Business Law Unit 3 Exam

For plaintiffs alleging racial discrimination, the Civil Rights Act of 1866 offers substantial advantages over Title VII:

A four-year statute of limitations (versus less than a year under Title VII) Unlimited compensatory and punitive damages Applicability to all employers, not just those with 15 or more employees (Not enforced by the EEOC, so plaintiff must negotiate or sue on their own)

Guilty

A judge or jury's finding that a defendant has committed a crime

Seniority

A legitimate seniority system is legal, even if it perpetuates past discrimination

Misdemeanor

A less serious crime, often punishable by less than a year in county jail

Limited Liability Partnerships

A limited liability partnership offers the limited liability of a corporation and the tax status of a flow-through organization Partners are not liable for the debts of the partnership, but are liable for their own misdeeds To form an LLP, the partners must file a statement of qualification with state officials LLPs must also file annual reports Other attributes are similar to general partnership

Partnership Transfer of Ownership

A partner cannot sell his share of the organization without the permission of the other partners A partner only has the right to transfer the value of her partnership interest, not the interest itself

Joint venture

A partnership for a limited purpose It is not a legal entity, so all tax liability is shared among the participants of the venture The participants also share any liability that arises out of the joint venture's activities

Secondary Boycott

A picket line established not at the employer's premises but at a different workplace

To create an agency relationship, there must be

A principal An agent Who mutually consent that the agent will act on behalf of the principal Be subject to the principal's control Thereby creating a fiduciary relationship

Apparent Authority

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 The issue in apparent authority is always what the principal has done to make the third party believe that the agent actually has authority

Authority

A principal is bound by the acts of an agent if the agent has authority

Felony

A serious crime, for which a defendant, can be sentenced to one year or more in prison

Obesity

According to the EEOC, just being overweight is not a disability unless it has some underlying physiological cause, such as thyroid disorder However, being ________ _____ (defined as having double the normal body weight) is a disability, no matter what the cause

Agent's Liability for Torts

Agents are always liable for their own torts

Competition With The Principal

Agents are not allowed to compete with their principal in any matter within the scope of the agency business

Confidential Information

Agents can neither disclose nor use for their own benefit any confidential information they acquire during their agency This duty continues even after the agency relationship ends

Duties of Agents to Principals

Agents owe a fiduciary duty to their principals

State Laws

All 50 states have statutes that protect whistleblowers from retaliation by their employers The scope of the protection varies greatly from state to state

Franchises Legal Requirements

All franchisors must comply with the Federal Trade Commission's (FTC) Franchise Rule Some states also impose their own requirements The FTC requires delivery of a Franchise Disclosure Agreement (FDD) to a potential purchaser at least 14 calendar days before any contract is signed or money is paid

PCs have some limitations:

All shareholders of the corporation must be members of the same profession The required legal technicalities for forming and maintaining a PC are expensive and time-consuming Tax issues can be complicated

Sarbanes-Oxley Act of 2002

Among other provisions, this Act protects employees of publicly traded companies who provide evidence of fraud to investigators (whether inside or outside the company) A successful plaintiff is entitled to reinstatement, back pay and attorney's fees

Liability to third parties

An agency relationship dramatically increases the risk of legal liability to third parties

Death or Incapacity of The Principal or Agent

An agency relationship terminates upon the death or incapacity of either the principal or the agent

Duty of Care

An agent has a duty to act with reasonable care An agent with special skills is held to a higher standard because she is expected to use those skills

Duty to Provide Information

An agent has a duty to provide the principal with all information in her possession that she has reason to believe the principal wants to know The agent also has a duty to provide accurate information

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 The agent has an obligation to put the principal first, to strive to accomplish the principal's goals

Duty of Loyalty (Duties of Agents to Principals)

An agent is bound by the duty of loyalty, whether or not the agent and principal have consciously agreed to it The duty of loyalty applies unless the principal and agent expressly agree to change it

Confidential Information (Effect of Termination)

An agent is not entitled to use confidential information, even after the agency relationship terminates

Fully Disclosed Principal

An agent is not liable for any contracts she makes on behalf of a _____ _________ _________ A principal is fully disclosed if the third party knows of his existence and his identity

Appropriate Behavior

An agent may not engage in inappropriate behavior that reflects badly on the principal This rule applies to even off-duty conduct

Outside Benefits

An agent may not receive profits unless the principal knows and approves

Duty to Obey Instructions

An agent must obey her principal's instructions, unless the principal directs her to behave illegally or unethically

Section 7 of the NLRA is the cornerstone of union power

Guarantees employees the right to organize and join unions, bargain collectively through representatives of their choosing, and engage in other concerted activities Supervisors are not employees and do not have the right to form a union

The plaintiff must show that:

He is 40 or older; He suffered an adverse employment action; He was qualified for the job for which he was fired or not hired; and He was replaced by a younger person

Accommodating the Disabled Worker

Once it is established that a worker is disabled, employers may not discriminate on the basis of disability as long as the worker can, with reasonable accommodation, perform the essential functions of the job. An accommodation is not reasonable if it would create undue hardship on the employer Reasonable Accommodation

Economic strike

One intended to gain wages or benefits

Nonphysical tort

One that harms only reputation, feelings or wallet

Prosecution

Only the government can prosecute a crime

The Fifth and Fourteenth Amendments to the Constitution require that the language of criminal statutes be clear and definite enough that:

Ordinary people can understand what conduct is prohibited and Enforcement cannot be arbitrary and discriminatory

Advantages of a Franchise

Owning a Business Support

Partnership Tax Status

Partnerships are flow-through entities. The partnership itself does not pay income tax Partners report profits on their individual income tax returns

