BLAW 441 - Exam 2

Young v. UPS, Inc. Pregnancy Discrimination Act

- Drivers for UPS have to meet physical requirements - When this women became pregnant, doctor said she should not lift more than 20 pounds; a normal driver needs to lift 70 pounds - She asked for an accommodation and they said no - In court, employer had multiple injured workers and made accommodations for them - UPS said she does not fall under the category of injured that they established already - Trial court = employer won - court of appeals = employer won - supreme court = employee won - Does the employer have the right to treat her differently then the other injured employees? - Employer accommodates non-pregnant workers who have lifting requirements, but not pregnant workers? - Prima Facie case - Supreme court reversed trial and appeals court

Case Ex. 24.6 Bobo v. Tennessee Valley Authority (2017) Worker Health and Safety Provisions

- Gets lung cancer after working at a factory - Wife got lung cancer as well later - Company's negligence - Smell and smoke on his clothing when he came home - Have to protect workers and their families - Wife won $3.3 million in court - Sustained on appeal but price reduced slightly

Janitor example Employer Liability for co-worker

- Individual who was working as a janitor in another person's space - Janitor was being harassed by one of the employees - she reported it to her boss - her boss has a responsibility to make sure her working environment is safe so her boss contacted the other person's boss - Employer has a responsibility even if off-site

Case Example 25.22 Johnson v. Federal Express Corp. (2014) Seniority Systems

- Kathleen Johnson is an African American working for Federal express - Filed a discrimination lawsuit for equal pay act - White male co-worker was paid almost $2 more than her per hour for same position - Argued that he had seniority - Legitimate defense - argued that he had senority - Employer won Legitimate seniority system rather one that is put in place to avoid discrimination lawsuit

Diacetyl Injuries to Popcorn Work Example Worker Health and Safety Provisions

- Missouri doctor found that there was a troubling pattern with microwave popcorn workers at plant - 9 workers suffering from rare lung disease - Missouri officials asked OSHA to investigate - Found that exposure to artificial butter flavor caused disease - OSHA declined to issue standard because the science is murky whether it actually causes the disease - Could not prove that it is the popcorn because it could be anything - OSHA wants voluntary compliance strategy without injury --> OSHA asked for voluntary compliance once public new about it - Companies have pledged to stop using additive - 20-30% of retired workers have this disease

Distribution of Assets Order

1. Creditors 2. Partners 3. Return of Capital 4. Reminder to Partners (Agreement) 5. Remainder to Partners (No Agreement)

What is sexual harassment?

1. Employee required to accept unwelcome sexual advances, requests for sexual favors or other verbal or physical conduct of a sexual nature, as a condition of employment 2. Employee's response to unwelcome attention is used a basis for employment decisions 3. Unwelcome attention unreasonably interferes with the employee's work performance or creates a hostile work environment The employee's response sometimes becomes the basis for how a person is treated - end up working under terrible conditions

EEOC Processing of Title VII Complaint

1. Initial Interview --> No charge filed or charge filed - review case and show employee - see if you have a claim for discrimination - all information taken as true - if you can't, dismiss case 2. Charge filed --> voluntary mediation --> settlement - Or after a charge is filed or after voluntary mediation it can go to fact-finding conference 3. Fact-finding conference --> Lawsuit filed by EEOC in federal court, or settlement, or Plaintiff's right-to-sue letter - a lot of time it leads to a settlement - EEOC usually only takes cases that show a new issue (EEOC litigation) or class Action - EEOC would be lead counsel - once you get right to sue letter you need to file within 90 days

Liability for Partnership by Estoppel A and B form a partnership to operate a bakery. A and B have bad credit and want a bank loan. A and B decide to seek credit.(decided together as a partnership decision) Without B's knowledge, A tells bank that C, a rich cousin, is a partner in the business. C is not. Bank relies on C's wealth and gives the partnership a bank loan. The partnership defaults on the loan. 1. Is the partnership liable to the bank? 2. Is A liable to bank? 3. Is B liable to the bank? 4. Is C liable to bank? •Yes if __________________. •No, if __________________.

1. Is the partnership liable to the bank? - Yes, have to repay loan (partnership decision to get credit) - Transaction not fraud yet 2. Is A liable to bank? - yes, because A engaged in wrongdoing and is a partner conducting business for partnership - personally liable in partnership 3. Is B liable to the bank? - yes because status in partnership and transaction is getting credit, not lying 4. Is C liable to bank? - Yes if C is aware his name is being misused and does not do anything to stop it (partnership by estoppel principles) - No, if C is not aware because a person has to voluntarily consent to be a partner Happens often mostly in family and friend relationships

Burden Shifting: Employer's Response to Prima Facie Case - Age

1. Plaintiff makes out a prima facie case of age discrimination 2. Employer must state legitimate justification for employment decision 3. To win lawsuit, plaintiff must show: - that employer;s reason was a pretext; AND - that the employment decision was motivated by age discrimination 4. Employer wins if able to establish an exception under ADEA In some organizations they will have mandatory retirement protocols and they relate to the performance of the job Some organizations will create a test that is designed for older people to fail

Burden Shifting: Employer's Response to Prima Facie Case - Disability

1. Plaintiff makes out a prima facie case of disability discrimination 2. Employer must state legitimate justification for employment decision 3. To win lawsuit, plaintiff must show: - that employer's reason was a pretext; and - that the employment decision was motivated by discrimination 4. Employer wins if able to establish a defense under ADA

Burden Shifting: Employer's Response to Intentional Discrimination - Prima Facie Case

1. Plaintiff makes out a prima fair case of discrimination - provides evidence to their action or provides good reason 2. Employer must state legal reason for employment decision 3. To win lawsuit, plaintiff must show: - that employer's reason was a pretext - that the employment decision was motivated by discrimination - Pretext = ignoring something that another person did (I broke something but so did she) 4. Employer wins if able to establish a bona fide occupational qualification - allows an employer to discriminate because the safe, efficient, and performance of job requires it - gender, religion and national origin (not race and color) - ex: TSA needs to have men and women on staff to pat down. A women will be hired even if she scored lower on the test (gender) - ex: men can only be priests (gender) - exL citizenship requirement (national origin)

Three Consequences of Dissociation

1. Terminates the right of the leaving partner to participate in partnership business. -Duty of loyalty ends. Which duties are still owed to the partnership? Keeping trade secrets, duty of care for transactions before - duty of care for things before dissociation unless "winding-up" partner (everyone else leaves after) 2. Requires partnership to purchase his/her interest. - cash-out - apparent authority is still there but express disappears - unless notify 3. Alters third party liability. Alters liability of both parties to third parties. -For 2 years after partner leaves, the partnership is liable to 3rd party for transactions with dissociated partner based on apparent authority. How does the partnership avoid liability from acts of dissociated partner? - 0 days apparent authority if you provide direct notice to people working with the company - File a notice with secretary of state limits it to 90 days - do nothing then 2 years Is it possible for the dissociated partner to be bound by partnership after leaving the partnership? - yes - goes both ways - that partner should also file notice of dissociation - limit to 90 days -possible to seek indemnification from other partners

Who may receive workers' compensation?

2 requirements must both be met: 1) Persons who have an employment relationship 2) The injury must be accidental and happened on the job or in the course of employment - employee must notify employer of injury within 30 days - employee must file claim within certain period (60 days to 2 years) from time injury is noticed

Examples 1) A & B are general partners. Each contributes $5,000. C & D are limited partners. Each contributes $10,000. No agreement on allocation of profits and losses. Limited Partnership has $60,000 in profits. -A & B get how much? -C & D get how much? 2) Same partnership. A & B are general partners. C & D are limited partners. No agreement on allocation of profits and losses. Suffer $60,000 in losses -A & B responsible for how much? -C & D responsible for how much?

A and B together contribute $10K C and D together contribute $20K 1) A and B get $20K ($10K each) C and D get $40K ($20K each) 2) A and B have $40K in losses ($20K each) C and D have $20K in losses ($10K each)

Employee Retirement Income Security Act (ERISA)

A federal act (law) designed to prevent fraud and abuses with private pension funds - voluntary pensions - established fiduciary control over money set aside for workers - came in as a result of companies going bankrupt Are employers required to establish pension plans for their employees? - No. It is voluntary How does ERISA prevent fraud? - prohibiting employers from using the money and sets fiduciary duties for the funds - there is insurance benefit for the funds What is vesting? - gives employee a legal right to money promised to them - most employees say no until 5 years at the company - but if you contribute to your own plan you definitely get your own contributions

Consolidated Omnibus Budget Reconciliation Act (COBRA)

A federal law that allows employees and their families to keep their group health insurance coverage if employee has left the job or had hours reduced that caused ineligibility for coverage Which employers must comply with the Act? - if you have 50 or more employees Does the employer or the former worker pay the insurance premium? - the former work pays for this - the employer can require the employee to pay up to 102% for administrative costs May the employer discontinue health insurance if the employee was fired on the basis of gross misconduct? - employee can keep coverage with former employer but lose employer contribution - usually ends in 18-24 months (not permanent) - depends on if the person has a disability - if so might last longer - theft embezzlement

The Federal Unemployment Tax Act (FUTA)

A federal program to assist workers who are temporarily unemployed - Each state has enacted laws to implement the program to provide unemployment compensation How is this program funded? - employer pays into the fund When are unemployed workers not eligible for unemployment compensation? - dismissed for wrong doing - have to show proof that you are applying to jobs as well

What is Medicare?

