Agency

The key to . . . something

Agency is a relationship• Consent shown to one person (agent)• Act on behalf of the other (principal)– Agent is subject to control by principal– Agreement subject to consent by agent

• Principal thus agrees to be responsible for acts of agent– Contracts– