Final Exam Flashcards
What are DEFAULT RULES?
set to favor EEs and impose burden on ERs to seek change and set to a point where parties almost certainly would not want to be so encourage bargaining
What is the Life Cycle Model (for EEs)?
First Stage: Early Career – protect reliance
* Turning down other offers, accepting reduced pay, relocation, human capital investment
* (Grouse) – promissory estoppel
Second Stage: Mid-career – no protections
* At peak and prime of career, generally not vulnerable
* (Veno no help)
Third Stage: Late career – protect “life investment” of worker (Pugh implied contract)
* Decline in productivity, reduced mobility, age discrimination
* Employees take lower actual wages in the beginning for the possibility of future benefits
* Danger: a firm has the incentive to fire workers nearing the end of their life cycle, when they are paid more than they are currently producing
Why would a Worker want Employee status?
- Coverage by fed/state EE protex statutes –> Wage and hour (FLSA, Cal Lab Code, IWC Wage Orders), anti-discrimination laws (T7, ADEA, FEHA), worker’s comp and unemployment ins, obligation to report/remit employment taxes and for ER to withhold income tax, whistleblower protex, FMLA, reimbursement of EE’s bus expenses (Cal Lab Code §2802)
- Unionization
- 3d parties for torts claims –> deep pockets of ER for vicarious liability
Why would a Worker want Independent Contractor status?
- IP/patents –> don’t want ER to own work product
- Torts – fault injury
- Breach of K (not at will – default termination)
- Non-compliance
- Flexibility
- Freedom to contract with other parties – Can hire other people to do the work
What are the IRS factors to determine a Worker as an Employee under Federal Law?
IRS 20 factor classification test: Level of instruction, Amt of training, Degree of business integration, Extent of personal services, Control of assistants, Continuity of relationship, Flexibility of schedule, Demands for full-time work, Need for on-site services, Sequence of work, Reqs for reports, Method of payment, Payment of bus/travel expenses, Provision of tools and materials, Investment in facilities, Realization of profit or loss, Work for multiple companies, Availability to public, Control over discharge, Right of termination
Is the determination of a worker’s status Factual or Legal?
Facts need to be determined –> but factoring the facts in the overall multiple tests –> A MATTER OF LAW
What is the Dial America 7-Factor Test for Employee Status ( EE vs IC)?
- ER’s control as to the work performed (Who has the right to terminate?)
- EE’s profit/loss opportunities
- EE’s investment in equipment/materials (capital investment)
- Whether the service rendered by EE req a special skill
- Permanency and duration (continuity) of position
- Whether EE’s work was an integral part of ER’s business
- ECONOMIC DEPENDENCE - added by Easterbrook - would EE have source of income without employer
What is the FLSA definition of employment?
- FLSA defines EE vaguely employment – suffer or permit work
What is the ABC TEST in CA Law for definition of Employment?
ABC Test identified in Dynamex
o All workers are EEs unless ER proves they are ICs; Dynamex ABC test (codified in AB5), ER must prove:
The worker is free from the control and direction of the ER in connection with the performance of the work, both under the contract for the performance of the work and in fact;
The worker performs work that is outside the usual course of the ER’s business; and
The worker is customarily engaged in an independently established trade/occupation/business of the same nature as that involved in the work performed –> looking at industry norms
What are the Borello factors for Employment?
- Whether or not the work is part of the regular business of the principal [Factor “B” under AB 5]
- Whether the one performing services is engaged in a distinct occupation or business [Factor “C” under AB 5]
- The right to discharge at will, without cause
- The skill required in the particular occupation
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision
- The worker’s opportunity for profit or loss depending on his managerial skill (“Entrepreneurial Opportunity”)
- Whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work
- The length of time for which the services are to be performed
- The degree of permanence of the working relationship
- The method of payment, whether by time or by the job
- Whether or not the parties believe they are creating the relationship of employer-employee
*
- Whether or not the parties believe they are creating the relationship of employer-employee
By proxy, what is the CA Law ABC definition of an Independent Contractor?
workers are only independent contractors for a business if they
(a) are allowed to work independently,
(b) are hired to perform work the business doesn’t usually do, and
(c) are regularly contracted to do that kind of work.
What are techniques of excluding workers from the term Employee?
- Labeling: Sorting workers into core employees and IC/temps creating an internal 2-tier system
- Leasing: using a temp agency to hire “leased employee”
- Subcontracting/ outsourcing – purchasing the services through another entity
Lobel’s Proposal for Gig Economy
- Simplify the Classification Test [wage/hour]
- classification-neutral [anti-discrim; whistleblowing and anti-retaliation]
- A third way class – Dependent contractor; Independent workers [collective bargaining; modified set of rights]
- Delinking Welfare from Work [health insurance, disability, unemployment, pensions]
What are the implications for termination for At-Will Employees?