A federal system that provides health insurance coverage for hospital and non-hospital medical costs to: - people age 65 and older - some people under age 65 with disabilities - people with permanent kidney failure How is Medicare funded? - employer and employee What is Medicaid? - usually a matching fund provided to pregnant persons, disabled persons, and persons that cannot work. - Federal Government funded

What is Social Security?

A federal system that provides retirement, disability, and death benefits to covered employees and their families. 1) How is Social Security Funded? - employer and employee 2) Do self-employed persons have to make FICA contributions? - yes but have to pay it all by yourself 3) Are your personal FICA contributions returned to you when you retire or become disabled? - Yes? 4) Do monthly Social Security benefits remain the same year after year? - Static until 2022 and then may change - Usually decided by cost of living

What is a franchise?

A franchise is: - a business arrangement where the owner of a trademark, trade name, or copyright (franchisor) - licenses to another (franchisee) - the right to use the trade market, trade name or copyright in the sale of goods or services Is the franchisee legally independent of the franchisor? - legally independent - not subsidiary because separate entity ex: Qdoba, UPS, Dunkin Donuts, Plato's

What is a general partnership?

A general partnership is created when: - two or more persons agree to carry on business (natural or cooperation combinations) - for profit - as co-owners with equal rights to manage and share profits (UPA - Uniformed Partnership Act) - can have one person that makes all of the decisions and one person that just collects profit --> The UPA governs the operation of partnerships if the parties have no express agreement (with words)

What is a Limited Liability Partnership?

A limited liability partnership (LLP) is a special form of partnership where: -ALL partners are limited partners; and -There are NO general partners. Limited partners' liability for partnership debts: -is limited to capital contributions; and -None of the partners is personally liable for the debts and obligations of the partnership beyond capital contributions (UPA). How are injured third parties protected? - Title of enterprise will tell you a lot about how liability issues will flow in favor of the third party - Personal guarantees are asked for the spouses of partners because don't want them dragged into this situation Entity can protect themselves -Personal guarantees -Statutory formality -Capitalization Business insurance

What is Partnership Dissociation?

A partner ceases to be associated with carrying on the partnership business. 5 Events Trigger Dissociation (UPA 601) 1.Voluntary Notice of Withdrawal. 2.Occurrence of an Event. 3.Unanimous Vote of Partners. 4.Judicial Decree. 5.Bankruptcy; Assignment of Interest to Creditors; Incapacity; or Death. 1-3 is most common After dissociating, the partner: (voluntarily needs to break) -Has his/her interest bought back by partnership. -Ends his/her authority to act for partnership. (become unauthorized) -No longer participates in running business with partners. Is the partnership dissolved when a partner leaves? - used to be like this under common law but now switched to UPA where it does not - sometimes happens but not necessarily Can sign contract that if commit crimes of moral turpitude (ex = public drunkenness) --> does not HAVE to get arrested but other partners can say you have to leave the partnership - can kick partner out of business - reputation

What is a partner's interest in the firm?

A partner's interest in the firm is a personal asset made up of: (need to be written because oral is hard to prove) 1. a proportional share of the profits earned; AND 2. a return of capital when the partnership ends (surplus). Creditors of individual partners may attach (go after) the partner's interest. Does the creditor of an individual partner have the right to attach partnership property? - can attach partnership interest (like a lien) - creditor can not force termination of partnership or automatically attach assets Compensation: - duty so usually not paid unless they decided they will be - some will get paid quarterly - but run the risk of breaching fiduciary duty so don't underfund enterprise

Partnership as an independent entity

A partnership is sometimes called a company or a firm - suggests that the partnership is an entity separate and apart from its members At common, the partnership was not a separate legal entity from its owners Today, many states recognizes a partnership as an independent entity for some purposes - UPA = partnership is its own entity and may be sued in its own name

How is a partnership formed?

A partnership is typically formed by an oral or written agreement (express agreement) - Oral is allowed but need good testimony What are the essential elements of a partnership? 1. sharing of profits or losses (Party has burden of proof) 2. joint ownership or the business 3. an equal right in managing the business Intent to create a partnership

What is a disability?

A qualified individual with a disability: 1. has a physical or mental impairment that substantially limits one or more of major life activities; and 2. has a record of such impairment; or 3. is regarded as having such an impairment What are some of the health conditions that are considered disabilities? - have to show chronic conditions trigger physical impairment What health conditions are not considered disabilities? - covers diagnosed, informed employer, or regarded with impairment - if work believes you have a disability, even though you do not and they treat you badly because of it - congress amended the statute that prohibits the employees from considering mitigating measures in determining if the person has a disability - ADA if employer uses mitigating measures as discrimination

What are the advantages and disadvantages of a Sole Proprietorship?

Advantages: - ease and low cost of formation - owner's makes all of the management decisions - owner receives all of the business' profits - owner can easily sell or transfer business Disadvantages: - access to capital limited to savings and loans - owner is personally liable for all torts and contracts - owner has unlimited personal liability - business dissolves automatically upon owner's death --> if it is passed on it triggers the creation of a new enterprise

How does the law of agency relate to partnerships?

Agency concepts and partnership law - each partner is an agent of the other (owes duty of care to company and copartner) (conduct does not matter much here) - there may be imputation of liability - each partner is a fiduciary of the other How is a partnership different from an agency relationship between employer and employee? - party enjoys ownership rights and typically employees do not (unless stock) - parties are also fiduciaries or each other

Prima Facie Intentional Discrimination Example 2: Sam is an Arab-American retired police officer. He applied for a job as a bank security guard. Was fired because he was aggressive and had complaints of police brutality against him. Asked many questions about his ethnicity during interview. Denied position. Bank aware of police brutality complaints. States reason was that he was no qualified for job. Would Sam be successful if he filed a lawsuit?

Aggressive behavior is a reasonable defense Company won

Partnership Buy-Sell Agreements

Agreement entered into at the formation of the partnership to address dissolution issues. Provides that one partner may purchase the other's partnership interest under certain circumstances. Often determines the value of the interest being sold and gives other partner or 3rd parties option to purchase interest. (appraiser) Anticipate what will happen

The Partnership Agreement

Agreements to form partnerships may be: 1. Oral 2. Written - some partnership agreements must be in writing to be enforceable under the Statute of Frauds 3. Implied by Conduct (common law principles) -How is a partnership agreement implied by conduct? Pay for equipment, hire employees, invest a lot of money Reasonable people don't act like business owners unless they believe they are business owners Partnership agreements may include any terms unless they are illegal or contrary to public policy Some examples: - illegal agreements - any civil wrongs or torts - interferes with duties of a public officer (governmental official) - engagement in immoral acts - any engagement in illegal acts

State Workers' Compensation Laws

An administrative procedures for compensating employees for injuries during the course and scope of employment - injured employees make claim against employer's workers' compensation insurance policy - require most employers to carry workers' compensation insurance Which workers are excluded from coverage? - business owners, volunteers, independent contractors, federal employees, railroad employees, and longshoremen May a workers sue for injuries caused by an employer's negligence if s/he has accepted workers' compensation benefits? - No, in general

How does an employer defend an employment discrimination lawsuit?

An employer may present these defenses to counter the worker's prima facie case: 1. Business necessity 2. Bona Fide Occupational Qualification 3. Seniority Systems 4. After-acquired evidence of employee misconduct

Job Applicants and Preemployment Physical Exams

Application process must be modified do that those with disabilities are able to compete for jobs against the non-disabled Submissions to preemployment tests limited to performance of the tasks required for the job - testing requirement must be for all applicants

Case Ex. 25.15 Morriss v. BNSF Railway Co. (2016) What is a Disability?

Applying for position for railroad - position is considered safety sensitive so they have a medical review They found he had a BMI (measured of fat) over 40 - obese They have a policy if you have a BMI over 40, you cannot work for safety sensitive positions. They rescinded their offer But did not suffer any medical condition that caused obesity Summary judgement granted to employee (employer won)

Partnership as an Entity

As a separate legal entity, a partnership may 1. sue and be sued 2. have judgments collected against its assets 3. own and convey partnership property 4. keep its own financial records 5. be subject to marshaling of assets How is liability against a partnership assessed? - partnership assets will be started with - take away ownership interest from parties - look to a wrongful partner- personally liable - responsible for his/her own wrong-doing - then recover form other owners - personally liable

Case 26.2: S&P Brake Supply, Inc. v. Daimler Trucks (2018) How is a Franchise Terminated?

Authorized dealer of Daimler Trucks - Selling trucks and only authorized representative in yellowstone county - were bit meeting standard quotas for 4 years in a row - advise and gave suggestions - Daimler then said terminating relationship Court = Daimler had cause for termination because of sales figures - 7 bought in the area and only 2 by S&P - not holding market share

Example of Contractual Liability Ali and Bob formed partnership to manage real estate. Ali bought land from Cindy and signed promissory note as "Ali, Partner." Prior to buying land, Ali and Bob entered into an agreement saying that only Ali would be personally liable for promissory note. Cindy not aware of side agreement. Cindy sues partnership and Ali and Bob, when Ali doesn't pay. Is Bob liable?

Both agreed they want to buy land "I am here as a partner of..." Court said Bob is liable because when Ali doesn't signed as promissory note, then Ali is acting as an agent to Bob, so Ali is binding Bob This transaction can not be imposed on Cindy because Cindy didn't know that (unfair) - she was denied opportunity to agree to this

Example of Tort Liability Alison and Ben formed partnership to practice medicine. Alison and Ben treated Colleen during her pregnancy. Child born with severe physical problems Colleen sues Alison and Ben. Jury find that Alison committed malpractice, but Ben did not. Colleen awarded $4 million. Is Ben also liable for Alison's malpractice?

