Employment Law Outline

Employment Law Outline
Basics of Employment Law o What is an employee?  Provides services  For another individual or entity  In return for remuneration  Contractual  Employer- profitable business o Effect of “employee” label  Primarily contracts  Agency law  Respondeat superior  Torts  Property law- non-compete agreements, IP o Sources of Employment Law  Federal statutory law  Chapter 7  Anti-discrimination law  Anti-retaliation  State Statutory law  Constitutional Law  Employee benefits  Preemption  Individual rights- both fed and state constitution o Due process, speech, property, privacy

EMPLOYMENT LAW, THE BASICS
DISTINGUISHING “EMPLOYEE” AND “INDEPENDENT CONTRACTOR” o Basics  Employee: Typically derive test from Rest. Of Agency definition of employee or servant  Master/employer: a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.  Servant/employee: an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master  Independent Contractor:  one who contracts with another to do something for him but who is not controlled by the other nor subject to the

other’s right to control with respect to his physical conduct in the performance of the undertaking.  Rest. 220 Definition of Servant- Factors  Extent of control  Whether or not the one employed is engaged in a distinct occupation or business  The kind of occupation- and whether in that locality its typically done with/without supervision  Skill required  Who supplies the location of work and the tools  Length of time  Method of payment- by time or by job  Whether work is part of regular business of employer  Belief of parties  Whether principal is in business o Why it matters  Employee:  Advantages o Worker’s comp= limited damages o Increased fiduciary duties o Greater degree of control over work o Preference of workers matters in competitive market o Economies of scale and efficiency o Worker morale creating stakeholders  Disadvantages o Respondeat superior  Ind. Contractor  Advantages o Significantly reduced vicarious liability o Greater flexibility for independent contractor o Avoid Immigration Reform and Control Actcannot hire employees without checking paperwork, so outsource it  Disadvantages o Limited fiduciary duties o Respondeat Superior and Independent Contractors  Underlying premise is protection third parties and the public  Exceptions o Torts principal intended o Certain non-delegable duties  Nonetheless, strong incentive to outsource dangerous work o Impact of contract  Due to the economic realities test, parties cannot completely contract into a certain relationship

However, can contract out of certain default rules that pertain to relationship  Cannot bargain in or out of some federal rules o Problem with common law test:  Designed to deal with respondeat superior, doesn’t really apply to other instances when court needs to determine if person employee: discrimination, wage/hour  Common law focus on control, this concern doesn’t make sense in other contexts  o Cases  McCary v. Wade  Facts: injured when the van they were riding in hit a lumber truck owned by company that supplies lumber to Georgia Pacific  Used similar test to Rest., focused on question of control- indep. contractor o Paid by piece, not by wage o Obligation to work permission required to not work  Contract is what makes independent contractor come to work o Ownership and maintenance paid by contractorhe controls the means of production o Portion of day- is it during scope or course of employment?  Normative- using indep. contractor passes savings on to consumer, but what about undercapitalized indep. contractors? o Unstated element of dangerous nature of business?  Logging truck v. nuclear power plant  Certain areas may be necessary to apply fed. guidelines  But this IS different than negligence claim against owner o DOES THIS COME FROM SOMETHING?  Fitzgerald v. Mobil  Facts: driver fell off truck, trailor owned by truck company, leased to Mobil. Tractor owned by third party leased to Mobil. Mobil wants driver to be employee to get exclusivity of worker’s comp, but contract disclaims employee relationship  Economic realities

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o Really just an examination of control factors + whether activity is an integral part of business o Here  Control  Provided assignment  Wages, indirect but enough  Controlled duties  Hire and fire o Mobil’s approval necessary  Didn’t own, maintain truck  Economic reality: he was hauling oil  Why not apply estoppel? o Double edged sword- Mobil liable for employee’s torts now  Natkin v. Winfrey  Facts : freelance photographers photographing show  Work for hire doctrine: o default rule: artistic rights vests with artist o but if work done for an employer, employer gets copyright DISTINGUISHING “EMPLOYER” AND “EMPLOYEE” o Basics  Lack of negotiating power is a strong incentive to give primacy to private ordinary  Different benefits for different designations: pick one or the other  Fear of enforcing private ordering is to, in consideration of employment, would have employer waive rights  Strong contract deference, but not complete o Clackamas Gastroenterology Associates v. Wells  Facts: employee sued under ADA for discrimination, clearly an employee, the question was whether the doctors were also employees and thus qualify for ADA  If court rules partnership: not employees, but employees if corporation  Doctors want court to look past fact that they designated professional corporation in articles  ERISA  must call selves employees to qualify  applied 6 factor test suggested by EEOC focusing on control pg. 29  they control the operation of clinic, share profits, and are personally liable  remand  Dissent

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Focuses on right to contract- wanted to be employees for ERISA, let ‘em  Usually a pro-employer argument“CONTINGENT” LABOR o Basics  No uniform definition of what a “contingent worker” is  No independent legal significance to status  Simply less permanent relationship  May prefer for  Flexibility  Competition among workers  Labor savings  Tax advantages  Lower liability  Typically receive lower wages, fewer benefits-avoidance of FLSA is often motivator o Fair Labor Standards Act  Most strict employment act  Most litigation focuses on coverage, as application is straightforward  Whether workers are employees or not  Whether employees exempt  Whether defendant firms are employers, joint employers or non employers if first two met o Ansoumana v. Gristede’s Operating Corp.  Facts: defendants (Hudson-Chelsea) are labor brokers for Duane Reade, contingent delivery workers hired from defendants but also had them do menial tasks around stores  Applied economic realities test to determine if they are employers  HC o Control test  Ability to hire and fire  Workers have financial investmentusually irrelevant  Skill required  Duration of employment  More difficult for workers here  But argue physically demanding job  Gets at whether workers have other options o Economic realities: work is the only thing HCD does

