BL 3335 Exam 3
Retaliation (Plaintiff must prove...)
(1) protected activity (2) retaliatory conduct (3) retaliatory motive (but...for) -- timing between activity and motive *mixed motive --> if there is any other legitimate reason, defendant may not be liable
Harassment based on hostile environment (prima facie case)
(1) unwelcome by victim (2) based on gender (or any bases) (3) sufficiently severe of pervasive to create an abusive environment (4) affect a term, condition, or privilege or employment
elements of tortious interference with contract
(1) valid, enforceable contract between A & B, or established business relationship (2) 3rd party(defendant) must know contract/relationship exists (3) 3rd party(defendant) must intentionally induce a party to breach the contract or sever the relationship, must be predatory (targeting specific competition) - if defendant knew of the contract then intentional - look for predatory behavior or involved targeting
Misappropriation - disclosure/use
(2) without express or implied consent by a person who: Culprit: - (2a) used improper means to acquire knowledge of the trade secret - (2bii) acquired under circumstances giving rise to a duty to maintain secrecy Recipient: - (2bi) derives info from one who has utilized improper means to acquire it - (2biii) derives from one who owed a duty to the person seeking relief to maintain its secrecy or limit its use (c) before a material change in position, one knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by mistake
Title VII prohibited bases
(SCORR) - Sex - Color - Origin - Race - Religion
implied contractual limitations of employment
(a) period of employment -statements regarding salary per period - english rule - objective intent - statute of frauds: if term exceeds 1 year, agreement must be in writing (b) reason for termination - general statements and assurances do NOT justify - must have clean and definite intent to be bound to a contract to not terminate (c) handbooks - substantive - procedural - contractually binding if: (1) reasonably certain and definite terms that an employee believes there is an offer (2) effectively communicated to employee that there is an offer (3) valid acceptance (can be implied by action)
Misappropriation - acquisition
(possession) (1) - a person who knows or has a reason to know that the trade secret was acquired by improper means
Issues with "outside relationships" with agencies
(relationship between the principal and 3rd party and between the agents and 3rd party) issues: - vicarious liability-- responsibility of the superior for acts by subordinate - conflict of interest - contract issues - duty to notify
Age Discrimination in Employment Act
- Employer cannot discriminate against 40 years or older - For the act to apply, an employer must have 20+ employees and employer's business activities must affect interstate commerce - "but for the employees age, the action would have not been taken.."
Statutes Regulating Employment (describe aim and recognize the applicability)
- Equal Employment Opportunities (Title VII of Civil Rights Act of 1964, Americans with Disabilities Act, Age Discrimination in Employment Act) ......
Might an agent be liable for breaching its duty to a principle for preparing to compete with the P if no competition occurs until after termination of agency relationship?
- Grey area - not for preparing but have to be careful with how you are preparing
risks of misclassifying an employee as an IC
- IRS investigations (watches so employers cannot avoid certain tax liabilities) - Financial penalties (employee comp benefits) - Tort Liability - Department of Labor -- Misclassification Initiative
Faragher defense to harassment
- If plaintiff suffered a tangible job detriment, employer is strictly liable - If no, employer has a defense a. supervisor -- offer evidence that (1) employer took reasonable steps to prevent and correct the situation and (2) employee unreasonably failed to take advantage of the corrective or preventative opportunity b. co-worker -- employer may be liable if he knew or should have known about the harassing behavior and failed to take remedial action
Duty of Loyalty (4 Components)
- Outside benefits / secret benefits: (agent is not entitled to receive benefits from outside agency relationship unless P knows about and agrees to receipt of benefits) - Representation of More than One Principal: (A may not act on behalf of two or more P whose interest conflict) - Confidential Information: (A can neither disclose nor use for his own benefit confidential info acquired during course of agency; terminates agency relationship; may still be liable for breach of k after relationship is terminated) - Competition with the Principal: (A may not compete with the principal in any matter within the scope of the agency business during the course of the agency relationship)
Reimbursement and Indemnification (P-->A)
- P has a duty to reimburse A for any costs incurred on P's behalf - P has a duty to indemnify (compensate) an agent for liabilities incurred because of authorized and lawful acts/transactions - P must indemnify A for the value of the benefits that an A covers on the P (specified in agency k)
What protection does Title VII afford to women who are pregnant?
