Exam 4 Flashcards
Chapters 17-20 Agency law, employment and labor law, employment discrimination, starting a business: LLCs and other options
principal
a person who has someone else acting for him
agent
a person who acts for someone else
agent relationship
- principal and
- agent,
- mutually consent that agent will act on behalf of the principal and
- be subject to the principal’s control
- thereby creating a fiduciary relationship
consent
the principal must ask the agent to do something, and the agent must agree
control
principals are liable for an agent’s acts because they exercise control over that person
fiduciary relationship
the trustee must act in the best interests of the beneficiary
- one of trust
- agents has a fiduciary duty to their principals
agency relationships
- consent
- control
- fiduciary duty
elements NOT required for an agency relationship
- written agreement
- formal agreement
- compensation
equal dignities rule
if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written
duties of agents to principals
- duty of loyalty
- duty of obey instructions
- duty of care
- duty to provide information
agent to principal: duty of loyalty
an agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship
- outside benefits
- confidential information
- competition with the principal
- conflict of interest between two principals
- secretly dealing with the principal
- appropriate behavior
outside benefits
an agent may not receive profits unless the principal knowns and approves
confidential information
agents can neither disclose nor use for their own benefit any confidential information they acquire during their agency
competition with the principal
agents are not allowed to compete with their principal in any matter within scope of the agency business
conflict off interest between two principals
unless otherwise agreed, an agent may not act for two principals whose interests conflict
secretly dealing with the principal
if a principal hires an agent to arrange to transaction, the agent may not become a party to the transaction without the principal’s permission
appropriate behavior
an agent may not engage inappropriate behavior that reflects badly on the principal
- even off duty, in uniform
other duties of an agent
- duty to obey instruction
- duty of care
- duty to provide information
agent to principal: agent’s duty to obey instructions
an agent must obey her principal’s instructions unless the principal directs her to behave illegally or unethically
agent to principal: agent’s duty of care
an agent has a duty to act with reasonable care
- an agent with special skills is held to a higher standards because she is expected ti use those skills
gratuitous agent
someone not paid for performing duties
- agents are liable of they commit gross negligence, not not ordinary negligence
agent to principal: agent’s duty to provide information
an agent has a duty provide the principal with all information in her possession that she has reason to believe the principal wants to know. She also has a duty to provide accurate information
principal’s remedies when the agent breaches a duty
- damages
- profits
- rescission
principal’s remedies: damages
the principal can recover from the agent any damages the breach has caused
principal’s remedies: profits
if an agent breaches the duty of loyalty, he must turn over to the principal any profits he has earned as a result of his wrongdoing
principal’s remedies: recession
if the agent has violated her duty of loyalty, the principal may rescind the transaction
duties of principals to agents
- duty of indemnify
- duty to cooperate
principal to agent: duty to indemnify (1)
a principal must indemnify an agent for any expenses or damages reasonably incurred in carrying out his agency responsibilities
principal to agent: duty to indemnify (2)
a principal must indemnify an agent for tort claims brought by a third party is the principal authorized the agent’s behavior and the agent did not realize he was committing a tort
principal to agent: duty to indemnify (3)
the principal must indemnify the agent for any liability to this parties that the agent incurs as a result of entering into a contract on the principals behalf, including attorney’s fees and reasonable settlements
principal to agent: duty to cooperate (1)
the principal must furnish the agent with the opportunity to work
principal to agent: duty to cooperate (2)
the principal cannot unreasonably interfere with the agent’s ability to accomplish his task
principal to agent: duty to cooperate (3)
the principal must perform her part of the contract
terminating an agency relationship
- termination by agent and/or principal
- principal or agent can no linger perform required duties
- change in circumstances
- effect of termination
terminating an agency relationship: termination by agent and/or principal
- term agreement
- time
- achieving a purpose
- mutual agreement
- agency at will
- wrongful termination
termination by agent and/or principal: term agreement
if the principal and agent in advance how long their relationship will last, they have a term agreement
- time
- achieving a purpose
- mutual agreement
termination by agent and/or principal: agency at will