Both parties treated but only one person committed malpractice Ben is liable because partnership even though he is innocent Ben would not be liable in specialized forms of of partnerships

How Does Dissolution by Acts of the Partners and Operation of Law Occur?

By Acts of the Partners: 1. Stated Time or Purpose. (ex: construction) 2. Partner's Withdrawal. - Partnership for term - breach of contract - No term - no breach. 3. At least 50% of partners decide in favor of dissolution if certain events occur. By Operation of Law: Illegality. - goods or services provided become illegal (ex: lightbulbs) - or involving a partner (ex: cannot be a lawyer and a judge at the same time)

Pregnancy Discrimination: Tylo v. Spelling Entertainment Group Example: Won $5 million after trial Claimed that she was fired from Melrose Place because she was pregnant Never appeared on a single episode

Can this person provide the work for the employer and can the employer make the necessary accommodations? Women was an actress coming onto a new show temporarily - had fight scenes she needed to participate in On first day of work she informed them that she was pregnant but it was very early and you could not tell - she told them early so they can film her before the baby starts to show They fired her and did not accommodate her, even though she was ready, willing, and able She sued --> during the trial she was pregnant with her 3rd child and was the same size as the first day of work Jury gasped because she looked fin She won millions

Disparate Impact: Unintentional Discrimination example: Ozark Airlines has a minimum height requirement of 5 feet 7 inches for its pilots - average height men: 5 feet 9.5 inches - average height women: 5 feet 4 inches Minimum height of 5 feet 5 inches needed to view control panels (required mobility of vision) Ms. Boyd sued alleging that this height requirement had a disparate impact on women Do you think she was successful?

Case was with a small airline History: had 380 pilots and all were men Looking at height excluded 95% of women and only 28% of men Changing requirement 5'5'' only screens out 74% of women

Laws governing franchises

Contractual relationship between franchisor and franchisee Federal and state laws to protect potential franchisees - not a lot of room for negotiation but can help in court The Franchise Rule (Federal Trade Commission) 1. disclosure requirements: how do you know you are getting a good deal 2. termination requirements: termination before contract expiration can be seen as theft Regulations specific to industry - Franchisees make affinity groups to help each other

Prima Facie Intentional Discrimination Example 1: Sam is an Arab-American, retired police officer. He applied for a job as a bank security guard. Asked few questions about his ethnicity during interview. Interviewer made comments about Arabs being hostile to American interests. Denied position. States reason was that it would make bank customers "uncomfortable after what happened on 9-11" Would Sam be successful if he filed a lawsuit?

Customer preference is not a good defense - company said they can't hire the employee because it would make the customers uncomfortable After 9/11, there was a lot of discrimination Employee won

Miller v. D.F. Zee, Inc Example Franchisor Vicarious Liability

DF Zee owns a Denny's franchise (Tualatin Denny's). Under agreement, DF Zee agreed to train and supervise employees in accordance with the Denny's Operations and Food Service Standards Manual. Denny's regularly sends inspectors to assess compliance and reserved the right to terminate the franchise for non-compliance. Denny's logo displayed throughout restaurant and there is no indication that the owners were other than Denny's. Christine Miller worked as a waitress, and was sexually harassed, along with 3 others. She complained to Stanley Templeton, the manager, but nothing was done. She called another manager in another Denny's store, who referred her to the district franchise manager for Denny. The district franchise manager referred her complaint back to D.F. Zee. The harassment continued, and Miller and 3 other employees filed a lawsuit. Will the franchisor Denny's be held responsible for the waitresses' harassment? - Denny's was vicariously liable - language and conduct She was bring sexually harassed - She complained - They did nothing and then referred her to National Denny's - now does franchisor have control over franchisee? - Denny's had more control and can terminate franchisee for noncompliance - Denny's is responsible because franchisee is an agent because of level of employees - "right to control franchisee's in the discipline and termination of employees."

What is a business necessity?

Defense against unintentional discrimination Employer must show that an employment practice that discriminates against the protected class is related to job performance - Unintentional discrimination - Disparate impact - Related to job performance

What is Bona Fide Occupational Qualifications?

Defense for discrimination against a protected class Employer must show that identifiable characteristics are reasonably necessary for normal operation of the business - Characteristics may include national origin, gender and religion, but not race or color - Intentional discrimination or disparate treatment - Excluding race and color because difficult to show the person does not have the skills necessary because of their race

What are seniority systems?

Defense for discrimination against a protected class and disabled persons - those who have worked longest for the employer are first in line for promotions, salary increases or benefits. Also includes "last hired, first fired." - Employer must show no intent to discriminate and that seniority system is the reason there are no members of protected class or disabled in upper-level positions Looking at issue last hired first fired

Bauer v. Lynch Discrimination on the basis of Sex

Different standards for men and women FBI recruit and going through training - everyone had to pass physical test to get into academy While in the academy, the student did very well - but he was unable to pass the physical exam for graduation - men had to 30 push-ups and women had to do 15 Trial court-he won Appellate court = employer does not discriminate based on requiring different physical levels based on physical differences - number of push-ups have equal burdens on both men and women - Tests must be equal for all candidates - equally fit men and women show their fitness differently - this test does not violate Title VII

Title VII Discrimination - Disparate treatment verse impact

Disparate Treatment or Intentional Discrimination - Employer intentionally treats employees or applicants differently on the basis of their race, color, gender, religion, or national origin - Limited BFOQ exception available to the employer Disparate impact of unintentional discrimination - Employment criteria or selection device disproportionately screens out employees based on race, color, gender, religion, or national origin. - Business necessity defense available to the Employer - Employee rebuts by showing that alternate option was available and not offered Example: - Job wanted a high school diploma - when looking at data, 34% of white men and 12% of black men had high school diplomas - If want to move up to a higher position, have to have a diploma and pass a test - This test was challenges because they test was not necessarily related to the position - BFOQ : person needed for position

Dissolution of the Limited Partnership

Dissolved in much the same way as a general partnership. Causes for Dissolution: 1. End of a set time period for partnership or completion of a project. 2. Written consent of all general and limited partners. 3. Bankruptcy/Withdrawal of a general partner. 4. Decree of judicial dissolution. - Enterprise is impracticable - Punishment for wrong doing Limited Partnerships tend to be public services -Lawyers -Accountants -doctors

What are the major types of franchises?

Distribution: franchisor is a manufacturer and sells goods to another company - ex: car dealership Chain Style Business Operation: have to operate under trade name and follow specific instructions - ex: McDonalds and other fast food places Manufacturing or Processing-Plant Arrangement: company gives franchisee ingredients necessary to make something - ex: coca cola

Job Applicants and Substance Abuse

Drug addition is a disability under the ADA, but only protects former addicts - presently in supervised drug-rehabilitation programs, or - have successfully completed supervised drug-rehabilitation programs Alcoholics are not protected if: - they use alcohol on the job or are under the influence of alcohol while working - s/he poses a substantial risk of harm to self or other, and the risk cannot be reduced by reasonable accommodations - Becomes difficult for people who have alcoholism or abuses drugs - can affect companies executive functioning - If you disclose condition from past, there should be no discrimination against you when being considered for job - If you formally use drugs you can be disqualified from the job application - Work rules that relate to no drug use for people that have a prescription -Need accommodations because they will test positive on drug tests - Some states are starting to pass laws that allow people to have marijuana prescription and cannot be discriminated against by employers

What is after-acquired evidence of employee misconduct?

During discovery period, employer learns that employee was improperly hired. 1. Example: falsified credentials - not qualified so can not say discrimination 2. Example: no back pay or reinstatement - claim they are on their treatment but turns out they have been kicked out of treatment because they relapsed If employer were aware of misconduct, employee would not have been hired. Is misconduct an absolute defense? - only if it is related to the position? - Misconduct is used to limit damages they receive - Disqualified = fail prima facie case - During discover period can ask questions, records, and documents to prepare case - Employer learns that they should not have hired this person in the first place

What are the Fiduciary Duties of Partners?

Duty of Care: - A partner must refrain from grossly negligent or reckless conduct, intentional misconduct or a knowing violation of the law. (ignorance of the law is not a defense) -What about simple mistakes in conducting the partnership business? can't wait for perfect information so sometimes have to forecast. Act like a reasonable person. We can make small mistakes Duty of Loyalty: - A partner must account for all property, profit benefit that arises from the partnership's business or property. -When is a partner able to compete for business against the other partners? Full disclosure, decided together not to use opportunity so someone else can

What is the Equal Employment Opportunity Commission?

EEOC is an administrative agency that monitors compliance with Title VII - enforces rights given by civil rights statue Rights enforced by the EEOC: 1. work free from harassment 2. work free from discrimination 3. complain about job discrimination or harassment without punishment 4. request workplace accommodations for your religion or disability These cases are very fact specific - a lot of testimony - takes a lot of resources and time

What Is the Authority of Partners?

Each partner is an agent of every other partner and acts as both a principal and agent in any business transaction that are within the scope of the partnership agreement. (both principle and agent) -If a partner has no authority to transact business, and the 3rd party is not aware of the lack of authority, does the partner cause the partnership to become liable? - no, if a partner without authority cannot bind company unless estoppel or ratification - breach of contract - remedy suing wrongful person What happens if the 3rd party knows there is no authority? - even harder for 3rd party to find estoppel (not possible) - no chance because you need detrimental and reasonable reliance

What is a reasonable accommodation?