Constitutional Claims

People bringing a Constitutional claim must file suit on their own

The False Claims Act

Permits anyone to bring a suit a "person" (including a company) who defrauds the government The Act also prohibits employers from firing workers who file suit under the statute Any recovery is shared between the government and the whistleblower

Searches Without a Warrant

Plain View Stop and Frisk Emergencies Automobiles Lawful Arrest Consent

Steps in a disparate treatment case

Plaintiff must offer prima facie evidence that the employer discriminated because of his disability The employer must then offer a legitimate, nondiscriminatory reason for its action To win, the plaintiff must now prove that the employer intentionally discriminated She may do so by either showing: The reasons offered were a pretext, or A discriminatory intent was more likely than not

Under the ADEA, a disparate impact case requires 2 steps:

Plaintiffs must present a prima facie case that the employment practice in question excludes a disproportionate number of people 40 and older The employer wins if it can show that the discriminatory decision was based on a reasonable factor other than age Example: cost

Civil

Preponderance of the evidence

Term Agreement

Principal and agent can agree in advance how long their relationship will last

Principal's Duty to Indemnify Agent (Effect of Termination)

Principal must indemnify agent for expenses incurred before the agency ended

Control

Principals are liable for the acts of their agents because they exercise _______ over that person An agent and principal must not only consent to an agency relationship, but the principal must also have _______ over the agent

Wrongful Discharge: Violating Public Policy

Prohibits an employer from firing a worker for certain particularly bad reasons A bad reason is one that violates public policy In essence, the public policy rule prohibits and employer from firing a worker for a reason that violates fundamental social rights, duties or responsibilities

Fifteenth Amendment

Prohibits restrictions on the right to vote because of race or color

Thirteenth Amendment

Prohibits slavery

Fourteenth Amendment

Prohibits state governments from violating an individual's right to due process and equal protection

Fifth Amendment

Prohibits the federal government from depriving individuals of life, liberty, or property without the due process of law

Common themes of close corporation statutes

Protection of Minority Shareholders: Close corporation laws typically require that majority shareholders owe fiduciary duties to minority shareholders Transfer Restrictions Flexibility Dispute Resolution

Civil Rights Act of 1866

Provided that all people born in the United States (except Native Americans) were citizens of the United States and had the same rights as white citizens Has been interpreted to prohibit racial discrimination in both private and public employment (Does not apply to the federal government)

Two categories of sexual harassment

Quid Pro Quo Hostile Work Environment

Protected categories

Race, color, religion, sex, or national origin

Courts have primarily applied the public policy rule when an employee:

Refuses to violate the law, Performs a legal duty, Exercises a legal right, or Supports fundamental societal values

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 benefits of the whole transaction, not just part The third party does not withdraw from the contract before ratification

Other Statutory Claims

The EEOC is the federal agency responsible for enforcing Title VII, The Equal Pay Act, the Pregnancy Discrimination Act, ADEA, ADA, and GINA Before a plaintiff can bring suit under any of these statutes, she must first file a complaint with the EEOC There are statutory limitations on damages in many instances Employers are increasingly requiring arbitration

The plaintiff must present a prima facie case

The plaintiff is not required to prove discrimination; he need only show a disparate impact - that the employment practice in question excludes a disproportionate number of people in a protected group

Picketing

The goal of _________ is to discourage employees, replacement workers, and customers from doing business with the company _________ the employer's workplace in support of a strike is generally lawful Secondary boycotts are generally illegal

Affirmative Action

The goal of ___________ ______ programs is to remedy the effects of past discrimination ___________ ______ is not required by Title VII, nor is it prohibited

Employee or Independent Contractor?

The more control a principal has over an agent ,the more likely that the agent will be considered an employee

S Corporations

The name "_ ___________" comes from the provision of the Internal Revenue Code that created this form of organization Shareholders of _ ____________ have both the limited liability of a corporation and the tax status of a flow-through entity

Limited Liability Formation

The only required document is a charter The charter is short, containing basic information such as name and address. It must be filed with the Secretary of State An ___ should have an operating agreement that sets out the rights and obligations of the members

The required steps in a disparate impact case are:

The plaintiff must present a prima facie case The defendant must offer some evidence that the employment practice was a job-related business necessity To win, the Plaintiff must now prove either that the employer's reason is a pretext or that other, less discriminatory rules would achieve the same results

Under the ADEA, a disparate treatment case requires 3 steps

The plaintiff must show that... The employer must present evidence that its decision was based on legitimate, nondiscriminatory reasons The plaintiff must show that the employer's reasons are a pretext, and, in fact, the employer intentionally discriminated (The plaintiff must show that but for his age, the employer would not have taken the action it did)

Mental Disabilities

Under EEOC rules, physical and mental disabilities are to be treated the same

Exclusivity

Under Section 9 of the NLRA, a validly recognized union is the exclusive representative of the employees This also requires that the union treat all members fairly, impartially, and in good faith

Immigration

Under Title VII, it is illegal for employers to discriminate against non-citizens because "national origin" is a protected category Employers are permitted to ask if a person is authorized to work in the United States

Alcohol and Drug Use (Private Employers)

Under federal law, private employers are permitted to test job applicants and workers for alcohol and illegal drugs State laws on drug testing vary widely The Equal Employment Opportunity Commission (EEOC), the federal agency charged with enforcing federal employment laws, prohibits testing for prescription drugs unless a worker seems impaired

Organizing: Stages (Authorized Cards)

Union organizers ask workers to sign authorization cards, which state that the particular worker requests the specified union to act as her sole bargaining representative Employers will generally refuse to recognize the union voluntarily

Organization: Stages (Campaign)

Union organizers talk - or attempt to talk - with employees and persuade them to form a union

Conflict of Interest Between Two Principals

Unless otherwise agreed, an agent may not act for two principals whose interests conflict

Implied Authority

Unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it The law assumes that the agent has authority to do anything that is reasonably necessary to accomplish her task

Limited Liability Transferability of Interests

Unless the operating agreement provides otherwise, existing members of an LLC cannot transfer their ownership rights, nor can the LLC admit a new member without the unanimous permission of the other members LLCs cannot issue stock options

Limited Liability Flexibility

Unlike S Corporations, ____ can have members that are corporations, partnerships or nonresident aliens Not required to hold annual meetings or maintain a minute book Allowed to have different classes of stock

Truth in Hiring

Verbal promises made during the hiring process are generally enforceable, even if not approved by the company's top executives

Formation

Very few businesses deliberately choose to be a general partnership Easy to form Best practice would say to have a written partnership agreement, but one is not required

Dissociation

When a partner leaves a partnership

Agents have a

fiduciary duty to their principals

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 of their own or in their immediate family

The agent's liability on a contract depends upon

how much the third party knows about the principal

An employer may require medical exams or discuss any suspected disability, but only to determine

if a worker is still able to perform the existing functions of her job

Employers have the right to prohibit guns in the workplace, but

in almost half the states, Bring Your Gun to Work Laws prevent companies from banning firearms in the parking lot

The beneficiary places special confidence in the fiduciary who, in turn,

is obligated to act in good faith and candor, doing what is best for the beneficiary

Under Title VII of the Civil Rights Act of 1964

it is illegal for employers with 15 or more employees to discriminate on the basis of race, color, religion, sex or national origin This protection applies to every aspect of the employment process, from job ads to postemployment references, and includes hiring, firing, promoting, placement, wages, benefits and working conditions of anyone who is in one or more of the so-called protected categories

Sit-down strike

members stop working but remain at their job posts, blocking replacement workers This type of strike is illegal

Under the Patient Protection and Affordable Care Act, employers with 50 or more full-time employees

must pay a penalty if they do not provide basic health insurance Company insurance policies must cover employees' children up to the age of 26

To win, the plaintiff must now prove

that the employer intentionally discriminated She may do so by showing either that: The reasons offered were simply a pretext, or A discriminatory intent is more likely than not

The principal is liable for the acts and statements of an agent if:

the agent had authority, or the principal ratifies the acts of the agent

Professional corporations (PCs) offer

the limited liability of a regular corporation

To win a disparate impact case

the plaintiff must show that a policy that looks neutral falls more harshly on a protected group and cannot be justified by business necessity

As a general rule, an agent has no authority to delegate her tasks to another unless

the principal authorizes her to do so

To say that the principal is "liable for the acts and statements" of the agent means that

the principal is as liable as if he had performed the acts or made the statements himself Additionally, the principal is deemed to know any information that the agent knows or should know

But when an agent is authorized to hire a subagent

the principal is as liable for the acts of the subagent as he is for the acts of a regular agent

In apparent authority

the principal is liable for the agent's actions even though the agent was not authorized

The Supreme Court has ruled that it is unconstitutional to withhold federal benefits from same-sex married couples, but

this inconsistency in federal law means that, in many places, a gay person could be fired for claiming these benefits

The NLRA also established the National Labor Relations Board (NLRB)

to administer and interpret the statute and to adjudicate labor cases

Under ERISA, employers are not required

to establish pension plans, but if they do, they must follow the rules of ERISA

The Employee Retirement Income Security Act (ERISA)

to protect workers covered by private pension plans

An employee who takes a leave must be allowed

to return to the same or an equivalent job with the same pay and benefits

After an unfair labor practices strike, union members are entitled

to their jobs back, even if that means the employer must lay off replacement workers

These reimbursable expenses fall into three categories: The principal must indemnify the agent for any liability

to third parties she incurs as a result of entering into a contract on the principal's behalf, including attorney's fees and reasonable settlements

These reimbursable expenses fall into three categories: A principal must indemnify an agent for

tort claims brought by a third party if the principal authorized the agent's behavior and the agent did not realize he was committing a tort

Fiduciary Relationship

A _________ ____________ is one of trust: A trustee acts for the benefit of the beneficiary, always putting the interests of the beneficiary before his own

The Drawbacks of a Franchise

Control Cost: Initial purchase Annual fee Supplies Joint advertising System standards

Most important times when a strike is illegal:

Cooling-Off Period Statutory Prohibition Sit-down Strikes Partial Strikes

Supporting Societal Values

Courts are sometimes willing to protect employees who do the right thing, even if they violate the boss's orders

Performing a Legal Duty

Courts have consistently held that an employee may not be fired for serving on a jury

Voluntary Act

A defendant is not guilty of a crime if she was forced to commit it In other words, she is not guilty if she acted under duress The defendant would have to prove by a preponderance of the evidence that she did act under duress

Merit

A defendant is not liable if he shows that the person he favored was the most qualified

Franchise Disclosure Document

A disclosure document that a franchisor must deliver to a potential purchaser The purpose of the FDD is to ensure that the franchisor discloses all relevant facts

Lifestyle Laws

A few states, such as California, have passed lifestyle laws that protect the right of employees to engage in any lawful activity or use any lawful product when off duty

The ADA does not apply to:

Current drug users Sexual disorders Pyromania Exhibitionism Compulsive gambling

A principal has three potential remedies when an agent breaches her duty

Damages Profits Rescission

Limited Liability Company Changing Forms

A change from a corporation to an LLC would be considered a sale of all the corporate assets by the IRS, and the value of the assets would be taxed A change from a partnership to an LLC or from an LLC to a corporation would not be treated as a sale of the assets

No-strike clause

A clause in a CBA that prohibits the union from striking with the CBA is in force