- Pregnancy discrimination act: must be treated the same as other employees if she has the same ability to work
Dodd Frank Wall Street Reform and Consumer Protection Act (whistleblowing)
- an effort to reform the practices that created financial meltdown of 2008 - employees in financial services industry - protected for engaging in whistleblowing activities (filing a claim or testify in any proceeding) or objecting to or refusing to participate in activity they reasonably believe to be a violation of any statute subject to SEC jurisdiction
Express contract of employment
- an individual employed under an express contract for a definite term may not be fired before the expiration of the term except for cause, unless contract provides otherwise - no stated duration and no stated task to be completed can be terminable at will by either party
Remedies for Title VII
- backpay - front pay - reinstatement - compensatory damages - punitive damages (if malice)
Gender discrimination
- based on sex - pregnancy, childbirth/related medical conditions, sexual harassment
provisions in a partnership agreement
- basic structure - capital contribution - sharing of profits and losses - management and control - dissociation and dissolution
National Origin discrimination
- cannot discriminate based on characteristics of a group (ie. physical, cultural, linguistic) - does not prohibit discrimination based on citizenship
Race discrimination
- cannot discriminate on race of employee, or the employees spouse/children
Advantages of hiring an IC rather than an employee
- cheaper - no benefits - less administrative costs - less liability
When is profit sharing not an indicia (sign) of partnership?
- debt installments - wages of an employee - rent - annuity of deceased - sale of intangible asset
"cure" or "waive" a conflict of interest
- disclosing the conflict, needs consent from the client - give a clear understanding of the potential consequences of waiving the conflict
Requirements for a covenant not to compete to be enforceable in Texas
- employer has a protectable interest (legitimate) - covenant must be part of or in support of another enforceable agreement - restrictions must be reasonable
When is a non-solicitation agreement enforceable?
- employer has an interest that he is legally allowed to protect - part of an enforceable contract
risks of whistleblowing
- employer retaliation - industry blacklisting - professional violations
rights of partners
- equal management rights - right to inspect books - accounting of assets of profits - proportion of profits and losses - partners can agree on a salary or compensation but it is not a right
What do Workers' Compensation statutes provide? How do they mitigate risks?
- est administrative procedure for compensating workers injured on the job - in exchange for these benefits, employee may not sue the employer for negligence - workers insurance shifts risk
Economic Espionage Act (theft of trade secrets)
- federal crime - thefts of trade secrets used in interstate or foreign commerce is punishable by fines or imprisonment - fines cannot exceed $5M - imprisonment = 10 yrs - stealing trade secrets to benefit foreign govt. = fines up to $10M for entity and 15 yrs of imprisonment - enforced by Department of Justice
Defending Trade Secrets Act (theft of trade secrets)
- federal, civil - same definition of trade secret - interstate commerce is required - inevitable disclosure (level of comp, employees new position similarity) vs. threatened misappropriation (viable current threat exists)
examples of means of maintaining secrecy of info
- implement a proactive plan for safeguarding trade secrets - secure physical and electronic versions of your trade secrets - confine intellectual knowledge on a "need-to-know" basis - provide training to employees about your company's intellectual property plan and security - mark info as confidential - recognize there is an insider and outsider threat to your company
How can an employer mitigate the risk of liability for harassment? (Faragher)
- implement written anti-sexual harassment policies which include accessible grievance procedures - immediately and thoroughly investigate complaints -implement reasonable remedial action - carefully screen, train and monitor supervisors
proper means of obtaining trade secret (TUTSA)
- independent development - reverse engineering (unless prohibited in k) - any means that are not improper
Limited Liability Partnership
- like an LP, used with professionals (accountants, doctors, etc) - protects professional malpractice (professional negligence) - flow through taxation - limits personal liability of partnership but the partner at fault is still liable
Employer's administrative responsibilities or risks vis a vis an employee that is does not have vis a vis an IC
- must withhold taxes - provide benefits - more liability - laws that prohibit discrimination apply
How does NLRB enforce employee's Sec. 7 rights?
