Employment Law Outline:
I. Overview: Legal Intervention in the Workplace
A. Historical Foundations
1. Industrial Revolution
a) Lochner-early efforts to regulate employment (b/c some jobs were hazardous and there was unequal
bargaining power) were struck down as infringing on freedom to contract.
b) Freedom of contract approach; quickly abolished though; first protective statutes here;
c) 14th Amendment – “equal protection of the laws” can be used by government employees as the basis
for discrimination suits, though it is inapplicable to private employees.
d) Civil Rights Act of 1866 (42 U.S.C. Section 1981) – states may not enact legislation restricting any
racial group’s legal rights (i.e. right to contract, right to litigate, tax burden, employment benefits). It
was aimed at protecting blacks from “Black Codes.” No minimum number of employees to sue and
employer. No administrative exhaustion.
e) Civil Rights Act of 1871 (Ku Klux Klan Act) prohibits discriminatory “state action” and conspiracies
that interfere with civil rights. If any state official deprives someone of a legal right, the person has a
private cause of action against the individual. Municipalities may be sued (fed and state may not)
2. Great Depression
a) Supreme Court upheld the National Labor Relations Act of 1935 giving employees the right to
organize into unions and the government was given the right to regulate employment.
b) Fair Labor Standards Act (1938): provides minimum wage protection and premium pay for overtime
3. Modern Approach: “Yet what is efficient, expedient, or profitable for a business is not necessarily also
beneficial to its employees, and may even be harmful.”
a) Equal Pay Act (1963): made it unlawful for Ers to discriminate between men and women with respect
to wages
b) Title VII of the Civil Rights Act (1964): prohibited all discrimination in E’ment on the basis of race,
color, religion, sex, or national origin.
c) Age Discrimination Employment Act (1967): prohibited discrimination on the basis of age
d) Occupational Safety and Health Act (1970): established minimum health and safety standards for the
workplace
e) Rehabilitation Act (1973): E’ment rights for individuals with disabilities
f) Employee Retirement Income Security Act (1974): protects pension entitlements
g) Equal Employment Opportunity Act of 1972- expanded the acts coverage and increased the EEOC’s
enforcement power.
h) The Pregnancy Discrimination Act of 1978- expanded the definition of “on the basis of sex” to include
pregnancy, childbirth and other related medical conditions.
i) The Civil Rights Act of 1991-right to a jury trial and added compensatory and punitive damages to the
available relief. The prevailing party may also get attorney’s fees.
j) Age Discrimination and Employment Act (ADEA)
k) State Fair Employment Practice Laws- Most state laws do not exempt small employers. They also
have added more protection such as marital status and sexual orientation.
l) Executive Order 11246 and 11375 – Prohibits government contractors from discriminating and
requires affirmative action. Applies to subcontractors and venors with whom they deal. Race, Creed,
Color or National Origin; later sex was added.
m) Mid 1980’s - : Worker Adjustment Retraining and Notification Act; Employee Polygraph Protection
Act; Americans with Disabilities Act; Civil Rights Act of 1991; Family and Medical Leave Act
