employment law outline

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Employment Law: Chapter 1: Introduction Employment-at-Will rule: an employer or employee may unilaterally terminate the employment relationship at any time, for any reason, absent prior agreement to the contrary. (employer does not even need a reason to discharge) • The termination must not violate common law (i.e. wrongful discharge in violation of public policy) or statutory law, (i.e. antidiscrimation law). Chapter 2: Legal Boundaries of the Employment Relationship companies would rather have their employee’s many times defined as independent contractors so they do not have to give them the protections which are reserved for employee’s under employment law. Government generally wants them to be employees so they can have the benefit of the taxes. The CONTROL test: (for establishing an employer’s vicarious liability) distinguished employee’s from independent contractors o Common law factors considered by the court in the control test:  Behavioral Control: (factors) – whether the employer has the right to direct and control the work • When and where to do the work • What tools or equiptment to use • What assistants to hire • Where to purchase supplies and services • What work must be performed by a specified individual • What order or sequence to follow • TRAINING – employees often receive training while independent contractors usually do not  Financial Control: • The extent to which the worker has reimbursed business expenses (independent contractors have more expenses) • Extent of the worker’s investment (independent contractors are presumed to invest more) • Extent to which workers makes services available to others (independent contractors offer their services to a wider market) • How the business pays the worker (independent contractors are usually paid a flat fee whereas employees get a wage hourly, weekly, or yearly) • The extent to which the worker can make a profit or loss (independent workers generally can whereas employees cannot)  Type of Relationship:



Whether the parties have a written contract describing the relationship they intend to create • Whether the business provides the worker with employmentlike benefits (such as insurance, pension, vacation pay, and sick pay) • Whether the relationship is expected to be permanent or indefinite (indicates employment) verses a specified project or period (independent contractor) • The extent to which the services performed by the worker are a key aspect of the business’s regular activity (if so then the business is presumed to be more likely to retain the right to control the worker’s activity) Economic Realities test: (6 factors which indicated employee status) – factors are un-weighted and non-dispositive o 1. a limited amount of the workers investment in facilities and equipment o 2. the nature (close supervision) and degree of control (high) retained or exercised by the company o 3. the workers limited opportunities for profit and loss o 4. the small degree of the workers independent initiative, judgment, and foresight in open market competition with other required for the success of the operation o 5. the high degree of permanency of the work relationship o 6. The broad extent to which the services are an integral part of the company’s business


LEGAL BOUNDARIES OF THE EMPLOYMENT RELATIONSHIP THE IDEA OF EMPLOYEE STATUS DICHIARA’S LIST FROM OUTLINE: I. Employee v. Independent Contractor Employee v. independent contractor (1) Degree of alleged employer’s right to control the manner in which the work is to be performed (2) Alleged employee’s opportunity for profit or loss depending (3) Alleged Employee’s investment in equipment or materials required for his task (4) Whether the service rendered requires a special skill (5) The degree of permanence of the working relationship (6) Whether the services rendered were an integral part of alleged employer’s business I. EMPLOYEES V. INDEPENDENT CONTRACTORS


Cases that we looked at distinguish independent contractors and employees. The courts look at: • You have the control test and the economic realities test o Economic realities test is more based on formalism • Factors that the court look at to determine whether one is an independent contractor or an employee: o Behavioral control o Fiscal control o Benefits: if the employer or complaint is providing benefits than you are more likely to be an employee o Relationship and length: if the relationship is an indefinite length then you are more likely to be considered an employee because as an employee you are “at-will.” If there is a contract in place then you are more likely to be an independent contractor.  Finite period of time in generally an independent contractor o Training the worker receives  More supervision would be an employee and training for a job would also signal an employee o Ability to profit or maximize your earning potential  Independent contractor has the ability to make a profit and maximize whereas an employee doesn’t National Labor Relations Board v. Hearst: (Over – ruled and is now bad law) o Facts: News publishers refuse to collectively bargain with union representing paperboys because they didn’t consider them “employees” under the NLRA. o Holding: Union should be allowed to collectively bargain because the paperboys are employees under NLRB. o Rule: In determining whether person is IC or Employee look at “economic realities” of the situation (i.e. newsies rely on the wages paid by publishers, publishers set the minimum price on papers, give them equipment, etc). o The United States Supreme Court , interpreting the National Labor relations Act, held that when particular worker are “subject, as a matter of economic fact, to the evils the statute was designed to eradicate, “ such as abject economic dependency, these workers should fall within the protection of the statute notwithstanding the “technical legal classification” of the workers as independent contractors. • This case has been overruled and is now bad law o Has been over-ruled for legislative reasons

Facts: the newsboys were selling newspapers and worked under various managers. The court ruled that the newsboys were employees. The court applied the control test. o What if the newsboys had the ability to set their own price for the papers?  In this case it would be a little more difficult analysis because they control their profits in this case but then again this is only one factor among the many to look at and consider to make the determination • The price is only one factor whereas the courts look at a whole list • The courts really look at CONTROL and how much control the entity has over the work.

Nationwide Mutual Insurance Co. v. Darden: - The Supreme Court favorably cited Reid and again held that Congress’s failure to provide a meaningful definition demonstrated it’s intent that the common law control test would apply. o Facts: Nationwide allowed P to enroll in company retirement plan so long as he sold their insurance. Contract provided that P would forfeit this retirement plan if he sold other insurance within a year of termination. P is terminated and begins selling other insurance. Nationwide rescinds his retirement plan and P sues under ERISA. o Holding: Remanded to determine whether P is “employee” under Agency Test o Rule: Where the statute is unclear as to how to determine whether P is an “employee,” the Court should employ a common-law “agency theory including factors such as: o Factors that the court looked at:  The skill required  The source of the instrumentalities and tools  The location of the work  Duration of the relationship between the parties  Whether the hiring party has the right to assign additional projects to the hired party  The extent of the hired party’s discretion over when and how long to work  The method of payment  The hired party’s role in hiring and paying assistants  Whether the work is part of the regular business of the hired party  Whether the hiring party is in business  The provision of employee benefits  Tax treatment of the hired party

Darden was an individual trying to get some benefits and wanted to be an employee and his employer wanted him to be an independent contractor. The court used the control test and the court ruled that there was a question of fact involved and remanded.

Clackamans Gastroenterology Associates v. Wells – the court held that the common law control test applies o Facts: P files suit alleging that she was fired in violation of the ADA. D argues that ADA does not apply because they do not meet the 15-employee threshold necessary for ADA to apply. P argues that the 4 physicians that own the practice should be counted as employees. o Issue: Whether a “shareholder-director” is an “employee” under the ADA. o Holding: “Shareholder-directors” or a Professional Corporation can be employees if sufficient control is exerted over them as in a typical master-servant relationship. Reversed and remanded o Rule: Control Test: Developed six factors test which are relevant to the inquiry whether a shareholder/director is an employee:  1. whether the organization can hire or fire the individual or set the rules and regulations of the individuals work  2. whether and if so to what extent the organization supervises the individual’s work  3. whether the individual reports to someone higher in the organization  4. whether and if so to what extent the individual is able to influence the organization  5. whether the parties intended that the individual be an employee, as expressed in written agreements or contracts  6. whether the individual shares in the profits, losses, and liabilities of the organization • The bookkeeper had been terminated and was suing under the ADA provisions which had a minimum employee requirement. The court remanded the issue but left them with the common law control test. • We have a situation where the employee is seeking protection under the ADA but you need at least 15 employees for protection. • Issue is whether the four physicians (partners) in the practice are also counted as employees or just shareholders. o Real partner = shareholder = equity relationship in the company Vizcaino v. Microsoft Corp. - Vizcainzo stands for the proposition that employers may not designate a worker’s status for purposes of ERISA and other employment laws merely by contractually affixing the label.

Facts: Microsoft employs two workforces—one of “core” employees and one of “freelancers”—that essentially do the same work under the same supervision. The difference is the freelancers signed a contract that states they were ICs ineligible for health and retirement plans but received more pay. P sues under ERISA o Holding: Freelancers were entitled to retroactive benefits because they were employees. o Rule: An employer may not contract a way around a statutory or common-law definition of an employee. Labeling someone an “independent contractor” in an agreement doesn’t necessarily make them one.

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Can the IRS really be neutral when they are deciding whether someone is an employee or independent contractor since their primary job is to collect money for the government The dispute here is that there were temporary workers (contingent workforce; independent contractors) contracted as full-time workers without all the benefits and health insurance so they sued. o The court determined in this case that they were employees o Simply having an employee sign a statement saying they are independent contractors when they are actually functioning as employees is not valid The court made a review of Microsoft: they were being sarcastic in the fact the Microsoft made this determination in good faith.

Connor v. Pier Sixty: • The factors that the court found dispositive were that they were supervised by the same people that pier sixty was supervised and they provided both with training and uniforms • Basically all the allegations in the complaint by the plaintiffs, the court has to accept as true o It’s very hard for a court to dismiss a case based on the employee and independent contractor distinction. NOTE: Some employment laws exclude certain employees from coverage. (See FLSA exemptions). - Many employment rights are non-waivable. Courts have held that employee agreements to waive FLSA minimum wage and overtime rights are unenforceable. o Some employment rights are waiveable: i.e. the right to a jury trial mat be waived by signing an arbitration agreement and the right to participate in ERISA employee benefit plan is valid so long as the waiver is voluntary and knowing. o An employer MAY NOT use a contract to make an end run around a common law or statutory definition of employee!! (Vizcaino)

II. STATUTORY EXEMPTIONS, SMALL EMPLOYERS, AND JOINT EMPLOYEES - Employment statues often exempt certain types of employers either from the definition of a covered employer or from ebing subject to some or all of the statutory provisions. o Small employer exemption: some employment statutes contain an exemption for small employers. What about small employers? Do all of the employment laws apply to them? - Why for the ADA to apply for example, do you have to have 15 employees for it to apply? What’s the reasoning? o The primary reasoning is the cost of compliance. It will cost you more to comply with all of these regulations if there are only 2 or 3 employees. Government says it’s too large of a burden to make these smaller businesses apply because the costs for them would be too great.  The employees of these small businesses can have remedies under state law even if they can’t depend on the remedies of the federal ADA law. Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003) o Facts: Ps are non-English-speaking workers that finished clothing for several contracting corporations through Liberty. They brought suit against Liberty alleging overtime and minimum wage violations under the FLSA. o Issue: Whether garment manufacturers who hired contractors to stitch and finish pieces of clothing were “joint employers” within the meaning of the FLSA. o Holding: Vacated and remanded with new test o Rule: Economic Realities test: 6 factor test: o Whether [employer]’s premises and equipment are used for P’s work o Whether Contractor Corp. had a business that could shift as a unit from one putative joint employer to another. o The extent to which Ps performed a discrete line-job that was integral to Liberty’s process of production o Whether responsibility under the contracts could pass from one subcontractor to another without material changes o The degree to which the [employer] or their agents supervised P’s work; and o Whether Ps worked exclusively or predominantly for the [employer] • Issue: court trying to figure out whether these plaintiffs working in the garment industry were joint employees. The court discusses which test should be used in determining this. Joint employees: - Under the FLSA, joint employment exists where

o 1. employers arrange to share a worker’s services o 2. one employer is working in the interest of another employer in relation to the employee o 3. the employers share control over the employee or a company employing an employee control or is controlled by another company Factors pertinent to the economics realities test for considering joint employees: o Whether [employer]’s premises and equipment are used for P’s work o Whether Contractor Corp. had a business that could shift as a unit from one putative joint employer to another. o The extent to which Ps performed a discrete line-job that was integral to Liberty’s process of production o Whether responsibility under the contracts could pass from one subcontractor to another without material changes o The degree to which the [employer] or their agents supervised P’s work; and o Whether Ps worked exclusively or predominantly for the [employer] THE HIRING PROCESS III. LEGAL RESTRICTIONS ON JOB ACCESS