- oversees union protection and prohibits employer from taking an adverse action against an employee because the employee is engages in protected concerted activity
trade secret vs. other forms of intellectual property
- patents expire, trade secrets do not - need to file an application for a patent, must put the info in public domain
Sarbanes Oxley Act (whistleblowing)
- people who work for publicly traded companies, mutual funds, or any officer, employer contractor, subcontractor of such company of mutual fund are protected from retaliation for whistleblowing - protected for providing info, causing info to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation - much report to appropriate law official, his supervisor, or any employee who has authority to investigate alleged conduct
purpose of doing business as a Limited Partner (LP)
- raise capital based on LP's interest contribution - LP's have limited liability
Creating a Corp. - promotional activities
- raising capital - issuing stock
Partner's Duty of Care
- refraining from grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law
Partners Duty of Loyalty
- report any "property, profit, or benefit derived - cannot compete
Title VII Theories of discrimination
- retaliation - disparate treatment - disparate impact - harassment
National Labor Relations Act's protection of employees for engaging in concerted activity for mutual aid
- rights of employees to engage in collective bargaining and to strike -- defines # of employer practices unfair to labor - Est. National Labor Relations Board - prevents employers from engaging in unfair and illegal union-related labor practices
factors that indicate existence of a partnership
- share profits and losses - joint ownership - equal rights to be in management
improper means of obtaining trade secret (TUTSA)
- theft - bribery - misrepresentation - breach or inducement of a breach of a duty to maintain secrecy (common law - duty of loyalty, or contract) - espionage through electronic or other means
Implied contract of employment
- whether or not it exists depends on the parties' objective intent to be bound to the terms at issue (objectively manifests an unequivocal intent to be bound not to terminate) - can alter the employee's at will status
TUTSA trade secret definition
-derives independent economic benefit, actual or potential, -from not being generally known to, -and not being readily ascertainable by proper means by, -other persons who can obtain economic value from its disclosure or use; and -is the subject of efforts that are reasonable to maintain security (AGENCY RULES APPLY) if reasonable effort isn't made for ALL steps= NOT a trade secret
Compensation and Benefits (Fair Labor Standards Act of 1938 "FLSA")
-regulates wage an hour issues (for minimum wage) -requires employees who work more than 40hrs per week are paid no less than one and a half times their regular pay for all hours over 40
Disability definition by the ADA
1. A physical or. mental impairment that substantially limits one or more of the major life activities of the affected individual 2. a record of having such an impairment 3. being regarded as having such an impairment (someone perception that you have one)
How is an agency relationship formed?
