Exam 4 Contents Flashcards
Agency
What is defined as the “fiduciary relations that results from the manifestation of consent by one person to another that the other shall act in his/her behalf and subject to his/her control and consent by the other so to act”
Fiduciary (when used as an adjective it is a fiduciary relationship)
What involves the trust between the principal and the agent; is at the heart of agency law; can be a noun or an adjective
What are the 2 types of agency relationships in business?
Employer-Employee Relationship
Employee Independent Contractor Relationship
Employer- Employee Relationship
typically all employees who deal with 3rd parties
are deemed to be agents of the business/owner(s).
– Salesperson in department store- making sales binding on owner
– Overlap between Employment and Agency Law (based upon common law)
Employment laws do not apply to who?
Independent Contractors
Independent Contractor
a person who contracts with another to do something for them but who is not controlled by the other party; may or may not be an agent;
ex.) homeowner hires a real estate agent to sell their home; hire a plumber to fix a leaky toilet; contractors and subcontractors are this
- Employer-Independent Contractor relationship:
– Independent contractor is a person who contracts with another to do something for them but who is not controlled by
the other party. The IC may or may not be an agent.
The criteria considered when determining whether a person is employee or contractor
is:
– How much control does the employer exercise over the details of the work?
* More control and detail= employee
– Is the worker engaged in an occupation/business distinct from that of the employer?
* If so, indicates IC
– Is the work usually done under the employer’s direction or by a specialist w/out supervisor?
* If done under employer discretion- employee
– Does the employer supply the tools at the workplace?
* If so-employee
– For how long is the person employed?
* Long period of time-employee
– What is the method of payment- time period or at the completion of job?
* Payment by time- every 2 weeks or monthly-employee
– What degree of skill is required?
* Great deal of skill-IC
IRS
states that the most important factor between an employee and IC is the degree of control the business exercises on the worker; they closely scrutinize firm’s classifications b/c of tax liabilities involved with employees
What may the IRS force the employer to do if cause misclassifying workers?
Pay all applicable taxes
“work for hire”
a person who creates a copyright work is the owner of the copyright unless what;
under copyright law, any copyright work created by an employee within the scope of his/her employment at the request of the employer is this
Who owns the copyright when an employer hires an IC unless the parties agree that the work is a “work for hire”?
The IC
What are formed by voluntary consent and agreement between parties; are normally consensual and do not need to be in writing & consideration not required?
Agency Relationships
An individual needs what in order to be a principal in an agency relationship; the rationale behind this is that if you can’t legally enter a K, you should not be able to do so indirectly through an agent?
Contractual Capacity
An agency relationship created for an illegal purpose is what?
Unenforceable
What are most agency relationships based on where the agent will act for the principal and the principal agrees to have the agent so act; these can be formed through expressed written or oral K’s?
Expressed or Implied Contracts
What is it called if a person who is not agent (or acting outside the scope of his/her authority) makes a K on behalf of another (principal) and the principal affirms (by actions/words) the K; this requires intent and intent can be expressed by words/actions?
Agency by Ratification
What is when a principal allows/causes a 3rd party to believe that an agent is acting on behalf of the principal and causes the 3rd party to act on that belief in his detriment; the 3rd party must prove that he reasonably believed an agency relationship existed (using reasonable person standard) and that the principal’s conduct / statements was the cause of the belief (not the agents)?
Agency by Estoppel
What is it called when courts may find agency relationships absent formal agreements; this can occur through family relationships (actions of one spouse may impose liability upon the other; parent and child as well) and emergency situations?
Agency by Law
What is it called when courts may find agency relationships absent formal agreements; this can occur through family relationships (actions of one spouse may impose liability upon the other; parent and child as well) and emergency situations?
Agency by Law
Once the principal-agent relationship has been established, what does each party owe the other?
The duty to act with the utmost good faith
What are the 5 duties that agents generally owe principals?
- Performance
- Notification
- Loyalty
- Obedience
- Accounting
“principal employer”
the main company or individual who ultimately controls and supervises a workforce, even if they don’t directly employ the workers themselves, typically utilizing a contractor/agent to provide the labor
Which of the duties owed by the agent to the principal is an implied condition that the agent will use reasonable diligence and skills performing the work; failing to do so may result in a breach of contract; this is judged by the reasonable person standard (ordinary care for level of skill advertised)?