if they make no agreement in advance about the term of the agreement, either principal or agent can terminate at any time
termination by agent and/or principal: wrongful termination
a principal and agent have a personal relationship, if an agency relationship is not working out, the courts will not force the agent and principal to stay together
termination by agent and/or principal: either party always has the power to terminate they may not, however, have the right
if one party’s departure from the agency relationship violates the agreement and causes harm to the other party, the wrongful party must pay damages
terminating an agency relationship: principal or agent can no linger perform required duties (1)
either the agent or principal fails to obtain (or keep) a required license
terminating an agency relationship: principal or agent can no linger perform required duties (2)
the bankruptcy of the agent or the principal affects their ability to perform required duties
terminating an agency relationship: principal or agent can no linger perform required duties (3)
either the principal or the agent dies or becomes incapacitated
terminating an agency relationship: principal or agent can no linger perform required duties (4)
the agent violates her duty of loyalty
terminating an agency relationship: changes in circumstances
- war
- change of law
-loss of destruction of subject matter
terminating an agency relationship: effect of termination
once an agency relationship ends, the agent no longer has the authority to act for the principal. if she continues to act, she if liable to the principal for any damages he incurs as a result
effect of termination
some of the duties of both the principal and agent continues even after the relationship ends:
- principal’s duty to indemnify the agent
- confidential information
liability to third parties
- principal’s liability for contracts
- agent’s liability for contracts
- principal’s liability for negligent physical torts
- principal’s liability for intentional physical torts
principal’s liability for nonphysical torts - agents liability for tots
liability to third parties: principal’s liability for contracts
- authority (express/implied/apparent)
- ratification
- subagent
principal’s liability for contracts : authority
a principal is bound by the act of an agent of the agent had authority
principal’s liability for contracts : authority - expressed
the principal grants express authority by words or conduct that, reasonably interpreted, cause the agent believe the principal desired her to act on the principal’s account
principal’s liability for contracts : authority - implied
unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it
principal’s liability for contracts: authority - apparent
a principal can be liable for the acts of an agent who is not, in fact, acting with authority if the principal’s conduct causes a third party reasonably to believe that the agent is authorized
- remember that the issue in apparent authority is always what the principal has done to make the third party believe that the agent has authority
principal’s liability for contracts: ratification
if a person accepts the benefits of an unauthorized transaction or fails to repudiate it, then he inbound by the act as if he has originally authorized it. He has ratified the act
principal’s liability for contracts: ratification 2
even if an agent acts without authority, the principal can decide later to be bound by her actions as long as these requirements are met:
- the “agent” indicates to the third party that she is acting for a principal
- the “principal” knows all the material facts of the transaction
- the “principal” accepts the benefit of the whole transaction, not just part
- the third party does not with draw from the contract before ratification
principal’s liability for contracts: subagent - intermediary agent
someone who hires subagents for the principal
- when an agent is authorized to hire a subagent, the principal is a s liable for the acts of the subagent as he is for the acts of a regular agent
principal’s liability for contracts: subagent
someone appointed by an agent to perform the agents duties
liability to thirds parties: agent’s liability for contracts
- fully disclosed principal
- unidentified principal
- undisclosed principal
- unauthorized agent
agent’s liability for contracts: fully disclosed principal
an agent is not liable for any contracts she makes on behalf of a fully disclosed principal
- a principal is only fully disclosed if the third party knows of his existence and identity
agent’s liability for contracts: unidentified principal
in the case of an unidentified principal, the third party can recover from either the agent or the principal (partially disclosed principal)
- a principal is unidentified If the third party knew of his existence but not his identity
unidentified principal: jointly and severally liable
all members of a group are liable; they can be sued as a group, or any one of them can be sued individually for the full amount owed, but the plaintiff cannot recover more than the total she is owed
agent’s liability for contracts: undisclosed principal
in the case of an undisclosed principal, the third party can recover from either the agent or the principal