B. Functions of Work
1. Economic and social functions of society, providing goods and services and a place for people to interact
2. Psychological: “the individual person is dignified by work”; “Work helps us become more fully human” (see.
CB, p. 5 -7
C. Development of Employment Law
1. Ordinance of Labourers 1349 (p. 15). After the bubonic plague there was a shortage of workers and thus
wages soared and crops went un-harvested; prescribed a duty to work and prohibited leaving a job or
discharging a servant before the end of a term and by the Poor Laws, which used a test or residence and E’ment
to determine which community was responsible for the support of a person (not restricted to agricultural and
domestic workers
2. Master and Servant 1765: employment as a private contract matter between the Er and the Ee; originally
developed as an offshoot of the law of domestic relations, and master and servant alike were bound by
obligations to each other; man was master of his home and could impose whatever working conditions he
wanted on Ees; Ers were subject to no real sanctions; THIS IS STILLRELEVANT IN THE AREA OF TORTS;
“once it is determined that the man at work is a servant, the master becomes subject to vicarious liability for his
torts”
3. Employer-Employee: (Industrial Revolution) the E’ment relationship was one which pertained between equals:
the Ee was free to quit to seek alternate E’ment whenever she/he wanted and the Er was free to fire the Ee at
any time; first protective statutes here; PROPERTY RIGHTS - - the Er’s ability to impose a wide range of
conditions on Ee’s is often justified because the work is performed on the Er’s property, with the Er’s materials
and equipment, and even utilizing the Er’s intangible property such as good will and trademarks
4. Employment at Will: Created by an Albany lawyer named Horace Gray Wood in the 1890’s(see p. 27);
endorsed by the Supreme Court in:
Adair v. U.S. (p. 27): (1908)the Court struck down as unconstitutional a federal statute making it
a crime for an Er engaged in interstate commerce to discharge an Ee solely because of
membership in a labor organization
Clarke v. Atlantic Stevedoring Co. (p. 28): an E’ment contract that is for an indeterminate lenth is terminable at the will of either party; letter to 200 black longshorement guaranteeing continuous work for those who “fulfilled their duties satisfactorily”; shortly after the black longshoremen were fired and replaced by white longshormen just based on race; letter here held as an advertisement not an offer
Note: taken together, illustrate 3 aspects of the common law at-will rule: the Er was free to impose any conditions of E’ment, to discharge an Ee at any time for any reason, and to effect the discharge in virtually any manner
5. Now a combination of: individual contracts of E’ment, collective bargaining, and government regulation
II. Conditions of Employment and Restrictions on Employment
A. Employee Status: pros and cons of being an Ee –
Pro: protected via FLSA & Title 7; entitled to: unemployment compensation; workers compensation; collective bargaining rights; minimum wages and maximum hours; social security; pensions, occupational safety and health; anti-discrimination protection
Con: barred from suing Er in tort for injuries – limited to workman’s comp.; responsible for your own taxes, etc; need your own tools/investment; more freedom to contract/dispose of your labor
The Contingent Workforce:
Part-time Workers: no benefits packages; by far the largest segment of contingent workers (almost 1/5 of entire U.S. Workforce); most common in the clerical, sales, and service industries; typically offer low pay ad few or no benefits and require few skills and demonstrate high turnover rates; worse than full-time jobs on all fronts; only 22% of PT received health insurance from work; no pension; frequently exempted from statutory workplace protections
Contract Workers: those who may be employed by a primary Er but who provides serviced to a secondary Er on a contract basis (aka Ees of subcontractors); construction, janitorial, garment manufacturing, and many other industries; the secondary Er who pays the subcontractor disclaims all responsibility for social security, unemployment compensation, minimum wage or overtime violations, or tax withholdings of any kind. THE HUGE INDUSTRY OF STAFF LEASING WOULD FALL INTO THIS CATEGORY; Vizcaino does not apply to leased Ees (p. 115)
Temporary Workers: still predominantly female and clerical; in general temp agencies take care of tax withholdings, minimum wage requirements, etc. but are unable to monitor work conditions; the statues of temporary workers as non-Ees of the recipient firm may facilitate workplace abuses such as sexual and racial harassment and discrimination and unsafe working conditions; NO RIGHTS AT RECIPIENT FIRM; Vizcaino does not apply to leased Ees (p. 115)
Independent Contractors: no access to federally-mandated benefits and standards including unemployment compensation, workers’ comp, pension regulation through ERISA, health and safety standards, anti-discrimination laws, federal disability insurance, protection under the FLSA, tax withholdings; STATE CONTRACT LAW DETERMINES THEIR RIGHTS
Day Laborers: often these workers are paid by the day and their wages are sub-minimum after Ers deduct for the provision of tools, transportation, or a meager lunch; they are given the dirtiest and most dangerous jobs
1. Employees and Subcontracting
a) NLRB v. Hearst Publications, Inc. (supplemental case) - Newsboys were employees not independent contractors. What were the factors that the courts used to determine whether they were independent contractors or employees? “In this case the NLRB found that the designated newsboys work continuously and regularly, rely upon their earnings for the support of themselves and their families, and have their total wages influenced in large measure by the publishers, who dictate their buying and selling prices, fix their markets and control their supply of papers. Their hours of work and their efforts on the job are supervised and to some extent prescribed by the publishers or their agents. Much of their sales equipment and advertising materials is furnished by the publishers with the intention that it be used for the publisher's benefit. Stating that "the primary consideration in the determination of the applicability of the statutory definition is whether effectuation of the declared policy and purposes of the Act comprehend securing to the individual the rights guaranteed and protection afforded by the Act," the Board concluded that the newsboys are employees. The record sustains the Board's findings and there is ample basis in the law for its conclusion.” Congress overruled this decision by amending the NLRA to say that independent contractors are not employees. This would not help the outcome in this case because it is precisely what the court was trying to figure out, were they independent contractors or employees?