1. Agreement of the parties (expressed or implied) 2. Ratification 3. Estoppel - to stop them from denying something, arises when the principal's actions have created the appearance of an agency that does not in fact exist (ie. If landlord says rent will be reduced, the landlord is estopped from collecting the full rent if the tenant relied of this to stay in the building) 4. Operation of Law - often in family relationships and emergency situations
Sources of law that govern agency relationship
1. Common law (most predominant) 2. Statutory law - partners and employment relationships 3. Contracts
What common law duties does the principal owe to the agent? CSCR
1. Compensation 2. Reimbursement and Indemnification 3. Cooperation 4. Safe Working Conditions
Sources of exceptions to an employer's right to terminate an employee at will
1. Contract 2. Statute 3. Common law (public policy exceptions)
sources of law that govern partnerships
1. Contracts (3rd party rules) 2. Statutory (Uniform Participation Act) 3. Common Law (Agency)
3 statutes that address the theft of trade secrets
1. Economic Espionage Act 2. Uniform Trade Secret Act 3. Defending Trade Secrets Act
Creating a Corp. - first organizational meeting
1. Elect directors 2. Adopt corporate bylaws 3. Issue stock
Right to Control Test -Employment Status: Employee vs. Independent Contractor
1. How much control does the employer exercise over the details of the work? (considerable control - employee; most important factor) 2. Is the worker engaged in an occupation or business distinct from that of the employer? (If so, IC) 3. Is the work usually done under the employee's direction or by a specialist without supervision? (if employer's direction - employee) 4. Does the employer supply the tools at the place of work? (if so, employee) 5. For how long is this person employed? (long - employee) 6. What is the method of payment? (time period - employee) 7. What degree of skill is required of the worker? (great degree of skill - IC)
What common law duties does the agent owe to the principle?
1. Performance 2. Loyalty*** 3. Notification 4. Obedience 5. Accounting
Harassment types
1. Quid Quo Pro - "this for that" - only for sexual harassment - plaintiff must prove there was a request for sexual favors and conditions were contingent on compliance 2. Hostile Environment - all bases - a pattern of sexually offensive conduct runs throughout the workplace and employer has not taken steps to prevent or discourage it
trade secret was misappropriated requires
1. acquisition of a trade secret of another by a person who knows or has a reason to know that the trade secret was acquired by improper means OR 2. disclosure or use of a trade secret of another without express or implied consent by a person who a. used improper means to acquire knowledge of the trade secret OR b. at the time of disclosure or use, knew or had reason to know that the person's knowledge of the trade secret was: i. derived from or through a person who had utilized improper means to acquire ii. acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use or iii. derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use c. before a material change of the person's position, known or had reason to know that it was a trade secret and that knowledge of it had acquired by accident or mistake
Administrative process plaintiff must take before filing suit for violation of Title VII
1. file a claim with the EEOC 2. EEOC investigates (180 days to complete) 3. employer has opportunity to respond 4. EEOC decides is claim is meritorious and then they can either file or not file the suit
public policy exceptions
1. refusing to perform an illegal act 2. reporting illegal activity 3. exercising legal rights 4. performing public duties
Restrictions on employee included in the covenant not to compete
1. time (1 year is reasonable) 2. geographic (cant be too broad) 3. scope of activity *must have all 3
Compensation and Benefits (Medicare)
65+ or disabled get health insurance by the social
Duty of Performance (A-->P)
A agreement to use reasonable diligence and skill in performing work (breach of k if they set standard and didn't live up to it)
Duty of Obedience
A had a duty to follow all lawful and clearly stated instructions of P
Duty of Notification
A is required to notify the P of all matters that come to his/her attention concerning the subject matter of the agency
Duty of Accounting
A must keep and make available to the P an account of all property and funds received and paid out on the P's behalf
TX public policy exception
An employer cannot fire an employee who refuses to commit an illegal act that would result in criminal penalties
Who must comply with ADA?
Businesses that serve the public must modify policies and practices that discriminate against people with disabilities
disparate treatment vs disparate impact
Disparate treatment: intentional discrimination, intent is based off of a motive to discriminate Disparate impact: unintentional discrimination, occurs when a group of people are adversely affected by an employers policies/practices, even if they don't appear to be discriminatory - ie. dress code, physical tests, etc.
Who must comply with Title VII?
Employers/labor unions with 15+ employees
Why is an agent prohibited from accepting outside benefits, representing mult. principals, and competing with P?
It avoids all conflicts of interest
If a conflict of interest can be waived, should it?
Just because they can, does not mean they should - ethical issues of fairness arise
Does designating a worker as an IC in a contract of employment definitely establish his status as such?