- a principal is undisclosed if the third party did not know of his existence
- the principal is always liable, but the agent is only liable when the principal’s identity is unknown
agent’s liability for contracts: undisclosed principal rules
a third party is not bound to the contract with an undisclosed principal if
- the contract specifically provides that the third party is not bound to anyone other than the agent
- the agent lies about the principal because she knows the third party would refuse to contrast with him
agent’s liability for contracts: unauthorized agent
if the agent hasn’t o authority (express, implied, or apparent), the principal is not liable to the third party, and the agent is
liability to third parties: principal’s liability for negligent physical torts
an employer is liable for physical torts negligently committed by an employee acting within the cope of employer
- employee
- scope of employment
liability to third parties: principal’s liability for negligent physical torts - respondent superior
a principal is liable for certain torts committed by an agent
principal’s liability for negligent physical tort: employee
two kinds of agents:
1. employee; principal is liable
2. independent contractor; principal is not liable
principal’s liability for negligent physical tort: the gig economy
the gig economy is based on companies that, instead of hiring full-time employees, use mobile apps to facilitate peer-to-peer transactions that pay per job
-ride sharing, chores, cleaning, delivery, repairs, and shipping
principal’s liability for negligent physical tort: negligent hiring
a principal is liable for both the negligent and intentional physical torts of an independent if the principal has been negligent in hiring or supervising her
principal’s liability for negligent physical tort: scope of employment
an employee is acting within the scope of employment if the act:
- is one that employees are generally responsible for,
- takes place during hours that the employee is generally employed,
- is part of the principal’s business,
- is similar to the one the principal authorized,
- is one for which the principal supplied the tools, and
- is not seriously criminal
principal’s liability for negligent physical tort: scope of employment - authorization
an act is within the scope of the employment if expressly forbidden, is it is of the same nature as that authorized or if it is incidental to the conduct authorized
principal’s liability for negligent physical tort: scope of employment - abandonment
the principal is liable for the actions of the employee that occur while the employee is at work, but not for actions that occur after the employee has abandoned the principal’s business
principal’s liability for intentional physical torts
a principal is NOT liable for the INTENTIONAL physical torts pf an employee unless
(1) the employees intended to serve some purpose of the employer
or
(2) the employer was negligent in hiring or supervising this employee
principal’s liability for nonphysical torts
a nonphysical tort is one that harms only reputation, feelings, or wallet.
- nonphysical torts (whether intentional or unintentional) are treated like a contract claim: the principal is liable only if the employee acted with express, implied, or apparent authority
agent’s liability for torts
agents are always liable for their own torts
employee at will
a worker without an employment contract
- could be fired for a good reason, a bad reason, or no reason at all
employment security
- common law protections
- family and medical leave act
- fair workweek laws
- whistleblowing
employment security: common law protections - wrongful discharge
an employer may not fire a worker for a reason that violated basic social rights, duties, or responsibilities
- the public policy rule prohibits an employer from hiring a worker fro reason that violate fundamental social rights, duties, or responsibilities
wrongful discharge: refusing to violate the law
as a general rule, employees may not be discharges for refusing to break the law
wrongful discharge: exercising a legal right
as a general rule, an employer may not discharge a worker for exercising a legal right if that supports public policy
wrongful discharge: supporting societal values
courts are sometimes willing to protect employees who do the right thing, even if they violate the boss’s orders
common law protection: contract law
- promises made during the hiring process
-employed handbooks - covenant of good faith and fair dealing
contract law: promises made during the hiring process
promised make to job applicants are generally enforceable, even if not approved by the company’s top executives
contract law: employee handbook
creates a contract
contract law: covenant of good faith and fair dealing
states imply to a covenant of good faith and fair dealing in contracts. requires both parties to behave reasonably, making an honest effort to meet both the spirit and letter of the contract
common law protection: tort law
- defamation
- workplace bullying
tort law: defamation
employers may be liable for defamation when they give false references about an employee
- more than half of the states recognize a qualified privilege of r employers who give references about former employees
qualified privilege