Wardwell v. Board of Education: - Facts: A schoolteacher brought an action under federal civil rights statutes questioning the constitutionality of a rule adopted by the Board of Education of the City of Cincinnati requiring all teachers in the Cincinnati schools hired after a given date to establish residence within the city's school district within 90 days of employment. o Holding: The right to INTRAstate travel is not protected by the Federal Constitution and that there was rational basis for the school board's residency requirement. o Rule: Government employer can restrict job access where it has rational bases for basis for restrictive measures such as: o (1) hiring teachers who are highly motivated and deeply committed to an urban educational system, o (2) teachers who live in the district are more likely to vote for district taxes, less likely to engage in illegal strikes, and more likely to help obtain passage of school tax levies, o (3) teachers living in the district are more likely to be involved in school and community activities bringing them in contact with parents and community leaders and are more likely to be committed to the future of the district and its schools, o (4) teachers who live in the district are more likely to gain sympathy and understanding for the racial, social, economic, and

urban problems of the children they teach and are thus less likely to be considered isolated from the communities in which they teach, o (5) the requirement is in keeping with the goal of encouraging integration in society and in the schools. o What if a custodian is applying to the school district and the school says that they must also relocate? • Should this rule apply to him? If it applies to teachers why not to the custodian? o All you would need is a rational reason between the hiring process and this requirement. • Should costs be considered? What if the town is extremely costly to live in? • Why else would cities want people to live in the communities where they work? o They can get to work on time, the quality of their work would be better, to recycle taxes, help your own community by cutting down on unemployment. -City lifted the requirement to have been living in the city for certain jobs because they were not getting enough qualified applicants for the position. Collins Food International v. INS: o Facts: Collins, through a store manager, hires an employee from Sizzler’s in California to work at a Sizzler’s in Phoenix. When employee shows up to work he doesn’t have his working documents so he is not allowed to work. The next day he returns and presents driver’s license and fake SSI card. INS fines Collins for hiring an alien to work. o Holding: offering alien a job prior to verification of documents could not support finding of constructive knowledge, and employer complied with verification requirement. o Rule: Employers need not verify documents prior to extending an offer to work but must before commencing employment. • Employer offered the job on the telephone and accepted his forged documentation. The INS charged the employer with hiring an alien. o The court held that the employer was not required to check the documentation before the employee began working for wages and also that the documentation only needed to reasonably appear to be valid to meet the verification requirement. IV. EMPLOYER INFORMATION-GATHERING

(A) INTERVIEWS Lysak v. Seiler Corp, 614 N.E.2d 991 (Mass. 1993) o Facts: In interview woman tells employer without solicitation that she is done having children. She is terminated after she discloses that she is pregnant. It comes out that she was pregnant—and knew of it—

during the interview. P brings sex discrimination suit against employer. o Holding: employer was entitled to discharge employee on basis of her unsolicited and false statement at time of interview when she knew she was pregnant o Rule: Employer can terminate employee for giving knowingly false information on an interview. What if a private employer made the same requirements of relocation which was seen in the Wardwell case? o When you have a government actor then you have constitutional consideration in any policy that you have, if you are a private employer you can make any sort of rules you want as long as they are not discriminatory.  A job offer which requires you to live within a certain mileage of the office, it is perfectly alright for this employer to do so • The government will not interfere in private hiring practices unless they are illegal or discriminatory. • Private employers can really set whatever parameters they want as long as they are not discriminating.

(B) Employment References - Whenever an employer publicizes the reasons for firing an employee, gives a negative reference to a subsequent employer, or discloses sensitive employee information to other employees, there is a risk that the employer will be subject to either a defamation or invasion of privacy claim. • DOES AN EMPLOYER HAVE A LEGAL OBLIGATION TO PROVOIDE A REFERANCE FOR A FORMER EMPLOYEE?? o NO but if the employer does decide to provide a reference then it must be factual o the employer can simply say that they do not give references and simply avoid a lawsuit altogether  Does the employer have an obligation to inform the new prospective employer of the negative activity? • Do we want to instill a burden on the former employer to make them divulge this information? o What if the prospective employee is applying for a job as a janitor in a school and he was fired form the last school for molesting a child? Singer v. Beach Trading Co., 876 A.2d 885 (N.J. Super Ct. App. Div. 2005)

Facts: Employee is terminated from new job when her old job tells the employer that she was not a VP but a customer service representative. She sues for negligent misrepresentation. o Holding: Reverse and remand to use new negligent misrepresentation test. o Rule: Employer can be held liable for the negligent misrepresentation of a former employee's work history if: o (1) the inquiring party clearly identifies the nature of the inquiry; o (2) the employer voluntarily decides to respond to the inquiry, and thereafter unreasonably provides false or inaccurate information; o (3) the person providing the inaccurate information is acting within the scope of his/her employment; o (4) the recipient of the incorrect information relies on its accuracy to support an adverse employment action against the plaintiff; and o (5) plaintiff suffers quantifiable damages proximately caused by the negligent misrepresentation.

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Defamation: defamation focus on reputational injuries to persons as a result of false statements being published to others about them o False and defamatory statement o Unprivileged publication to a 3rd party o Has to be some sort of negligent dissemination of the information on the publisher o Has to be some kind of harm or special harm caused by the publication Defenses to Defamation are : o Truth : truth of the statement o Privileged communication: conditional privilege of common interest (whether the new employer should know why the former employer was terminated such as a criminal offense)  this conditional privilege is eliminated by the presence of malice or reckless disregard!! For non-public figures: to have a defamation claim you have to have a false statement that is published to a third party and is only a negligent dissemination standard. To have a defamation claim involving a public figure there has to be malice which is reckless disregard Conditional privilege is a defense to a defamation claim: As a general matter, employers have a conditional privilege to publish the reasons for an employee’s termination to other employee’s. o A plaintiff wants to overcome this claim by showing malice which is a knowingly false statement or reckless disregard for the truth (actual malice standard) o Abuse of the privilege may also occur if the alleged defamer engages in excessive publication of the defamatory statement ‘by speaking

defamatory words in the presence of persons whose knowledge of them in unnecessary to the protection of the interest in question.’ • Lewis v. Equitable Life Assurance Soc’y, 389 N.W. 2d 876 (Minn. 1986) Gross insubordination case: the employees were not fired for performance reasons because they were good performers. o The court finds that in an action for defamation the public

Defamation: elements – • False statements • Publication • Negligent dissemination • Harm Malice replaces negligence only when you have a person that is a public figure!!! (the test is the same but your substituting negligence for malice) Public figure – celebrity, senator, congressman, even a police office or doctor or nurse has been held to be a public figure (depends on the circumstances of the case) Qualified Privilege – has to be a common interest; it has to be a good faith dissemination and you have to weigh the public policy interests as well - the need to share the information and your balancing public policy concerns and there is a common interest *If the employer makes this publication with malice then the privilege does not apply and it is not a defense or qualified privilege. (c) Invasion of Privacy – invasion of privacy claims based on pubic disclosure of private facts focus on the violation of the employee informational privacy interests when true statements of fact are disclosed to the general public and the public has no legitimate concern in knowing those facts. Different from defamation claims because hey involve (1) a true statement of facts, and (2) the focus, rather than on publication to a third party, is on unwanted publicity to the public at large. Eddy v. Brown, 715 P.2d 74 (Okla. 1986) – the court considered a public disclosure of private facts claim in the contxt of a supervisor disclosing to a limited number of other employees that the plaintiff had seen a psychiatrist. The court REJECTED a claim of unreasonable publicity because only a small group of co-workers were told, and this tort normally requires that the general public be informed. o Facts: A couple of Eddy’s co-workers make fun of him after they out—through his medical record—that he is undergoing psychological evaluation. P sues for IIED and invasion of privacy. Claim for

intentional infliction of emotional distress and invasion of privacy. Plaintiff worked for the oil refinery dept of texco and he claimed that his employer had him evaluated with a psychiatrist and the employer claimed it was for employment records and that his supervisor was legitimately concerned for his mental health. The court found that there was no intrusion because they believed the employer was acting in good faith. The foreman told the coworkers and made the publication that he was getting psychiatric help so he is suing for invasion of privacy. The court holds that this was a legitimate concern for the employer to have the employee go for a psychiatric evaluation and there were not enough people told to meet the publicity requirement. o Holding: Because psychiatric visits legitimate concerns of his supervisor, they were not actionable as unreasonable intrusion upon employee’s seclusion. Furthermore, since only a few people knew about the psych visits, it did not amount to “publicity.” o Rule: Invasion of privacy: o Publicity  “Publicity” means that the matter is made public, by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge ... The difference is not one of the means of communication ... [but] one of a communication that reaches, or is sure to reach the public.  Rest. 2d Torts § 652D o Unreasonable o Given as a private fact • The court applied a three part test: o 1. publicity o 2. unreasonable o 3. given as a private fact The court is obviously concerned about publication and if the information goes beyond the company but the court doesn’t even address this because they simply say that not enough people were told about the information o The bigger question in this case is: by disseminating to just 2 employees isn’t the company essentially telling the whole company? o Why is the court making the assumption that this information was just limited to those few people?  The court can only rely on the record and cannot assume that they have told other people o Different states have different venues regarding if they are employee or employer friendly

Bratt v. IBM Corp., 785 F.2d 352 (1st Cir. 1986) o Facts: P sues IBM for right of privacy for: o (1) disclosing P’s use of a company wide open-door policy; o (2) circulating memos that said he was paranoid and had mental problems; and o (3) allowed IBM’s physician to discuss P’s medical problems without P’s permission. o Holding: o (1) discussion of open-door policy is permitted because it’s not intimate or highly personal o (2) circulating memos about P’s mental health was not invasion of privacy because it was not widely disseminated and limited to managers that would work with P. o (3) REVERSED and REMANDED because a reasonable factfinder could have found that IBM gave P a reasonable expectation of privacy in providing an “in-house” doctors—even though the doctor that disclosed this was not “in-house” but a “local examining physician.” o Rule: Invasion of Privacy balancing test: o Balance  the degree of intrusion on privacy created by this disclosure Against  the legitimate business interest in that information held by the employees to whom the disclosure was made. Nelson v. NASA: (this case is bad law now but not for the ruling we are using it for) • Science support staff is applying for renewal of contract with NASA and the NASA application process consists of a background investigation. NASA claims they need financial history, emotional and mental stability, alcohol abuse statement etc. Their excuse for all this information was national security issues. The employees are asking for injunctive relief. • Injunction entails balancing the merits of likelihood of success on the merits vs. irreparable harm/monetary • The government has to show when prying into someone’s personal background: o Heightened scrutiny standard so they have to show legitimate state interest and the government’s action have to be narrowly tailored to meet the legitimate interest. • The court found that all of these questions into a person’s background is too broad and the court is not narrowly tailoring its actions to meet the interest of security. o If they had narrowed the questions specifically then it might have been justified. o The court also said that the choice facing these employees was simply that they either disclose the confidential and private information to potentially have their rights violated or you lose your job