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o These factors get to whether employee is dependant on employers largesse Principals of HCD o Typically in fed. employment statut, individaual not directly liable o Under FLSA, if an individual makes wage decision, they can be held liable

THE “AT-WILL” DEFAULT RULE AND ITS LIMITS BACKGROUND o For cause: can only fire for just cause as defined by common law o Argument over whether a rule or presumption, but most courts hold it as a rule JOB SECURITY AND THE PRINCIPLE OF AT-WILL EMPLOYMENT o Hanson v. Central Show Printing Company  Facts: skilled pressman, given written promise to be given work “40 hours a week thru out the entire year each year until you retire” although its seasonal work, terminated two years later  If a promise does not have a definite end date, then its unenforceable  Additional Consideration:  Traditional rule: at will absent additional consideration  Many states require for modification of contract  Some courts conceive of employment contracts as renewing each day- supports modification  If employer had requested non compete? Clear situation of additional consideration  More on this day??????????????????????????? o Greene v. Oliver Realty  Facts:  worked below union scale in exchange for “life employment” in oral agreement made at beginning of employment  original employer bought out and purchaser says “all contracts will be honored”  Brought to attention of management because oral  Laid off 9 years after change of employer, 24 years after original agreement  At will presumption can be overcome by intent of parties  Policies underlying at will presumption  Freedom of contract o Establishes a default rule, then allows groups to contract regarding this provision

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o For employees- better default rule is just cause, but consider bargaining power differential  Mutuality of obligation o At will imposes on each side same duties, remedies available o Mutuality not required by contract law- more of a fairness justification o (Remember the justification behind consideration= evidence of contract)  Usually the expectations of parties o Empirical evidence questions this justification o Counteracts with actual employer activity: progressive discipline  Procedural protection against meritless lawsuits o But then jury sympathy is on the employee side  Fairness and equity o Employer can rarely sue the employee- turnips  Additional consideration  Good way to prove intent of parties, but not necessary  Any evidence can rebut at will presumption o Greene, On Remand  Oral contract  Statute of frauds o One year limitation o Not for specified term, but life o At any rate, part performance would overcome as well  Evidence: hard to procure here—so old  Additional considerationo Worked below union rate, working at all is regular consideration o Unjust enrichment argument o Thus, additional consideration may be the only thing Greene can argue o Pay raise and new negotiation  If giving a raise, explicitly state that additional pay is not consideration for “at fault” relationship  Danger is the relinquishment of other job offers  Avoid making general statements about “life employment” or “you will always have a job” o Wrongful Discharge Act  Conceived as a tradeoff, only wrongful discharges, but limited damages ORAL AND IMPLIED CONTRACT RIGHTS TO JOB SECURITY o RELIANCE ON OFFERS OF EMPLOYMENT

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Courts have held that employees have a right to assume a good faith opportunity to perform Promissory Estoppel  Elements: o Representation that is intended or foreseeably will induce reliance (or a promise) o Reasonable reliance o To the recipient of the representation’s detriment  Recovery: o Limited, not the benefits of the bargain o Instead, the successful plaintiff is put in the position that would have been in absent detrimental reliance: “reliance damages” Goff Hamel v. Obstetrician  Facts: given offer of employment to leave current job  Analysis of elements o Statement likely to induce reliance o She quit job= reasonable reliance  On exam: try to focus on this- way to make unreasonable- leaving higher paying job for less, only oral promise, ect.  Reasonableness o Courts that reject promissory estoppel cause of action find that it is impossible to assert reasonableness of reliance on an at will employment  Damages o Based on prior employment  Proof of reliance o Most convincing are those that relocate or incur significant costs for new job Schoff v. Combined Insurance  Facts: employment contingent on bonding, concerned that charged with felonies  Worked for awhile, then quit- since at will must find quasi contractual principle for cause of action  Analysis of Elements o Statement: assurance of employer  “only felonies convictions matter”  convictions that you do have don’t matter  compounded by fact that employer filled out application o reasonableness

employer didn’t have all the information, so it is hard to rely on their statements  separate assurances: but courts sidestep and require more definite promise, not just a statement regarding his “impression of the facts”  not the real question  really should look to see if Schoff’s reliance was reasonable  Distinctions between Goff and Schoff  Temporal distinction o How long must one work before promissory estoppel is foreclosed? o Difficult to show while preserving at will rule  In the end, even though many courts recognize the promissory estoppel claim, bar set very high o ASSURANCES OF CONTINUED EMPLOYMENT  Shebar v. Sanyo  Facts: o employee was promoted, but given negative evaluations, hires headhunter, gets offer from Sony and resigns o they say – his leaving is a personal insult, resignation not accepted, he is “married to company,” and they never fire manager  promissory estoppel claim o intended to induce reliance, did rely, reasonable  could be fraud: making a promise with the intent not to perform  court analysis: contract o offer for lifetime employment  rejects literal lifetime contract, though from words that is what he is offering  instead it’s a contract for employment with only just cause termination  Impact of culture o Must prove terminated without just cause and faces evidentiary problem: negative evaluation o Look to other employers evaluations, try to argue its pretext  Pugh v. Sheebar  Facts: works for 32 years with assurances job is secure, also evidence of unofficial policy of not firing manager without just cause  Two legal triggers: do good job, and be loyal to company 

