©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law...

©2005 by West Legal Studies in BusinessA Division of Thomson Learning

Fundamentalsof Business

Law6th Edition

Chapter 23Employment Law

©2005 by West Legal Studies in BusinessA Division of Thomson Learning 2

Fundamentals of Business LawMiller • Jentz 6th Ed.

Introduction• Historically, employment law was governed by

the common law doctrine of “employment at will” where either employer or employee could terminate the relationship at any time, for any reason.

• Today employment law is heavily regulated by state and federal statutes.



Wage-Hour Laws• Davis-Bacon Act -- the prevailing wage act.• Walsh-Healey Act -- beginning of minimum wages.• Fair Labor Standards Act (FLSA):

– Extension of wage and hour regulation to workers in interstate commerce.

– Child Labor: FLSA prohibits oppressive child labor practices.



Labor Unions • Norris-LaGuardia Act.

– Protects peaceful strikes by limiting the injunction powers of federal courts.

• National Labor Relations Act.– Establishes the right of workers to strike and

engage in collective bargaining.



Labor Unions• Labor Management Relations Act.

– Prohibits certain unfair union practices such as closed shops.

• Labor-Management Reporting and Disclosure Act.– Regulates the internal operations of unions and

outlaws hot-cargo agreements.– Case 23.1 National Steel Corp. v. NLRB (2003).



Worker Health and Safety

• The Occupational Safety and Health Act. (OSHA).– The fundamental federal law aimed toward safety

in the workplace.– Enforcement is by OSHA, NIOSH, and the

OSHRC.



• These laws reduce employer liability to employees for workplace injuries, and provide a measure of assurance that workplace injuries will be compensated, regardless of the solvency of the employer, by:– Requiring that injured employees make a claim against

the employer’s workers’ compensation insurance policy, instead of suing the employer.

– Requiring most employers to carry workers’ compensation insurance.

Workers’ Compensation



Income Security• The primary income security laws are

– Social Security and Welfare.– Case 23.2 U.S. v. Cleveland Indians Baseball,

Co. (2001).– Private Pension Plans.

• Employee Retirement Income Security Act (ERISA) gives employee a vested right to receive pension benefits at a future date when she stops working.

– Unemployment Compensation.



COBRA• COBRA prohibits the discontinuance of

insurance benefits of workers who have voluntarily or involuntarily been separated from work, unless the involuntary separation was on the basis of gross misconduct.

• Employers must comply if they have more than 20 employees.



FMLA• The FMLA requires employers with over 50

employees to provide unpaid leave to employees who need to care for a spouse, child, or parent suffering with a serious medical condition.

• The employee cannot be terminated for taking leave under the policy, and has the right to restoration to the same or a similar position upon return to work.

• Case 23.3 Nevada Dept. of Human Resources v. Hibbs (2003).



Wrongful Discharge• The doctrine of employment-at-will allows

the employer and the employee to terminate employment at any time, for any reason, without liability.

• Some states however recognize one or more judicial exceptions to this rule, while some states recognize none.



– There are three such exceptions to the doctrine of employment at will:• Contract (implied covenant of Good Faith

and Fair Dealing).• Torts: fraud, emotional distress.• Public Policy.

Wrongful Discharge



Whistleblower Statutes• A whistleblower is one who reports illegal employer

activities to the proper authorities.• Whistleblowers are frequently subjected to

retaliation for such activities.• There are a number of state and federal (

Whistleblower Protection Act) whistle-blower protection statutes, offering a wide variation in protections.

http://www4.law.cornell.edu/uscode/5/ch12.html#PC12



Title VII of The Civil Rights Act of

1964• Title VII prohibits discrimination in employment on

the basis of race, sex, color, religion, and national origin. “Sex” now includes pregnancy.

• In addition to prohibiting religious discrimination, employers must reasonably accommodate an employee’s religious practices.

• Enforcement of Title VII by EEOC.

http://www.eeoc.gov/



Race, Color and National Origin

• Title VII prohibits employment policies or intentional/ negligent discrimination on basis of race, color or national origin.

• Company policies that discriminate are illegal, unless (except for race) they have a substantial demonstrable relationship to realistic qualifications for job.



Religious Discrimination

• Employers must “reasonably accommodate” the “sincerely held’ religious practices of its employees, unless to do so would cause undue hardship to employer’s business.



Gender Discrimination• Title VII prohibits sex discrimination in the work

place.• Employers are prohibited from classifying jobs as

male or female or from advertising such, unless employer can prove gender is essential to the job.

• Plaintiff must show gender was determining factor in hiring, firing or lack of promotion.