This turns up to be a no win situation and this is why the court granted the injunction in this case

Is it a legitimate concern for employers to ask about the financial background of their prospective employees, credit checks or about their previous mental conditions? • Probably depends on the position and the type of job you are trying to get V. NEGLIGENT HIRING/RETENTION Malroney v. B&L Motor Freight, Inc., 496 N.E.2d 1086 (Ill. App. 1986) o Facts: D trucking company hires truck driver. On the application it asks if he has committed any vehicular or criminal offenses. He says no. The answer is not verified by D. While on duty, the trucker picks up hitch-hiker (P) and sexually assaults her. P sues D under respondeat superior. o Holding: Employer has duty to entrust truck to competent employee fit to drive a truck with a sleeping compartment. REMANDED to determine whether hiring was negligent. The court holds that the existence of a duty is not contingent on forseeablility alone. The court says that in this summary judgment motion there was an issue of fact concerning whether the employer had a duty to make a more detailed background investigation o Rule: Negligent Hiring Elements: o Duty – trucking company employer has duty to public to entrust truck to competent employee. o Breach o Causation o Damages Keller v. Koca, 111 P.3d 445 (Colo. 2005) o Facts: D owned drycleaners where Uzan was GM and had keys to the store but was not allowed to let 3rd parties in during non business hours. Uzan lets in a 12-year-old (P) during non-business hours and sexually assaults her. P sues. o Holding: Employer did not owe duty to victim, since harm to her was not foreseeable risk. o Rule: Duty element requires foreseeability. o The court said it was not foreseeable that the employer should envision this situation from happening  Should the employer have had the foresight that this would happen and taken preventative measures? • The court did leave open the possibility that this girl can have some sort of premises liability action

o But the court will not place the blame or responsibility on the employer  If you place the blame on the employer in this case then where do you draw the line for the future? When does the employer’s responsibility end then? - The forseeablility aspect gets rolled into the duty aspect Kadlec v. Medical Center v. Lakeview Anesthesia Associates, 527 F.3d 412 (5th Cir. 2008) o Facts: Anesthesiologist lets patient lapse into vegetative state at current job. Admits to on-duty narcotic use. Current employer sues old employer for negligent misrepresentation on old referrals and omissions of the employee’s drug use. o Holding: o (1) defendants had duty not to make affirmative misrepresentations to clinic in their referral letters concerning anesthesiologist; o (2) statements in PC shareholders' referral letters were materially misleading; but o (3) hospital's referral letter that did not recommend anesthesiologist to clinic was not affirmatively misleading; o (4) defendants did not have duty to disclose in their referral letters, absent misleading statements; o Rule: Employer does not have a duty to disclose, but if they choose to disclose, they have a duty to not make affirmative misrepresentations concerning previous employees. • The new employer sues Lakeview for intentional misrepresentation and also for negligent misrepresentation. o Intentional misrepresentation requirements: • Misrepresentation of a material fact • Made with intent to deceive • Causing justifiable reliance with resultant injury o Negligent misrepresentation elements: • Legal duty on part of defendant to supply correct information • Breach of that duty which can occur by omission or affirmative misrepresentation • Breach must have cause damages to the plaintiff based on the plaintiff’s reasonable reliance on the misrepresentation TESTING OF APPLICANTS AND EMPLOYEES POLYGRAPH AND PERSONALITY TESTS Soroka v. Dayton Hudson Corp., 1 Cal. Rptr 2d 77 (Cal.Ct. App. 1991). o Facts: Target security applicants brought class action suit against the company for requiring them to submit to a psychological


screening. The test involved questions of religious beliefs and sexual orientation. o Holding: Target's preemployment requirement of psychological screening violates both the constitutional right to privacy and statutory prohibitions against improper preemployment inquires and discriminatory conduct by inquiring into its applicants' religious beliefs and sexual orientation o Rule: Under California Constitution, any violation of the right to privacy of job applicants must be justified by a compelling interest. o There is no compelling interest to ask a store security officer about sexual orientation or religion. o The employer’s justification for asking questions about religion and sexual orientation was that these questions were to measure emotional stability. The court says there is no correlation between asking about emotional stability through asking someone about their religion or sexual orientation. Chapter 9: Employee Privacy Protections - Congress passed the Employee Polygraph Protection Act of 1988 which makes it unlawful for an employer to require or request an employee or applicant to submit to a polygraph o ruse the results of such tests, except in limited circumstances. - The act does not apply to public employees (because they have constitutional protections), national defense and security contractors, security guard firms, and drug manufacturers and distributors. VII. DRUG TESTING AND THE CONSTITUTION The laws of workplace drug testing are divided into public employment (where the 14th amendment applies) and private employment (where employees must rely on either statutory schemes or common law theories like the tort of invasion of privacy.) Public employees and the 14th amendment: o Public employers must satisfy a less stringent “reasonableness” standard in order to engage in drug testing.  Public employees are most likely to be successful in challenging drug testing regimes in situations where employees are not involved in dangerous, sensitive work or where there is no evidence to suggest that employees have been using drugs.  Random drug testing have been allowed for employment positions such as teachers because they play an impressionable role in the lives of young children. National Treasury Employees Union v. Von Raab, 489 U.S. 656 (1989) - the question presented was whether federal customs agents could be subjected to drug urinalysis testing as a condition of their being promoted or transferred, even though there was no history of a drug problem in the Customs Service. Using a constitutional balancing test, the court noted

that the immediacy of a government concern and the minimal nature of the intrusion outweighed the individuals privacy interest and permitted the government to drug test customs agents. o Facts: Customs agents are notified and subjected to drug testing prior to promotion/transfer o Issue: Whether federal customs agents could be subjected to drug urinalysis testing as a condition of promotion or transfer even where there’s no history of a drug problem. o Holding: Urinalysis does not violate 4th Amendment because Government has a reasonable interest in drug testing customs officers —immediacy of the government concern outweighs the minimal intrusion. o Rule: DRUG TESTING Balancing: o public need for the program against o the individual's privacy concerns implicated by the tests to determine whether a warrant, probable cause, or some level of individualized suspicion is required in this particular context. Chandler v. Miller, 520 U.S. 305 (1997)(contrast with Von Raab) – the court struck down a state statute in Georgia that required random drug testing of candidates for public office. o Facts: State statute in Georgia requires those running for public office to submit to a drug test. o Holding: Georgia's requirement that candidates for state office pass a drug test does not fit within the closely guarded category of constitutionally permissible suspicionless searches o Rule: Where public safety is not genuinely in jeopardy, Fourth Amendment precludes suspicionless search, no matter how conveniently arranged. For private sector employees: such challenges usually maintain that the process of specimen collection invades employee’s privacy or that the test itself reveals sensitive private information. o Private employees rely on legal arguments based on state constitutional provisions, statutory regimes, or common law doctrines but are generally less successful than their public employee counterparts. DRUG TESTING (CONCLUSION) 19 Solid Waste Dept. Mechanics v. Albuquerque; 156 F.3d 1068 (10th Cir. 1998) o Facts: City employees challenge city’s alcohol- and drug-policies on the grounds that they are violations of 4th and 14th Amendments. o Holding: City's program requiring drug testing of trash truck mechanics not authorized to drive city vehicles on streets and


highways was not warranted by a special need, and thus constituted unreasonable search and seizure o Rule: o Balancing Test Explained: In balancing intrusion on individuals' privacy interests against promotion of legitimate governmental interests, for purposes of determining whether program for drug testing of government employees constitutes unreasonable search and seizure, court examines on one side the nature of the privacy interest upon which the search at issue intrudes and the character of the intrusion that is complained of, and, on the other side, considers the nature and immediacy of the governmental concern at issue and the efficacy of the challenged test for meeting it.


Luedtke v. Nabors Alaska Drilling Inc., 768 P.2d 1123 (Alaska 1989) o Facts: Brothers working on Alasking drilling rigs are fired by private employer after refusing to submit to a drug test. o Holding: (1) drug testing program did not violate state constitutional right to privacy; (2) employer's actions did not give rise to cause of action for invasion of privacy; and (3) discharge of employees did not violate implied covenant of good faith and fair dealing. o Rule: With private employer (at-will doctrine!), the state constitution must afford a right to privacy to invalidate drug test program. Private employees will likely have a difficult time mounting state constitutional or common law challenges to private work place drug testing programs as long as some basic procedural benchmarks, concerning notice and timeliness, are followed by the employer. GROOMING AND DRESS Kelley v. Johnson, 425 U.S. 238 (1976) o Facts: Policeman brought suit under the Civil Rights Act of 1871 challenging validity of county's hair grooming regulation for the male members of its police force. The regulation required short hair, no sideburns, moustaches, beards or goatees except for medical reasons. o Holding: Police force regulations were not arbitrary enough to deprive an officer of his liberty because they were rationally related in fostering an “esprit de corps” and making officers readily identifiable to the public. o Rule: Choice of organization, dress and equipment for law enforcement personnel is a decision entitled to the same sort of presumption of legislative validity as are state choices designed to promote other aims within the cognizance of the state's police power.



Jespersen v. Harrah’s Operating Co, Inc., 444 F.3d 1104 (9th Cir. 2006) o Facts: Female bartender at a casino is told to wear make-up. She refuses and is terminated. She brings a suit against the casino under Title VII sex discrimination. o Holdings: o requirement that only female employees wear makeup was insufficient to establish prima facie Title VII sex discrimination based on disparate impact; o Court of Appeals would not take judicial notice of asserted fact that it cost more money and took more time for a female employee than a male employee to comply with employer's grooming policy; and o grooming policy did not constitute impermissible sex stereotyping, as would establish that gender played a motivating role in employer's policy. o Rule: Private employees may reasonably regulate the grooming and dress of their employees.