Just cause? o Tough guy to work with, problem is it appears to be post hoc justification o Don’t need a good reason to fire for cause, just must have a reason  This is an implied in fact contract o Not promissory estoppel or oral contract o Look to the totality of the circumstances to fid a contractual right o Whether the circumstances are judged based on the individual or the entire work force depends on context- here individual, in handbook cases, the workforce  Totality of circumstances here o Work culture: managers not fired o Assurances o Worked for 32 years, moved his way from the bottom up  Compare to handbook cases:  Shifting Burdens  Plaintiff asserts prima facie, defendant responds with legitimate business reason  Plaintiff must then prove that the Legitimate business reason is pretext for a forbidden reason  Most often pretext argument based on opportunistic firing: the wage/productivity curve o Actually unproductive: that is a common law acceptable justification for termination o Difference with discrimination cases: prima facie case is that a contract exists, not discrimination  The degree of the fall in productivity that supports termination depends on the job: McDonalds cook v. nuclear reactor inspector o EMPLOYEE HANDBOOK CASES  Basics  One factor in implied contracts is “employer practices and policies”  Policies has a more formal connotation- and is more and more frequently given directly to workers via a handbook  Wooley v. Hoffman-La Roche  Facts: no written employment agreement, hired to inspect property, and after he found a problem and reported it, was fired

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Listed reasons for keeping on an employee, but conspicuously absent was termination without cause o Remember to have terms that benefit employer, not just employees  Fair process put in manuals to prevent unionization  Changes to manual o Occurred several times here, each with more favorable terms for employees o Courts will NOT require additional consideration—the manual is to keep employees free to leave  Binding Nature of manual: o Covers all employees- even those that haven’t read/ have it o No disclaimer- important to have in many places, bold, and with some acknowledgement o Reasonableness:  Reasonable to see that employer is creating rights for employees (changes)  Reasonable for employee to believe that the terms will be followed o Reliance: presumed  Conner v. City of Forest Acres  Facts: manual includes disclaimer  Language however overcomes this- mandatory language of “shall” or “will were practical”  Disclaimers further damaged by use of legalistic terms and terms of art  Because of these problems- question of FACT  Contractual right to job security v. procedural rights in event of cause termination  Conner and Hoffman La-Roche- assert job security  Possible to assert the latter as well o MISSED CLASS? PG 115 WRITTEN CONTRACTS AND EXPRESSLY NEGOTIATED TERMS OF EMPLOYMENT JOB SECURITY AND CONTRACT AMBIGUITY o Tropicana v. Speer  First: was there a contract?  There is one, there is a difference between a contract for employment, and contract for certain things  Contract for employment evidenced by the fact he was working

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Second: was there a breach?  Constructive discharge: way around just cause provision  Here, it is a question of degree, not kind. Shoulda been a jury question, but court misunderstands- if he had a right to those employees, would have been an actual breach  Could seek restitution: not a contractual argument, would have to find reasonable value of services and employer would get credit for wages paid o Parol evidence and contracts  Must find ambiguity: allows for potential interpretation with outside info  Process to incorporating parol evidence:  Is agreement complete integration? o Yes, then no parol evidence o Merger clause strong evidence of complete integration  Find an ambiguity o Be wary of lists o Many courts ignore the clause “but not limited to”  Parol evidence must relate to ambiguity o Can’t be contradictory to language o Must be prior to contract  See problem 3-1 for examples o Cave Hill v. Hiers  Facts: five year term agreement, VA rule: if for indefinite term, at will, but presumption flips if for term  Contract doesn’t include cause provision, just notice  Court rebuts averse presumption?  Finds unambiguous contract  Notice provision contradicts presumption (but not 5 year term)  Notice refers to at will right  Notice makes it a 30 day term agreement- remedy is for damages of notice period  PROBABLY NEED MORE HERE  GO BACK TO BOOK FOR CONTRACT WRITING PORTION o Esbensen v. Userware International  Facts: for term, but tried to get out of just cause provision  Better language for the employer, but goes the other way Looks to see if document ambiguous at the beginning of analysis (VA court operated with presumption of unambiguity) 

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“for any reason” what does it refer to? o Terminate for any reason o or if terminated for any reason  HOW TO AVOID o Cause and no cause termination clause o Just cause paragraph o Subordinate clause:  Upon termination, which may be for any reason  Insert substantive right in procedural paragraph??????  RULE: basic contract rule: construe contract against drafter, but many states unwilling in employment context  RETURN TO CASE FOR DRAFTING QUESTION JUST CAUSE TO TERMINATE o Benson v. AJR  Facts: deadbeat son case, three specific conditions of termination: dishonesty, conviction of felony, and voluntary termination of the agreement by deadbeat  Lies regarding cocaine use but terminated for using cocaine  Ambiguity in contract, make sure you look at contract before you fire someone o Severance pay and term contracts  Consider fixed term not as a guarantee of employment, but a guarantee of pay  Limits opportunistic firing  Puts cap on employer liability  So basically, a liquidated damages clause  Sometimes, companies fire without cause even though they must pay severance  Avoid liability and bad PR  Leave amicably  But could be subject to derivative suits o Unitah Basin v. Hardy  Facts: 90 day termination notice, and dr. understood the agreement to mean he would have opportunity to match economic reasons for termination  Valid reason to terminate: cheaper doctor  Indefinite term, economic reason ok for just cause o What just cause includes:  Opportunistic economic reasons?  Type of contract important  Term: econ reason not enough  Indefinite: ok, allows for layoff o Three Approaches to Just Cause

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Deference approach:  Employer states legit reason, and court accepts  Burden of production, and court accepts  larger minority  Proof Approach  State reason for termination and prove reason actually existed  Hardly ever used  Good Faith reason supported by facts reasonably believed to be true by employer  Majority approach  State good faith reason, believe this reason, and this belief must be objectively reasonable  Involves burden shifting o CONTRACT WRITING  Problem 3-3 pg 158  Extensive notes in notebook o Causes for termination  Layoffs  Most often based on seniority- first in last out  Poor results  Question is, just how bad is the performance  Often turns on specifics of case- circumstances of hire, performance expectations, and terms of contract  Actual cause v. reasonable decision making  When alleging misconduct, courts generally hold that the employer bears the burden of proof  What they have to prove is undecided o Procedure and just cause termination  Some courts impose a procedural requirement in just cause terminations  Ex. Employees conduct egregious enough for reasonable discharge, and the employee had fair notice, express or implied, that such conduct could result in discharge o Satisfaction contracts  Promises employment as long as employer “satisfied”  Generally held to be less protective of employee than just cause agreement  Ultimately depends on language of the agreement SPECIAL COMPENSATION ISSUES o Interpreting Express Compensation Agreements  Frequent litigation around whether the employer had contractual entitlement v. contingent right or expected right based on employer practices  Guggenheim 

Non specific bonus based on performance Consider what part of the contract is actually discretionary  Court finds non-discretionary, eligibility for bonus a material inducement for bargaining  Implied in fact terms to contract o Pay bonus o 10% bonus o cap doesn’t apply to her  Nadherny  Facts: opening new office in Boston, the vesting problem  Should have had language about extinguishing, expiring, or terminating  Ambiguous- kick it back to consider: o Look at contract itself o Extrinsic evidence  Employee expectations: “common understanding and common usuage”  Similarly situated employees in similar industries o Parol evidence  Ambiguous  Clearly not complete integration  Partner o Co-ownership and share profits- most states it’s a rebuttable presumption o Participation interest comes AFTER wages o However, likely rebuttable- intend not to form partnership evidenced by the at will languge o “other compensation”- just part of wages o Implied Duty of Good Faith and Fair Dealing  Fortune v. National Cash Register  Facts: at will employment, receives commission, regardless if he actually sells item  Terminated day after sale, but told to stick aroundreally just changed only title  Opportunistic termination: after sale but before commission is due, big real estate issue  Contract gives no right on face, but he gets to jury on implied term: good faith  Implied Good Faith  Significant court resistance  Generally restrict recovery to the value of benefits accrued through past performance

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Some explain via unjust enrichment

THE PUBLIC POLICY EXCEPTION TO THE AT-WILL DOCTRINE COMMON LAW PUBLIC POLICY EXCEPTION o EXPECT AN EXAM QUESTION ON THIS!!!!!!!!!!!!!!!! o Basics  Tort in complete flux, no state agrees with another  Difference from above discussion: everything based on contract or quasi contract  Four Categories as defined by Restatement  Refusing to commit act that the employee reasonably and in good faith believes would require the employee to violate a law or code of ethics protecting the public interest  Fulfilling an obligation that is imposed by the law o Jury duty, military service o Fed statute protects military, state usually protects jurors o Must be a legal, not moral duty: car accident case  Claiming a legal right- such as workers comp though they usually have a retaliation clause  Complying with investigation, or reporting in good faith o Basically, whistleblowing o Usually have statute o Employers want internal compliance covered as well- otherwise go straight to external source and look bad  Other categories  Tort related to termination but before termination: ex. False imprisonment  Defame former employee on reference  Personal injury and workers compensation?  Intentional infliction of emotion distress/invasion of privacy  Important note: termination must occur  Wrongful discipline- very small minority of jurisdictions recognize o Peterman v. Teamsters  Facts: closed shop environment, was going to testify against teamsters, encouraged to commit perjury  Wrongful discharge under public policy  Termination had effect of suborning perjury- violation of public policy o Foley v. Interactive Data  Facts: ratted on new employee

 Not actionable- only serving company policy, not public policy o Murphy v. American Home  Facts: employee reports on fraud, would be covered by Saxbane – today as its publicly traded company  NY denies:  Doesn’t implicate public policy  Don’t want to create court based on claim deriving from company policy- kick it to the legislature  Nowadays, impact on public has greatly expanded  Still have to show some third party harmed  Claim employee an embezzler v. was embezzling  NOTE: Sarbanes (and federal law) appear to overrule ethical codes o Fitzgerald v. Salsbury  Facts: fatal accident, lawsuits followed- Kelly testified, then terminated and sues in response. Karash testifies for Kelly, has incident. Manager to Fitzgeral: “you should decide what team you are on”  Proof structure  Garden variety public policy tort: o Protected act o Discharge (discipline) o Causal connection  Borrows proof structure for discrimination cases  Preponderance of the evidence, absent another provision  More advanced:  Clear public policy tort (clarity)  Dismissal of employee under circumstances alleged in case would jeopardize public policy (jeopardy)  Public policy conduct results in termination (causation)  Absence of justification  Difficulty of proving  Reliance on what employer was thinking  Judge determines the what a public policy is  Sources for determining public policy  State Constitution- why relevant when cannot use directly o Evidence of systematic interest of state o If could sue on constitution, cannot use public policy tort o Statutes, judicial decisions, federal statute  Factors  Clarity: o Clearly defined, not overly broad

o Court even unwilling to find good faith doctrine applies o Arg. For  Oppose wrongful termination  Clear in discrimination cases  Here, no facts to support- he just says he should be kept around  Didn’t oppose wrongful termination, just termination  Truthful testimony  Two step reasoning o Perjury- clear public policy o Negative implication: encourage truth in judicial process o Some courts require statute!  Jeopardy o Must show that employers action will have chilling effect- not just employee but others as well o Appears to be part of pattern- Fitzgerald has the weakest case, but strong inference  Causation o Jury question, employer may assert justification o Train managers to shut up o Proving Causation  Temporal proximity  Formulistic view: judge made time limit  Realist/instrumentalist: totality of the circumstances  Extend to discipline  In discrimination, this is ok  Managerial prerogative: how many decisions are subject to judicial review? o Law and econ: bad bad o But dicipline can chill behavior as well o Tape Recording  Most states not illegal  Ethical? Yep  Litigation:  Everything discoverable, can help opponent  Will think manufacturing claim  Work product?

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No legal analysis, but is fact work process o To discover fact work process- must show that no other way to get info  Work done at attorney’s direction qualifies o Must be in anticipation of claim- looking for a claim more difficult o Contract v. tort  Some courts find public policy discharge to be contractual  Benefits of tort  Mental distress  Punitive damages  Benefit of contract  For employer- limited damages  Longer statute of limitations o Sources of Law  Rackley  Manager of nursing home receives request not to cash out check for patient  Framing public policy o Defendant will want very narrow public policy so its harder to find clearly explicit definition of public policy  Must be clear and substantial o Here, clear but not substantial o Based on admin code- supposed to be a nimble, policy shifting organization  Rest. And Source of Law  Very expansive view of potential sources- even professional code of ethics!  Four hooks for public policy tort- see above  State statute  Some states try to capture whole field, and preempt common law claims  NY, MN STATUTES CREATING PUBLIC POLICY CAUSES OF ACTION o State Approaches  Conscientious Employee Protection Act (CEPA) (NJ)  Pg 204  Reasonable belief standard o Internal or external reporting (disclosure o Participate in investigation o Catch all clause- object to participate  Must give employer 30 days notice to cure  Retaliation explicitly illegal  Broader and narrower than common law

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o Does not seem to protect employee from reprisal for claiming employee benefit o Participation clause seems to go far beyond illegal activities-- public health, safety, or welfare  MN statute  Report- good faith standard  Refuse to participate- objective basis, with immediate notice  Report- (health care)- good faith  Doesn’t seem to cover legal testimony  Some state statutes operate with “at employee’s peril” approach- no reasonable/objective standard  What to do with CEPA statute?  Establish independent hotline, with different avenues depending on who is calling o Roach v. TRW  Facts: Roach drafts ethics language, must report unethical conduct of others, tries to call hotline but ignored, everyone in department fired, everyone but Roach immediately rehired  Litigated under CEPA, jury finds disclosure and participation violated, not objection  Disclosure  CEPA requires written notice, but court finds hotline fills this need  But CEPA only requires written notice to outside body  Other potential causes of action:  Implied in fact contract claim o Was following code of conduct FEDERAL WHISTLEBLOWER PROTECTION o SOX:  Series of fraud protection provisions  Requires employees to report conduct in conflict with laws/accounting principles  Includes retaliation protection  Procedure  90 day statute of limitations  Give notice to OSHA, who have 180 days to begin review  Must give 15 days notice to OSHA, if nothing happened, then can bring suit in federal court o Choice of law or equity  If OSHA does act but don’t like ruling, can appeal on abuse of discretion standard  UNRESOLVED: decision at administrative level after suit filed

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Affirmative defense for employers: would have fired anyways regardless of protected activity See problem 5-1, and answers in notes Collins v. Boozer Homes  Facts: gets hired in context of internal conflict  Alleged issue: deal laden with conflicts and kickbacks  Makes report, then complaints arise over her  makes more serious complaints, higher up the food chain  90 day probationary provision helped fire them  How SOX triggered  Rules of SEC covers internal accounting procedure, not how good they are but whether they are followed in retaliation context  Contributing factor: lower standard than motivating factor  Not but for causation but affirmative defense creates but for causation in the end  Conduct protected?  Court yes, but “close case”  Though its not  Employer aware of protected conduct?  HR saying this is serious problem is enough  Sole decisionmaker issue  Shaffer named sole decisionmaker, as he didn’t really know what was going on  Common strategy  Had legit reasons o Presentation poor o Didn’t get along with employees o Personality conflict with employers  Temporal proximity  Court finds sufficiently close Remedy in SOX  Often order reinstatement as signal to other employees that they will be protected  Response for good lawyer:  Settle and have term that they may not be rehired  Settle so you can control the remedy, even if you are going to win False Claims Act  Authorizes any individual to bring a claim in the name of the US against any entity that submits false or fraudulent claim for payment to feds  Procedure, pg 226 

TRADITIONAL TORTS IN THE EMPLOYMENT RELATIONSHIP INTENTIONAL INTERFERENCE WITH THE EMPLOYMENT RELATIONSHIP o Basics  Traditionally asserted by employers to protect their employers from being pirated by others  Most courts have found at will contracts within the tort- it’s a contract claim  Privilege to interfere broader if at will  Restatement §766  Intent  Non-privileged (competition is privileged)  Interference with performance o Breach o Non-performance o Perspective business relationship o (dependant on state)  Third party  Cause non performance  Pecuniary loss  Common law (or is this just restating the Restatement, more coherently?)  Intent  Interference (needs to be third party, can’t interfere with own contract that’s a normal breach)  No justification  Causing non performance  Pecuniary loss o Kumpf v. Steinhaus  Facts: Steinhaus consolidates company, gives self cash, at will employment so he sues Steinhaus personally  3rd party?  Separate entities, so pierce the corporate veil?  Induced breach of contract: o But then no longer third party o Plead in alternative o I have NO IDEA what I am talking about here  The problem here:  Justified ? o Steinhaus: move was to improve company o Problem with argument  Actual impropriety  Weak economic argument for getting rid of WI market  Just assumed away??