No
Cooperation (P-->A)
P has a duty to cooperate with A and to assist the A in performing his/her duties
Safe working conditions (P-->A)
P has to provide safe working premises, equipment, and conditions for all agents and employees (mitigate reasonable and foreseeable risks)
Disparate impact (prima facie case)
Plaintiff must prove the same prima facie case Defendant: - offer evidence that it is a business necessity Plaintiff: - less discriminatory means of meeting that need were available. can prove by pool of applicants or rate of hiring
Texas Uniform Trade Secret Act ("TUTSA")
Plaintiff must prove: (1) info at issue meets definition of a trade secret (2) trade secret was misappropriated
Disparate treatment (prima facie case)
Plaintiff must show: (1) member of protected class (2) qualified for position (3) adverse employment decision (4) others not in the same protected class did not suffer the same adverse employment decision (the employer continues to seek applicants for the position or filled the position with a person not in that protected class) Employer's defense: - there was a legitimate (nondiscriminatory) reason for the employment decision Plaintiffs rebuttal: - offers evidence that the defendant's reason is a pretext for a discriminatory motive
What does it mean to say that shareholders have limited liability?
SH are not personally liable for the obligations of the entity - they can only lose their investment
Non-disclosure agreement (confidentiality agreement)
a contract between two parties that outlines confidential material, knowledge, or information that the parties wish to share with each other for certain purposes, but do not want it shared with third parties
Corporation (publicly traded and close)
a) means of creation: 3 steps - promotional activities - incorporation - first organizational meeting b) owner's liability: SH not personally liable for obligations of the entity c) management and degree of control: SH elect a director who appoints officers d) profit distribution and taxation: SH not entitled to any profits; double taxed (taxed a Corporate level, dividends taxed again) e) means of capitalization: issue stock f) duration: perpetual
Limited Liability Company
a) means of creation: file a form b) owner's liability: members not personally liable for obligations of the entity c) management and degree of control: - member managed (1 vote) or - manager managed (members elect manager/committee) d) profit distribution and taxation: allocated based on capital contribution; taxed as a partnership (flow through) - can elect to be taxed as a Corp. (double taxed) e) means of capitalization: contributions and debt f) duration: as long as they want
Limited Partnership
a) means of creation: file relevant form with Secretary of State b) owner's liability: limited liability (chart in notes) c) management and degree of control: General Manager has managerial control; LP has no managerial control (to maintain limited liability) d) profit distribution and taxation: profits shared in proportion of ownership (%); flow through taxation e) means of capitalization: contributions and debt f) duration: expire at will
General Partnership
a) means of creation: meet the definition of a partnership (2+ persons, unincorporated bus., purpose of making profit) b) owner's liability: joint and several liability (exposed to personal liability) c) management and degree of control: 1 vote per partner (same weight, majority rules) d) profit distribution and taxation: equal shares in profits and same % of losses; flow though taxation (once) e) means of capitalization: contributions and debt f) duration: at will partnerships (can be dissolved)
Sole Proprietorship
a) means of creation: no specific requirements b) owner's liability: 100% liable c) management and degree of control: 100% control d) profit distribution and taxation: owner gets 100% of profits and pays personal income tax (taxed once) e) means of capitalization: limited to what SP can contribute and borrow f) duration: dies with owner
Duty of Loyalty(A-->P)
agent acts solely on behalf of the principle in all matters connected with the agency
Compensation (P-->A)
agent reasonable expects payment, therefore, the principal has a duty to pay the agent for services rendered
trade secret
any information a business possesses that gives a competitive advantage
Conflict of Interest
any situation that impairs the ability to preserve a particular interest
employment at will doctrine
both parties have the right to terminate relationship at any time for any reason with no liability
English only policy
can only speak english at all times or at certain times
gender stereotyping
cannot be denied an employment opportunity because they do not fit the gender stereotype
Creating a Corp. - incorporation phase
certificate of formation - make name, prepare articles of incorp, file article with state
covenant not to compete (non-compete agreement)
contract that says once and employee becomes former, he/she will not compete with the employer
preparing to compete
develop business plan, contact attorneys, explore ideas
remedies to retaliation under Sarbanes Oxley and Dodd Frank
double backpay, reinstatement, litigation costs, attorney's fees, compensatory damages
Disparate treatment by failure to accommodate (prima facie case)
employee must demonstrate: (1) bona fide religious belief (2) conflicts with employment requirement (3) informed employer of belief (4) was disciplined for failure to comply employer then must show that it reasonably accommodated the employee's religious needs or undue hardship bc of accommodation
Duty to accommodate (religious practices)
has a duty to make reasonable accommodations unless to do so would cause undue hardship to the employer's business
damages for breach of a covenant not to compete
injunctive relief compensatory damages
relief for misappropriation
injunctive relief and/or compensatory damages and unjust enrichment or a reasonable royalty
threatened misappropriation
involves a viable threat of misappropriation (relief is injunctive relief only)
In what context might the issue of whether a worker is an employee or IC arise?