Employee informs employer of religious belief or conduct that is in conflict with work. An employer must make reasonable attempt to accommodate an employee's religious beliefs or practices. Employer may discharge the employee if reasonable attempts are unsuccessful or involve undue hardship If employer says no and employees does it anyway - can fire the employee and it is not considered discrimination - If integral to operation, cannot have a reasonable accommodation because it is an undue hardship

Health Insurnace Portability and Accountability Act (HIPPA)

Employees enjoy federal statutory protection of health insurance coverage under HIPPA - strictly limits an employer's ability to exclude coverage for preexisting conditions - mandates stringent policies and procedures to prevent the unauthorized use of disclosure of health and medical information (referred to as protected health information - PHI) - restricts access to information and tracks the use and disclosure of information Cannot discriminate against employees who have illnesses to make insurance go down

How does Title VII prohibit differentia treatment on basis of gender?

Employers may not classify jobs as male or female, unless gender is essential to the job - preference against men or women Applicant (plaintiff) must show that gender was the determining factor in the adviser employment decision - determining factor = make or break factor (usually very clear)

How does Title VII protect religious expression in the workplace?

Employers must "reasonably accommodate" the "sincerely held" religious practices of its employees, unless it would cause undue hardship to the employer's business - we have the freedom of expression as given by the first amendment Are religious practices listed to established religions? - No, can be a religion we never heard of as long as it fits the definition or religion What does "sincerely held" mean? - have to prove that you are truly a participant in the religion at work and privately in your home - are you following the tenants of your religion

Case Example 27.1: Tubb v. Aspect International, Inc. (2017). Has a partnership been created?

Entered into agreement to make and sell ammunition to public Both participate and share profits, but did not specify type of entity or if they will share losses - deciding between general partnership and joint venture - difference is general partnership copartner has more power to make the other partner liable then a copartner in a joint venture There was a partnership even though no express agreement to share losses Usually when split profits also split losses

Preemployment Physical Exam Examples

Example: applied for customer care representative position (was interested) - learned in interview that she was paralyzed from the waist down - she was rejected - if a company is going to have a test related to a disability, it has to be related to the work they do - she can do this job sitting down Example: James Schottel, a paraplegic, sued producers of "The Appearance" seeking an injunction - he was in a wheel chair - online application sought applicants with excellent physical health - Matter settled with new language " All applicants who believe they meet our criteria, including persons with disabilities are welcome and encouraged to apply to be a participant." - no one is in "excellent" health - applicants were required to submit an examination by a physician

Rights and Duties in a Limited Partnership

Except for right to participate in management, limited partners have essentially the same rights as general partners. General and limited partners also owe each other a fiduciary duty to exercise good faith in transactions related to the partnership. -Taking opportunities that belong to the enterprise and using them for your own advancement -Stealing

Reasonable Accommodation and Undue Hardship

Factors from EEOC guidelines that are used in determining whether an accommodation may cause undue hardship: - The size of the employer's workforce and number of employees requiring accommodations - The nature of the job or jobs that present a conflict - The cost of the accommodation - The administrative requirements of the accommodation - Whether the employees affected are under a collective bargaining agreement - What alternatives are available, and have been considered by the employer

How is a sole proprietorship created?

File a certificate of trade name with a governmental agency. - Why is a trade name filed with the government? Notice of trade name published in a newspaper in the area where business will be done. Local government may require owner to obtain a license to do business. Easiest to form --> but does bring disadvantages

Worker Health and Safety Provisions

Foremost laws protecting employees' health and safety is the Occupational Safety and Health Act of 1970 ("OSH Act") - tied to the commerce clause - have to track OSHA All private sector employers and their employees are covered by the OSH Act 1) Who is not covered under the OSH Act? - self-employed - immediate members of family farm 2) What are the employer's duties under OSH Act? - providing a safe working environment - fixing and warning 3) How does the employee enforce his rights under the Act? - employee can reach out to OSHA inspectors - tell employer about the issue - file whistleblower to get protection 4) What are the economic costs/savings for protecting worker health and safety? - reduced employee expenditure - increased productivity - less overtime - less injuries

CNN Example The Federal Unemployment Tax Act

Fork Lift operator (Temp Job) - used forklift to shake vending machine - supervisor saw him and terminated him - dangerous cause - for cause termination - denied unemployment request because terminated for cause by operating forklift dangerously

Franchina v. City of Providence (2018) Employer Liability for co-worker

Franchina (supervisor) complained to the chief - Chief was responsive - Charge becomes public knowledge to other workers on her shift and other workers on the shift began to treat her terribly (her subordinates) She submitted 40 different complaints of harassment against others - pushing, spitting, rude comments - Nothing was taken against these people - She sued Is there evidence that she was subjected to terrible work space - 1st circuit = yes there is enough evidence Working under significant stress while being harassed -Does not provide her an equal opportunity in the work place -Disparate treatment -Was based on gender since they used gender specific insults -Female workers in this department were treated as less competent

Quality control of Franchisee May lead to vicarious liability

Franchise contract allows franchisor to establish certain standards or quality control - can terminate early if you can prove cause 1) Why is quality control important to franchisor? - consistent with other franchisees 2) Which party is typically responsible for day-to-day operations? - Franchisee but franchisor has rights - too much control leads to liability issues - level of control in relation to conduct that triggers lawsuit Franchisor may be labile for torts of franchisee - When does this occur? If they have too much control in how the operation is managed

How does the franchisor ensure that the franchisee maintains standards?

Franchise contract allows franchisor to establish certain standards or quality control - Franchisor may require regular reports from franchisee - Franchisor may inspect premises and books on regular basis - Franchisor has remedies that may include termination of the franchise business if it is in violation of standards or quality controls Power to terminate --> drives relationship

D'Artagnan Dissolution and Exercise of Buy-Sell Agreement In 1985, Ariane Daguin and George Faison started foie gras distributor to sell local delicacies to chefs. $2 million sales by 1986. 1993: Consultants urged dividing business into 2 groups. AD (sales and marketing); GF (finance and operations). Buy-sell Agreement. If partner dies, survivor offered shares at pre-determined price. Life insurance on each other to fund purchase. Shot-Gun Clause: Fair price to one partner to buy out other; lawsuit free way for the business to survive. •1999: $20 million in annual revenue. •2004: Disagreements began. •2005: GF exercised shotgun clause •2006: $46 million in annual revenue.

General Partnership 26 years Agreement by conduct Met in grad school One person died - each person buys life insurance of each other to buy other one out - can't determine partner - Keep people ethical

What is the entity theory of partnership? Diagram

General Partnership owes a debt or obligation to the third party - capital investment and personal liability General partners have a personal liability for partnership's debts and obligations to the third party

Liability in a Limited Partnership

General partners -Unlimited personal liability for the debts of the limited partnership. Why do general partners have unlimited liability? -Telling the enterprise how to do work -Enterprise is a legal person Limited partners -Liable for debts of the limited partnership up to their capital contributions. Unlimited personal liability occurs: 1. Defective formation 2. Participation in management (Doing things the only GP should do, not the LP) 3. Personal guarantee

Management of A Limited Partnership

General partners assume all management rights and have fiduciary responsibility to limited partners. -GP does all the work, bears all the responsibilities, has all of the risk Limited partners give up right to participate in the control and management of the LP. -Limited partner DOES NOT have the right to bind the LP to contracts or other obligations. What business and partnership activities may the limited partner engage in? -Accounting -Vote to dissolve enterprise/ voting for other times -Can work for enterprise as long as it is clear that GP is in charge -Can be involved but can't pull the trigger and make decisions

Legal Independence/Economic Interdependence: Wendy's International Inc. EXAMPLE On March 22, 2005, Anna Ayala claimed that she found a fingertip in Wendy's chili. Franchise (San Jose, JEM Management) lost 60% to 70% of its business. Laid off dozens of workers at CA franchises. Chain lost $2.5 million from bad publicity. Sentence?

Grand Theft - wife = 9 years - husband = 12 years - also had to pay restitution for lost sales, lost wages to employees, and Wendy's international Went to a restaurant and found finger tip in food - real finger but she added it to the food after she purchased it - Chili was cooked and finger wasn't Lost tons of money Reward got them info - husband works at industry - coworker lost a linger and husband bought it for $100 - coworker will get part of settlement

Case 27.1: Harun v. Rashid (2018) Partnership Formation

Harun wanted to open restaurant in Texas but didn't have financial resources so reached out to Rashid for funding. Rashid said yes and agreed to give $60K Rashid was actively involved. He helped negotiate lease, was on bank account, helped pick out furniture, advertising, and hired a bookkeeper Bookkeeper expressed concern of Harun's reporting on tax return. Harun became upset and removed Rashid from bank account and locked him out of the physical restaurant Rashid sued Harun and the enterprise - partnership is a separate legal entity - breach fiduciary duties as well to co-partners Trial court = partnership exists and Rashid received damages Appellate court affirmed decision - economic damages for losses $36K - punitive damages - attorney fees and interest costs $76K Why the decision was made: - Share profits, losses and liabilities - duty to contribute money to business - Control enterprise Therefore it a partnership and not questionable because overwhelming evidence for intent to form a partnership

PGA Tour, Inc. v. Martin Casey Martin has a circulatory disorder that clocks blood flow from right leg to heart Disease has shriveled his right leg Asked PGA to use gold cart. PGA said no. Martin sues under ADA What outcome?