- Fourth Amendment protections (searching offices) – in deciding whether public employees have such protections, the court should first decide whether the employee has a reasonable expectation of privacy in different parts of her office. If so, the court should next balance the privacy interests of the employee against the legitimate interests of the employer in running an efficient governmental workplace. The “special needs” for legitimate work-related, non-investigatory intrusions and investigations for workrelated misconduct mean that it is not necessary to obtain a warrant based on probable cause in this context. Such searches are instead judges by overall reasonableness. Bodewig v. K-Mart, Inc, 635 P.2d 657 (Or. App. 1981) o Facts: K-Mart employee is accused by customer of shorting her change. The employee is searched and subsequently strip-searched. She sues K-Mart and customer under theory of outrageous conduct. o Holding: o Rule: Vega-Rogriguez v. Puerto Rico Tel. Co., 110 F.3d 174 (1st Cir. 1997) o Facts: o Holding: o Rule: (1) employees lacked objectively reasonable expectation of privacy against disclosed, soundless video surveillance while toiling in open and undifferentiated work area; o (2) employees lacked fundamental right to be free from surveillance; and

(3) surveillance did not violate employees' substantive due process rights

Smyth v. Pyllsbury Co., 914 F. Supp. 97 (E.D. Pa. 1996) o Facts: Employee is discharged for what he send over company email o Holding: o Rule: Termination of at-will employee for sending inappropriate e-mail did not violate public policy. o Reasonable expectation of privacy was lost when he sent out the e-mail over the company server. Catalano v. GWD Management Corp., 2005 WL 5519861 (S.D. Ga. March 30, 2005) o Facts: McDonalds strip search case o Holding: o Rule:

- the has to be some nexus between the employee’s off- duty conduct and the business of the employer. Rulon-Miller v. IBM Corp., 162 Cal. App. 3d 241 (1984) – top performing female employee was fired after her supervisor discovered she was having a romantic relationship off-duty with a competitors employee. Th eocurt foidn that the firing violated the company’s own policy and amounted to a wrongful discharge. Court also granted intentional infliction of emotional distress as well because they found that the manner in which the employee was fired was extreame and outrageous. The court went on to suggest that that an employee who is fired for romantic off-duty conduct might also have a cause of action in those states which recognize claims for breach of the implied covenant of good faith and fair dealing. • IBM tried to fire an employee that was dating a previous employee that now worked for a competing corporation. The company had already known about the relationship before her promotion, she was also a good performer at the company. The manager called her in after the promotion and said she would have a week to decide whether she wants her job or to pursue the relationship. The manager then calls her in the next day and says that she is transferred and at some point fired. Miller brings a claim of wrongful discharge and intentional infliction of emotional distress. IBM had a policy of employer privacy and protection of off work activates as long as they did not affect the work situation or performance. The employee prevails in this case.

o What if there was a relationship between employees of two competing corporations who had essential information about the businesses and profit seeking plans?  If there is a policy to protect the privacy of the employee (such as in the IBM case) the employer might win if the jury got the same jury instruction as in this case which would balance the privacy interest of the employee and the business interest of the company. o Is it sufficient for a company to say that this person has a conflict of interest because they are in the position to share our company secrets with other people? Is this even is privacy interest?  At- Will employment means that you can be fired anytime for anything McCavitt v. Swiss Reinsurance America Co., 237 F.3d 166 (2d Cir. 2001) Two employees of Swiss co were dating each other and the plaintiff was passed over for a promotion and brought attention to this to his manager. The employee was soon fired and he claims that he cannot be fired for his recreational off work activities. The federal court looks at the highest court in the state of New York and decides whether dating was seen as a protected recreational activity. The court decides that dating is NOT a recreational activity. o look at the sources form where you’re coming up with your causes of action. o The whole point of these dating cases is to talk about privacy and to what extent employers can hold your private life against you to terminate you or to where they cannot judge you based upon it.  Exceptions are contracts, promissory estoppel, good faith and fair dealing, public policy exceptions. o Absent a constitutional right or a statutory right or a contract, employment is at will and the employer can fire anybody for any reason.

**only one state that does not have at-will employment is Montana – you need to have an express statement of cause. Poirier v. Mass. Dept. of Correction:

FREEDOM OF EXPRESSION ON AND AWAY FROM THE JOB The public Sector: - for public employee to make out First Amendment retaliation claims based on their speech, they must o Prove that the conduct at issue was constitutionally protected, and that it was a substantial or motivating factor in the termination. If the employer

discharges that burden, the government can escape liability by showing that it would have taken the same action even in the absence of the protected conduct. Important considerations in carrying out this balance include whether the statements in question impair the disciplinary authority of superiors, the harmony among co-workers, the close working relationships for which personal loyalty and confidence are necessary, of the performance of the employee’s duties or the regular operation of the enterprise. **if you want first amendment protection is has to be speech and it has to be aimed at a matter of public concern. - the protection only applies when it is a matter of public concern!!!!!!!!!!!!! Rankin v. McPherson, 483 U.S. 378 (1987) – provides an example of the fact intensive nature of this analysis. A Texas constable fired an employee after overhearing her say after the Regan assassination attempt that they should get him next time. The court overturned the employee’s termination, finding that the statement, when taken in context was an indirect comment on Regan’s policies and was not literally a threat to kill the president. Consequently, the statement was protected as a statement concerning a matter of public concern and the court went on to find that under the ‘Pickering’ balance, the first amendment right of the employee outweighed the efficiency interest of the employer. o Facts: Data-entry employee in county constable office is terminated because she says, “if they go after him again, I hope they get him,” in reference to an assassination attempt on the president. o Holding: (1) statement by employee, made in course of conversation with coemployee addressing policies of President's administration, that, “if they go for him again, I hope they get him” dealt with matter of public concern, and o (2) constable's interest in discharging clerical employee in constable's office for making statement did not outweigh employee's rights under First Amendment. o Rule: Protected Work Speech Balancing Test: o to determine whether public employer properly discharged employee for engaging in speech is whether speech may be fairly characterized as constituting speech on matter of public concern • McPherson was appointed as a deputy constable and was conditional for a 90 day period. All she did was solely data entry and had no contact with the public. She made a statement after Regan had been shot that, “if they go for him again, I hope they get him.” The boss asked her about this and she admitted it and they fired her. One of her justifications was due to the fact that she was African American and that Regan had not done anything for the African American people. o The court implements a balancing test to determine whether the speech was protected. (pg 8 of the case)

Balance between the interests of the employee commenting on matters of public concern verses the interests of the state as an employer and providing sufficient services. • Public concern: o Issue was about president o The court found that the remark was made in a private context and she didn’t know anyone else was listening. She wasn’t discrediting the agency and she was not a policy maker. o The court found that she was terminated in violation of her first amendment rights because in the balancing test, her rights trumped the employers.  There was no dispute that she was fired due to the comment she made at work.  The court found that she was commenting on a matter of public concern. • The dissent’s concern about this case in general was that we are expanding the range of protected speech and pretty much ruling that anyone who is not a policy maker can say anything they want and we can take no action.  Curay-Cramer v. Ursuline Academy, 450 F.3d 130 (3d Cir. 2006) o Facts: Former teacher at private Catholic school sued school, individual school officials, and others, alleging that her termination after signing pro-choice advertisement in local newspaper constituted retaliation for protected speech and sex discrimination in violation of Title VII and Pregnancy Discrimination Act o Holding: (1) teacher did not engage in protected activity when she signed newspaper advertisement, precluding retaliation claim, and o (2) sex discrimination claim was not cognizable, since it would necessitate court's assessment of relative severity of violations of church doctrine, in violation of First Amendment. Catholic school teacher had signed a petition for pro-choice rights and was also involved with Planned Parenthood. The president of the school consults with the Bishop and she was fired. The school gave her an opportunity to resign as opposed to being fired and they also said that she could keep her job if she recanted and said she was pro-life. She sues under the gender discrimination ordinance and the court determines that this has nothing to do with an illegal employment practice but rather goes to a religious tenement. o She also has a retaliation claim here o By saying she was pro-choice; she basically was not protesting any employment practice here.

For the private workplace:


Novosel has not been upheld in any other court!!! The current state of the law is that unless private sector workers have statutory or contractual protections, such as under a state Hatch Act, individual employment contract, or company handbook, they remain without workplace protection for their political affiliations of beliefs.

Novosel v. Nationwide Insurance Co., 721 F.2d 894 (3d Cir. 1983) – based on the tort of wrongful discharge, in violation of public policy, the ocurt found that the employer’s termination was in violation of Pennsylvania’s public policy because that policy encompassed rights of political expression and association derived from both the federal and Pennsylvania state constitutions. o Facts: employee was fired by his employer after he refused to lobby on a political issue on the employer’s behalf. o Holding: (1) former employee's allegations of discharge for refusal to participate in former employer's lobbying effort and his privately stated opposition to company's political stand stated claim for wrongful discharge under Pennsylvania law; o Rule: Factors to be considered in discharge for refusal to participate in lobbying: o whether, because of speech, employer was prevented from efficiently carrying out its responsibilities, o whether speech impaired employee's ability to carry his own responsibilities, o whether speech interfered with essential and close working relationships, and o whether manner, time and place in which speech occurred interfered with business operations. Jordan v. Ector County, 516 F.3d 290 (5th Cir. 2008) o Facts: Two County Clerk employees run for County Clerk. When one wins (Morgan), the other (Jordan) stays on but is demoted. After an incident where Jordan goes into a locked judge’s office, Morgan fires her. It comes out that Morgan fires her because they were about to run against each other again. o Holding: employee engaged in protected activity involving hybrid of speech and political affiliation o Rule: For a public employee to prevail on a First Amendment retaliation claim, she must prove that: (1) she suffered an adverse employment decision; (2) she was engaged in protected activity; and (3) the requisite causal relationship between the two exists o She is trying to enforce the first amendment right of political activities. o The court engages in a balancing test Pickering – Connick o Matter of public concern – the court finds that there is a matter of public concern and you are balancing this against

the employers interest of having an efficiently run workplace o The ultimate opinion in this case was that the employee prevailed because the court seems to think that she was fired because of the rivalry going on between her and her boss. o The court focused on the fact that they were rivals  If other employees in the clerks office had done the same thing and weren’t terminated than the employer has a problem. The motivating factor in Jordan’s termination could have been the fact that she was a rival.  When you are practicing and you have a discrimination claim like this, the key thing that you want to look at is how the company treated other people in the similar situation.


DISCHARGE AND TERMINATION OF EMPLOYMENT A. THE EMPLOYMENT AT-WILL RULE Employment at Will Doctrine: the employer can fire you for pretty much any reason and you can leave for any reason. The employment relationship can be terminated by either party for any reason or no reason at all at any time. o This doctrine may seem to favor employers Distinguishing between reason and good reason: just because you have a reason does not mean that it is enough for someone to be terminated for. i.e. being 5 minutes late to work. Chapter 4: (exception in Montana) - Today at-will employment is the baseline legal rule in every American State except Montana, which in 1987 enacted the Wrongful Discharge from Employment Act. (under this statue, after an employee has passed a probationary period, the employer cannot fire the employee absent ‘good cause,’ which the statute defines as “reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer’s operation, or other legitimate business reason.” Buian v. Jacobs and Co., 428 F.2d 531 (2d Cir. 1970) o Facts: P is offered a contract to work in Saudia Arabia offering a MONTHLY salary for an 18-month contract. He is terminated after arriving in Saudia Arabia o Holding: provision of employment contract that ‘it is scheduled that your assignment in Saudi Arabia will continue for a period of 18 months' was merely one of expectation and was not sufficient to convert employment relationship terminable at will to contract of

specific duration, particularly where contract specifically permitted employee to work as long as he desired. o Rule: An employment contract not specifically intended by the parties to be any certain duration creates employment relationship which is terminable at will by either party without cause and without liability. o The employee sues under breach of an employment contract; the employee says that the letter was a contract  The court rules that the letter was not an intended contract and was terminable at any time. The contract was not supposed to be for a given duration. The carefully chosen language of the letter by the employer helped them out here. The court also found that there was no mutual obligation of the parties.  The employee relied on this job promise but he didn’t give up his job, his travel expenses were covered. If you have at-will employment and your job is taken away, you don’t really have any remedy. Even under promissory estoppel theory, the most you could probably get is something like your moving expenses.

