BLS EXAM 2
40
Employers may not discriminate against whom under the Age Discrimination in Employment Act of 1967?
implied agency
an agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties
Creature of the State
it may be formed only by substantial compliance with a state incorporation statute
preferred stock
stock that conveys preferences to its holder with respect to assets & dividends
self-dealing
occurs when managers take advantage of their position to further their own private interests rather than those of the firm
principal
one who hires an agent to represent him/her
Agent possibly liable, principal liable
partially disclosed principal (liable)
decision makers
role of directors
managers (day to day operations)
role of officers
owners
role of shareholders
joint venture
-joint ownership -sharing expenses/profits/losses -voice in determining the division of net earnings -active participation in management & direction of the business -fixing salaries
Respondeat Superior
"Let the master answer" an employer is vicariously liable for the behavior of an employee working within his or her scope of employment
De Facto Corporation
"corporation in fact" Corporation that has not met the requirements of state incorporation statute, but courts recognize it as a corporation for most purposes to avoid unfairness to third parties who reasonably believed it was properly incorporated
Duty to Disclose Conflict of Interest
-full disclosure of interest -board members/shareholders approve it
RICO Act
A U.S. law that provides extended penalties for criminal acts performed as part of an ongoing criminal organization.
Undisclosed Principal
A principal whose identity is unknown by a third party, and that person has no knowledge that the agent is acting for a principal at the time the agent and the third party form a contract.
Distributorship
A type of franchise in which the franchisor manufactures a product & licenses a dealer to sell the product in an exclusive territory
Manufacturing Arrangement
A type of franchise in which the franchisor provides the franchisee with a formula or ingredient that is necessary to manufacture a product.
chain-style franchise
A type of franchise where the franchisee operates under the franchisor's tradename. and is required to follow the franchisor's standards & methods of business operation
express agency
Agency created through words, written or oral, between the principal and the agent, such as a listing agreement.
False Claims Act
Allows employees to sue employers on behalf of the federal government Employee retains share of recovery
partially disclosed agency
An agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal.
Employer-Independent Contractor Relationship
Employer hires persons (other than employee) to conduct some sort of task; employer has no control over details of conduct of independent contractor
NO
Does the doctrine of Respondeat Superior apply to independent contractors?
only if traveling for work
Does workers' compensation cover workers' when they are traveling?
COBRA (Consolidated Omnibus Budget Reconciliation Act)
Ensures when employees lose their jobs or have their hours reduced to level at which they are not eligible to receive medical, dental, or optical benefits from their employer, employees have right to continue receiving benefits under employer's policy for up to 18 months by paying premiums for the policy
Family and Medical Leave Act (FMLA)
Federal law requiring organizations with 50 or more employees to provide up to 12 weeks of unpaid leave after childbirth or adoption; to care for a seriously ill family member or for an employee's own serious illness; or to take care of urgent needs that arise when a spouse, child, or parent in the National Guard or Reserve is called to active duty
Sarbanes-Oxley Act
Federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms. Key provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the validity of their financial statements.
· Death · Insanity · Bankruptcy · Change in circumstances · Change in law · Impossibility of performance · Disloyalty of agent · war
How can a principal/agent relationship terminate by the acts of the parties and by operation of law?
agent not liable, principal liable
How does the responsibility of the agent change when a principal is disclosed
agent liable principal not liable
How does the responsibility of the agent change when a third party reasonably believes the agent has authority when they do not?
agent liable, principal not liable
How does the responsibility of the agent change when a third party reasonably believes the agent has authority?
Accredited Investor
In the context of securities offerings, "sophisticated" investors, such as banks, insurance companies, investment companies, the issuer's executive officers and directors, and persons whose income or net worth exceeds certain limits. (200,000 year/net worth = $1million +)
limited offer
Involve small amounts of money or are offered only to sophisticated investors
De Jure Corporation
Lawful corporation that has met the substantial elements of incorporation process
Vicarious Liability
Legal doctrine under which a party can be held liable for the wrongful actions of another party.
fiduciary
One with duty to act primarily for another person's benefit
public policy
Protects discharged due to a refusal to commit an unlawful act, whistleblowing, jury duty, military service, testifying workers' comp. claim
joint venture
Relationship between two or more persons/corporations created for specific business undertaking
tort and contract remedies
Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.
Apparent Authority
The authority an agent is believed by third parties to have because of the behavior of the principal.
Duty of Care
The duty of all persons, as established by tort law, to exercise a reasonable amount of care in their dealings with others. Failure to exercise due care, which is normally determined by the reasonable person standard, constitutes the tort of negligence.
Make reasonable accommodations to the disability
What are employers required to provide under the Americans with Disabilities Act (ADA)?
o Return to same position o 12 weeks in a 12 month period o Continuation of health benefits
What are employers required to provide under the Family Medical Leave Act (FMLA)?
· Professional · Administrative · Executives · Outside sales persons · Highly compensated employees
What are the "white collar" exemptions to the requirements of the Fair Labor Standards Act?
-loyalty -notification -performance -obedience -accounting
What are the Agent's duties to a principal?
1. tort & contract remedies 2. demand for accounting 3. specific performace
What are the Agent's rights and remedies against the principal?
1. compensation 2. reimbursement and indemnification 3. cooperation 4. safe working conditions
What are the Principal's duties to an agent?
1. constructive trust 2. avoidance 3. indemnification
What are the Principal's rights and remedies against the agent?
-actus reus & mens rea -misstatements were material -investors relied on the misstated financial statements when they purchased/sold their shares
What are the elements of a suit under section 10(b) of the '34 Act?