Has a public accommodation component Guy has a disease that is avascular disease with blood vessels - obstructs blood flow from leg to head (very rare) - less strength in that leg, therefore smaller than the other one - he has a high risk of fractures so he asked for an accommodation and they said no They said if you remove the walking from golf then it changes from a sport to a game - fatigue factor of walking rule doesn't really have as much of an impact as they thought - he is fatigue because his body is not working well - fatigue from disease is greater than the fatigue from walking Under ADA, PGA tour must allow Martin to use a cart to get around - he is the only one that can have a cart

Case example 25.17: Rohr v. Salt River Project Agricultural Improvement and Power District (2017) What is a Disability?

He has diabetes - Can have a physical component depending on how well they can control it - This person could not manage it property unless he ate on a very tight schedule He worked on power lines -Included dangerous conditions that would mess up his schedule - On the road, out of town, don't know how long the work will take - Accommodation = he cannot have any off premises and night shift and emergency work -Employer said no because cannot do essential duties of job Court: -He was a covered person under ADA -Because he had to do certain things for physical well-being -Employer refused accommodations but his limitations - employer had other employees in the same category -He can shift over and work there They could have easily have transferred him over and provided valuable work for employer

Case ex: 16.1: Quality care & Truck Leasing Inv. v. Sark Sole Proprietorship

Hide assets under other people to protect them Sark owned sole proprietorship (husband and wife) - since both parties owned the company, he could not move assets under wife Sold home to son for $1 consideration (fraudulent conveyance) - made transfer without reasonably normal value - debtor was engaged in a transaction (bankruptcy) - now personal assets become unreasonably small than money available in transaction Trial court ruled in favor of Quality but sark appealed Appeal court = same decision

Case 26.3: Holiday Inn Franchising, Inc. v. Hotel Assoc., Inc. (2011). How is a Franchise Terminated?

Holiday Inn = Franchisor - buddy house construction company renovated Holiday Inns - usually projects done without contracts - They made a deal to be a franchisee for 10 years and construction - Buddy house said he wanted more time to make money and they said he can extend it - Hotel Associates did amazing - People offered to buy it for $15M Guy won in court because he reasonably relied on the promise

May a Hostile Environment Claim be brought under the ADA?

Hostile enviroment theory allows a worker to sue his/her employer, even if the worker was not fired or discriminated against - The worker must show that the offensive conduct: - was severe enough to permeate the workplace; and - that it altered the conditions of employment so that a reasonable person would find the environment hostile or abusive - Claim that was established under title VII for title discrimination - Hostile work environment has now been applied to all places in title VII and its amendments - Same standard is used Example: - Person with disability worked on a farm had a disability - Employer called his stupid and retarded, other workers bullied him - He was not paid well - He began to become run down and having nightmares - He quit because he was injured and then realized that he was being abused at work - Can bring this claim so long as you can show the offensive conduct was bad enough to create a hostile work environment then he can do this case - He won

When do we presume that a partnership exists?

If a commercial enterprise shares profits and losses a partnership will be inferred. (and liability) - easy to form a partnership - so many informal partnerships go to court (family and friends) Exceptions: Partnership not be inferred if profits received as payment in the following situations (UPA 202(c)(3): (not be a finding that a partnership exists) 1.Debt by installments of interest on a loan. 2.Wages of an employee or independent contractor. 3.Rent to a landlord. 4.Annuity to a widow or representative of a deceased partner. 5.Sale of good will of a business or property. Friends and Family loan money but are not partners - creditors are not partners usually 3rd party wants to make creditor partner to be jointly liable

What are the management rights of a partner?

In a general partnership, all partners have equal rights in the management and conduct of partnership business. - but can go against this 1 vote per person and majority rules - Each partner has one vote in management matters. -The majority rule controls decisions on ordinary matters of partnership business. Can partners agree to delegate management decisions to a committee? - Yes When is unanimous consent required? - fundamentally changes the business - admitting new partners - could make business fail

Sole Proprietorship Liability Example: John Smith owns store ("Cool Clothing") capital: $25K (savings) $50K (friend) John closes store. Business has assets worth $5K Owes loan ($24K) rent ($1K) John has home worth $75K How are business debts settled?

In a sole proprietorship, can go after personal property (like home) Have to pay: $50K to friend $24K loan $1K rent Have: $25K in savings $5K in assets $75K home

Workers' Income Security Laws

Income security indignities a group of insurance programs run by the government to protect employees and their families These insurance programs provide money to employees and their families for: 1. Retirement 2. Disability 3. Death 4. Hospitalization 5. Unemployment

What is a Limited Partnership?

It is a partnership that has two types of partners: 1. General partners - Invest capital, manage the business and are personally liable for partnership debts; and 2. Limited partners - Invest capital, no right to participate in management; and - NOT personally liable for partnership debts beyond investment in partnership. At least how many general and limited partners should a LP have? - Each state has different requirements but all states need AT LEAST 1 general partners and 1 limited partners to have a limited partnership

What is Joint Liability?

Joint Liability for Contracts and Debts. -Each partner is liable for claims regarding partnership debt or contractual disputes if transactions were authorized. -3rd party must name partnership and all partners in lawsuit. What happens if a partner contracted without authority? - unauthorized transaction Is the partnership liable? - no unless ratification, estoppel, or operation of law Is the individual partner liable? - yes because responsible for own wrongdoing Everyone is liable --> mathematical provision Can seek contribution form other partners Torts are not here because vicarious liability

What is Joint and Several Liability?

Joint and Several Liability. A 3rd party may sue one or more partners separately (severally) or all of them together (jointly) for all partnership obligations. - want access to discovery and who has money - sue everyone (joint and several) If it is truly a partnership obligation (authority or course and scope of partnership business), then all partners are held liable. - all liable May a partner who did not participate in, or ratify, the wrongdoing be held liable? YES

How Does Dissolution by Judicial Decree Occur?

Judicial Decree: -Apply for a court order that dissolves the partnership. Reasons supporting a judicial decree: 1.Business Impracticality. (business can only operate at a loss) 2.Improper Conduct. 3. Other Circumstances (personal dissension). - People not getting along and interfering with business

Has a partnership been created between David and Citibank? David owns the Empire Casino. David borrows $3 million business loan from Citibank. David and Citibank agree that he will pay back loan by sending Citibank 10% of his monthly business profit until the loan is paid in full. Do David and Citibank have a partnership agreement regarding Empire Casino?

Lawsuit filed against bank and enterprise Not partners but close relationship Sharing profits is not enough to show partnership Bank not sharing losses Not agreement with respect to management

Liability of an Incoming Partner

Liability of Incoming Partner. -Newly admitted partner has no personal liability for partnership debts and obligations incurred before the individual joined the partnership. May the new partner's capital contribution be used to satisfy debt that existed before s/he joined the firm? - YES?

How long do partnerships last?

Limited Duration: Partnership for a term. (will end) -Partners agree that the partnership will continue until a certain date, or until the completion of a project. May a partner dissolve this type of partnership before the date certain or project completion? - breach of contract - wrongful termination or disassociation lawsuit Unlimited Duration: Partnership at will. -Partnership agreements do not specify how long the partnership will last. (need to provide notice) - May a partner dissolve this type of partnership at any time? can lead to breach of contract

Liability of Partners in Limited Liability Partnership - Diagram

Limited Liability Partnership (LLP) owes debt to a third party - capital investment Limited Partners have liability limited to capital contribution - no personal liability Third party can be an agent, a person they designate, or someone else

Liability of Partners in Limited Partnership - Diagram

Limited Partnership (LP) owes a debt to the third party - capital investment - personal liability sometimes Limited Partners have a liability limited to capital contribution. No personal liability General Partners have personal liability for company's debts No personal liability unless the three things happen on the previous slide

Profits And Losses

Limited partnership agreement may specify how profits and losses are allocated. - General Partner usually gets the larger amount If no LP agreement, profits and losses are allocated according to ratio of capital contribution. -Remember, a limited partner is not liable for losses beyond his or her capital contribution in either situation. - Limited partner is never liable for losses beyond your contribution - Can get more profit but can never get more losses

Proof of Disparate Impact: The Four-Fiths Rule

Methodology developed by the EEOC Compares the selection rates for the various protected classes Disparate impact demonstrated when the proportion of the applicants from the protected group with the lowest selection rate (pass rate) is less than 80% of the pass rate of the group with the highest selection rate - employer may keep selection criteria if the test is sufficiently job created or correlated with successful job performance - Title VII does not prohibit employer from hiring only those who are capable of doing the job

In re Dissolution of Midnight Star Enterprises, LP (Case Example 27.17) Dissolution of the Limited Partnership

Midnight Star Enterprises, LP Operates casino, bar, and restaurant in South Dakota Limited Partners = - Kevin Coster - Caral Caneva - Francis Caneva General Partners - midnight star enterprises The Canveas solicited a competitor to but the limited partnership, who offered $6.2 million for the business. MSEL filed petition to dissolve the limited partnership. Accountant estimated the fair market value of business as $3.1 million General partner is also a limited partnership Owner invested in real estate in south Dakota on this huge ranch - Carla and Francis are people that live there and do work - Kevin (GP) hired them and gave them part of the profits - GP became dissatisfied with how they were doing and terminated them and distinguished their ownership rights --> allowed to do this - In agreement they decided what the number would be - Fair market value determined by an appraiser choose by the GP Someone wanted to buy the ranch and they knew the GP would not want to sell - They tried to get the trial court to use the valuation - Court said no - Limited partner does not have the right to petition for this because they do not have the authority - Comes from agreement --> fair market value

The Affordable Care Act (ACA, a/k/a Obamacare)