Chapter 5 - Contract Erosions of Employment at Will - since the employment at-will rule is a default rule, it can be changed by contract (the contract can be written or oral, express or implied, definite term or satisfaction) or through a contract with the employer and union (this is called a collective bargaining agreement). o Definite term contracts:  Written contract that specifies a length of time, or limits the circumstances under which the employer may discharge the employee -> this is no longer employment at will!! • Issues: o Which standard of discharge should be implied into an employment contract that is silent on that issue:  Most courts would imply a “just cause” standard into the term contract if it was silent on issues of termination or discharge. o What does just cause mean?

Well drafted employment contracts will outline what just cause is for termination, but most do not.  Each party will argue from their own point of view as to why their action are correct or justified o With what consequence can an employee quit during a term contract?  Most courts have held that employment contracts should be interpreted symmetrically and that employee’s, like employers, may terminate the employment contract for just cause.  o Oral Contracts:  Although many times these agreements can be upheld in court, the problems which arise are: • Nearly every employee has heard language form his employer assuring job security o This might just be words of encouragement which the employee takes to be a legally enforceable promise o Employers could avoid such misunderstandings by constantly reminding employees that they are employed at will and can be fired at any time with no notice and for no good reason. • Second problem is that many courts require the employee to show not only that the employer made contractual representations, but also that the employee furnished additional consideration, beyond continued employment, in reliance on those representations. • Third problem is proving exactly what was said years afterward. • Fourth problem is the statue of frauds – nullifies oral contracts which are not performable within one year. o If an employee asserts a contract for employment ‘until retirement’ most courts will refuse enforcement if the employee is young and therefore not within retirement age. (But what if the employee were to win the lottery????) THE PUBLIC POLICY EXCEPTION (i.e. whistle blowing, exercising a right (statutory or constitutional) etc.) Chapter 6: Tort erosions of employment at will (employment torts) - Employment tort remedies are far more generous than employment contract remedies.


Wrongful discharge in violation of public policy: o The public policy allows the employee to serve the public interest notwithstanding the employer’s displeasure (public policy tort still applies even if a contract is signed; this cannot be waived)  Public policy: 2 ways it can be defined • 1. require that the public policy be articulated in a constitution, statute, regulation, or judicial holding • 2. much broader way is to only require that the employee articulate a public good or civic duty Gantt v. Sentry Insurance, 4 Cal. Rptr. 2d 874 (Cal. 1992) o Facts: Employee is demoted and ultimately terminated for supporting a co-worker who has claimed sexual harassment against their employers. o Holding: employee who was terminated in retaliation for supporting co-worker's claim of sexual harassment stated cause of action for tortious discharge against public policy o Rule: At-will employee possesses tort action when: o he or she is discharged for performing act that public policy would encourage, o or for refusing to do something that public policy would condemn o Addresses a public policy issue – a woman was being sexually harassed at work and her boss (plaintiff) supported her and took up her side in advocating for her with upper management. The plaintiff was advocating on behalf of another who was a subject of sexual harassment. Ultimately he was demoted from his managerial position down to a sales rep position and he couldn’t keep his books so he looks at it as a constructive discharge and he ultimately left the job. Bruno (woman), along with complaining to the supervisor also complained to DFEH (dept. of fair employment of housing). The plaintiff had cooperated with the investigation of DFEH and as a result he was demoted. o Constructive discharge is when your employer makes your work environment so horrible that you are forced to resign.  Finding a new job before you resign affect your damages award but you can still bring the claim. o The court says that there was a public policy violation and they found the public policy in the statute; the antidiscrimination statute of California.  The court generally went though a thought process which asked would you want the public to do what the plaintiff did without impunity. (Do we want to encourage this as a public policy

matter? Do we want people to report decimation who aren’t themselves victims of discrimination?) • The answer here is yes o There has to be an adverse action as well (such as a demotion or discharge) to bring this claim. o The court was also looking at public policy questions of (along with the discouragement of discrimination) employees feeling comfortable to cooperate or tell the truth without the fear of being fired. Arres v. IMI Cornelius Remcor, Inc., 333 F.3d 812 (7th Cir. 2003) o Facts: Employee suggested to employers that they terminate people who may have fraudulent SSI cards. Employer tells her to notify the employees to correct the error. She refuses to do this because she believes it to be unlawful. o Holding: fact that employee may have had federal remedy against employer under Immigration Reform and Control Act did not automatically preclude employee's state law tort claim of retaliatory discharge o Rule: Public Policy exception is allowed even if the employee asserting it is incorrect about the law which he or she is trying to uphold. o A theory of retaliatory discharge under Illinois law requires an employee to show: o (1) that she had been discharged; o (2) that her discharge was in retaliation for her activities; and o (3) that her discharge violated a clearly mandated public policy of the state of Illinois. • An agency came back to the defendant and said that 10% of the staff didn’t fill out their W2 forms correctly and the information (Social Security Numbers) didn’t line up. The company sought legal counsel and sent letters out to correct the information and supplement it. Arres refuses to cooperate and process because she believes the people are still lying and wont process the information and she gets fired because the company says that this was poor performance. She brings suit. o The court says that the employers attempt to supplement the information was reasonable but this employee took it upon herself to be judge and jury and everything else without consulting anybody and ultimately lost her job.  Although she believed what they were doing was against the law, she probably didn’t go about her objection the right way.  The court did not find a public policy exception because she took action in to her own hands for her own idiosyncratic view of what the law is.

You really can’t have employees freelancing and doing their own thing when the employer is asking the employee to do something reasonable here. o In some cases it is warranted for the employee to blow the whistle but here the employer is acting in a reasonable manner. CEPA – conscientious employee protection act (NJ) • Serrano v. Christ Hosp., 2007 WL 4462723 (N.J. Super Ct. App. Div. 2007) Plaintiff was employed as a security at a hospital and had signed a confidentiality agreement. The plaintiff had to interpret for an elderly woman who thought to have meningitis and she also had grandchildren who may have had it. (She saw him cough and she said that the kids shouldn’t go to the school.) The school asked why the children were being pulled out of class and the secretary tells them and is subsequently fired for disclosing the information. The family sues. o The hospital wins on summary judgment but the appellant court overturns this. The appellate court looks at the procedural issue that there are no findings of fact and the judge is not clear. o Regarding the public policy issue the court says that even though there is not specific statute to allow this, there is a public policy interest. The court balances the idea of confidentiality with laws that are in effect to protect children.  There is also a public policy interest in the confidentiality of patients but there are exceptions to this interest. • The court says that there is a public policy here that raises the interest of children above people like us. o The court reverses the decision. o The court here is using a balancing act of conveying confidential information and protecting young children. (these are the two public policy issues in play)  The interest of children here outweighs but the court will let the jury here decide which one outweighs for sure without being definitive. • The court left this decision up to the jury

Public policy claims can arise when there is a statutory or constitutional right. They can also arise when you refuse to commit an unlawful act or if you are exercising a statutory right. - The manner in which you go about trying to establish this public policy exception is also important. (i.e. the example of the case where the employee was fired for breaking out into a fist fight while trying to prevent someone from drunk driving. Although the intentions were noble, the employee could have gone about accomplishing this in a better manner!!) o There is a means by which you try to enforce the public policy or whistle blow that the courts look at.

For the exam you just have to say that there is a public policy exception that could apply but don’t necessarily need to know the circuit. XIII. BREACH OF CONTRACT TERMS Breach of Contract Terms: - For a contract you need to have an offer, acceptance, consideration. o There can be two kinds of contracts – unilateral or bilateral o Terms of a contract are bargain for exchange Gordon v. Matthew Bender & Co., 562 F.Supp. 1286 (N.D. Ill. 1983) o Facts: Employee is terminated right before the 8-year mark of employment where his pension would have kicked in. o Holding: Employer could not terminate (in bad faith) prior to the vesting of pension to avoid paying the pension. o Rule: Employee at will may not be deprived of commissions, in large part “earned” prior to separating from employer, by discharge made in bad faith and intended to deprive employee of the commissions. • Gordon sold overpriced law books. There wasn’t an employment contract and they both worked very well and after a while they downsized his district and there was a letter which said that he has to perform to satisfaction and meet the same sales performance in order to continue. There was no time set. If he met his goals, he would be taken off probation and be stored to same status as he was before. The offer here is dependant upon the satisfactory performance of the plaintiff. Gordon gets fired and he filed 12 count complaints. o The court says that satisfactory performance is a subjective standard as compared to just cause. Satisfactory performance is applied in every contract.  Just cause was not spelled out anywhere in the companies policy so isn’t that essentially subjective as well? • The court says that they should have had employment termination based on just cause rather than satisfactory performance. o The court here says its not a contract;  Unless you have an express written contract it’s very difficult that the court will enforce a contract claim just based on oral promises or discussion. Scribner v. Worldcom, Inc., 249 F.3d 902 (9th Cir. 2001) o Facts: Employee is terminated by his employer when they are trying to sell a division of the corporation. The corporation frames the termination as “for cause” to avoid having to honor stock options to employee.

Holding: committee breached duty of good faith and fair dealing it owed under Washington law when it found employee's termination to be with cause for purposes of option contracts o Rule: Once again, you cannot deprive an employee of bargain-for terms (pensions, stock options) by operating in bad faith.


Here we have a stock option contract. Scribner was terminated to facilitate an asset sale and he was fired without cause. This case is about what cause is or is not. The court granted summary judgment for the employee and the appellate court upheld. The court looked at the contract and it wasn’t clear exactly whether there was just cause provision and exactly what just cause meant. The terms of the contract were interpreted by the stock option committee who reviewed Scribner’s case and they determined that he was terminated for cause. The purported cause in this case the court determined was a performance related term.