A defendant can be convicted of taking part in a conspiracy if

A conspiracy existed, The defendants knew about it, and Some member of the conspiracy voluntarily took a step toward implementing it

Close Corporation

A corporation with a small number of shareholders whose stock is not publicly traded and whose shareholders play an active role in management. The close corporation is entitled to special treatment under state law

Piercing the company veil

A court holds members of an LLC personally liable for the debts of the organization

Government Employers

Government employees can be tested for drug and alcohol use only if they show signs of use or if they are in a job where this type of abuse endangers the public

Partnership Management

In the absence of a partnership agreement that provides otherwise, all partners in a firm have an equal right to share in management Management becomes difficult as the partnership grows

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

Disability

A ________ person is someone with a physical or mental impairment that substantially limits a major life activity or the operation of a major bodily function or someone who is regarded as having such an impairment The ADA applies to recovered drug addicts

Hostile Work Environment (Sexual Harassment)

An employee has a valid claim of sexual harassment if sexual talk and activity are so pervasive that they interfere with the employee's ability to work

Hostile Work Environment (Disability)

An employee is entitled to recovery under the ADA if she is subjected to a hostile work environment because of her disability

Polygraph Tests (except in the following cases)

An employee who is part of an ongoing investigation into crimes that have already occurred, An applicant for a government job, or An applicant for a job in public transport, security services, banking, or at pharmaceutical firms that deal with controlled substances

Scope of Employment

An employer is liable for a physical tort committed by an employee acting within the scope of employment

Respondeat superior

An employer is liable for a physical tort committed by an employee acting within the scope of employment and a nonphysical tort of an employee acting with authority

Bona Fide Occupational Qualification (BFOQ)

An employer is permitted to establish discriminatory job requirements if they are essential to the position in question Only religion, sex or national origin can be a ____ - never race or color

Relationship with a Disabled Person

An employer may not discriminate against someone because of his ____________ ____ _ ________ ______

Wrongful discharge

An employer may not fire a worker for a reason that violates basic social rights, duties or responsibilities

Flow-through tax entity

An organization that does not pay income tax on its profits but passes them through to its owners who pay the tax at their own individual rates

Partnership

An unincorporated association of two or more co-owners who carry on a business for profit Each co-owner is called a general partner

Sole proprietorship

An unincorporated business owned by a one person It is the most common form of business organization

Supervisor

Anyone with the authority to make independent decisions on hiring, firing, disciplining, or promoting other workers

Disparate Impact

Applies if the employer has a rule that, on its face, is not discriminatory, but in practice excludes too many people in a protected group The plaintiff does not have to prove intentional discrimination

Duty to Indemnify

As a general rule the principal must indemnify (that is, reimburse) the agent for any expenses she has reasonably incurred

Exercising a Legal Right

As a general rule, an employer may not discharge a worker for exercising a legal right if that right supports public policy Example: employee fired for filing worker's compensation claim

Refusing to Violate the Law

As a general rule, employees may not be discharged for refusing to break the law

Warrant

As a general rule, the police must obtain a _______ before conducting a search _______ will be issued only if there is probable cause A _______ must specify with reasonable certainty the place to be searched and the items to be seized

Principal's Liability For Contracts

As a general rule, the principal has no right to rescind a contract entered into by his agent

Organizing: Stages (Petition)

Assuming that the employer does not voluntarily recognize a union, the union generally petitions the NLRB for an election

Cooling-Off Period

Before striking to terminate or modify a CBA, a union must give management 60 days notice

Criminal

Beyond a reasonable doubt

Major restrictions on S Corporations

Can only be one class of stock There can be no more than 100 shareholders Shareholders must be individuals, estates, charities, pension funds or trusts, not partnerships or corporations Shareholders must be citizens or residents of the United States, not nonresident aliens All shareholders must agree that the company should be an _ ___________

Civil Law

Civil law involves the rights and liabilities that exist between private parties

Statutory Protection for Federal Employees

Congress passed the Civil Service Reform Act in 1978 and the Whistleblower Protection Act in 1989 These two statutes prevent retaliation against federal employees who report wrongdoing They also provide for the award of back pay and attorney's fees to the whistleblower

(Title VII of the Civil Right Act of 1964) There are four types of illegal activity under this statute

Disparate treatment Disparate impact Hostile environment Retaliation All of these activities are illegal if used against anyone in a protected category

Background and Credit Checks

EEOC regulations prohibit companies from using criminal history information in a way that has an adverse impact on employees in a protected category if that background information is irrelevant in determining whether the employee is appropriate for the job Employers may not consider arrest records, because that is not evidence of wrongdoing The EEOC also discourages the use of credit checks because minorities tend to have worse credit ratings than whites

Partnership Liability

Each partner is personally liable for the debts of the enterprise whether or not she caused them

Sole Proprietorship Advantages

Ease of Formation: Easy and inexpensive to create and operate Taxes: A sole proprietorship is a flow-through tax entity

Wrongful Termination

Either party always has the POWER to walk out. They may not, however, have the RIGHT If the agent is a gratuitous agent (i.e. is not being paid), he has both the power and the right to quit any time he wants, regardless of the agency agreement

Terminating An Agency Relationship

Either the agent or the principal can _________ the agency relationship at any time The agency relationship __________ automatically if the principal or agent can no longer perform their required duties or a change in circumstances renders the agency relationship pointless

Two kinds of agents

Employees Independent contractors

Constitutional Protection for Government Employees

Employees of federal, state and local governments have a right to free speech under the United States Constitution The government cannot retaliate against public employees who blow the whistle, as long as the employee is speaking out on a matter of public concern

Whistleblowers

Employees who disclose illegal behavior on the part of their employer

Religion

Employers cannot discriminate against a worker because of his _________ beliefs In addition, employers must make reasonable accommodation for a worker's _________ practices unless the request would cause undue hardship for the business

Defamation

Employers may be liable for defamation when they give false references about a former employee More than half of the states, however, recognize a qualified privilege for employers who give references about former employees

Social Media

Employers may learn things of a protected nature when viewing applicant or employee social media Some employers will separate the roles of hiring and "cyber-vetting"

Under OSHA:

Employers must comply with specific health and safety standards Employers are under a general obligation to keep their workplace "free from recognized hazards that are causing or are likely to cause death or serious physical harm" to employees Employers must keep records of all workplace injuries and accidents The Occupational Safety and Health Administration (OSHA) may inspect workplaces to ensure that they are safe.