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o Impropriety and Motivation  Sole motivating factor  Motivating factor  Predominate factor  Easterbrook Ignores the law, and basically applies business judgment rule  This requires an unconflicted manager, which is not present here  His approach however, it the majority one  How to succeed if Easterbrook the judge?  Prove impropriety more clearly DEFAMATION o Basics  Factors  False statements that are purportedly factual, not opinion  That tend to damage the reputation of the subject of the statement  Implied factors  Somewhat public  Unprivileged statements o Known or should have known false= actual malice o Should have known- reckless, not negligent standard  THAT DOESN’T MAKE SENSE  Largely comes up in media issues, but can come up in references  Advice to give to employer, pg 247-8!!! o Factors for analysis  Falsity  In US must be false, not so in UK and France  Most common defense: statement true  Must be asserted as a purported fact, not opinion  Publication  Has to be made known to someone who’s opinion of the reputation of the subject matters  Defamatory  Note, separate element from falsity  Damages reputation of subject of statement  Business or personal reputation  Non-privileged  Technically an affirmative defense  But think about an element as it will need to be proved

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 Again, competition privileged (Damages)  whether it has to be proven dependent on type of defamation o some categories, damages presumeddefamation per se: ex. business reputation o don’t need to prove damages slander or libel  common law, slander less serious  libel- published, but includes radio, tv  slander- impermanence interest in hearing material  must be objective interest in hearing info, beyond just morbid curiousity GMR v. Jackson  Facts: Jackson hired as CEO finds out finances are terrible and Pujols stealing 3 mil. Reaches sales goals, but fired for “losing 3 mil”. Gets hired immediately at competitor, but has to take lower job for a few months after Pujols reaches out to them  Should have had a non-compete, especially at this level, and is trying to do it illegally  Privilege and Actual malice:  Would be good argument in this case, but doesn’t matter because of actual malice, which is required when: o Privilege (qualified) o 1st amendment (public figure) o punitive damages  Proving actual malice: o Knowledge that statement false o Reckless disregard  Absolute privilege cannot be overcome o Statements made in accordance with judicial or quasi judicial proceeding  Privilege superseded if telling people that have no need to know  Statement judged on community- here the business community  “mismanaged business”: sounds like opinion, but implied facts will make it defamatory  “tremendous amount of money”: opinion gloss on factual statement Defamation and Damages 

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Very very lucrative, in GMR v. Jackson- 200k for breach, 6 mil. For defamation  Remittur- judicial reduction on the value of the award Civil procedure attack on pleadings in defamation context  State versions of Fed. Rule 9: must plead defamation and fraud with particularity  Identify exact statement that is allegedly defamatory  Reciprocal to this challenge: proof at trial must relate to statement alleged  Evidence issues:  Double hearsay  Looking at statements for effect, not truth  RULE: must be substantially similar, not identical (GMR)  Furthermore, can amend the complaint all the way through as long as it doesn’t delay trial Actions as statements  May be by actions, if false and malicious and meaning plain Recommendations  Liability may be imposed if recommendation so overly favorable that it amounts to an affirmative misrepresentation presenting a foreseeable and substantial risk of physical harm to third person  Limit supervisors from talking about former employers, regardless of whether they were good or bad  Saying “ I don’t do references: probably wont protect you Compelled self publication  Some courts have found defamation when plaintiff himself publishes the defamation Falls v. Sporting News  Downswing case  How do you draw the line between fact and opinion?  Part of statement verifiable: still going to as many events? Shannon v. Taylor AMC  Facts: prior to immediate facts, manager wanted him gone, he is after all stupid- sets up private sting operation  Fired for participating in stolen parts, and told all customers about it  Privilege  Want to prevent customers from thinking that they dealt in stolen parts, but never a situation before  If customer asked, must have bona fide reasonreciepent must have a real interest, not some morbid curiousity  Overcoming privilege  Actual malice- see above 

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o Knew falsity, or reckless disregard of the truth Lying clearly destroys privilege

WORKER SAFETY AND HEALTH WORKERS COMPENSATION o Basics  History  Original Doctrines which limited compensation o Fellow servant doctrine o Assumption of the risk o Contributory negligence  As these doctrines started to soften, both employers and unions went to the legislatures  Basic structure  “arise out of”- causation  “In course and scope of employment”: at work  Benefits to Employee  Strict liability  Certain compensation o Independent contractors almost never get coverage o Temporary workers more difficult- but if statute silent, get covered  Benefits to Employer  Exclusivity  Limited damages  Benefits to courts system  Admin system administers  Less expensive, quicker, and easier o Standard Benefits given to employer  Medical expenses coverage  Lost wages, to a statutory cap  Excludes pain and suffering damages and some emotional distress  Permanent disability benefits  Scheduled disabilities- statutorily adopted benefit  Unscheduled benefits o Refer to those injuries not listed in the schedule o Based on loss of earning capacity, capped at statutory maximum  Vocational rehabiltation services  Death benefits