Gender Discrimination

• Two types of sex discrimination:– Differential treatment.– Sexual harassment, which itself, exists in two

varieties:• Hostile Work Environment.• Quid Pro Quo.



Sexual Harassment• Title VII does not specifically mention sexual

harassment as a form of sex discrimination, but the U.S. Supreme Court has interpreted Title VII’s prohibition against sex discrimination to include a prohibition against sexual harassment.

• There are currently two forms of recognized sexual harassment:– Hostile Work Environment.– Quid Pro Quo.



“Hostile Work Environment”

• Hostile environment occurs when workplace is “permeated” with discriminatory intimidation, ridicule, insult so severe to alter the conditions of the victim’s employment.

• The conduct in the workplace must be offensive to a reasonable person as well as to the victim, and it must be severe and pervasive.



Harassment by Supervisors: Quid Pro

Quo • Quid Pro Quo harassment involves the demands for

sexual favors by a superior from a subordinate, in exchange for some workplace benefit.– See Faragher v. City of Boca Raton (1998) and

Burlington Industries v. Ellerth (1998).• Under certain conditions, an employer may be

liable for the quid pro quo harassment committed by its supervisory employees.

http://caselaw.findlaw.com/scripts/getcase.pl?navby=search&linkurl=%3C%25LINKURL%25%3E&graphurl=%3C%25GRAPHURL%25%3E&court=US&case=/us/000/97%2D282.html





Harassment by Co-Workers

• Employer generally liable only if employer knew or should have known and failed to take action. – Employee notice to supervisor is notice to Employer

under agency law.• Employers may also be liable for harassment by

non-employees.• Same-sex harassment violates Title VII.



Remedies under Title VII

• Liability may be extensive. Plaintiff may receive:– Reinstatement.– Back Pay.– Retroactive Promotions; and– Damages.



Discrimination Based on Age

• The Age Discrimination in Employment Act (ADEA) protects individuals over the age of 40 from workplace discrimination that favors younger workers.

• Under Kimmel v. Florida Board of Regents (2000), states are immune from private lawsuits brought in federal court under 11th Amendment.

http://caselaw.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=98-791



Discrimination based on “Disability”

• The Americans with Disability Act (ADA) requires employers to offer reasonable accommodation to employees or applicants with a “disability” who are otherwise qualified for the job they hold or seek.

• The duty of reasonable accommodation ends at the point at where it becomes an undue hardship.

• Case 23.4 Clackamas Gastroenterology Assoc., P.C. v. Wells (2003).



ADA• To prevail on a claim under ADA, plaintiff must

show she:– Has a “disability.”– Is otherwise qualified for the employment in question;

and– Was excluded from employment solely because of the

disability.• Plaintiff must first exhaust administrative relief

with EEOC.



ADA: What is a “Disability”?

• ADA defines disability as:– Physical or mental impairment that “substantially limits

one or more of major life activities; or– A record of such impairment; or – Being regarded as having such an impairment.

• Determination is decided on a case-by-case basis.• Case 23.5 Sutton v. United Airlines, Inc. (1999).



ADA: “Reasonable Accommodation”

• If an employee with a disability can perform the job with reasonable accommodation, without undue hardship on the employer, the accommodation must be made.– Examples: wheelchair ramps, flexible working hours,

improved training materials.• Job Applications and Pre-Employment Physical

Exams.



Defenses to Employment

Discrimination • There are four basic types of defenses to

employment discrimination claims.– Business necessity.– Bona fide occupational qualification.– Seniority Systems.– After-acquired evidence of employee

misconduct.



Business Necessity• The business necessity defense requires the

employer to demonstrate that the imposition of a job qualification is reasonably necessary to the legitimate conduct of the employer’s business.

• Business necessity is a defense to disparate impact discrimination.



BFOQ• The bona fide occupational qualification

(BFOQ) defense requires an employer to show that an particular skill is necessary for the performance of a particular job.

• The BFOQ defense is used in cases of disparate treatment discrimination.



Seniority Systems• A seniority system is one that conditions the

distribution of job benefits on the length of time one has worked for an employer.

• A seniority system can be a defense only if it is a bona fide system, not designed to evade the effects of the anti-discrimination laws.



Affirmative Action• Affirmative action programs go one step beyond

non-discrimination: they are designed to “make up” for past patterns of discrimination by giving preferential treatment to protected classes.

• AA has led to “reverse discrimination” cases such as Adarand and the recent U.S. Supreme Court cases:– Gratz v. Bollinger (2003).– Grutter v. Bollinger (2003).

©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law...

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