At will means - an employee can be fired for:
A good reason
A bad reason
No reason
False reason
But not for: a PROHIBITED reason, e.g., public policy tort / discrimination /organizing/reporting illegalities
What is weakest EE/ER relationship for the employee?
○ At Will: default; easiest way to terminate; no reason needs to be given; can lie about reason; subject to prohibited reasons; no notification necessary
■ Weakest for EE
What is the strongest EE/ER relationship for the employee and why?
FOR TERM –> employee can’t be fired for economic downturn but can for bad performance/not qualified/bad attitude
■ Strongest for EE
■ Can only be fired for good cause, which does not include being fired for political disagreement or denial of academic freedom
■ Justifications include behaviorally structuring incentives, want efficient workplaces and high performance, and don’t want to give EE total job security where they don’t have to perform
Describe Just Cause termination.
Satisfactory Work? Cause for Termination?
■ Satisfactory work includes regular attendance, obedience to reasonable work rules, a reasonable quality/quantity of work, and avoidance of conduct (at or away from work) that would interfere with employer’s ability to carry on effective business
■ For Just Cause, discipline must further managerial interests
● Unsatisfactory work (action/omission and subjective/objective)
● For business restructuring
○ Not a good/bad EE performance; no longer needed/can be fired for economic downturn
■ Moral Hazard Problem: when you incentivize behaviors that are economically disadvantageous by forming bad habits; when people are fully insured or protected against a bad event, they have little reason to exert effort to see that the bad event does not take place
How to avoid Implied Just Cause?
- Written contract with disclaimer :
“This contract can be terminated at any time and for any reason” - Contract should state that HR cannot modify:
“this contract cannot be modified orally…”
List Employer Defenses when EE claims job security.
- Oral promises: Statute of Frauds / Parol Evidence Rule / Credibility
- Lack of specificity – vague statements
- Lack of additional consideration (promotions are the prize in-and-of-themselves…)
- Lack of mutuality
- Just cause arguments (policy question: should court micro-manage firms?)
How can EE show Oral modifications to At-Will Contracts? How can ER defend against?
EE SHOW ORAL MOD
must be more than “pep and puff/puffery talks” and “casual comments” and must be specific to an individual –> Promises are read into K when they incentivize EE
ER DEFEND AGAINST
● ER defenses to oral modification:
○ Statue of Frauds: look to see if terms extend beyond 1 year if so then you need to have it written, BUT if a term could come to fruition before 1 year then not subject to SoF
○ Parole Evidence Rule Against Oral Modification: depends on if it is a new/formation of a K or a modification; can’t use things that were before the written K
○ Lack of Specificity: vague statements; must be more than “pep and puff/puffery talks” and “casual comments”
■ Oral promise “we will retire together” too broad and vague to overcome the at-will presumption, Veno v. Meredith
● First, the Court found that broad statements by an employer about employment duration do not overcome the at-will presumption.
○ Lack of additional consideration: promotions are the prize in-and-of themselves
■ Consideration could be validation devise: make sure offer and acceptance form a K; interpretive devise: to discern what kind of K was formed, courts will infer parties didn’t intend for at-will though this can be rebutted by specific K for at will; Fictional device: a legal fiction to overcome at-will presumption
What are the employee’s arguements for evidentiary categories for implied security?
● Personnel policies and practices
● Duration of Employment
● Commendations and Promotions
● Lack of criticism or bad reviews
● Assurances of continued employment
● Practices of the Industry custom and reasonable expectations
● Reliance and giving up other job options
Why are paper trails important in a Just-Cause relationship?
- If an employer shows that a worker was warned a few times for their poor performance, more likely to be recognized as just cause.
- The more there is an objective criterion used for evaluations, the easier it is to prove inadequate performance.
- Consistent enforcement of rules and disciplinary measures helps employers prove their case.
What are the methods of consideration in employment contracts?
- Validation device: to make sure offer and acceptance form contract
- Interpretative device -> to discern what kind of contract was formed
- fictional device: a legal fiction to overcome at will presumption.
What type of contracts are employee manuals/contracts?
Unilateral Contracts
Does an employee handbook/manual create a binding contract?
Woolley – an employee handbook may create a binding contract (typically requiring cause for termination) if the context could reasonable give one the impression that the company intended the manual to be binding.
Why do employers issue manuals/handbooks?
- Regularizes work expectations
- Cost-effective general instructions – reduces agency costs
- Creates an environment of fair treatment and settled rules.
- Enhances employee loyalty, morale and commitment.
- Preempts unionization attempts.
When can an employee manual/handbook be considered not binding?