employers who give references are liable only for false statements that they know to be false or that are primarily motivated by ill will
tort law: workplace bullying - intentional infliction of emotional distress
an intentional tort in which the harm results from extreme and outrageous conduct that causes serious emotional harm
common law protection: family and medical leave act
the family and medical leave act (FMLA) guarantees both men and women up to 12 weeks of unpaid leave each year for childbirth, adoption, or a serious health condition or their own or in their immediate family
serious health condition:
- any health issue that required hospitalization
-a condition that requires more than one visit to a healthcare provider; the visits may be spread out over as long as a year
- a condition that required only one visit to a healthcare provider but also requires a course of treatment such as physical therapy or prescription medication
common law protection: fair workweek laws
requires employers to:
- provide 14 days’ notice of work schedules
-pay workers extra for each shift cancelled on short notice
-pay extra for split shifts
- avoid retaliating against workers who ask for changes in their work schedule
common law protection: whistleblowing
someone who discloses wrongdoing
protected against:
-The false claims act
-Sarbanes-Oxley Act of 2022
-The Dodd-Frank Wall Street Reform and Consumer Protection Act
-Constitutional protection for government employees
-Statutory protection for federal employees
-State Laws
whistleblowing: false claims act
permits whistleblowers to bring lawsuits against anyone who defrauds the government and prohibits an employer from retaliating against workers who file suit under the statute
whistleblowing: Sarbanes-Oxley Act of 2002
protects employees of publicly traded companies who provide evidence of fraud to investigators
whistleblowing: The Dodd-Frank Wall Street Reform and consumer Protection Act
anyone who provides information to the government about violations of securities or commodities laws is entitled to a payout of from 10-30% of whatever award the government receives, provided that the award tops $1 million
whistleblowing: constitutional protection for government employee
employees of federal, state, and local governments have a right to free speech under the US Constitution
whistleblowing: statutory protection for federal employees
the civil service reform act and the whistleblower protection act prevent retaliation against federal employees who report wrongdoing
whistleblowing: state laws
all 50 states have laws that protect whistleblowers from retaliation by their employers, but varies
workplace freedom
- off duty activities
-the right to free speech - lie detector tests
workplace freedom: off-duty activities
in the absence of a specific law to the contrary, employers do have the right to fire workers for off-duty conduct
- lifestyle laws
- smoking
- alcohol and drug use
off-duty activities: lifestyle laws
a few states have passed lifestyle laws that protect there rights of employees to engage in any lawful activity or use any lawful product when off duty
off-duty activities: smoking
employers cannot prohibit workers from smoking, however, employers can refuse to hire smokers because it costs them more
off-duty activities: alcohol and drug use
under federal laws, private employers are permitted to randomly test job applicants and workers for alcohol and illegal drugs
- the EEOC permits employers to fire or refuse to hire workers for using prescribed drugs only if that use creates a safety issue
workplace freedom: the right to free speech
- national labor relations act
- social media policies
- privacy on social media
the right to free speech: national labor relations act
protects the employees right to unionize
- who engages in collective activity
- relating to work conditions
- who are not supervisors
even non-unionized workers cannot be fired for complaining about their jobs, so long as these complaints are shared with other employees and are not inappropriately hostile or violent
the right to free speech: social media policies
policies violate the NLRA if they unreasonably limit employee speech about work conditions
to be PROTECTED, the employee speech must be CONCERTED (with other employees)
the right to free speech: privacy on social media
Stored Communications Act (SCA) prohibits unauthorized access to electronic communications, which includes email, voice mail, social media
employers can monitor if:
1. the employee consents
2. monitoring occurs during ordinary business courses
3. in cases of email, if the employer provides the computer system
workplace freedom: lie detector tests
under the Employee Polygraph Protection Act of 1988, employers may not require, or even suggest, that an employee or job candidate submit to a lie detector test except in the following cases:
- an employment who is part of an “ongoing investigation” into crimes that have already occurred
- an applicant applying for a government job, or
- an applicant for a job in public transport, security services, banking, or pharmaceutical firms that deal with controlled substances
workplace safety
- OSHA
- employee data
- guns
workplace safety: OSHA
- general duty