Pugh v. See’s Candies, Inc., 171 Cal. Rptr 917 (Cal. Ct. App. 1981) –. o Facts: Wayne Pugh, a 32 year employee of See’s Candies, had started as a dishwasher and worked his way up to Vice President of Production, and a member of the board of directors. Prior to his termination, See’s enjoined a record setting year for which Pugh was largely responsible, and See’s never gave Pugh any indication that his performance was less than stellar. Nonetheless, when Pugh returned form a trip, See’s fired him without explanation. Pugh sued for breach of contract. o Holding: Court of appeals held that employers conduct can give rise to an implied promise not to act arbitrarily creating an implied in fact contract. Conduct which created this implied in fact contract was the duration of Pugh’s employment, the commendations and promotions he received, that apparent lack of any direct criticism of his work, the assurance of job security he was given, and the employers acknowledged practice of not terminating administrative personnel except for good cause. o Rule: ** a later case retreated this case by clarifying that long tenure is one factor in the determination of an implied in fact employment contract, but it cannot alone form such a contract. XIV. EMPLOYEE HANDBOOKS

Employment manuals: - these manuals promote consistency in the treatment of employees, which in turn both improves employee morale and decreases the likelihood of discrimination suits (which are often predicated on inconsistent treatment) - The manuals fulfills a statutory notice requirement - The manuals can create a defense in other types of employment claims



Employment manuals efficiently communicate to employees basic information about the workplace Employment manuals can also create employment contracts o It depends on the state as to whether the manual can be upheld even if the employee had no knowledge about it or whether they must have read it An employment manual can may contractually convert at-will employment into just-cause employment by implication o Employers can avoid this handbook claim by adding a disclaimer into the handbook which is 1. prominent, 2. clear, and 3. and specific, reminding the employee that the position is at will. For amendments: (best way is to have a disclaimer in the front to avoid issues) o If the handbook has a disclaimer reserving the right for the employer to rescind or modify information, this is easy to do.  Employer simply needs to give employee adequate notice of the changes o If the handbook has no such disclaimer than the employer might have to jump through contractual hoops  Then the modification has to be done in traditional contractual ways through offer, acceptance and consideration, yet other courts take the position that the promises in a manual only bind the employer as long as they wish to be bound and yet other courts have held that employers can unilaterally modify the job protection promises only after a reasonable time, with reasonable notice, and without interfering with the employee’s vested benefits. Woolley v. Hoffman-LaRoche, Inc., 99 N.J. 284 (1985) o Facts: P works as an engineer for D. There is no written employment contract. After writing a report about piping problems that his superiors did not like, he is asked to resign or be fired. P declines. P is fired. o Holding: absent a clear and prominent disclaimer, an implied promise contained in an employment manual that an employee will be fired only for cause was enforceable against employer even when employment was for an indefinite term and would otherwise be terminable at will. o Rule: An employment manual can contractually obligate the employer to the terms within it (unilateral contract!) Bankey v. Storer Broadcasting Co., 432 Mich. 438 (1989) o Facts: o Holding: In Michigan, employer may unilaterally change written discharge-for-cause policy to employment-at-will policy, even though right to make such change was not expressly reserved from onset o Rule: For revocation of discharge-for-cause policy to become legally effective, reasonable notice of change must be uniformally given to affected employees.

Nicosia v. Wakefern Food Corp., 136 N.J. 401 (1994) o Facts: Low-level employee (P) is fired for mishandling merchandise. P files wrongful termination suit for not following the manual’s procedures. The manual contains a disclaimer on the first paragraph of the first page of a 160-page manual but was only distributed to 300 of the 3,000 of the employees. o Holding: employee handbook created implied contract of employment. o Rule: Disclaimer location: In determining whether handbook is enforceable contract of employment, courts look to reasonable expectation of employment. o Distribution: the handbook must be widely distributed XV. PROMISSORY ESTOPPEL Promissory Estoppel: (usually a second best claim that is used when a straightforward breach of contract claim in untenable) - The contract theory of promissory estoppel enforces promises that induce reasonable reliance. A promissory estoppel claim can be divided into 4 elements: o 1. a promise o 2. which the promisor should reasonably expect to induce action or forbearance o 3. which does induce such action or forbearance o 4. resulting in injustice - Such claims are usually made the employer makes a job offer and the prospective employee resigns her current job and moves to the employer’s place of employment, and the employer rescinds the job offer at the last minute. (most courts would say that the offer was illusory, as neither party was bound to anything and the original job offer as at-will) o Many plaintiff who move for job offers in this scenario argue that the relocation constituted “additional consideration” sufficient to support an implied promise by the employer to discharge only for cause. (depends on the court if they will uphold this) Pepsi-Cola General Bottlers, Inc. v. Woods, 440 N.E.2d 696 (Ind. App. 1982) o Facts: P is orally promised a job with Pepsi provided that she quit her other jobs. She discloses that her boyfriend works for Coca Cola. She is terminated before she reports to work. She subsequently finds a job at the Ramada. P sues on promissory estoppel theory. o Holding: P had right of action under promissory estoppel, but since defendant could discharge plaintiff after a single day's work without incurring liability and since there was insufficient proof of out-of-pocket expenses incurred in reliance on defendant's promise, plaintiff was not entitled to recovery.

Rule: Executory indefinite employment contract is not enforceable, and is terminable at will of either party. o If tenure of service cannot be determined from terms of contract, such contract is one at will, and may be terminated at any time

Worker is designated to start working on March 26, and is interviewed on March 6th. At the interview it comes out that her boyfriend works for Coke. The employer said that it wasn’t a problem. Pepsi discharged her before she even started work. She had to work for 26 weeks at Ramada and then finally found a job that would pay her same amount as Pepsi. o She wins at trial and was awarded $2,100 for the 26 weeks that she earned less than she would have earned at Pepsi.  Pepsi appeals and Pepsi wins because the court said that there wasn’t a term contract and she could have been fired even after 1 day. Also the damages were just too speculative and she couldn’t show it.  The court says that promissory estoppel is defiantly a viable claim but there was no work contract and she could have been fired in one day. He recovery could have been something like moving expenses • Promissory estoppel is a viable theory but the problem is the damages; so you want to make sure that your damages are reasonable in relation to the job offer and something moving expenses etc. You have to make sure the damages are not speculative. The damages have to be based on reasonable action someone would take in response to a job. • Promissory estoppel is a contract theory but its not really a contract, it is only to get you the damages from relying on a promise but in a reasonable light. • The benefit for Pepsi to appeal this judgment is so that they wouldn’t have to pay salary; they’ll pay the moving expenses but in any other case the salary might be much more than the one in this case. • If it is an at-will situation then you will not collect your salary. It is far too speculative because you don’t really know how long you would have worked there.

XVI. COVENANT OF GOOD FAITH AND FAIR DEALING Implied Covenant of Good Faith and Fair Dealing: - good faith not applicable to at-will employment: o many courts have held that the implied covenants of good faith do not apply to at-will. Murphy v. American Home Products Corp., 448 N.E.2d 86 (N.Y. 1983) -

Facts: P who has no written contract is allegedly fired for uncovering millions in illegal financial manipulations and for his age. P argues that D was bound not to dismiss employees for reasons contrary to public policy. o Holding: there is no implied obligation of good faith in at-will contract of employment o Rule: Good Faith: (NY) an obligation of good faith and fair dealing on the part of a party to a contract may be implied and, if implied will be enforced. The covenant of good faith will not, however, fetter an employer’s right to terminate an employee.

Accountant Joseph Murphy claimed that he was fired because he had told the board that company officers were engaging in accounting improprieties. Murphy argues that the covenant of good faith and fair dealing should be implied into his at-will employment contract, and that because it was part of his job to report accounting improprieties, his discharge violated the covenant. NY court of appeals refused to imply the covenant of good faith into the at-will relationship. Any limitation to the employer’s right to fire should come from legislature or an express contract. • He wasn’t a contract employee so he tries to use the good faith and fair dealing because he had been there so long even though he didn’t have a contract. The court says that you cannot have a breach of contract theory without an underlying contract. o Murphy also tired to alleged a public policy/whistle blowing exception!!  He was saying that this company was engaging in fraudulent accounting practices and he tried to blow the whistle and was fired and now he is trying to get the state of NY to protect him.  The court did not accept his public policy exception and said that the legislature can deal with that if they would like to. **NY later passed a whistle blowing statute which says that if you were trying to stop a public health and safety issue, you have to prove that there is a health or safety issue (very restrictive) . In NJ, all you need is a reasonable belief that your employer was breaking the law even if he wasn’t. There is also a one year statute of limitations in the NY whistler blower claim.

***other courts have implied the covenant of good faith into at-will employment, but have defined good faith narrowly to mean that employers cannot expropriate benefits already earned by employees. (see Fortune v. National Cash Register) Fortune v. National Cash Register, 364 N.E. 2d 1251 (Mass. 1977) o Facts: P is employed by written contract as a salesman who receives commission for his sales. Prior to completing a big sale, the company terminates him. o Holding: (1) even though salesman's contract was terminable at will, there was an implied covenant of good faith in the contract, and (2) evidence sustained determination that employer had discharged the salesman in order to avoid paying certain bonuses to the salesman.

Rule: (MA) Under covenant of good faith and fair dealing, employer cannot terminate employee to avoid contract terms.

Fortune worked for Cash Register and was an at-will employing. He got a salary plus a bonus/commission. In 1963, Fortune received an order for a million dollars for a new machine that National had developed. Fortune arranged a demonstration and after it National placed an order for 2008 machines which was 4 million dollars worth. Fortune’s bonus would have been $96,000. Fortune was terminated but he was asked to stay on to facilitate the transaction. Fortune only received 75% of his bonus and National said he would not receive the rest of his bonus. Before he was fired, the company asked him to retire but when he said no, the company fired him. o At trial the jury made a finding that the defendant acted in bad faith and the jury awards him $45,000. o On the appeal the company says that they don’t owe him anything because there is no contract and there was employment at will so they can fire anyone for any reason or no reason at all. The court found that fortune here is entitled to the jury to render a decision based on the motivation of your employment action. This was a very fact specific inquiry and they did what they did in order to get out of paying Fortune his bonus and deprived him of compensation. o Good faith and fair dealing is generally incompatible in the at-will doctrine and you generally need some kind of contractual basis.

The Jury found that NCR had fired Fortune on bad faith to disqualify him form his 25 percent of commission and awarded damages. Supreme Court affirmed and held that where commissions are concerned, the employer’s decision to terminate should be made in good faith

C. -

OTHER PROTECTIONS FOR EMPLOYMENT SECURITY Successful claims of wrongful discharge in violation of public policy typically fall into one of four categories:  1. refusing to commit an unlawful act • Examples are an employee refusing to testify and committing perjury, defrauding employer’s customers, or refusing to drive a truck which lacked a legally required inspection sticker.  2. exercising a statutory right • i.e. worker’s compensation, minimum wage, occupational safety and health laws. (many statutes also have antiretaliation provisions)  3. fulfilling a public obligation • i.e. being fired for participating in jury duty  4. whistle-blowing

• •

a.) source of legal protection: o wrongful discharge in violation of public policy o state statutory law o federal statutory law o constitution b.) scope of legal protection o varies by state c.) burdens of proof o Some states like NY require that the employee prove that the employee reported an employer’s actual violation of the statute whereas states like Ohio, conversely, protects an employee who blows the whistle if the employee reasonably believes a statute has been violated.