- Woolley – an employee manual may not be considered binding if it contains a disclaimer that:
- Prominent placement
- Proportionate length to Rest of Manual
- Capitalized, Larger than other print
- Explicit & Unambiguous
- Signed by employees
- Reserve Right to Change
- Restrict Ability of Supervisors to Add
What should employer disclaimers clearly state in employee handbook/manual to ensure ER-EE relationship is terminable at will?
(1) Terminable at will by either party;
(2) With or without cause; and
(3) Without prior notice.
What two claims against the employer does an employee have available if they were demoted but not terminated, against public policy?
- wrongful adverse action against public policy
- constructive discharge (if employee quits as a result of the demotion)
What codified the Dynamex ABC Test?
AB5 in 2019
What must an employee show to recover for a bad reference under defamation law?
- That the reference was false and defamatory (truth is an absolute defense) AND
- That the communication was unprivileged AND
- Published to a 3rd party (even if never goes outside the company)
What is the Ortega test for searches of a government/public employee?
(1) whether EE had a reasonable expectation of privacy that triggered the 4th Amendment based on “operational realities of the workforce” and (2) whether the search was reasonable at its inception and in its scope [judge ER’s actions by standard of reasonableness under the circumstances]
What is the Quon test for searches of public employees?
A government employer’s warrantless search is reasonable if it is:
(1) justified at its inception; and
(2) narrowly and reasonably tailored to the objectives of the search.
What are the elements for the tort of intrusion for private employees (K-Mart case)?
(1) Intentional intrusion into an area where Plaintiff had a reasonable expectation of privacy; and
* Look to: identity of intruder, extent to which others had access to the area, and the means of the intrusion.
(2) Intrusion would be highly offensive to a reasonable person.
* Look to: the degree, settings, and motives of the intrusion.
**high level employees generally have greater expectation of privacy and security
Can employers hire/fire at-will EEs based on private tastes (i.e. political activity, intimate relations)?
Generally yes because employment at will can be terminated without cause
* Exception =state Lifestyle statues that prohibit demotion/discharge from employment for lawful conduct outside of work hours
Can drug testing be mandated in the public sector? Private sector?
Private sector = generally yes (although CA treats private like public)
Public sector = 4th Amendment “Special Needs” search with relaxed reasonable suspicion/probable cause standard
o (1) Is there a substantial government interest?
Is this interest based on a real or merely hypothetical problem? (Chandler v. Miller)
Is the job for which employees are testing unique in its nature? (Von Raab)
o (2) Is the testing program reasonably likely to address the problem?
o (3) Balance the employee’s expectation of privacy against the government interest – is it impractical to require a warrant or individualized suspicion?
What are the limitations around the following items publicly and in CA:
(1) Polygraphs
(2) Personality Tests
(1) Polygraphs
EPPA makes it illegal for private ERs to require; CA Const. requires public ERs to demonstrate compelling business interest that outweighs EE’s privacy interest
(2) Personality Tests
demonstrate compelling business interest that outweighs EE’s privacy interest - cannot inquire about religious beliefs and sexualities
What are the two types of defamation?
- Slander = oral defamation
- Libel = written defamation
What are the two types of privilege available for ERs in defamation claims?
- Absolute Privilege: give complete protection without inquiry into the defendant’s motives (judicial officers, legislative proceedings, certain governmental executive officers)
- Conditional Privilege: statements made on a subject matter in which the person making the statement and the person to whom it is made have a legitimate common interest (always this for employment law – re EEs work ethic)
Can an employee be discharged based on the existence of a romantic relationship?
Whether one can be discharged based on a romantic relationship often hinges on the existence and content of a company policy on the matter
Is speech protected when a government employee is speaking pursuant to their official duties?
Where a government employee is speaking pursuant to his official duties, he is not speaking as a citizen for 1st Amendment purposes, and thus his statements are not insulated from employer discipline. (Garcetti)
Is speech protected when a government employee is speaking on a matter of public concern?
Where a government employee is speaking on a matter of public concern, the interests of the employee, as a citizen, are balanced against the government’s interest, as an employer, in promoting efficiency. (San Diego v. Roe; Rankin v. McPherson)
Is speech in the public workplace protected (i.e. is the EE insulated from employer retaliation?)?
Two steps:
1) Is the EE speaking as a citizen or in their official capacity?
2) Is the statement a matter of public concern?
What legal policies apply for protection of speech in the workplace (1) in the public sector and (2) in the private sector?
Public Sector
* 1st Am Freedom of Speech
* 4th Am Search and Seizure
* 14th Am Equal Protection
Private Sector
* Privacy Tort
* IIED
* WTPP
* Labor Codes – ‘Lifestyle Statutes’
* Fed/state Interception Codes
* Discrimination Laws
* Contract claims