Most employers of 50 of more employees must provide health insurance coverage - state exchanges provide market place for employer and individuals to compare insurance costs - cost to employee should be no more than 9.55 of employee's income - Employer receives tax credit of up to 35% to offset costs - Employer fined for not providing coverage of up to $2,000 per employee after the first 30 employees --> Fined only if employees receive a federal subsidy to buy health insurance through state insurance exchange People believe this act is overreaching - there are many different opinions about it - fines for companies that do not have coverage for employees

Formation of A Limited Partnership

Must create LP formally and follow statutory requirements. Certificate of Limited Partnership requires: 1. Name of business 2. General character of business 3. Address of principal place of business 4. Name and address of registered agent 5. Name and business address of each partner 6. The latest date upon which the limited partnership is to dissolve 7. Cash, property, services contributed by each partner What events would cause the certificate of limited partnership to be amended? -Fail to update general character of the business -Fails to update name and address of agent -Keeping addresses updated -Under capitalization -A general partner who is leaving à need to make sure you have another These are the minimums you need: - If you follow these in good faith = birth of limited partnership Problems can be with: - Problems with name or address of corporation - Problems with number 7

Relationship of OSH Act to FLSA's Child Labor Laws

OSH Act enforces restrictions on hazardous work by persons under 18 years - have to warn of hazards - look at website Teen workers: - under age 14: limited to family business, farm, entertainer, or newspaper. Can't work during school hours - 14 or 15 years old: cannot work during school time and cannot work in hazardous locations. 18 hours during school week and 20 hours in the summer. - 16-18 years old: cannot work in hazardous locations - over 18: no restrictions

What is Disparate Treatment or Intentional Discrimination?

Occurs when an employer discriminates against a specific individual because of his or her race, color, national origin, gender or religion Applicant must prove prima facie case: 1. she is a member of a protected class (easy to do) 2. applied and was qualified for, or was employed in the position in question (not independent contractor) 3. was rejected, demoted, or terminated for job (some adverse employment action) 4. employer filled position with person not in a protected class Everything is true unless proven untrue

What is unintentional discrimination?

Occurs when an employer discriminates against an entire protected class of capable prospective employees. What is a protected class? Color, Disability, Familial Status (i.e., having children under 18 in a household, including pregnant women, National Origin, Race, Religion, Sex How does the employer discriminate against an entire protected class? - screening mechanisms - must only test things that are highly correlated to the job

What is a hostile work environment?

Occurs when the "workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment"

What is constructive discharge?

Occurs when: 1. a reasonable person in the same position as the Title VII complainant 2. would make the same decision to leave his/her job voluntarily 3. Due to intolerable working conditions (need proof) Plaintiff must present objective proof if intolerable working conditions AND that the employer's unlawful discrimination caused the offensive working conditions - no adverse employment action but horrific working conditions (ex: hazing) - employer's practice or employer turing a blind eye?

A. Gadley Enterprises, Inc. v. Department of Labor Sole Proprietorship

Operated daycare center as a sole proprietorship Owed unemployment money to compensation fund --> $42K - When owe money to government, they can take your operating license She decided to sell the company to A. Gadley before that happened - business assets, no competition covenant, and good will of business In PA if a person buys 51% of a business they have an obligation to make sure all debts are paid to government A. Gadley didn't do this - risk of loss is on buyer - liable for any unpaid amount A. Gadley filed action in state court but they are still liable for all debts Unemployment contribution statutes - business assets of A. Gadley

How is a Franchise Terminated?

Parties decide the duration of the franchise in the franchise contract - Franchise contract usually states that termination must be "for cause" - what would be considered cause for termination? What is wrongful termination? - courts consider whether franchisor acted in good faith when terminating franchise - without cause then breach of contract Needs to be reason for termination because hurts franchisee - contract must have more specifics - material breach of contract - failure to meet quotas (sales) Must give them notice and they should have an option to defend against termination Reasonable time must also be given to close the business

Personal Liability of an Individual Partner in a LLP

Partner in LLP is held personally liable for: - his or her wrongful conduct (contracts, torts, crimes). - The wrongful conduct of an individual he or she supervised. Partner in LLP is not personally liable for: - Malpractice of another partner unless he or she acted as supervisor based on the theory of negligent supervision - UPA exempts partner for personal liability of any partnership obligation (contractual liability or tortious conduct). Still always held personally liable for your own unlawful person conduct but not held liable for other partner's unlawful personal conduct

What is Winding Up?

Partners have no authority to create new partnership obligations after dissolution occurs except to: 1. complete transactions already begun 2. Wind up by: - collecting and preserving partnership assets - discharging liabilities, and - accounting to each partner for the value of his or her share

What are the partner's rights to share in profits and losses?

Partnership Agreement Language: -Each partner is entitled to proportion of business profits and losses stated in the partnership agreement. No Partnership Agreement Language: -Partners entitled to share profits and losses equally. How are profits and losses shared when partners contribute different capital amounts? -E.g., what happens when partner A provides 60%; partner B provides 40%? No agreement --> mathematically equal - if don't want it to be equal then has to be in writing - normally when people write agreements they will make agreement equal to how much the invested - ex: A would 60% of profits and 60% of losses if invested 60% into business - but equal if not stated

Case Ex. 27.14 Jordan v. Moses (2012). Consequences of Dissociation - Duty of Loyalty ends

Partnership for an indefinite term Jordan left after 3 year Moses objected to ending partnership --> claiming wrongful dissociation and stealing money that should have gone to the Partnership (usually take 85% and leave 15%) Trial court held for Moses - loss of existing or continuing business opportunity

Distribution of Assets

Partnership obligations are paid in the following order: 1. Debts owed to non-partner creditors and partner-creditors. 2. Return of capital contribution and distribution of profits to partners. - share losses in same proportion that you share profits - no agreement then 50/50

Winding-Up the Limited Partnership

Partnership's affairs wound up by a general partner. Distribute assets: 1. Creditors - including partners who are creditors 2. Partners & former partners with respect to: - Unpaid distributions of partnership assets - Capital contributions - The remainder of proceeds proportionate to their share of distributions If have agreement follow this, but if not go to the general position

Partnership Introduction

Partnerships are governed both by common law, especially agency law and by statutory laws - difficult to prove with just conduct alone - conify laws = make state laws federal - ex: Uniform partnership acts Formation of partnership established rights and duties among partners and with third parties Right and duties are established in the partnership agreement

National Origin Discrimination example: Filipino immigrant Manuel Fragrant applied for clerk's position with City of Honolulu. - ability to speak clearly is one of the most important skills for the position - Manuel had higher test scores than other 2 applicants Employer said he had a "pronounced accent which is difficult to understand" - also said that other 2 applicants were superior in their verbal communication ability. Is "listener prejudice" a legitimate business reason for not hiring him?

Person had to pass test and be interviewed - he did well on test Didn't get job because it was difficult to understand him Building case law in customer preference = same as listener prejudice? court decision = even the court struggled to understand what he was saying in trial court. They agreed that he was not a qualified candidate

Proof of Disparate Impact: Pool of Applicants

Prima Facie Case of unintentional discrimination proven by: 1. comparing pool of qualified persons in the local labor market; and 2. the employer's workforce; to 3. show that percentage of protected class employees does not reflect the percentage of that group in local labor market; and 4. employer connection between hiring practice disparity - employee does not need to provide evidence of discriminatory intent Making a comparison: - looking at local labor market and comparing it to the workplace - need to show there is something the employer is doing that is causing the disparity between the market - ex: hiring practices - If employee can do this then do not have to show disparate treatment

What are the two forms of sexual harassment?

Quid Pro Harassment: The employee's response is considered in granting the employment benefit Hostile Environment Harassment: The employee may not suffer any economic loss, but the unwelcome conduct interferes with the employee's work performance, or creates a hostile work environment

What is Quid Pro Quo Supervisor's Harassment?

Quid Pro Quo harassment involves a supervisor's demands for sexual favors by a subordinate in exchange for some workplace benefit. - could be any adverse employment action = taking away company card, demoting, or firing Employer may be liable if supervisor took a tangible employment action against the employee - constructive discharge is deemed a tangible employment action against the employee - constructive discharge is deemed a tangible employment action Employers defenses (Ellerth/Faragher Affirmative Defenses: 1) Policies of Employer to prevent and correct offensive behaviors; and 2) complaining employee did not follow employer's policies - Employer who proves both elements will not be liable for the supervisor's harassment

Russell Realty Assoc. v. Russell (Case Example 27.13) Dissolution by Judicial Decree

Real Estate company - family business Brother Eddy Russel has authority to make decisions Brother and Sister got into disputes about - purchasing and selling property - getting son involved in company Partnership had 2 years of delays because of arguments (not efficient) - losing business opportunities - but still making money Court said not reasonable to run company even though still making money - Eddy was not able to execute

Tattoos: Red Robin Gourmet Burger example: Edward Rangel practiced Kemetic Orthodoxy Job: no visible tattoos Had tattoos on his wrist (1/4 wide Egyptian script) Symbol of dedication to his creator and sin to cover Hired with tattoos Fired 8 months later because he would not cover them Does the employer have a legitimate reason to terminate him?

Religion requires the tattoo Employer had a no tattoo policy but hired him anyway and kept him on for 8 months He sued with EEOC an they litigated for him Court rejected the company's claim because tattoos did not interfere with his work - not an undue hardship

Kerl v. Dennis Rasmussen, Inc. Franchisor= Arby's Franchisee = Dennis Ransummen, Inc. DRI Manager = Cathy Propp Inmate/Worker = Harvey Pierce Victims = Robin Kerl and David Jones Is Arby's Vicariously labile for DRI's hiring of Pierce?