- specific health and safety standards
- oversight
OSHA: general duty
employers are under a general duty to keep their workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm
OSHA: specific health and safety standards
employers must comply with specific health and safety standards
OSHA: records
employers must keep records of all workplace injuries and accidents
OSHA: oversight
OSHA may inspect workplaces to ensure that they are safe
workplace safety: employee data
employers necessarily obtain personal data from their workers:
- DOB
- SSN
- Bank
workplace safety: guns
employers have the right to prohibit guns in their workplace but, in almost half the states, Bring Your Gun to Work laws prevent companies from banning firearms in they parking lot
financial protection
- fair labor standards act (FLSA)
- worker’s compensation
- health insurance
- social security
- pension benefits
financial protection: FLSA
fair labor standards act regulates the wages and limits child labor
- prohibited oppressive child labor
financial protection: worker’s compensation
worker’s compensation statutes ensure that employees receive payment for injuries incurred at work
financial protection: health insurance
under the Consolidated Omnibus Budget Reconciliation Act (COBRA), former employees must be allowed to continue their health coverage for 18 months after leaving their job
financial protection: Social Security
the social security system pays benefits to workers who are retired, disabled, or temporarily unemployed to the spouses and children of disabled or deceased workers
- a worker who quits voluntarily or is fired for just cause is ineligible for unemployment benefits
financial protection: pension benefits
the employee retirement income security act (ERISA) protects workers covered by private pension plans
labor unions
- national labor relations act
- collective bargain
- concerted action
labor unions: National Labor Relations Act (NLRA)
ensures the right of workers to form unions and encourages management and unions to bargain collectively and productively
Section 7: guarantees employees the right to:
- organize unions and join unions,
- bargain collectively through representative of their own choosing, and
-engage in other concerted activities
Section 8: prohibits in engaging in unfair labor practices:
- interfering with union organizing efforts
- dominating or interfering with any union
- discriminating against union members, and
- refusing to bargain collectively with a union
prohibits unions form engaging in ULPs:
- interfering with employees who are exercising their labor rights
- causing an employer to discriminate against workers as means to strengthen the union, and
- charging excessive dues
labor unions: collective bargaining agreement (CBA)
a contract between a union and a company
- NLRA requires parties to bargain wages, hours, and other terms and conditions of employment
- the union and the employers are not obligated to reach an agreement, but they are required to bargain in gapped faith
labor unions: concerted action
tactics taken by union members ti gain bargaining advantage
- the MLRA guarantees the right of employees to engage in concerted actions for mutual aid or protection
concerted actions: strikes
- no strike clause
- cooling off period
- statutory prohibition
- sit down strikes
- partial strikes
strikes: no-strike clause
a clause in the CBA that prohibits the union from striking while the CBA is in force
strikes: cooling off period
before striking to terminate or modify a CBOm a union must give management 60 days notice
strikes: statutory prohibition
many states have outlawed strike by public employees
strikes: sit-down - illegal
workers go to work but do not work - illegal
strikes: partial strikes - illegal
stopping and starting work repeatedly - illegal
concerted action: replacement workers
when employees for on strike, management has the right to use replacement workers to keep the business operating
economic strike
one intended to gain wages or benefits
unfair labor practice (ULPs) strike
union members are entitled to their jobs back, even if it means the employer must lay off replacement workers
Picketing - legal
to discourage employees, replacement workers, and customers from doing business with the company
- picketing the employer’s workplace in support of a strike if generally lawful
picketing: secondary boycotts - illegal
a picket line established not at the employer’s premise but at a different workplace
concerted action: lockouts - legal
management prohibits workers from entering the premises
civil rights act of 1866
prohibit racial discrimination in both private and public employment (except it does not apply to the federal government)
constitution
the US constitution prohibits employment discrimination be federal, state, and local government
equal pay act of 1963
a worker may not be paid at a lesser rate than employees of the opposite sex for equal work
Tile VII of the Civil Rights Act of 1964
it is illegal to for employers with 15 or more workers to discriminate on the basis of race, color, religion, sex, or national origin
types of discrimination
- disparate treatment
- disparate impact
- hostile environment
- retaliation
disparate treatment