Hostile Work Environment

Employers violate Title VII if they permit a work environment that is so hostile toward people in a protected category that it affects their ability to work This rule applies to hostility based on race, color, religion, sex, national origin, pregnancy, age, or disability

Intentional Infliction of Emotional Distress

Employers who condone cruel treatment of their workers face liability under the tort of intentional infliction of emotional distress

Qualified privilege

Employers who give references are liable only for false statements they know to be false or that are primarily motivated by ill will

The Rehabilitation Act of 1973

Enforced by the EEOC (for claims against the executive branch of the federal government), the Department of Labor (for claims against federal contractors), and the Department of Justice (for claims against entities that receive federal funds)

Even if the disability can be successfully treated, the employee is still considered disabled

Example: Diabetes Exception: Person with normal vision when corrected with contact lenses or glasses is not disabled for purposes of the ADA

A court may pierce an LLC's veil if members:

Fail to observe formalities Comingle assets Fail to provide adequate capital Commit fraud

Other penalties for crime

Fines Restitution: A court order that a guilty defendant reimburse the victim for the harm suffered Limits on licenses that can be obtained Limits on the right to vote Limits on where you can live

Franchises

Franchises are not, strictly speaking, a separate form of organization Trademark owner (Franchisor) licenses trademark to operator (Franchisee)

Quid Pro Quo

From a Latin phrase that means "one thing in return for another" ____ ___ ___ harassment occurs if any aspect of a job is made contingent upon sexual activity

Prima facie

From the Latin, meaning "from its first appearance," something that appears to be true upon a first look

Ratification

If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound by the act as if he had originally authorized it. He has just ratified the act.

Secretly Dealing With The Principal

If a principal hires an agent to arrange a transaction, the agent may not become a party to the transaction without the principal's permission

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

Exception: 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

Change in Circumstances

If changes occur after the negotiating of the agency agreement, and the changes are significant enough to undermine the purpose of the agreement, then the relationship ends automatically

LLC Disadvantages

If done properly, an LLC is more expensive to set up Venture capitalists sometimes prefer C Corporations LLCs involve arcane tax issues C Corporations are easier to merge, sell or take public Legal uncertainty involving LLCs

Loss of Qualification

If either the principal or the agent is unable to obtain - or keep - any licenses necessary to perform duties under the agency agreement, the agency agreement ends

Unauthorized Agent

If the agent has no authority (express, implied or apparent), the principal is not liable to the third party, and the agent is

Rescission

If the agent has violated her duty of loyalty, the principal may rescind the transaction

Disloyalty of Agent

If the agent violates her duty of loyalty, the agency agreement automatically terminates

Change of Law

If the agent's responsibilities become illegal, the agency agreement terminates

Loss or Destruction of Subject Matter

If the subject matter of the agency is lost or destroyed, the agency relationship terminates automatically

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

A bullying atmosphere:

Impairs worker productivity May subject employers to liability

OSHA

In 1970, Congress passed the Occupational Safety and Health Act (OSHA) to ensure safe working conditions

Agency Relationship

In an ______ ____________, the agent agrees to perform a task for, and under the control of the principal

Principal

In an agency relationship, the person for whom an agent is acting

Agent

In an agency relationship, the person who is acting on behalf of a principal

Authorization

In authorization cases, the agent is clearly working for the principal, but commits an act that the principal has not authorized An act is within the scope of employment, even if expressly forbidden, if it is of the same general nature as that authorized or if it is incidental to the conduct authorized

Written agreement

In most cases, an agency agreement does not have to be in writing

Smoking

In roughly 60 percent the states, employers cannot prohibit workers from smoking

Unidentified Principal

In the case of a unidentified principal, the third party can recover from either the agent or the principal (jointly and severally liable) A principal is unidentified if the third party knew of his existence, but not his identity Jointly and severally liable: All members of a group are liable. The may 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

Undisclosed Principal

In the case of an undisclosed principal, the third party can recover from either the agent or the principal (jointly and severally liable) A principal is undisclosed if the third party did not know of his existence

Section 8 was amended to prohibit UNIONS from engaging in these unfair labor practices:

Interfering with employees who are exercising their labor rights Causing an employer to discriminate against workers as a means to strengthen the union Charging excessive dues

Section 8 of the NLRA prohibits EMPLOYERS from engaging in the following unfair labor practices

Interfering with union organizing activities Dominating or interfering with any union Discriminating against a union member Refusing to bargain collectively with a union

An employee is acting in 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 Is not seriously criminal

Conspiracy

It is illegal to conspire to commit a crime, even if the crime never actually occurs

Probable cause

It is likely that evidence of a crime will be found in the place to be searched

If the company was unaware of the behavior, and the victimized employee did not suffer a tangible employment action, the company is still liable unless it can prove that

It used reasonable care to prevent and correct harassing behavior, and The employee unreasonably failed to take advantage of the complaint procedure or other preventive opportunities provided by the company