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Based on percentage of the employee’s average weekly wage tied to the number of dependents- statutory cap, statutory period INJURIES SUSTAINED “IN THE COURSE OF” EMPLOYMENT o Kindel v. Ferco Rental  Facts:  killed on the way home from work, employer driving him home drunk, stopped at a bar for hours  policy against drug and alcohol use  why turn to workers comp?  tort system not kind to workers  driver is a turnip, and to sue the employer have to make responeat superior claim- need to show within employment  direct liability for employer? o Negligent hiring, negligent retention (driver had DUIs)  Employer would have traditional tort defenses: fellow servent rule, ect  Contributory negligence state-forget about it  Effect Kindel was drinking  None, passenger had no liability, and no evidence he increased chance of accident  Strict liability anyways here, but most states restrict workers comp if intoxicated  Nor proof that drinking caused death of Kindel  Effect of company policy  No intoxication, no driving drunk, no personal use of vehicle  Violation of company policy goes to the course and scope question  Irrebuttable presumption  When employee injured, assumed to be conferring benefit to employer- without irrebuttable component, would be a fault component  Course and scope only a question of if at work  Driving to work  Going and coming rule: usually not included  Exception: employer decision to make part of workday or necessity of employer  “frolic or detour”: most old cases would find this to be on detour while in bar, but then returned to work- and that’s what makes the difference  Personal comfort doctrine

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 o Squib cases  Angleton: pulled over to smoke week, hijacked  Hijacker testimony not reliable- so its workers comp  Woodring  Went to meeting, guy wasn’t there, had drinks, drove home and crashed  Abandoned business errand  Calloway  Deviate: no longer can claim workers comp, but can if return to work  Substantial deviation: assume abandoned business purpose, even if return to work (drinking for 12 hours)  Rainear  Nothing fixes an arbitrary limit for the number of hours to constitute deviation o Clodgo v. Rentavision  Facts: Stapler horseplay case  Injury occurred during dissent  Employees will amuse self if downtime  Laid out factors to consider in deviation case (not necessarily majority approach, but courts will look to something like this)  Extent and seriousness of the deviation  Completeness of the deviation (whether the activity was comingled with performance of a work duty or was complete abandonment  Extent to which activity the activity had become an accepted part of the employment  Extent to which the nature of the employment may be expected to include some horseplay  Majority: no commingling of work and horseplay= substantial deviation  Dissent  Probably right- this is a de minimus deviation  Shows some states more strict than others in re: horseplay o Extra-curricular activities  Difficult area, see pg. 813 for discussion  Rule really just one of reasonableness “ARISES OUT OF” EMPLOYMENT o basics  three categories of injury causing risks  personal risks: not compensable

Common sense inquiry, and dependant on employer’s view of what is natural deviation from work Very mch a judgement call

peculiar risks- direct risk of employment- always covered  “mixed” risks- fact specific o peculiar : toughest, almost the same as increased  risk typical to work place but not elsewhere  nobody uses this  sometimes though use this term but applies another test o increased  employment increases risk  most common o actual  easiest, all that must be shown is that it is a risk that is present when employed  few use this lenient of a test o positional  but for being at work, injury wouldn’t have happened o proximate cause  foreseeable injury and the causal chain unbroken  difficult to tell the difference between positional and increased  increased risk: intentional harm by employer? No- Alaska fishermen  exclusivity: only way for employee to get out of this is finding action was intentional in most cases  more than just normal work, but forcing employee to clean tank without equipment o Odyseey Americare of OK v. Worden  Facts: fell and hurt self leaving to visit patient  Course of employment?  Not at issue- coming and going part of job  Arising out of employment  Often result depends on test applied  Used increased risk o Slipping on grass can happen anywhere o Milledge v. Oaks  Facts: unexplained accident  Already in parking lot- going and coming not as relevant  Some states will not apply this liberally- some require to be in building (Fair Labor Standards Act test)  Court chooses positional risk test  But for conditions at employment: parking lot

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o Shows leniency of test o In this case, solving course and scope also solves arises out of o Not many this lenient o Workplace Assaults  Usually solved at “course and scope” Often deviation  If focus on temporal- usually very de minimus   Arising under Arguing about business? Maybe  Arguing about personal? No  Courts have found if, at minimum, the risk of an assault is increased by the nature of the job or the work setting or it it was precipitated by a work related dispute  Some courts, however, have found an assault in workplace by a co-worker is enough on its own- WalMart rape case  Assault exception to workers’ compensation coverage is sometimes separately codified rather than variation of arising out of o Street Risk Doctrine  Street or highway related injuries for employees- delivery and sales- whose duties increase their exposure to the hazards of the street arise out of emplyment o Interplay between “course and scope” and “arising out of” examination  One treatise suggested that sliding scale may exist between two- when scope question weak, can be overcome through strong arising out of “Accidental” or “By Accident o most states require injury to be accidental or by accident  accidental: key inquiry is unexpectedness “an unlooked for mishap or an untoward event which is not expected or designed  in many jurisdictions: “accidental” also includes element that injury must be traded to a definite time, place and occasion or cause, at least within reasonable limits  highly controversial  basically, read “accident” to mean there is a requirement for “an accident” o so what is unexpected?  Vast majority have found some sudden mechanical or structural change in body is unexpected, even if it results from often repeated activity