the plaintiff must show that she was treated less favorably than others because of her race, color, religion, sec, or national origin
disparate impact
applies if the employer has a rule that on its face is not discriminatory, button practice excludes too many people in a protected group and there is not a job-related business necessity
hostile work environment
employers violate Title VII is the permit a work environment that is so hostile toward people in a protected category that is affects their ability to work
sexual harassment
involves unwelcome sexual advances, requests for social favors, or other verbal or physical conduct if a sexual nature that. are so severe and pervasive that they interfere with an employees ability to work
retaliation
Title VII prohibits employers from retaliating against workers who oppose discrimination, bring a claim under the stature, or take part in an investigation or hearing
religion
employee cannot discriminate agains a worker because of his religious beliefs. In addition, employers must make reasonable accommodation for worker’s religious practices unless the request would cause undue hardship for the business
sex
Title VII forbids sex stereotyping
appearance
employers are free to adopt different appearance riles for men and women, but these standards may not impose a greater burden on one sec than the other. Unattractiveness is not itself a protected category under Title VII, so any discrimination claim would have to fit into one of the existing categories
pregnancy
the Pregnancy Discrimination Act provides that employers may not fire, refuse to hire, or fail to promote a woman because she is pregnant
parental status
discrimination based in parental status is a violation of Title VII if it involved treating men and women differently
sexual orientation and transgender status
both sexual orientation and transgender status are protected categories under Title VII
background and credit checks
EEOC regulations prohibit companies from using criminal history information in a way that has a adverse impact on employees in a protected category, also discourages credit checks
immigration
under Title VII, it is illegal to discriminate against noncitizens because “national origin” is a protected category
defenses
under Title VII, the defendant has four possible defenses
- merit
- seniority
- bonafide occupational qualification
- affirmative action
bonafide occupational qualification (BFOQ)
an employer is permitted to establish discriminatory job requirements if they are essential to the position in question
reverse discrimination
making an employment decision that harms a non-hispanic white person or a man because of his gender, color, or race
age discrimination in employment act (ADEA)
an employer with 20 or more workers may not fire, refuse to hire, fail to promote, or otherwise reduce a person’s employment opportunities because he is aged 40 or older
rehabilitation act of 1973
prohibits discrimination on the basis of disability by the federal government , federal contractors, and all entities that receive federal funds
Americans with disability act (ADA)
prohibits employers with 15 or more workers from discriminating on the basis of disability
disability
physical or mental impairment that substantially limits a major life activity, or someone who is regarded as having such an impairment
treatment of disabled workers
employers may not discriminate on the basis of disability of long as the workers can, with reasonable accommodation, perform the essential functions of the job
genetic information nondiscriminatory act
under GINA, employers with 15 or more workers may not require genetic testing or use information about genetic makeup or family medical history as a factor of hiring, firing, or promoting employees
EEOC
the federal agency responsible for enforcing Title VII
- Equal Pay Act
- Pregnancy Discrimination Act
- Age Discrimination in Employment Act (ADEA)
- Americans with Disability Act (ADA)
sole proprietorship
an unicorporated business owned by one person
advantages of a sole proprietorship
- ease of formation
- flow through tax entity - filing taxes goes through the owner
disadvantages of sole proprietorships
- owner is liable for debts
- limited capital
advantages of corporations
- limited liability
- transferability of interests
- perpetual existence
disadvantages of corporations
- expensive
- taxable entity
c corporation
a regular corporation that provides limited liability to its owners and is a taxable entity
s corporation
a corporation that provides limited liability to owners and the tax status of a flow-through entity
- only one class of stock
- no more than 100 shareholders
- shareholders must be individuals, estates, charities, pension funds, or trusts, not partnerships or corporations
- all shareholders must agrees that the company IS and S Corporation
close cooperations
a corporation with a small number of shareholders whose stock is not publicly traded and whose shareholders play an active role in management; it is entitled to special treatment under some state laws
LLCs
- limited liability
- flow through entity
advantages of an LLC
- easy to form
- flexible with tis members (can have partnerships, corporations, non-resident aliens)
- not required to hold annual meetings