Performance
Agents acting gratuitously (without payment) cannot be what?
Liable for breach of K (no K because no consideration)
- May still be liable for a tort
Which of the duties owed by the agent to the principal is where an agent is required to notify the principal of all matters that come to his attention concerning the subject matter of the relationship?
Notification (AKA duty to perform)
Which of the duties owed by the agent to the principal is the most fundamental duty; agent must act solely for the benefit of his principal and not in the interest of themselves / 3rd party; this must be undivided; cannot result in secret profits for agent/3rd party unless all parties agree to the arrangement?
Loyalty
What could it be a breach of agent loyalty to do?
Disclose confidential information during or after the relationship
Which of the duties owed by the agent to the principal is where the agent has a duty to follow all lawful & clearly stated instructions unless an emergency situation arises, in which the agent must act in good faith and reasonable if it is not clear?
Obedience
Which of the duties owed by the agent to the principal is where the agent must keep track and make available an account of all property & funds received and paid out; no commingling of funds (big issue for attorneys)?
Accounting
What are the duties generally owed to the agent by the principal?
- Compensation
- Reimbursement & Indemnification
- Cooperation
- Safe Working Conditions
Which of the duties owed by the principal to the agent is where the agent working for principal expects payment; principal must pay the agreed upon value for services in a timely manner?
Compensation
Which of the duties owed by the principal to the agent is where the principal must reimburse the agent for any necessary expenses incurred during the arrangement; the principal must also indemnify an agent for liabilities incurred because of authorized acts of the agent; principal not responsible for expenses nor must indemnify the agent for misconduct / negligence or unauthorized acts?
Reimbursement & Indemnification
Which of the duties owed by the principal to the agent is where the principal has the duty to work with the agent and to assist the agent in performing his duties; issue of exclusive agency?
Cooperation
What is it called where the principal cannot compete against the agent?
Exclusive Agency
Which of the duties owed by the principal to the agent is where the common law requires the principal to provide safe working premises, equipment, and conditions; Torts of workers compensation and OSHA are important here?
Safe Working Conditions
Since every duty of the principal provides a corresponding right for the agent (and vice versa), if one breaches then what is the other entitled to?
Remedy
An agent’s authority to act may be what?
- Actual (expressed or implied)
- Apparent
What happens if the agent acts outside the scope of their authority?
They still may bind the principal
What type of authority is declared in clear, direct, & definite terms (can be done orally)?
Expressed Authority
What rule is where some jurisdictions require that the K must be in writing, so must the agent’s authority to enter the K, otherwise the K is voidable?
Equal Dignity Rule
What are some exceptions to the equal dignity rule?
- Executive Officers of a corporation can conduct normal & business transactions without written authority from the corporation
- When the agent acts in presence of the principal, the rule does not apply
- When the agent’s signature is merely a formality
Giving an agent this confers expressed authority; this is a written document usually notarized; it can be special or genera; terminates on death or incapacity?
Power of Attorney
What allows agent to do what is reasonable & necessary to carry out the expressed authority and accomplish the objectives of the relationship; can be this by custom or inferred from the position the agent occupies; cannot contradict expressed authority?
Implied Authority
What type of authority is when the principal by words/actions causes a 3rd party to believe that the agent has authority to act, even though they did not (neither expressed or implied); usually occurs through a principal’s pattern of conduct over time?
Apparent Authority
In the case of apparent authority, what will a court apply when a principal has given a 3rd party reason to believe that an agent has authority to act; if the 3rd party reasonably relies on the principal’s representations to their detriment, the principal will be estopped from arguing the agent exceeded their authority?
Agency Estoppel
What is it called when an unforeseen emergency demands action by an agent to protect or preserve the property and rights of the principal, but the agent is unable to communicate with the principal; if the agent acts outside the scope of their authority here, they may still bind the principal?
Emergency Powers
What occurs when the principal affirms or accepts responsibility for an agent’s unauthorized act; the principal is now bound and treated as if the agent had expressed authority to act?
Ratification
What are the requirements for ratification?