-strike -picket -boycott
What are the methods the may legally be used by unionized employees to get better working conditions/pay/benefits, etc.?
1. Race 2. Color 3. Religion 4. National origin 5. Sex
What are the protected classes of people under Title VII of the Civil Rights Act?
1. (racketeer Influenced & Corrupt Organizations Act) RICO 2. False Claims Act 3. Sarbanes-Oxley Act
What are the three main federal crime-fighting laws?
1. actus reus (wrongful behavior) 2. mens rea (wrongful state of mind)
What are the two requirements in proving that a defendant committed a crime?
1. bribery 2. extortion 3. fraud 4. embezzlement 5. computer crimes 6. larceny 7. conspiracy
What are the types of white-collar crimes?
CEO & CEO: review the periodic report to ensure the financial statements are correct
What does section 302 of the Sarbanes-Oxley Act require?
- 1.5 times regular pay (over 40 hours) - min wage = 7.25
What does the Fair Labor Standards Act require in terms of pay and overtime pay?
· Enforce securities laws · Interprets provisions of securities acts · Regulates activities of brokers, dealers, & advisers · Regulates trade of securities
What does the Securities and Exchange Commission created in 1934 to do?
· Distinct occupation? · Work done under employer's supervision? · Does the employer supply the tools? · Skill required? · Length of time the worker is employed? Is the worker a regular part of the business? How is the worker paid?
What factors will the court look at to determine if a work is an employee or an independent contractor?
-Principal must have knowledge of all material facts regarding the contract -Principal must ratify the entirety of the agent's act
What is needed to create an agency relationship by Ratification?
1. Description of securities offered 2. Explanation of how proceeds from sale will be used 3. Description of registrant's business & properties 4. Information about management of company 5. Description of pending lawsuits 6. Certified financial statements
What is required to be included in a securities registration statement under the Securities Act of 1933 (6 disclosures)?
Hazardous Activities
What is the only instance in which employers of independent contractors may be liable for their actions?
· They are an employee · Both employee & employer are covered by state worker's compensation program · Injury occurred on the job
What must the worker prove to receive benefits?
1. environmental 2. fraud
What were the two general categories of the most common organizational crimes in 2018?
· Handbook contains the steps for progressive discipline leading to discharge · The handbook makes no mention of the words "employment at will" · The employee relies on the handbook
When can the Employee Handbook create an implied contract between the employer and employee?
1. public policy 2. implied contracts 3. implied covenant of good faith & fair dealing
When can these "at-will" employees be wrongfully discharged under the law?
injured/killed on job
Workers' Compensation Laws are state laws that provide financial compensation to employees when?
Franchise
a business arrangement between an owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark
alien
a business incorporated in another country
Disparate Impact
a condition in which employment practices are seemingly neutral yet disproportionately exclude a protected group from employment opportunities
domestic
a corporation located in the state in which it is incorporated
foreign
a corporation that does business in one state but is chartered in another state.
Subchapter S Corporation
a corporation that is taxed like a partnership
pierce the corporate veil
a court holds shareholders personally liable for the debts of the corporation
power of attorney
a legal document authorizing someone to act on your behalf
agent
a person who acts or does business for another
tipper
a person who discloses material nonpublic information to another person
Tippee
a person who learns of nonpublic information about a security from an insider
articles of incorporation
a written legal document that defines ownership and operating procedures and conditions for the business (where you file in the state)
-increased income -low risk
benefits to the franchisor
-liable if franchise exerts too much control -little control over franchise
disadvantages to the franchisor
prospectus
document issued to possible buyers of a stocks and bonds outlining the financial condition of the company issuing those securities
durable power of attorney
document that allows an agent to represent a patient (when incapacitated)
1. duty of care 2. duty of loyalty
duties of both officers & directors
1. elect & remove directors 2. majority shareholder have fiduciary duty to the corporation & to minor shareholders
duties of shareholders
employment at will
employment principle that if there is no specific employment contract saying otherwise, the employer or employee may end an employment relationship at any time, regardless of cause
ENRON -cooking the books -not acting in the best interest of shareholders
examples of violations of duty of care
management of shareholder assets (1. attend meetings 2. supervise employees 3. make informed & reasonable business decisions)
how does a director/officer satisfy their duty of care?
SEC Act 1934: 18a
imposes liability on those persons responsible for false/misleading statements of material fact in a 10-K, 10-Q, or proxy solicitation statement filed with the SEC
when shareholders mix personal & corporate interests
pierce the corporate veil
SEC Act 1934: 10b
prohibits use of manipulative & deceptive devices to bypass SEC rules
Disparate Treatment
results when employees from protected groups are intentionally treated differently
insider trading
the illegal trading of a company's stock by people using confidential company information
common stock
the most basic form of ownership, including voting rights on major issues, in a company
extortion
the practice of obtaining something, especially money, through force or threats
1. chain-style 2. distributorships 3. manufacturing arrangement
what are the 3 different types of franchises?
1. False representation of a material fact 2. Misrepresentation is made with intent to deceive 3. Victim reasonable reliance on the false misrepresentation 4. damages
what are the elements of fraud?
Any bonus received compensation during the last 12 months will be forfeitable
what does section 304 of the Sarbanes-Oxley Act require?
-flexibility -rights given to shareholders -restrictions of distribution of dividends -protection against takeover
what factors influence the state chosen to incorporate a corporation?
o Physical/mental impairment, substantially interferes with one or more major life activities o Record of impairment o Regarded as having the impairment
who qualifies under the Americans with Disabilities Act (ADA)?