Limited Liability Company Legal Uncertainty

LLCs are a relatively new form of organization without a consistent and widely developed body of law

Disadvantages of a sole proprietorship

Liability: Sole proprietor is personally liable for all debts Limited Capital: Options are pretty limited Debt is generally her only source of working capital

Advantages of a Corporation

Limited Liability: Shareholders do not have personal liability for corporation debts A corporation protects managers and investors from personal liability for the debts of the corporation and the actions of others, but not against liability for their own negligence (or other torts or crimes) Transferability of Interests: Corporate stock can often be bought and sold easily Duration: Perpetual existence, meaning they can continue without their partners

Three different sources of affirmative action programs

Litigation Voluntary action Government contracts

Disadvantages of a Corporation

Logistics: Corporations require substantial expense and effort to create and operate Taxes: A corporation is a taxable entity, meaning it must pay taxes and file returns Shareholders must then pay tax on dividends from the corporation (if/when they are distributed) This is called double taxation

Lockout

Management prohibits workers from entering the premises Most ________ are legal

Undue Hardship

Many courts hold that employers may use cost-benefit analysis

Statutory Prohibition

Many states have outlawed strikes by public employees

Limited Liability

Members are not personally liable for the debts of the LLC

Defenses to Charges of Discrimination

Merit Seniority Bona Fide Occupational Qualification

Four major reasons for this decline in unions

More states have passed right-to-work laws that permit employees in unionized workplaces to opt out of joining the union or paying dues Some large employers have relocated to states with little union presence Employment is increasing in industries, such as services, that have not traditionally been unionized Public employees are much more likely to be unionized, but they are generally not covered by the NLRA

The burden of proof is on the plaintiff

Must prove that the employer intentionally discriminated Discriminatory motive can be inferred from differences in treatment

Sexual Orientation

Neither Title VII nor any other federal statute protects against discrimination based on ______ ___________ However, by Executive Order, the federal government does prohibit discrimination based on ______ ___________ among its own employees and also among companies that work for it

Mutual Agreement

No matter what the principal and agent agree at the start, they can always change their minds later on, as long as the change is mutual

A search with a warrant violates the Fourth Amendment when

No probable cause to issue the warrant Warrant does not specify the place to be searched and the things to be sought Search extends beyond what is authorized in the warrant

Partial Strikes

Occurs when employees stop working temporarily, then resume, then stop again, and so forth A union may either walk off the job or stay on it, but it may not alternate

Collective Bargaining Agreement (CBA)

Once a union is formed, a company must then bargain with it toward the goal of creating a new contract

Limited Liability Going Public

Once an LLC goes public, it loses its favorable tax status Most LLCs would change to a corporation prior to _____ ______

Effect of Termination

Once an agency relationship ends, the agent no longer has the authority to act for the principal. If the agent continues to act, she is liable to the principal for any damages he incurs as a result The agent loses her authority to act, but some of the duties of both the principal and agent continue even after the relationship ends

The company may require a medical test and make it a condition of employment, but the test must be:

Required of all employees, whether they are disabled or not, and Treated as a confidential medical record

Courts almost always reject BFOQ claims that are based on customer preference, but the courts recognize three situations in which employers may consider customer preference:

Safety Privacy Authenticity

There are 3 required steps in a disparate treatment case: (Plaintiff presents evidence that)

She belongs to a protected category under Title VII, She suffered adverse employment action, and This action occurred under conditions giving rise to an inference of discrimination If the plaintiff can show these facts, she has made a prima facie case In this first step, the plaintiff is not required to prove discrimination, she need only create a presumption that discrimination occurred

Employee Handbooks

Some courts hold that employee handbooks create contracts

Subagents

Someone appointed by an agent to perform the agent's duties

Gratuitous agent

Someone not paid for performing duties Held to a lower standard because she is doing her principal a favor Gratuitous agents are liable if they commit gross negligence, but not ordinary negligence

Intermediary Agent

Someone who hires subagents for the principal

Immediate family member

Spouse, child, or parent

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Statute provides that former employees must be allowed to continue their health coverage for 18 months after leaving their job The catch is that employees must pay for it themselves, up to 102 percent of the cost _____ applies to any company with 20 or more workers

Workplace Bullying

Studies estimate that as many as 60 percent of employees are bullied at some point in their careers

Concerted Action

Tactics taken by union members to gain bargaining advantage The NLRA guarantees the right of employees to engage in concerted action for mutual aid or protection

LLC Advantages

Tax status Avoids the restrictions of an S Corporation Less formal rules than a corporation

Tax Status

Tax status of a flow-through entity

As a general rule, whistleblowers are protected in the following situations:

The False Claims Act

Gathering Evidence

The Fourth Amendment to the Constitution prohibits the government from making illegal searches and seizures of individuals, corporations, partnerships, and other organizations

Strikes

The NLRA guarantees employees the right to strike, but with some limitations Management will often demand a no-strike clause in the Collective Bargaining Agreement (CBA)

Organizing: Actions (What Workers May Do)

The NLRA guarantees employees the right: To talk among themselves about working conditions and forming a union To hand out literature, and ultimately To join a union

Organizing: Stages (Election)

The NLRB closely supervises the election to ensure fairness

Sex (Gender)

The Supreme Court has ruled that ______ must be irrelevant to employment decisions The Supreme Court has also ruled that Title VII forbids ______ stereotyping

Same-Sex Harassment

The Supreme Court has ruled that same-sex harassment is also a violation of Title VII

The Wagner Act, generally known as the National Labor Relations Act (NLRA)

The ____ ensures the right of workers to form unions and encourages management and unions to bargain collectively and productively

Bona Fide Occupational Qualification (To set a maximum age, and employer must show that)

