Chapter 9: Employment Law and Business Entities Flashcards
Employment At Will
Four exceptions to employment at will:
- Public policy exception
- Implied-contract exception
- Covenant-of-good-faith exception
- Statutory exception
Public Policy Exception
Examples:
- Refusing to commit perjury at the request of the employer
- Filing a workers compensation claim after being injured on the job
- Applying for medical leave specifically provided under state or federal law
- Refusing to participate in illegal price-fixing
- Refusing to violate another employee’s or a customer’s privacy without permission
Covenant-of-Good-Faith Exception
Example:
Firing a long-term employee right before he/she was eligible for retirement benefits
- Not as widely recognized by the state’s as the other types of exception
Antidiscrimination Laws
Prohibits termination based on:
- Age
- Sex, race, color, religion, or national origin
- Disability
- Other factors (military service, jury duty, wage garnishment)
Discrimination Based on Age
Two federal laws protect workers from age discrimination:
- The Age Discrimination in Employment Act (ADEA) of 1967
- The Older Workers Benefit Protection Act (OWBPA) of 1990
Civil Rights Act of 1964
Governs most employment discrimination actions, including:
- Prohibited employment practices
- Permissible employment practices
- Pregnancy discrimination
- Sexual discrimination
- Sex-based insurance rates
Discrimination Based on Sex, Race, Color, Religion, or National Origin
Employment discrimination may be based on:
- Disparate Treatment Theory
- Disparate Impact Theory
Discrimination Based on Sex, Race, Color, Religion, or National Origin
Two basics types of sexual harassment claims:
- Quid pro quo sexual harassment
- Hostile work environment
Discrimination Based on Sex, Race, Color, Religion, or National Origin
Two federal laws prohibit discrimination based on disability:
- The Rehabilitation Act of 1973
- The Americans with Disabilities Act (ADA)
Labor-Management Relations
Three key areas of law regarding labor-management relations:
- Collective-bargaining relationships
- Collective-bargaining process
- Economic pressures
Collective Bargaining
Examples of bad-faith:
- Refusal by either side to enter into negotiations on mandatory issues
- A take it or leave it approach by the employer from the time of the first bargaining conference
- Participation in a lengthy series of bargaining conferences with no intention to enter into an agreement
Employee Welfare Laws
- Safety and health
- Wages and hours
- Family medical leave
- Privacy
Corporations: Formation
Three main types of corporations:
- Government corporations, such as cities, counties, and states
- Charitable, or not-for-profit corporations, such as colleges, universities, hospitals, and religious institutions
- Business for-profit corporations
Corporations: Formation
Business entities can be organized as:
- Corporations
- Partnerships
- Sole proprietorships
- Unincorporated associations
Advantages of Incorporation
- Limit owners’ liability
- Possible tax advantages
- Easier to sell or transfer ownership
- Easier to raise capital
- Perpetuity beyond the death of owners
Duties of Directors and Officers
Under the Employee Retirement Income Securities Act (ERISA) of 1974, directors and officers have these duties:
- To act solely in the plan participants’ interest
- To exercise the care and skill of a reasonable person conducting a similar enterprise
- To diversify investments unless it is clearly unreasonable to do so
- To act in accordance with the plan documents
Stockholders’ Powers and Duties
Stockholder decisions include:
- Electing board members and, in many states, removing them without cause
- Approving changes to the articles of Incorporation
- Making or amending bylaws
- Approving loans to the corporation’s directors, officers, or agents
- Ratifying (approving) board actions
- Suing directors for mismanagement
Stockholders’ Actions
Stockholders may file three types of civil lawsuits to pursue complaints:
- Class actions
- Derivative actions
- Direct actions
Corporations: Mergers, Dissolution, and Reorganization
- Merger is the joining together of two or more corporations to become a new organization
- Dissolution is a voluntary or involuntary termination of a corporation
- Reorganization occurs when a corporation becomes bankrupt
Winding Up the Partnership Business
Partnership assets are distributed in this order:
- ) Partnership creditors
- ) Partnership advances
- ) Each partner’s capital
- ) Surplus to the partners, divided in the same proportion as profits
Limited Liability Partnerships (LLP)
Liability limitations do not apply in situations such as these:
- Individual acts of negligence or wrongful acts by a withdrawing partner
- Debts or obligations of the partnership for which a withdrawing partner has agreed to be liable
- Debts and obligations expressly undertaken in the partnership agreement
Unincorporated Associations
Examples:
- Trade Associations
- Labor unions
- Religious organizations
- Clubs
Characteristics of Unincorporated Associations
Differ from partnerships in several ways:
- Associations cannot hold title to real property or execute a lease in the association’s name
- A member’s withdrawal does not cause dissolution
- Any expense-sharing or profit-sharing in an association is frequently other than per capita
- Associations’ individual members do not have authority to participate directly in its day-to-day management
Types of Unincorporated Associations
- Trade associations
- Labor unions
- Benevolent and fraternal associations
- Religious organizations
- Clubs
- Condominium owners’ associations
Unincorporated Association Formation
Bylaws of an unincorporated association typically include provisions addressing:
- Qualifications, selection, and terms of directors and trustees
- Meetings
- Qualifications for membership
- Acquisitions and transfer of property
- Right and duties of members
- Dissolution
Dissolution and Winding up of Unincorporated Associations
Can be dissolved:
- By members’ votes
- By the death of withdrawal of a majority of its members
- By court action on application of creditors or members, or for illegal conduct
- By the expiration of period states in the articles