lawsuits (mistakes and liability), audits, employee benefits
Non-solicitation agreement
once terminated, employee cannot solicit employer's customers or employee's
Misappropriation - acquired by mistake
one may be liable for use or disclosure of the info if he knew or had reason to know that the info was a trade secret before he materially changed his position
family limited liability partnership
partners are related (usually used in agriculture)
joint venture
partners pool their resources for the purpose of accomplishing a specific task; own a separate entity of other business interests
What does the Americans with Disabilities Act (ADA) prohibit?
prohibits and employer from discriminating against an employee with a disability if that person is otherwise qualified AND can perform the essential functions of the job with or without reasonable accommodations
Title VII
prohibits discrimination on the bases sex, color, origin, race, religion
What is required for protection from retaliation for whistleblowing under the Federal Whistleblower Protection Act?
protects federal employees who report alleged illegal activity to an appropriate law enforcement official from retaliatory action
Compensation and Benefits (Social Security Act of 1935 "OASDI")
provides old age, survivor, and disability insurance and monthly payments from the Social Security administration
Compensation and Benefits (Federal Unemployment Tax Act of 1935 "FUTA")
provides unemployment compensation (taken from employees's paycheck)
Compensation and Benefits (Employee Retirement Income Security Act of 1974)
regulates employee retirement plans (401k plans)
whistleblowing
reporting alleged illegal activity to an appropriate law enforcement official
Compensation and Benefits (Federal Insurance Contribution Act "FICA")
requires employees and employers to contribute to the "social security fund" (taken from employees's paycheck)
Compensation and Benefits (Affordable Care Act of 2010)
requires most employers with 50 or more full time employees provide health insurance benefits
Health and Safety (Occupational Safety and Health Act of 1970,)
requires that employers maintain a safe workplace
Compensation and Benefits (Consolidated Omnibus Budget Reconciliation Act of 1995 "COBRA")
requires the employer to continue to provide medical, optical and dental insurance for worker upon the voluntary or in voluntary termination of employment for up to 18 months
Equal Employment Opportunity Commission
responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee based on the prohibited issues
affirmative defense for defendant in a tortious interference suit
right to interfere
Requirements for Texas Whistleblower Protection Act
same as fed - protects TX employees who report alleged illegal activity to an appropriate law enforcement official from retaliatory action - first must exhaust administrative remedies (only in good faith?)
close corporation
small number of shareholders (can generally be run directly by the shareholders)
competition
soliciting employees or customers, incorporating a business, acquiring a business space, entering into agreements with suppliers, selling products
Health and Safety (Workers' Compensation Statutes)
state statues that establish a procedure for compensating workers who are injured on the job
Wrongful discharge
termination on an employee in violation of an exception to the at will doctrine
define partnership
two or more persons operating an unincorporated business for the purpose of making a profit
bounty program (Dodd Frank)
whistleblowers who provide original info to the SEC or CFTC may recover between 10% and 30% of monetary sanctions in excess of $1,000,000 collected by agency