The age limit is reasonably necessary to the essence of the business; and either Virtually everyone that age is unqualified for the job, or Age is the only way an employer can determine who is qualified

Bankruptcy

The bankruptcy of the agent or the principal terminates an agency relationship only if it affects their ability to perform

Interviews

The bottom line is to avoid questions that relate to protected categories

Partnership Raising Capital

The capital needs of the partnership must be provided by contributions from partners or by borrowing

Employer Liability for Harassment The Supreme Court has held that:

The company is liable if it knew or should have known about the conduct and failed to stop it Even if the company was unaware of the behavior, it is nonetheless liable if the victimized employee suffered a "tangible employment action" such as firing, demotion or reassignment If the company was unaware of the behavior, and the victimized employee did not suffer a tangible employment action, the company is still liable unless (Exceptions)

Exceptions: 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, or The agent lies about the principal because she knows the third party would refuse to contract with the principal

To begin, entrepreneurs must select a form of organization

The correct choice can reduce taxes, liability and conflict while facilitating outside investment If entrepreneurs do not make a choice for themselves, the law will automatically select a (potentially undesirable) default option

Hostile Work Environment (Age)

The court has ruled that the ADEA prohibits a hostile work environment based on age

A principal is not liable for the intentional physical torts of the employee unless

The employee intended to serve some purpose of the employer; or The employer was negligent in hiring or supervising this employee

Organizing Actions (What Employers May Do)

The employer may vigorously present anti-union views to its employees but may not use either threats or rewards to defeat a union drive

Achieving a Purpose

The principal and agent can agree that the agency relationship will terminate when the principal's goals have been achieved

Damages

The principal can recover from the agent any damages the breach has caused

Express Authority

The principal grants _______ _________ by words or conduct that, reasonably interpreted, cause the agent to believe the principal desires her to act on the principal's account In cases of ambiguity about the principal's intent, the courts look at the principal's objective manifestation, not his subjective intent

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 The employer is liable if the employee is simply on a detour from company business, but the employer is not liable if the employee is off on a frolic of his own

Negligent Hiring

The principal is liable for the physical torts of an independent contractor if the principal has been negligent in hiring or supervising her

Nonphysical torts (whether intentional or unintentional) are treated more like a contract claim:

The principal is liable only if the employee acted with express, implied, or apparent authority

Principals have a duty to cooperate with their agent; they cannot impede the agent's efforts

The principal must furnish the agent with the opportunity to work The principal cannot unreasonably interfere with the agent's ability to accomplish his task The principal must perform her part of the contract

Courts consider whether:

The principal supervises details of the work The principal supplies the tools and place of work The agents work full time for the principal The agents receive a salary or hourly wages, not a fixed price for the job The work is part of the regular business of the principal The principal and agents believe they have an employer-employee relationship The principal is in business

Criminal procedure

The process by which criminals are investigated, accused, tried and sentenced

But-for Causation

The retaliatory action would not have occurred if it were not for the defendant's discriminatory intent

Limited Liability Duration

The trend is toward allowing the LLC to continue even after a member withdraws

Beyond a reasonable doubt

The very high burden of proof in a criminal trial, demanding much more certainty than required in a civil trial

Bench trial

There is no jury; the judge reaches the verdict A defendant could choose to have a bench trial

Social enterprises

These organizations pledge to behave in a socially responsible manner even as they pursue profits

Term Agreements Examples

Time Achieving a Purpose Mutual Agreement

Retaliation

Title VII also prohibits employers from retaliating against workers who oppose discrimination, bring a claim under the statute, or take part in an investigation or hearing The standard of proof is higher for retaliation claims than for the underlying discrimination issue

Consent

To establish _______, the principal must ask the agent to do something, and the agent must agree

Disparate Treatment

To prove a disparate treatment case, the plaintiff must show that she was treated less favorably than others because of her sex, race, color, religion or national origin

Gender Identity and Expression

Traditionally, courts took the view that sex under Title VII applied only to how people were born, not what they chose to become Some courts have found it a violation of Title VII for an employer to take adverse employment action because of the gender change of an employee The EEOC ruled that discriminating against someone for being transgender is a violation of Title VII and about one-third of the states and hundreds of cities prohibit gender identity and expression discrimination The federal government prohibits discrimination on gender identity among its employees and in companies that work for it

Wrongful Discharge: Contract Law

Traditionally, many employers (and employees) thought that only a formal, signed document qualified as an employment contract Increasingly, however, courts have been willing to enforce employer's more casual promises, whether written or oral Courts are sometimes willing to imply contract terms in the absence of an express agreement

Replacement Workers

When employees go on strike, management has the right to use ___________ _______ to keep the business operating During an economic strike, an employer may hire permanent ___________ _______

Entrapment

When the government induces the defendant to break the law, the prosecution must prove beyond a reasonable doubt that the defendant was predisposed to commit the crime

An employer generally may not require a medical exam or ask about disabilities, except the interviewer may ask:

Whether an applicant can perform the work (provided that the same question is asked of all applicants) For the applicant to demonstrate how he would perform the job, and (in the event that a disability is obvious) what accommodation the applicant would need

The NLRA protects all (unionized or not) employees

Who engage in collective activity In connection with work conditions and Who are not supervisors

Elements Not Required for an Agency Relationship

Written agreement Formal agreement Compensation

Search warrant

Written permission from a neutral official, such as a judge or magistrate, to conduct a search

Sexual Harassment

______ __________ involves unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature which are so severe and pervasive that they interfere with an employee's ability to work

Family Responsibility Discrimination

______ ______________ ______________ is a violation of Title VII if it involves men and women being treated differently The EEOC has issued guidelines indicating that stereotypes are not a legitimate basis for personnel decisions and may violate Title VII Some state and local laws prohibit either parenthood discrimination or family responsibility discrimination