Responsibility of franchise owner to make sure all managers complete manager training - Cathy Propp was hired but did not complete the program Harvey Pierce was on work release for 5 months but a terrible worker - Cathy assumed he was convicted of assault but it was sexual harassment Harvey came to work one day, clocked out early, shot girlfriends and her new boyfriend (Robin and David) and himself - Cathy new he bought a gun and she should have called his probation officer - David and Harvey died, Robin is suing for medical costs and damages Is Arby's vicariously liable for Cathy failing to take action? - court found Arby's did not have control over management of this issue - DRI is responsible for hiring, training, maintaining, and supervising employees - Arby's can only monitor and tell DRI to fix things - Arby's was dismissed from lawsuit

Meinhard v. Salmon Fiduciary Duties of Partners

Salmon --> 20 year lease - made agreement with Meinhard to change business from hotel to shops - usually co-partners have less authority to bind other partners to a joint venture - working together for 1 real estate transaction - Salmon has full authority to make decisions, but Meinhard gets 50% of profits 4 months before end of lease term, Meinhard suggested making building bigger - Salmon resigned lease and did this project by himself because he can now afford it - no disclosure Meinhard won - Salmon breached duty of loyalty by taking opportunity for themselves - Mainhard won half of the lease - Joint adventures --> like co-partners but with joint ventures

How is the successful plaintiff in a lawsuit against a partnership paid? Alice and John are dentists who form a general partnership, Lion Dental Associates. John treated patient and was negligent (med. malpractice). Patient sued partnership for infection from root canal; awarded $5,000. -Scenario 1: Partnership has $6,000 in assets. -Scenario 2: Partnership has $4,000 in assets -Scenario 3: Partnership has $4,000 in assets; John has no personal assets.

Scenario 1: - just recover from enterprise - taking away ownership interest as well Scenario 2: - $4,000 from enterprise and $1,000 from wrongful partner Scenario 3: - $4,000 from enterprise and $1,000 from innocent partner

How does Title VII prohibit national origin discrimination?

Selection/promotion of employees on basis of national origin is illegal unless it is a substantial and realistic job qualification Applicant (plaintiff) must show that his/her national origin was the determining factor in the employment decision ex: having citizenship status ex: case where only men and muslim people can fly to Saudi Arabia ex: add in a newspaper looking for nurses - at bottom says no Haitians

DeWine v. Valley View Enterprises, Inc. Limited Partnership

Separate entities playing the role of limited partners and general partners in this enterprise DeWine is suing because this enterprise is contributing to water pollution in the area Valley View Enterprises is owned completely by someone named Joseph Ferrara -Valley view enterprise --> general partner -Valley view enterprise incorporated --> limited partner Joseph is going to be liable because he is the general partner -He is saying he is not liable because the entity he owns is the general partner -Joseph is the owner of both enterprises and he believes he should not be liable for both? Appellant court --> general partner is personally liable -In some states they do not allow corporations to be a general partner in a limited partnership In a limited partnership, you can have legal entities as a general partner - He is saying the corporation is a general partnership

Joint and Several Liability - Limited Liability Partnership

Some, but not all, states provide for proportionate liability (one or more person in a limited liability can be responsible) - an individual determination of a partner's negligence - when more than one partner in an LLP is liable. -Ex: more than one partner works on a case. They would be responsible for the conduct. Not just a person who supervised -Apportion losses --> this person is 20% responsible, this person if 50% responsible and this person is 30% (Fairness argument) Losses are apportioned among the partners according to her/his responsibility for the negligent conduct. If the state does not permit proportionate liability, then joint and several liability applies for the negligent partners of the LLP, only.

General Electric v. Stover: Is the limited partner personally liable? Linnane Magnavox Home Entertainment Center is a limited partnership. Paul Linnane is the only general partner. Richard Gale Stover is the limited partner. Linnane Magnavox and GE Credit Corp. signed contract for financing. GE Credit refused to grant credit unless Stover signed as guarantor of the credit. Stover gave GE Credit personal financial statements and personally signed the credit agreement as guarantor. Linnane Magnavox defaulted on debt. Paul Linnane was adjudicated bankrupt. GE sued Stover to recover on the debt. How do you think the court ruled?

Stover would not give money unless two people could be held liable. Entity then defaulted on the debt. Paul went bankrupt so his liability to the company was vanquished. They sued Stover but he said he was a limited partner. -He was accountable to all of the debt -The GP that would typically be liable is out of the lawsuit and the LP is in -Only for this creditor though, not for any other creditors

Case Ex. 27.12: Estate of Webster v. Thomas Dissolution by Acts of partners

TNT agricultural partners - Webster, Tise, and Tho - agreement is more important than UPA Had a contract until January 21st, 2010 and it would automatically dissolve at that date unless they decide to continue - and dissolve earlier if death of a partner - Webster died in 2002 but partnership continued - Webster estate sued Trial court ordered Tise and Tho to dissolve partnership and distribute assets but they ignored it - now also have to pay attorney fees

How are the assets distributed? Amy and Sue form a partnership (Flower Power) to sell flowers. Amy contributes $4,000, Sue gives $2,000. Flower Power has $2,000 in bank loans. Amy lent Flower Power $1,000. Flower Power owes flower broker $4,000. Sue commits bank robbery; the partnership is dissolved. Flower Power has assets of $25,000.

Take care of outside creditors first - Bank gets 2,000 - Broker gets 4,000 - Amy gets 1,000 Take care of capital contribution next - Amy gets 4,000 sue gets 2000 Remainder to partners if agreement equal 6k each; if agreement according to capital contribution (8k to Amy, 4k to sue) if no agreement: 50/50 so each person gets 6k

ADA: Reasonable Accommodations

The ADA requires employers to make reasonable accommodations for otherwise qualified workers with disabilities that do not cause an undue hardship What are reasonable accommodations? - do not cause an undue hardship on the company What would be considered an undue hardship to the employer? - spending too much money, a person that is in a critical position, etc.

What is age discrimination?

The Age Discrimination in Employment Act (ADEA) prevents both: 1. employment discrimination on the basis of age against workers age 40 or older; and 2. mandatory retirement for non-managerial workers 3. protection against retaliation for age-related charges Does this law apply to all employers? - employers with 20 or more employees What type of employment practice does this law prevent? - any adverse action 40 was the number picked because at the time this act was passed, most people retired at 55 - different now and probably needs to be amended

Americans with Disabilities Act (ADA)

The Americans with Disabilities Act (ADA) 1. Prohibits employment discrimination against qualified individuals with disabilities 2. Requires employers to make reasonable accommodations for qualified individuals with disabilities, unless that would cause an undue hardship The ADA imposes obligations on employers, AND providers of public transportation, telecommunications, and public accommodations Does the ADA apply to small businesses? - 15 or more workers - the numbers ate different for all types of discrimination - "I will be able to do the job with reasonable accommodations" - ex: sometimes have no choice but to discriminate if their disability makes them not qualified - harder for small businesses

What is gender discrimination in Pay?

The Equal Pay Act requires that mean and women performing substantially equal work o jobs - the performance of which requires equal skill, effort, and responsibilities - be paid equally - seniority or meet pay system do not violate the Equal Pay Act How do the courts determine what is equal work? - effort = usually for physical jobs - responsibilities = who is accountable for certain situations People should be paid the same for performing the same work

Discrimination based on Military Status

The Uniformed Services Employment and Reemployment Rights Act (USERRA) prohibits discrimination against present and former military personnel - Covers all employers (even those with only 1 employee) and US employers overseas - Liability is imposed upon the employer and wrongful individual employee (vicarious and personal liability) Veterans may be terminated for cause only Relates to persons who might have to leave the workspace - This statue was passed to prevent discrimination against these people - Congress has a power to regulate activity - Usually employers have to follow law with 15 or 20 employees or more --> This law is only 1 employee

How does a worker prove discrimination on the basis of military status?

The applicant or worker must prove prima facie case 1. s/he served in the military 2. s/he is otherwise qualified for the position 3. the employer took an adverse employment action based in part on the employee;s connection to the military USERRA complainant entitled to reinstatement and adjustments based upon seniority, status, pay and other rights and benefits (health and pension plans) This person's status has to do with why they were not chosen

How does a worker prove discrimination on the basis of a disability?

The applicant or worker must prove prima facie case: 1. s/he has a disability 2. s/he is otherwise qualified for the position 3. s/he was excluded from employment solely because of the disability ADA lawsuit filed only after pursuing claim through the EEOC (like Title VII cases)

How does a worker prove discrimination on the basis of age?

The applicant or worker must prove prima facie case: 1. s/he was a member of a protected age group 2. s/he was qualified for the position 3. s/he was discharged because of age discrimination (But for the plaintiff's age, s/he would not have been discharged) Does the applicant or worker have to show that the individual who replaced her or him is younger than 40? - No - one of the characteristics that is different then other types of discrimination law

How is the franchise relationship defined?

The franchise contract sets forth the terms and conditions of the franchise. It may include: 1. payment of the franchise 2. physical location of the franchise - foot traffic 3. whether business premises is leased or purchased - some require you to own the building or franchisor will purchase building 4. business organization of the franchisee, including capital structure, quality controls, sales quotas and record keeping - a lot do not want you to be a sole proprietorship 5. standards for operating franchise - inspections and levels of standard 6. pricing arrangements

What is a sole proprietorship?