b) Donovan v. Sureway Cleaners (p. 97): aka The Sureway Cleaners Test aka Economic Realities Test
none of these factors is dispositive, you need to look to the circumstances of the whole activity:
(1) The degree of the employer’s right to control the manner in which work is done;
(2) The workers opportunity for profit and loss depending on his managerial skill;
(3) The worker’s investment in equipment or materials
(4) Whether the service rendered requires a special skill
(5) The degree of permanence of the working relationship; and
(6) Whether the service rendered is an integral part of the employer’s business.
(7) Economic dependence of the Ee on the Er: does not concern whether the workers at issue
depend on the money they earn for obtaining the necessities of life, rather it examines whether
the workers are dependent on a particular business or organization for their continued E’ment
(if they didn’t work for X, could they do the same job for someone else?)
(8) All of the above views within the totality of the circumstances
c) Donovan v. Dial America Marketing, Inc., (p. 95) 3rd Circuit adopts 9th Circuit test above.
Telemarketing company incorrectly classified their work force, who primarily worked from home, as
independent contractors. The court used the totality test to determine that just because the company
did not have control of the employees was insignificant in determining whether they were independent
contractors or employees. SEE ALSO PAGE 34 OF THIS OUTLINE – FLSA; adopted the Sureway
Test as the standard for determining “Ee” under the FLSA; Ee are held even if the parties
explicitly agreed that the worker was an independent contractor and even if the Er didn’t intend
to create an E’ment relationship; if it meets the Ee test, it’s an Ee
d) Viscaino v. Microsoft Corp., (p. 107) – Companies who mistakenly characterize some workers as
independent contractors may be liable to provide employee benefits to such workers. An agreement
establishing a worker’s status as an independent contractor, which is later proved to be invalid, can not
be used to exclude the worker from employee benefits. This does not apply to leased Ees (p. 115)
e) Illegally Employed Minors – some courts hold that illegally employed minors, injured or killed on the
job, should be limited to workers’ compensation (even though they are illegally hired under the Child
Labor Standards Act). Other courts say that it is against public policy to limit an injured child to
workers comp. when it is a legal impossibility for them to be employees in the first place. They
should be allowed to sue in tort and collect damages. (CBp. 23)
(1) Lemmerman v. A.T. Williams Oil Co (P. 19): An illegally employed minor may be considered an “employee” for purposes of workers’ compensation statute. 8 year old boy who did menial tasks for the manager of the gas station at which the boy’s mother worked sought to sue the owner of the gas station for injuries. The court looked a whether the boy expected to be paid for his services and whether the services could be considered gratuitous. The burden is on the Er to prove that P wasn’t an Ee.
(2) Northwest Advancement, Inc. v. State, Bureau of Labor, (p. 23) – minors employed as door to door salespersons, were employees and not independent contractors for purpose of wage and hour regulations.
f) Hypo: Computer Pros Hypo: Computer pros is a vendor provider of programmers to a large bank. A computer pros employee goes to work at the bank (computer pro pays the employees salary). Employee gets sexually harassed and sues both the agency and the bank
g) Outsourcing -
h) Nepotism-should the government regulate hiring? Not a violation of Title VII
B. The Hiring Process
1. Legal Restrictions on Job Access
a) Residency Requirements-are not per se invalid. The state actor need only establish that the
requirement is rational to survive constitutional (strict) scrutiny against the right to travel. This
requires the “compelling state interest test” in cases involving infringement of the right to interstate
travel by durational residency requirements and the “rational basis test” for residency requirements