Chapter 33: Employment and Labor Law

Business Law, Sixth Edition
© 2019 BVT Publishing. All rights reserved.
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Chapter 33:
Employment and Labor Law

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Learning Objectives
• Describe the theory of employment at will.
• Discuss the various exceptions to
employment at will.
• Understand the various conditions of
employment.
• Explain collective bargaining.
• Distinguish between job actions, strikes,
and lockouts.

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33.0 In the News
Ontario to hike minimum wage (8:00)
http://bvtlab.com/9vm93
Ontario Premier Kathleen Wynne announced a plan to
increase the provincial minimum wage to $15/hour by
Jan. 1, 2019. The increase would be phased in over the
next 18 months, rising to $14/hour on Jan. 1, 2018 and
then to $15 the following January. The wage increase is
part of a larger piece of proposed legislation which aims
to better protect part-time or contract workers.
• What are the pros and cons of raising the minimum
wage in the United States?

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33.1a The Theory of Employment at Will
• Employee can quit any time for any reason.
• Employer can terminate employee any time
for any reason.
• Central to the US employment relationship
• Employment at will can be overcome:
– Contract expressly states a set duration.
– Contract expresses dependence on certain
conditions.

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33.1b Statutory and Judicial Exceptions
to Employment at Will (Slide 1 of 3)
• Statutes that prevent discrimination
based on a protected trait or attribute
• Statutes that prevent employee
termination for exercising a legal right
• Judicially created exceptions
– Public policy
– Good cause

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Name of
Exception
Nature Who
Creates
Type of
Damages
Express
Contract
Provision in a contract of employment
that provides a set duration of
employment or specific conditions for
continued employment or dismissal
Employer
and
Employee
Contract
Statutory Statutory provisions aimed at either
preventing discrimination or ensuring
the exercise of a legal right
Legislative
branch
Statutory

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Name of
Exception
Nature Who
Creates
Type of
Damages
Public
Policy
Protects or encourages an important
social objective
Judicial
branch
Tort
(often)
Good
Cause
Through the actions of the employer,
the presumption of at-will employment
is changed to one of termination only if
good cause exists.
Judicial
branch
Contract

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33.1c The Public Policy Exception
• Termination violates a public policy.
• Individual may pursue damages based
on tort law.
– Lost wages and benefits
– Pain and suffering
– Punitive damages
• Courts look at two factors:
– Violation of a public policy
– Must relate to an important social interest

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33.1c Critical Thinking
CASE: Bastible
The company terminated employees who had
guns in their cars and trucks parked at work.
• Does it make sense that there are exceptions to the
constitutional right to bear arms? What exceptions
should exist?
• Should an exception exist to prevent an employer
from having a rule forbidding employees from
having a gun on the employer’s premises?
• Why did the court refuse to extend the tort-based
public policy exception to this situation?

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33.1d The Good Cause Exception
Employer acts in such a manner that
an implied contract to terminate only for
good cause is formed.
• Factors considered by Courts:
– Progressive discipline policy statement
– Duration of employment
– Treatment of worker as “good cause”
employee
• Only compensatory damages available

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33.2a Determining
Employment Status (Slide 1 of 2)
Employee/independent contractor
determination:
• Advantages of using independent contractors
– No mandatory contributions for Social Security,
Federal and State unemployment tax
– No voluntary benefits, ie vacation or sick pay
– Avoids employment laws, ie minimum wage
– Reduced risk of discrimination
• Risks of misclassifying employee as
independent contractor

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33.2a Determining
Employment Status (Slide 2 of 2)
Employee/independent contractor
determination (cont.)
• Tests to determine employee status
– Common law: Does employer have right to
control individual’s actions?
– Economic realities: Variety of factors considered
– Internal revenue: Three major categories
considered

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33.2b Pay and Benefits
• Fair Labor Standards Act (FLSA)
– Child labor, minimum wage, overtime
– Exempt employees
• Equal Pay Act
– Exempt and non-exempt employees
– Sex discrimination
• Pensions and Health Insurance
– Employee Retirement Income Security Act, COBRA
• Family and Medical Leave Act
• Unemployment Insurance
• Affordable Care Act

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33.2b Critical Thinking
CASE: Smith Kline
Questions whether the time spent traveling from
the office to various well sites was
compensable.
• Which argument, the majority or the dissent,
makes the greatest sense to you? Why?
• The majority opinion indicates that it will not give
much deference to the Department of Labor’s
regulations regarding the interpretation of the
statute creating the “outside sales” exemption.
• Is this a good idea for the court? Why?

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33.2c Worker Safety
Laws dealing with worker safety are
divided between the federal and state
government.
• Occupational Safety and Health Act
– General duty clause
– Specific duty clause
• Workers’ Compensation
– Financial benefits to employees who are injured
while at work
– Exclusive remedy

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33.2d Privacy
• Substance and Medical Testing
– Businesses requiring employees to submit to
alcohol and drug testing is allowed by states
– ADA prohibits testing for any medical
condition
– ADA may or may not prohibit genetic testing
• Electronic Monitoring
– Employees have no expectation of privacy
while at work.

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33.3a Overview of Labor Law
• The National Labor Relations Act
(aka the Wagner Act)
• National Labor Relations Board
• Labor Management Relations Act

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33.3b Collective Bargaining
• Collective bargaining relationship occurs in two
stages:
– Union secures the signatures of at least 30
percent of employees.
– Union petitions the NLRB for a representation
election.
– Must be conducted under laboratory conditions
(free from undue influence, inhibitions may be
expressed).
• If union wins the election, union becomes the
exclusive bargaining representative for the
employees.

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33.3b Critical Thinking
Case: Curwood
The employer allegedly issues letters to employees
promising improvements in pension benefits at the
same time the union was campaigning that it was
attempting to unionize workers.
• What was indicated in the April 7 letter that was
particularly hurtful to the case presented by the
employer?
• What should the employer have done in this case to
ensure “laboratory conditions” as required under the
National Labor Relations Act?

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33.3c Job Actions, Strikes, & Lockouts
If union and management bargain in
good faith but fail to reach agreement
or
If management fails to fulfill an obligation
under an existing contract:
• Workers may participate in either a job
action or a strike.
• Employer may lockout the workers.

Chapter 33: Employment and Labor Law

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