- The agent must have acted on behalf of the principal who subsequently ratifies the action
- The principal must know all the material facts involved in the transaction
- The principal must affirm the agent’s act in its entirety
- The principal must have legal capacity to authorize the transaction at the time the agent engages in the act and at the time of ratification
- Principal’s affirmation must transpire before the 3rd party withdraws from the transaction
- Principal must observe the same formalities when ratifying the act as required to undertake the act- The agent must have acted on behalf of the principal who subsequently ratifies the action
- The principal must know all the material facts involved in the transaction
- The principal must affirm the agent’s act in its entirety
- The principal must have legal capacity to authorize the transaction at the time the agent engages in the act and at the time of ratification
- Principal’s affirmation must transpire before the 3rd party withdraws from the transaction
- Principal must observe the same formalities when ratifying the act as required to undertake the act
What depends on how the principal is classified and whether the action of the agent was authorized or unauthorized?
Liability for Contracts
What are the classifications of principals?
-Disclosed
-Partially Disclosed
-Undisclosed
What principal classification is where the identity is known to the 3rd party at the time the K was formed?
Disclosed Principle
What principal classification is where the identity is not known, but the 3rd party knows the agent MAY be acting for a principal at the time the K was formed?
Partially Disclosed Principle
What principal classification is where the principal is totally unknown and there is no knowledge that the agent is acting in agency capacity?
Undisclosed Principle
With authorized acts, what is the principal required to do if the agents acts within the scope of his authority?
Principal is obligated to perform the K regardless of principal’s status
With authorized acts, what will the agent’s liability under the K depend on?
Whether the principal’s status was undisclosed or partially disclosed
What principal classification for authorized acts is liable to a 3rd party for a K made by the agent, but the agent has NO K liability for performance?
Disclosed Principle
What principal classification is where for authorized acts most jurisdictions treat the agent as a party to the K and thus liable under the K?
Partially Disclosed Principle
What principal classification is where for authorized acts the principal is liable for the K and must indemnify the agent; once the undisclosed principal’s identity is revealed, the 3rd party can elect to hold either the principal or agent liable under the K; undisclosed principal can require the 3rd party to fulfill the K under certain circumstances?
Undisclosed Principle
With undisclosed principals under authorized acts, the undisclosed principal can require the 3rd party to fulfill the K unless one of the following are true?
- The undisclosed principal was expressly excluded as a party in the written K
- The K is a negotiable instrument signed by the agent with no indication of signing in a representative capacity
- Performance of the agent is personal to the K; thus, allowing the 3rd party to refuse the principal’s performance
With unauthorized acts, if the agent has no authority but contracts with a 3rd party, what happens to the principal?
Cannot be held liable under the K; the agent is solely liable
With unauthorized acts, what is the agent’s liability if the principal is disclosed or partially disclosed and the agent contracts with a 3rd party without authorization?
Agent’s liability based upon implied warranty of authority
What holds that the agent has the authority to enter the K on behalf of the principal; if 3rd party knows the agent does NOT have the authority, no liability to the agent?
Implied warrant of authority
What is a semi-autonomous software that can execute specific tasks and enter into binding agreements on behalf of their principals (ex. internet orders); today the same agency principles apply to human agents and these agents?
E-Agents
What is when a principal acts through an agent and may be liable for harm resulting from the principal’s own negligence / recklessness; could arise by improper instructions, authorizes the use of improper materials or tools, or establishes improper rules that results in the agent’s committing a tort?
Principals’ Tortious Conduct
A principal who authorizes an agent to commit a tort may be what?
Liable to persons or property because the act is the principal committing the act
What says that a principal is exposed to tort liability whenever a 3rd party sustains an injury due to an agent’s misrepresentation; principal’s liability depends on whether the agent was actually or apparently authorized to make representations and whether the representations were made within the scope of the agency?
Liability for Agent’s Misrepresentation
What says that an agent is liable for his own actions; a principal may also be liable for harm an agent causes to a 3rd party under the doctrine of respondeat superior (let the master respond)?
Liability for Agent’s Negligence
What holds that a principal/employer is liable for any harm caused to a 3rd party by an agent/employee in the course or scope of employment; is like the theory of strict liability in that liability is imposed regardless of fault; doctrine imposes vicarious liability (indirect liability) because principal/employer is being held liable for torts committed by the agents?
Respondeat Superior
What is the key to determining whether a principal may be liable under the doctrine of respondeat superior?