The owner is the business. - There is no separate legal entity. - May operate under the name of the sole proprietorship or as a trade name. Over 2/3 of all American businesses are sole proprietorships. 99 percent of proprietorships have revenues of less than $1 million per year. - Unique because the business and the owner are the same - In everything else we are studying, the business is a legal person itself - in this one it is merged - usually captured in the name of the organization - d/b/a doing business as

Tort Liability

The partnership is liable for all tortious conduct committed by a partner during the ordinary course and scope of partnership business. -The partnership may not seek indemnification (repayment of debt paid to the plaintiff by the partnership). - Partnership may seek indemnification for tortious activity of any partner that was not within the ordinary course and scope of partnership business. Sometimes for good will they will settle anyway so not bad reputation then can seek indemnification - done under scope of business - Partnership is liable and cannot seek indemnification

What is equal opportunity in employment?

The right of all employees and job applicants: - to be treated without discrimination - to sue employers if they are discriminated against Title VII: equal Access to compete for jobs and equal opportunities to thrive in jobs (covers applicants and workers)

What are the rights of a partner in a partnership?

The rights and duties of partners are governed by the terms of the partnership agreement. If there is no partnership agreement, then the law imposes rights in the following areas: 1.Management 2.Interest in the Partnership 3.Compensation 4.Inspection of Books 5.Accounting of Partnership Assets or Profits 6.Property Rights can set any terms you want so long as it does not violate statutory or common law - if not in writing then law imposes those rights covered by the law

Termination: How Does A Partnership End?

The termination of a partnership occurs in two stages: 1.Dissolution - when any partner stops being associated with carrying on the partnership business. - 4 methods (acts of partners; operation of law; expiration of time period; or judicial decree) - is the legal "death" of the partnership (cannot get new business but can finish up old business) - if business becomes unlawful have to dissolve (lightbulbs) 2.Winding Up - collecting and distributing partnership assets. - partnership's legal existence ends when winding up is complete. --> can purchase from organization assets to start a new partnership from death of old partnership

What are the forms of conducting business?

The three forms of conducting business are: 1. Sole proprietorship 2. Partnerships 3. Corporations What other business forms do entrepreneurs use? - some have statutory components What factors does an entrepreneur consider when deciding what form his or her business should take? - affects ability of managerial positions to get authority - creators want to shield themselves from person liability

Examples of Liability in Limited Liability Partnership A, B & C are partners in accounting LLP. Each contributes $5K. B does work for client on his/her own. B does not file tax returns; client has to pay IRS fines of 20K. Client sues LLP. - Can A and C be held responsible? -How much does B have to pay?

Three partners - assume entity has 415K and no more Can A and C be held responsible? - No statue protects them from that - B is held personally responsible How much does B have to pay? - Entity would pay first à $15K - The $5K short fall would go to the person that committed the act --> B is responsible for paying at least $5K - If Entity had no money then B would have to pay all of it

Discrimination Based on Gender

Title VII bars limiting, segregating or clarifying applicants or employees in a way that would deprive any person of employment opportunities because of his or her (gender) - Exception: An employer's bona fide occupational qualification (BFOQ) Are both genders covered? - yes can be against men or women

The Pregnancy Discrimination Act

Title VII prevents differential treatment on the basis of pregnancy, childbirth or related medical conditions Protected class (pregnant women) treated the same as others with similar ability to perform the work of the employer - employer may establish a bona fide occupational qualification

Same-gender and sexual orientation

Title VII prevents sexual harassment by employees of the same sex as the victim of the harassment - Oncale v. Sundowner Offshore Services, Inc. : Title VII does not reach conduct tinged with offensive sexual overtones, but does forbid conduct of a sexual nature that creates a hostile work environment (same as sexual harassment) No federal protection for sexual orientation harassment, but several states have enacted state statutes to prohibit sexual orientation discrimination - Some jurisdictions believe sexual orientation is a type of sexual harassment and others say it isn't - State discrimination statutes take federal law and expand it (including things but can't take away anything)

Title VII of the Civil Rights Act

Title VII prohibits discrimination against workers on the basis of: 1) Race 2) Color 3) Religion (Creed) 4) Gender 5) National Origin Do all employers have to follow Title VII? - 15 or more workers - applies to all persons What kind of employment decisions does Title VII prohibit? - adverse employment actions - ways employees are penalized in the workplace (Hostile work environment) How does Title VII erode the employment at-will doctrine? - before 1964 you could discriminate - extended protection overseas in 1991 - American citizen and American company Example: race discrimination - 3 employees stole from employer - 2 were white and 1 was black - white employees were terminated and black employee was suspended - white employees said they were treated differently on the basis of race Example: gender discrimination - disparate treatment case - different people but same experience - female managers discriminated against men - female with low scores kept, men with same scores terminated - not considered reverse discrimination - just gender discrimination

Retaliation by Employers

Title VII protects the employee from any adverse employment action taken by the employer for filing a Title VII complaint, testifying or participating in an investigation or proceeding. - Demote, fire, or otherwise change terms and conditions of employment The employee must prove that the adverse employer action is one that would dissuade a reasonable worker from making or supporting a Title VII claim very difficult to win - typically people do not leave a paper trail so need other to testify

Gender Discrimination

Two types of gender "sex" discrimination: 1. Differential Treatment 2. Sexual Harassement - Hostile Work Environment - Quid Pro Quo

Affirmative Action

Voluntary job hiring policies give special consideration to persons in an effort to overcome present effects of past discrimination Affirmative action programs are constitutional (14th amendment) if it attempts to remedy past discrimination, and does not make use of quotes or preferences - States have an inherent right to ban affirmative action programs at public institutions within its jurisdiction Looking for consideration to overcome present effects of past discrimination - May have something that looks like affirmative action but really isn't - Affirmative action is voluntary - Having a diverse student body and workspace is constitutional so can have affirmative action programs - Been challenged by businesses

Has a partnership been created? Penny works for Charles as an employee in his family's garden nursery business for 5 years. Charles buys out interests of siblings in business. Gives Penny 20% share of net profits (after expenses are paid). Penny gives no capital contribution to business. No social security or income taxes withheld. Charles handles all of the finances and books; borrowed money solely in his name for business. Penny managed the physical aspects of the nursery, supervised care of plants. Penny's taxes returns said that she was self-employed. Will there be a finding of a partnership?

Wanted to turn business over to kids. One kid wanted it and bought out other siblings Wants one person's knowledge so wants her to say on - lump sum 20% of net profits She didn't provide any money to business - share management equally They had a disagreement so he kicked her out and didn't give her ownership interest Court found sharing of profits AND losses - profit alone isn't enough - she is suffering losses for liability of business - there was a partnership - he had to buy her ownership interest

Another Form of Partnership by Estoppel

When a real partnership exists: -A partner in an actual partnership tells a third-party that a non-partner is in fact a partner, -The non-partner is an agent whose acts are binding on the partner only, not the partnership. Remember: Partnership by estoppel requires that the third party reasonably rely on the representation to his/her detriment. Non-partner is an agent of the misrepresentation person

What is a Partnership by Estoppel?

When no partnership exists: -a "person" who is not a partner, either by words or conduct, -causes a 3rd party to reasonably believe that -the "person" is a partner of the "so-called" partnership. Who is liable to a third-party for this misrepresentation? - person who made misrepresentation and person who consented to misrepresent - partnership is prevented from claiming there is no partnership - acted to our detriment and other party received benefit - law does not say partnership rights on so-called right but gives liability - includes a third party - someone not in the partnership - everyone coming into partnership needs to consent, unless their is one management team specifically has power to hire or make someone partner Who is liable? - the person who lied If a legitimate partner in the partnership confirms or agrees to the misrepresentation, is s/he personally liable for the misrepresentation? - Yes

What Is Wrongful Dissociation?

Wrongful dissociation occurs when: - looks like wrongful termination (breach of contract) 1.Leaving the partnership would be a breach of the agreement. -A partner leaves before the expiration of a term in a partnership for term. -A partner leaves before the completion of a project in a partnership at will. How does a wrongfully dissociating partner cause damages to the remaining partners? - person who leaves is robbing enterprise of time, talent or money 2. A Partner refuses to perform duties required by the partnership agreement.

Is this person covered by workers' compensation Marissa is a physician with a private practice who has privileges at a hospital. She slipped on a wet floor in the hospital as she entered a patient's room. Would she be eligible?

Yes

Is this person covered by workers' compensation? Hannah, a 15 year old teenager, was burned by steam when she ran an industrial dishwasher at Denny's? Would she be eligible? How would OSHA be involved in this accident?

Yes OSHA would be involved because a 15 year old should not be working in hazardous locations

Failure to Give Notice of Dissolution Emil and Milton have general partnership (E & M) E & M borrowed money from bank. Emil and wife execute personal guarantee in bank's favor for any existing or future debt. Emil & Milton dissolve partnership; do not inform bank that partnership is dissolved. 1 year later, Milton obtains loan from bank for E & M. Milton does not pay loan back. Bank sued Emil to recover debt. Is Emil liable?

Yes because apparent authority (he was unauthorized to act) Notice was not given directly and they did not file notice with state Emil can recover money from milton - but he may not have the money (Fraud)

Employer liability for co-worker/non-employee's harassment

co-workers: liable for both quid pro quo and hostile work environment if the employer knew of or should have known of, the harassing conduct and failing to take reasonable steps to stop it - employer has a duty to monitor the workplace - they should have known about it even if they didn't Non-Employees: - liability based on whether the employer had some control over the harasser - employer knew about the harassment and failed to take corrective action --> If customer is harassing employees, employer can still be liable --> But still have defenses of policy and employee failing to complain about the policy