Intentional infliction of Emotional Distress: -Many employment statutes and torts permit an employee to recover damages for emotional distress the employee suffers when the employer acts wrongfully - 4 elements of the emotional distress tort: o The defendants conduct was extreme and outrageous, beyond all bounds of human decency o The defendant intended to cause severe emotional distress to the plaintiff, or acted in disregard of a high probability that its conduct would inflict such harm o The defendant proximately caused emotional distress to the plaintiff and, o The emotional distress was so severe that no reasonable person could expect to endure it. Dudewicz v. Norris-Schmid Inc., 443 Mich. 68 (1993) “Whistle-blower” case: the plaintiff got into an altercation instigated by another employee while working at an auto-dealership. The plaintiff was trying to get a warranty or discount for a customer getting work done on his car. The other employee tore plaintiff’s shirt, cursed at him and left fingerprints on his shirt. The plaintiff files a complaint which the employer learns of and tells him to drop the complaint if he wants to keep his job. The plaintiff refuses to drop the complaint and leaves and the employer says that he quit and he says he was fired. o The two complaints are a public policy exception and the whistle blower complaint.  The public policy exception was having victims of crimes reporting the crimes that are committed against them.

He also alleges that he was terminated in violation of the whistle blower protection act. • WPA protects employees pretty broadly from any illegal act by the employer or from another employee. o Whistle-blower claim holding- the court reversed the lower court ruling and found that a claim was possible because it was irregardless whether the criminal actor was the actual employer or another employee. The intermediate court interpreted it as only being applicable when the employer does something criminal but the Michigan Supreme Court ruled that it should be interpreted broadly and applies to the acts of employer or other employees.  What if the fight had been after work in the parking lot over baseball issues?? • You have to look at what is considered business hours and whether the issue of the fight matters? o Was it during work hours, on work property, was it about work issues?? All of these factors matter. o Public policy issue:  The court held that if you have something that provides you statutory protection and there is no common law protection, then you can only have the statutory protection and there will not be a public policy issue, your exclusive remedy will be from the statutory protection. • There was no common law theory that you are protected from being charged from criminal activity by an employee or employer so your remedy is the statutory protection. The dissent: the dissent believed that this was not a protected issue because it was not really business related so the whistle blower protection would not really apply but we might have a public policy protection.  Wilson v. Monarch Paper, 939 F.2d 1138 (5th Cir. 1991) Wilson worked for the Monarch Company for over 40 years and works his way up to ‘special assistant to the president.’ His boss dies and the company hires an evil man to take his position. The new president tells him that he will not make anymore money and he is given three options. He can either take a sales job with half pay, termination in 3 months, or supervisor of a warehouse which was the same pay but lesser position. Wilson takes option number 3 but he is not a supervisor, he is basically in charge of housekeeping and janitorial work and he was also subject to harassment. Wilson starts to develop respiratory problems as well as emotional problems and he starts to see a shrink. He is eventually hospitalized and he gets shock treatment, gets put away etc. While this case is pending, the company files a counterclaim against him for slander but the company withdrew it. o At the trial the jury finds for Wilson.

The elements of the intentional infliction of emotional distress is: • You have to have a defendant with emotional distress • The conduct must be extreme or outrageous • Emotional distress needs to be caused • Emotional distress has to be serve o **very difficult to prove** o The court found that the extreme and outrageous conduct was the degrading and humiliating manner in which he was stripped of his position and given the position of working among people that used to work under him. o The court did express some reservations about applying it in the employment context but Wilson was awarded the damages.  XVIII. WRONGFUL DISCHARGE STATUTES Buck v. Billings Montana Chevrolet, 248 Mont. 276 (1991) o Facts: Guy goes around buying failing dealerships. He offers the previous owners a contract to buy the dealership on the condition that they resign. Buck’s contract doesn’t have this condition. He is subsequently terminated. Buck sues for: wrongful discharge, violation of public policy Rule: Montana law requires a legitimate business reason for termination (cannot be arbitrary, capricious or whimsical). NO AT WILL DOCTRINE.

***Montana is the only state in the union that does not have employment at will*** • The company that Buck worked for was sold to another company. The higher officials were supposed to resign but not the employees. Buck was a manager and did not have to resign but he was fired. He sues for wrongful discharge. o In Montana you have to have a legitimate business interest for a discharge because the state does not have employment at will.  A legitimate business interest: cannot be completely arbitrary and has to have some logical relationship to the business. It also takes into account the employer’s interest to hire and fire who they want. There has to be good cause for termination as long as the employer has a business reason for it. • The concern for a statute like this: o For the employer: do we want courts to be involved in the day to day decision making of the employers and businesses.  The company manual and policy said that you will have a job as long as the company is producing, which Buck was, so he believed he would have a job. The new owners said that they wanted to have someone else in Buck’s position that shared their new

reasoning and loyalty and were part owners and the court said that this was a legitimate interest and they did not find fraud. • The company said that the values of the business would be better held this way with managers that were part-owners. The court said that they will buy this reasoning as long as it only applies to upper-level people and not the lower level employees.  The court pretty much remands because of the employee manual o Dissent: the dissent says that this guy was a good performer by all counts and we are basically eliminating and rendering the statute meaningless if we terminate him for arbitrary reasoning. XIX. PROPERTY AND LIBERTY INTERESTS Goetz v. Windsor School District, 698 F.2d 606 (2d Cir. 1983) o Facts: The school believes that Goetz played a role in break-ins occurring at the school. He asks for an extension to write reasons why he was not involved and it is granted. He doesn’t turn it in and it terminated. o Holding: Goetz has no property interest in his job because he was not implied for 5 years as required by law. o Rule: Civil service employment positions can be legitimate property interests. •

You have to be a public employee to have a property and liberty interest. Goetz is suing Windsor. Goetz was a janitor and there were thefts going on at the school and Goetz was arrested and suspended by the school district. After the arrest, the school asked for a written confession from him and Goetz does not do this so he is terminated. His allegation is that he was fired without due process because he did not have the right to be heard and they fired him. Civil Service laws do not apply to all employees. • A liberty interest claim arises when you are defamed in the course of a termination. o For Goetz this was being termed a thief and the stigma attached to it **basically, you have a property or liberty interest in your employment** Mosrie v. Barry, 718 F. 2d 1151 (D.C. Cir. 1983) o Facts: Police officer criticizes his superiors and is transferred laterally (to a worse assignment). Asserts that he is being deprived of Due Process liberty. o Holding: police officer was not deprived of any liberty interest when he was publicly criticized prior to his being transferred, and thus he was not entitled to due process protections before transfer. o Rule: Deprivation of liberty must involve a removal, extinguishment, or significant alteration of an interest recognized and protected by state law.

Mosrie was a police officer in the homicide branch and his supervisor was Trussel and Jefferson was the chief of police. Ultimately the allegations against Mosrie are unfounded and he was then transferred to the 6th district which was kind of a dead end spot and a less desirable post. (he keeps his rank and salary but looses the likeliness of promotion) Mosrie argues that he had outside businesses losses because he was a guest lecturer at a few places but was never invited to lecture there again. Mosrie alleged that he was publically stigmatized. o The court says about stigma that stigma alone does not give you a liberty interest in your reputation. You have to have stigma plus. The plus that was lacking here was job loss, demotion, procedural due process violations. He was deprived of no legal rights. His legal status was not affected, his right to get liquor was not affected. There court basically says that defamation alone is not enough to give rise to a constitutional claim to a liberty interest in your job. o There has to be stigma plus related to the defamatory conduct. There has to be something more than just stigma. Speculation is not sufficient. There has to be more of a showing than just stigma or defamation alone. PLANT CLOSINGS UI – (Unemployment Insurance) – provides temporary and partial wage replacement for experienced workers who are unemployed through no fault of their own - two major criteria that disqualify workers form receiving UI benefits are voluntary separation and willful misconduct. o A worker that leaves his or her job without good cause or engages in conduct serious misconduct serious enough to warrant dismissal, is not among the group of workers that the UI system was intended to benefit.  Good cause: examples of good cause include an employee leaving due to sexual harassment, domestic violence threats, compulsory retirement, a new job that unexpectedly fails to materialize, school attendance, illness, and military service.  Willful misconduct mar include insubordination, violation of company rules, absences, or drug use. - In order to be eligible for UI benefits the worker must be willing and able to work and also actively seeking a job. Worker must look for work, and accept suitable employment when found to be entitled to UI compensation. (most states assist workers in this) **WARN- (Workers Adjustment and Retraining Notification Act) provides notice rights to workers facing the loss of jobs as part of a plant closing or mass layoff. a. Policy – created to diminish harmful affects of plant closing (on workers and on the community in general), provides employees transition time to seek new jobs or retrain and obtain swift dislocated worker assistance from the state b. Provisions i. Covers employees with 100 or more full-time employees

Definition of Employment Loss 1. Termination of Employment that is not discharge for cause, voluntarily quitting or retirement 2. For more than 6 months OR 3. greater than 50% reduction in work hours over a 6 month period 4. NOTE** - employment loss does not occur even if one of these conditions are met if the plant closing or mass layoff is the result of a relocation or consolidation of the business and the employer offered to transfer employees to a different site within reasonable commuting distance with no more than a six-month break in service. iii. Requires 60 days notice (must be in writing) of 1. Plant Closings a. Single site of employment that is permanently or temporarily closed b. AND the shutdown results in employment loss for 50 or more employees for more than 30 days 2. OR Mass Layoffs a. A Reduction in Force (RIF) (not result of plant closing) b. Results in employment loss at a single site during 30 day period i. BOTH at least 33% of employees and more 50 workers fired ii. OR at least 500 workers are fired iv. EXCEPTIONS – (temporary closings do not trigger WARN or layoffs caused by the end of a specified project, or a closing caused by a strike or lockdown.) 1. Faltering Company Exception a. Only applies to plant closing b. Company must give as much good faith notice as possible, but because notice might reduce chance of getting financing i. there must be a realistic opportunity to obtain the capital 2. Unforeseeable Business Circumstance Exception a. Applies to both plant closings and mass layoffs b. Still must give as much notice as practical, but is not required to give 60 days if caused by business circumstances not reasonably foreseeable at time when notice would have been required i. reasonably foreseeable as if caused by dramatic, unexpected action outside of employer’s control a. i.e a sudden or unexpected termination of a major contract, a strike or other disruption at a major


supplier, an unanticipated and dramatic economic turndown, and an unexpected governmental-ordered closing of a worksite. 3. Natural Disaster a. the exception applies if ‘any form of natural disaster’ makes advance notice of the action impossible. However notice is still required to the extent it is practicable, even if after the fact. v. impact of WARN 1. purpose: to permit workers transition time to adjust to prospective loss of employment and facilitate re-employment 2. advance notice of plant closings associated with lower unemployment and poverty rates three years later and lower usage of social welfare services c. Remedies – But Company can buy out violation from employees, so may not be issue (no standing) i. Up to 60 days back-pay/benefits to employee ii. Attorney’s Fee iii. Civil Penalty of up to $500 a day of inadequate notice o Common Law and Statutory Responses: Local 1330, United Steel Workers v. US Steel Corp o Carpenter Dist Council of New Orleans v. Dillard Dept Stores Inc o Pena v. American Meat Packing Corp o Roquet v. Arthur Anderson LLP XX. • COMMON LAW AND STATUTORY RESPONSES Local 1330, United Steel Workers v. U.S. Steel Corp., 631 F.2d 1264 (6th Cir. 1980) Two steel plants were closing in Ohio and 3,500 employees were employed by them. The employees were tying to set up a deal where the community could purchase the plants and keep them running. The suit involves the congressmen, Attorney General and the union suing the Steel Company to keep these plants open. The court found for the steel companies and found that there was no law out there to get a remedy under. One remedy that they said the employee’s only chance was to keep these steel plants open was under promissory estoppel. The promissory estoppel claim could have at least paused the procedure to look at it because the managers had promised the employees that if the workers worked at the plant and if it was profitable then they would keep the plant open. The superintendant to the plant made this promise and this is important because US Steel itself was not a part of this promise. If someone higher up in the company had made this promise it might have been a clearer offer and more valid. Another argument that was made was the community interest: basically saying that these plants are community property and you can’t shut them down because of the impact they will have on the community.

