFENSES—No Strict Liability Like in Torts—Why not?
P. GIOIOSO & SONS, INC.—failure to raise issues before the Commission precludes ER from
raising them to the Court of Appeals based on § 660(a) Judicial Review that no objection that has
not been urged before the Commission shall be considered by the court, unless the failure or
neglect to urge such objection shall be excused b/c of extraordinary circumstances.
Reviewing court usually defers to an agency's reasonable interpretation of a statute that it
administers=OSH Administration's own interpretation of its regs, and only not upheld if
"arbitrary, capricious, abuse of discretion" under Admin Procedures Act.
Unpreventable EE Misconduct Defense—Not made out in Gioioso w/out Documentation
Elements:
1. The ER established a work rule to prevent the reckless behavior and/or
unsafe condition from occurring
2. The ER adequately communicated the rules to its EEs-- safety
manuals, has weekly "toolbox talks" at work sites, monthly safety
meetings for supervisors, and biennial safety seminars for all EEs.
ADVISE—doc who gave them and who attended.
3. The ER took steps to discover incidents of non compliance
4. The ER effectively enforced the rule whenever EEs broke it—need
docs like daily safety checklists, more than anecdotal evidence
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Another Articulation-- Advice to ER: Need to have safety program that is thorough and
adequate, and communicated and enforced as written such that EE conduct violating the policy
was idiosyncratic and unforeseeable.
NY State Gas & Electric Co.—knowledge of supervisor can be imputed knowledge to ER for
prima facie element of ER's actual or constructive knowledge of the specific violation.

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