Scope of Employment
What are the factors that courts look at to determine whether or not the agent’s acts were within the course and scope?
- Was the employee’s act authorized by employer
- The time, place, and purpose of the act
- Was the act one that is commonly performed by the employees on behalf of the employer
- To what extent was the employer’s interest advanced by the acts
- To what extent was the private interests of the employee were involved
- Did the employer furnish the means or instrument by which an injury was inflicted
- Did the employer have reason to know that the employee would perform the act in question and had the employee done it before
- Did the act involve the commission of a serious crime
What is the important distinction between a detour and a frolic in terms of the principal’s liability?
- If an agent merely takes a detour from his principal’s business then the principal is liable
- As opposed to a “frolic of his own” and not in any way on his principal’s business then the principal will not be liable
- Ex.) Any employee going to and from work or from meals is outside the scope of work; however, if travel is required and while traveling that is considered within the scope of work
What says that most intentional torts by an agent have no relation to their employment and their employers will not be held liable; must look at the doctrine of respondeat superior (the employer may be liable for intentional torts in examples such as bouncers at bars, security guards, police officers - employees who have propensities to act)?
Liability for Agent’s Intentional Torts
What says that an employer is not liable for the physical harm caused to a 3rd person by the negligent act of IC in the performance of the K; rationale is that the employer lacks requisite control of the contractors performance; however, if the contract involves “hazardous activities” then strict liability will be imposed?
Liability for Independent Contractors Torts
What says that the principal is normally not liable for an agent’s crimes even if committed within the scope of employment; exception is if the principal or employer participated in the crime by conspiracy or other action?
Liability for Agent’s Crimes
Agency law and K are similar in that both may be terminated by what?
Terminated by an act or by operation of law
Once terminated, the agent no longer has the right to what?
Bind the Principal
What is required for apparent authority to terminate?
The third party needs to be notified of the termination
Termination by Act of the parties may include what?
- Lapse of Time
- Achievement of Purpose
- Occurrence of Specific Event
- Mutual Agreement
- Option of One Party
The act of termination is called what if done by the principal and what if done by the agent?
- Done by principal: Revocation
- Done by agent: Renunciation
What may subject the cancelling party to a lawsuit for Breach of K; while both parties have the POWER to terminate an agency relationship, one or both parties may not have the RIGHT to do so?
Wrongful Termination
What is where the principal may still be required to give the agent reasonable notice of termination?
Agency at Will
What says that when parties terminate an agency, it is the principal’s duty to inform any 3rd party who knew of the relationship that it has been terminated; no specific notice is required; however, apparent authority will continue until 3rd party receives notice of termination?
Notice of Termination
When is there generally no duty to notify 3rd parties; circumstances include:
- Death or insanity
- Impossibility (subject matter is destroyed)
- Changed circumstances
- Bankruptcy
- War (no way to enforce legal rights)?
Termination by Operation of Law
What are employment relationships generally governed by; basically, either party may terminate the employment relationship at any time for any reason, unless it violates statutory or contractual rights; exceptions to the doctrine are violation of civil rights or CBAs?
Employment at Will
What says that courts have held that an implied employment contract exists between the employer and employee; if the employee is fired outside the terms of the implied contract, the employee may succeed in an action for breach of contract, even if no written K exists?
Exceptions to employment at will based upon K theory
- Ex.) Off-duty misconduct not tied to employment
What says that the termination of an employee may give rise to a wrongful discharge under tort theory; abusive discharge procedures may result in a lawsuit for intentional infliction of emotional duress; fraud may be another ground if an employer made false promises?
Exceptions based on tort
What is the most common exception to employment at will based on public policy; involves telling government authorities, upper-level management, or media that the employer has engaged in illegal activity or unsafe activity; since you are exercising legal rights there is a grievance process?
Whistleblowing
What is when an employer terminates an employee for illegal or unlawful reasons?
Wrongful Discharge
Who has enacted several laws over the years to regulate hours and working conditions of employees?
Congress
What requires contractors and subs working on federal government construction projects to pay “prevailing wages”?
Davis-Bacon Act
A prevailing wage is the average hourly rate paid to most workers in a specific occupation and area.
What applies to US government contracts, whereby it requires that a minimum wage as well as overtime be paid at 1.5 times the regular pay rate?