WARN ACT- when a plant is completely closing they have to provide a 60 day closing notice to give the employees time to look for another job. (Worker Adjustment and Training Notification Act). You have to have at least 100 employees for the WARN act to apply and there is a layoff of 30% of the total workforce or at least 500 people. WARN act applies if you close an entire plant. (threshold is 100 employees) If you are laying off anywhere between 50-499 it has to be 33 1/3% or more of the entire workforce. If you have more than 500 total employees being layed of then the WARN act is also imposed. WARN ACT LITIGATION Carpenter Dist. Council of New Orleans v. Dillard Dept. Stores, Inc., 15 F.3d 1275 (5th Cir. 1994)


The WARN act also applies to the white collar division as well. Reverse triangular merger- a wholly owned subsidiary of Dillard’s merged with Holmes and they didn’t give a 60 day notice because they didn’t count the part time employees. They also made an erroneous assumption because Dillard’s tried to take the 2 weeks vacation that they owned them and use that with the 60 days. The WARN act didn’t apply because for faltering company, the company has to be actively seeking capital and if the employee announces that they will be laying off all these people, they will not be getting any money. Pena v. American Meat Packing Corp., 362 F.3d 418 (7th Cir. 2004)

American meat closes their Chicago facility without giving notice to 350 employees. The plant had to stop production after one of the inspectors found rat droppings. There were 5 USDA inspectors in site and many unsanitary conditions. The plant had to shut down and throw away a lot of product, do renovations, and get new coolers so they can have sanitary meant produced which cost them a lot of money. The company is still getting non-complying notices and finally the rodent droppings lead to a stoppage of production. o The plant had brought in expert exterminators to stop the rats and also hired an attorney in order to get the plant re-opened. o Basically the plant has had a long history of unsanitary situations so the court says that this is not really an unforeseen issue so the court will not allow the plant not to give its employees the 60 day notice.

Roquet v. Arthur Anderson: • The DOJ got an indictment against Arthur Anderson. Unforeseen circumstances case.

o At issue in Roquet was whether the indictment was an unforeseeable business circumstance – in particular, whether the indictment was foreseeable.  The court held that it was not foreseeable because indictments against companies, rather than individuals, were rare and the company’s negotiations with the DOJ had not been indicted that such an indictment was likely.  The court stressed that the possibility of an occurrence is not enough. Rather the business circumstance must be probable to be considered foreseeable.

LEAVING A JOB XXII. BREACH OF EXPRESS TERMS Handicapped Children’s Educ. Bd. v. Lukaszewski, 332 N.W. 2d 774 (Wis. 1983) A speech language therapist was hired by the school board and was paid a little over 10 grand. She had a contract for the coming school year. She gets a job offer for better pay and tells the superintendant she wants to resign and he says to submit a letter so they can consider it. She sends the letter but he declines and says that she has to finish her contract. She has a hyper-tension disorder which is being aggravated by this and she gets a doctor’s notice telling the board that she has to quit due to the work-environment and the fact that she doesn’t want to be there any longer and it is not good for her health. So she quits and the school board finds another teacher to finish her class and the board has to pay more to the new teacher. The school then sues for breach of contract to recover the differences that they have to pay the new teacher. o Ultimately, the outcome is that she has to pay. BREACH OF IMPLIED TERMS Mercer Mgmt. Consulting, Inc. v. Wilde, 920 F. Supp. 219 (D.D.C. 1996) There are three defendants who used to work for Mercer who was the manager of a consulting company. There would be no solicitation and they would not hire anyone from Mercer for 1 year (1st agreement). The second agreement, after working for Mercer for one year, they signed a non-compete clause that said they could not compete within a 50 mile radius, or solicit clients. Mercer alleged that the three breached their contract and duty of loyalty and got confidential information and that is why the non-compete agreement needed to be in place. The confidential information was from the client lists. o The court says that the company has to show that the three defendants are using the confidential material or information to the company’s detriment and also that the other people even has access to it.


o The court says that as long as you are still performing and being loyal to your employer, you are not in breach if you contemplate starting a new company or your own business. o The employer does not suffer any damages if the employees do not leave. The court finds that Mercer has a legitimate interest to protect their business. The non-solicitation and non-compete agreement for one year was reasonable in scope and protected the legitimate interest of the employer. The interest was that it wanted to protects it’s employees and it’s clients.

***When looking at non-compete agreements:
They have to protect a legitimate interest of the employer and must be reasonable in scope. Three part analysis: 1. have to protect the legitimate interest of the employer 2. cant impose an undue hardship on the employee 3. can’t harm the public Any non-compete signed by an attorney is INVALID. Garden-leave: you won’t work at all for the employer for one year but the employer is paying you. For example if there is a non-compete for one year after you stop working, the former employer will pay you not to work for one year. Non-compete agreements are just per se invalid in California; the state does not like them. Employer can seek and injunction to not let the former employee from working for a competitor: you have to show reparable harm to the employer and likelihood of success on the merits. Non-competes’ are important today due to technology and the ease with which information can be taken and stolen. The employer’s right to enforce a non-compete are not absolute. There are elements that the employer has to establish as stated above. 1. The non-compete has to protect a legitimate interest of the employer. (one thing that is not protected are potential or prospective clients because they were not clients at the time!!) 2. the 1st is balanced against the undue burden or hardship on the employee. (the employee has to be able to earn a living) 3. it cannot be adverse to the public interest 4. finally, it has to be reasonable in scope as far as time and area. Courts can “Blue-Pencil” and make it so that the agreements are reasonable. (They can change the non-compete in order to make it work and be reasonable in nature.) III. ALTERNATIVE DISPUTE RESOLUTION


Holding: Rule:


Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth, Inc, 473 U.S. 614 (1985) o Facts:

Holding: Rule:


Gilmer v. Interstate Johnson Lance Corp., 500 U.S. 20 (1991) o Facts:

Holding: Rule:


Circuit City v. Adams, 532 U.S. 105 (2001) o Facts:

Holding: Rule:




Hooters of America, Inc. v. Phillips, 173 F.3d 933 (4th Cir. 1999) o Facts:

Holding: Rule:


EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) o Facts:

Holding: Rule:




Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1378 (11th Cir. 2005) o Facts:

Holding: Rule:


Gentry v. Superior Court, 42 Cal. 4th 443 (2007) o Facts:

Holding: Rule:


Fair Labor Standards Act:

The purpose of the act is to protect workers by regulating child labor. It sets minimum wage, also requires that employees get paid time and a half for overtime and it prohibits retaliation and requires employers to keep records. • The idea behind it is to regulate child labor, get a fair wage, and making sure that employees who work overtime get time and a half. • FLA covers most employers and employee is defined as any individual employed by an employer. • FLA covers any party who suffers or permits one party to work but does not apply to volunteers or independent contractors. o The minimum wage is now $7.25. The FLA has a provision which allows the states to set the minimum wage to be higher than what the federal minimum wage is. • There are certain exemptions which apply to the FLA, which means that you are not entitled to overtime. o Non-exempt means that you are entitled to overtime and exempt means that you are not entitled to overtime. (there are certain kinds of jobs that do not get overtime pay.) • Longer periods of time when you are relived form duty, such as lunch, is not compensable time. • Travel time (going to and from work) is not compensable unless you are traveling for the business in which case it is all compensable time. • Exemptions to the FLSA: o Administrative exemption o Professional exemptions o Executive exemption o Certain computer employees o Outside sales exemption o Highly compensated employee exemption: must make more than $100, 000 and fit into one of the two criteria for the administrative exemption To fit into any exemption you have to make at least $450 a week. The primary duty test applies to all exemptions: what is the principal job or duty that the employee performs. Where do they spend most of their time? Executive exemption: you must make at least $450 a week and their primary duty is the management of the enterprise or a customarily designed division. You have to supervise two or more to fit into this exemption. You also have to have the authority to hire and fire employees or at least makes recommendations to hire and fire. Administrative exemption: must earn more than $450 dollar a week. Primary duty is performing office or non-manual work directly related to management or general business operation of the employer or the employers customers. Primary duty must exercise of discretion or independent judgment over matters of significance. Does the

employee formulate policy for the company, can the employee bind the company through contract, can the employee represent the company in handling complaints or grievances, does the employee have the ability to deviate from established practices. Professional exemption: must make more than $450 a week. primary duty in the field of science or learning customarily acquired by a prolonged course of specialized instruction. Requires a consistent application of discretion. (Learned professional exemption) Creative professional exemption – primary duty requires the performance of work requiring originality, creativity, talent in a field of artistic or creative endeavour. Computer employee: your primary duty must be one of the following: 1. application of systems analysis, techniques and procedures 2. design development or documentation of computer systems or programs you can be paid on an hourly basis but that hourly pay must be at least $23.60. No need for the exercise of judgment in discretion. Outside Sales Exemption: Under outside sales there is not minimum salary requirement. An employee cannot waive their rights to overtime pay!! An employer also cannot rely on a job title to get exemption. Cases: IDP v. Alvarez – this case talks about whether down-time or prep time is compensable. The workers were complaining that the company was not paying the meatpackers for the time that it took them to get on their work clothes or outfits. The court said that the standard the employers would have to meet is whether what the employee is indispensible or integral to the work. Here the court decided that this time was integral to the work and therefore it was compensable. -what makes these cases valuable is that even if the issue is over an hour or two, as a class action it is extremely valuable for an entire class of individuals and this is where the plaintiff’s attorney makes a lot of money. The money is there if you bring the issue as a collective suit. Kuzinkski v. Shering Corporation – this is a mis-classification case. The employer said that the employees are exempt from overtime (pharmaceutical sales representatives). The representatives were being classified as sales positions even though they weren’t sales positions. The court said that the employees are not making any sales as classified by the statute and law. Claudio-Gotay v. Becton Dickonson Caribe – this is a retaliation case. Claudio was hired by Becton and approved invoices for security guard hours.

Rengifo v. Erevos Enterprises: an employee’s rights under the FSA will not be affected by their legal status. The court is trying to protect undocumented workers against exploitation.

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