Attractiveness

__________ men and women have advantages in life: voters, jurors, teachers, college admissions staffs, and bosses treat them better Studies have shown that investors are willing to pay more the stock of companies with __________ CEOs ________________ is not a protected category under Title VII

Under the Equal Pay Act of 1963

a worker may not be paid at a lesser rate than employees of the opposite sex for equal work

Age Discrimination in Employment Exceptions

airline pilots, police officers, top-level corporate executives

Under the Pregnancy Discrimination Act

an employer may not fire, refuse to hire, or fail to promote a woman because she is pregnant An employer also violates this statute if the work environment is so hostile toward a pregnant woman that it affects her ability to do her job An employer must treat pregnancy and childbirth as any other temporary disability The Pregnancy Discrimination Act also protects a woman's right to terminate a pregnancy - an employer can not fire a woman for having an abortion

Under the 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 40 or older Employers cannot require workers to retire at a certain age (there are exceptions to this rule)

A criminal defendant has a right to a trial by jury for

any charge that could result in a sentence of six months or longer

Owners of the LLC

are called members

Express and implied authority

are categories of actual authority because the agent is truly authorized to act for the principal

All three elements - consent, control, and a fiduciary duty

are necessary to create an agency relationship

A covenant of good faith and fair dealing requires

both parties to behave reasonably, making an honest effort to meet both the spirit and the letter of the contract In some cases, courts will imply a covenant of good faith and fair dealing in an at-will employment relationship

In a retaliation case, the plaintiff must demonstrate that

but for the defendant's desire to retaliate, he would never have taken the harmful action (this standard is called but-for causation)

Generally, a principal is liable for the physical torts of an employee

but is not liable for the physical torts of an independent contractor

The union and the employer are not obligated to reach an agreement

but they are required to bargain in good faith

Employee at will

could be fired for a good reason, a bad reason, or no reason at all For nearly a century, this was the basic common law rule of employment Since the beginning of the 20th Century, employment law has developed significantly In the absence of a specific legal exception, the rule in the United States is still that an employee at will can be fired for any reason

Almost half of the states and hundreds of cities have statutes that prohibit

discrimination based on sexual orientation

The Rehabilitation Act of 1973 prohibits

discrimination on the basis of disability by the executive branch of the federal government, federal contractors, and entities that receive federal funds It also requires these organizations to develop affirmative action plans for the hiring, placement and promotion of the disabled

Workers (who are not supervisors) have the right to

discuss work conditions, whether that discussion takes place in the lunchroom or in a chat room and whether or not the employee is engaged in union activities

Generally, courts have held that employers

do not have a legal obligation to disclose information about former employees. But, in the case of violence, courts are divided In some recent cases, however, courts have held that, when a former worker is potentially dangerous, employers do have an obligation to disclose this information

The federal Social Security System began in 1935

during the depths of the Great Depression, to provide a basic safety net for the elderly, ill, and unemployed Pays benefits to workers who are retired, disabled or temporarily unemployed and to the spouses and children of disabled or deceased workers. Social Security is funded by taxes on current workforce

The defendant must present evidence

that its decision was based on legitimate, nondiscriminatory reasons

The National Labor Relations Act (NLRA) protects

employees' right to unionize

Alcoholics are covered by the ADA if they can meet the definition of disability, but

employers can terminate them if their drinking adversely affects job performance

Under the Polygraph Protection Act of 1988

employers may not require, or even suggest, that an employee or job candidate submit to a polygraph test (Look at exceptions)

Under the Genetic Information Nondiscrimination Act (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 in hiring, firing, or promoting employees Nor may health insurers use such information to decide coverage or premiums

The courts have interpreted the provisions of the Fifth and Fourteenth Amendments to prohibit

employment discrimination by federal, state and local governments

Workers' compensation statutes

ensure that employees receive payment for injuries incurred at work provide a fixed, certain recovery to the injured employee, no matter who was at fault for the accident In return, employees are not permitted to sue their employers for negligence

There are three types of authority

express Implied apparent

A Limited Liability Company ("LLC")

offers the _______ _________ of a corporation and the tax status of a flow-through entity

These reimbursable expenses fall into three categories: A principal must indemnify an agent for any expenses

or damages reasonably incurred in carrying out his agency responsibilities

To win a conviction, the prosecution must demonstrate to the court that a statute has

outlawed the defendant's conduct

Criminal law

prohibits and punishes conduct that threatens public safety and welfare Conduct is criminal when society outlaws it

The Americans with Disabilities Act (ADA)

prohibits employers with 15 or more workers from discriminating on the basis of disability

The Federal Unemployment Tax (FUTA) is the part of the social security system that

provides support to the unemployed (A worker who quits voluntarily or is fired for just cause is ineligible for unemployment benefits)

Passed in 1938, the Fair Labor Standards Act (FLSA)

regulates wages and limits child labor nationally Minimum Wage Overtime Pay Child Labor

The intermediary agent is not liable to the principal for the misdeeds of the subagent, unless

she was negligent in hiring

In basic discrimination cases, a plaintiff can win by

showing that discrimination was a motivating factor, although other factors were also involved

"Equal work" means

tasks that require equal skill, effort and responsibility under similar working conditions

Recently, the National Labor Relations Board (NLRB), which enforces the NLRA, has ruled that company social media policies

violate the NLRA if they unreasonably constrain employee speech about work conditions

Under the NLRA, employers and unions must bargain

wages, hours and other terms and conditions of employment

The Norris-LaGuardia Act

which prohibited federal court injunctions in nonviolent labor disputes

FMLA applies only to companies

with at least 50 workers and to employees who have been with the company full time for at least a year