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Others require that their be a showing that some kind of unusual or abnormal exertion or exposure(including fall) caused the injury o Work-place assaults, revisited:  Not necessarily excluded, intentional on part of perpetrator, but not necessarily on other party o Sexual harassment and discrimination  Frequent question: covered by workers comp, or excluded as intentional or quasi-intentional conduct  If no physical injury, not covered  If is physical injury, unresolved o Diseases from work  Cause/ result issue  Not unexpected at all- black lung  Definitiness o Hard to show one incident gave disease  time element o delayed manifestation, raises proof and other problems Mental Injuries o Four General Categories  Physical stimuli causing physical injuries  Mental stimuli causing physical injuries (so called mentalphysical)  Stress induced heart attack  Physical stimuli causing mental injuries (physical-mental)  Psychological issues arising from injury  Mental or nervous injuries caused by mental stimuli (mental mental) o Categories 2&3 compensable, general agreement  May be limits on proof that restrict applicability o Category 4  Some allow, some do not  Concerned with  Floodgates  Causation and diagnostic problems  Question of proof  Some require no greater showing than for physical injuries  Others require showing that a sudden stimulus caused the psychological or mental injury  Others require showing mental stress unusual  Others increase proof o Impact: while it would help many, exclusivity would prevent other from utilizing tort law or other state law theory Exclusivity 

o Whether workers comp exclusive remedy usually depends on various scope questions  Whether the worker is covered employee  Whether the injury or illness arose in the course of and out of employment  Whether the injury was accidental or illness was otherwise covered occupational disease  Whether type of injury compensable  Some cases, have found that exclusivity extends beyond scope of covered injuries, but very controversial approach o Even if exclusive vis a vis employees and employers, still can pursue claims against third parties with deep pockets: manufacturers, ect o A few courts have found employers are third parties and subject to tort under “dual capacity” doctrine: employer caused or aggravated injury while acting in non employer capacity OCCUPATIONAL SAFETY and HEALTH ACT Basics o Types of standards  Emergency: cannot wait  Interim: lowest common denominator assessment, basically decided by industry while OSHA supposed to set permanent standard  Permanent standard:  “substantial evidence”, higher bar than preponderance of evidence  For some, even higher? NOT SURE WHAT THIS MEANS REALLY o Public Citizen Research Health Group v. Chao  Facts: Chromium case, clearly bad, interim rule 100mg/m, public citizen wanted .5  Court saw issue twice: private citizens can force government to act  Typically, government can be only restrained, here is one of the few areas where government compelled to act  mid 1990s  court gave deference to agency to allow further analysis of evidence  reality: OSHA stalling, not sure they can meet substantial evidence standard as they know they will be challenged- and if too lenient, public interest will attack  here  orders agency action

And if they refuse  Hold Sec. of Labor in contempt  No private right of action, enforcement of OSHA on Sec. of Labor’s shoulder  Alternative to rule making?  Collective bargaining  Torts o Don’t worry too much about this, only generalized OSHA issues on exam  COMPETITION, EMPLOYEE LOYALTY, AND THE ALLOCATION OF WORKPLACE PROPERTY INTERESTS Basics: o Tort and Agency Law protection:  Duty of loyalty: applies to agent only  Tortuous interference: applies to agent and third parties o Statutes:  Misappropriation of trade secrets o Contract Protection:  Non competition agreement:  Restrict actions after leaving employer  Non solicitation agreement:  Former employer’s employees and customers  Non-disclosure/ confidentiality agreement  Frequently restrained from using info as well FIDUCIARY DUTIES OF CURRENT EMPLOYEES Duty of Loyalty o Scanwell Freight v. Chan  DUTY OF LOYALTY: cannot act against interest of principal when agent  Violating the duty of loyalty:  Taking confidential information  Assets  “Made arrangements” not breach

MISSED CLASS?????? NON COMPETE AGREEMENT o REM METAH V. ZOGAN  Employee protected by freedom of contract  Practical effect of non compete:  Must be enforced right away

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Can seek ex parte injunction: temporary restraining order or (and lasts until)  Preliminary injunction (lasts until trial)  Both often require bond TWO BASIC Standards  First: (majority of feds)  Reasonable likelihood of success on merits  Goes through elemental process  Legit interest o Reasonable restriction o Scope: geographic and time  Reasonable likelihood of irreppearable harm  Second:  Serious questions on merits  Balancing of hardships of parties  What is an irresparably harmed? o Stealing customers ( and no damages) o If stealing project quantifiable  Stealing goodwill  Disclosure of confidential information  Some courts add public policy  Both standards applied to both reliefs Enjoined and no bond, then at trial succeed?  Wrongful injunction: prove injunction was not justified, proven by who wins at trial  Not frivolous lawsuit, still have damages  Some states: require more stringent showing such as frivolity  However, most states have bond, and even then usually settlement CTI Case  Covenant not to compete and trade secrets  VA – has adopted Uniform Trade Secret Act, unfavorable view of non compete  Highly technical business: always want non compete  Confidentiality agreement- all employees have, head employee also non compete  Employee left and started own company, could have potential breach of loyalty agreement as they started working on new business prior to departure  Court doesn’t find trade secret: no independent economic value from not being generally known- have a consultant Assuming established trade secret, then analyze missapropriation  Use or disclosure  How to prove: short development time, no documentation Non compete for hawkes

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Must prove business interest  If no trade secret, are there still interests  Yes K can provide protection outside trade secret statute Nationwide market?  Evidence they were looking further