Walsh-Healey Act
What extended wage hour requirements to just about all employees; established the distinction between exempt vs. non-exempt employees and says that exempt employees primary duty is management and as such they need to exercise discretion and independent judgment; requires OT when an employee works over 40 hours in a week?
Fair Labor Standards Act (FLSA)
What does the FLSA also prohibit?
Exploitation of Child Labor
What age group can work, but very limited like newspaper delivery, farm work, entertainment, work for parents?
Children under 14
What age group can work except hazardous occupations and use limited equipment; hours per day (working times as well) and week are limited?
14-15 years old
What age group has hours and working times not restricted; but still cannot work hazardous jobs?
16-18 years old
What age group has no restrictions on work?
18 or over
What must be paid to all employees for “time worked”?
Minimum Wage
What is the minimum wage for tipped workers?
Tips plus wages must equal minimum wage; tip credit for wait staff / bartender
2.13/hr
Who frequently enacts legislation that may impact federal wage and overtime laws?
State and Local Legislature
Ex.) state passes a law forbidding an employer from exercising “tip deduction”
Ex.) A state requires at least one day off per week, and employer requires work on that day will require OT for that day (including state holidays)
In terms of layoffs, what applies to all employers with AT LEAST 100 EMPLOYEES; this act requires these employers to provide 60 days notice before implementation of a mass layoff (1/3 of the full time employees at the job site) or closing of a plant?
Worker Adjustment and Retraining Notification Act (WARN)
What part of the WARN act allows employees to find new jobs while still being employed?
Notice
What does the WARN act allow state agencies the time to do?
Help displaced workers to find jobs/training/resources
What will NOT discharge obligations under the WARN act?
Bankruptcy
What are the penalties for violations of the WARN Act?
- Fines for violations can be up to $500 a day
- Employees can recover back pay for each day of violations (up to 60 days) and attorney fees necessary to enforce their rights
What was a federal law passed in 1993 and amended in 2008, 2009, and 2013 that balanced work and family responsibilities; 50 OR MORE EMPLOYEES TO QUALIFY (Public and private sector employees); changing demographics; job-protected leave and continuation of medical benefits; many states have adopted their own version of this?
Family and Medical Leave Act (FMLA)
What are the employer’s responsibilities under the FMLA?
- 12 weeks of UNPAID, job-protected leave per designated 12-month period
- Guaranteed continuation of medical benefits during an approved FMLA leave
- Job restoration upon return from an approved FMLA leave
- Medical certification required to substantiate need for leave
What are the requirements for employee’s eligibility under the FMLA?
- Been an employee for at least 12 months (need not be consecutive)
- Worked 1,250 hours during the 12-month period immediately preceding the date when the requested leave would begin (part-time, seasonal/intermittent, temporary employees and students may qualify)
- Only hours actually worked may qualify to be counted to meeting the 1250 hr eligibility
- Employees returning from fulfilling their National Guard or reserve military obligation must be credited with the hours of service that would have been worked during the period of military service
What are the qualifying reasons to apply FMLA?
- Employee’s serious medical condition that prevents them from performing the essential functions of the position
- Birth of a child and care for the newborn child (bonding leave) within a year
- Placement with the employee of a child for adoption or foster care within a year
- To care for family member (spouse, child, or parent of the employee) with serious qualifying health condition (GRANDPARENTS ARE NOT COVERED)
- Qualifying exigency arising out of the fact that the employee’s spouse, child, or parents is a covered military member active duty; military may qualify for up to 26 weeks of leave
What are the 3 main FMLA employee protections?
1.) Use of FMLA leave time cannot be counted against an employee for attendance purpose policies
2.) Use of FMLA time cannot be used as the basis for a negative performance evaluation
3.) Use of FMLA time cannot be used as a negative factor in employment actions, such as hiring, promotion, or disciplinary action
What are some examples of the adverse consequences for the employer that may arise due to violations of the FMLA?
- Damages for lost wages and benefits
- Job reinstatement
- Promotion, if the employee was denied a promotion with back wages
- Penalties and fines from DOL
A successful plaintiff under the FMLA would also be entitled to what?
- Court and attorney costs (supervisor and employer are generally named in the suit)
- If the employee acted in bad faith, the plaintiff could recover 2x the damages
Employees need not do what for the employer to be liable?
Ask for FMLA leave
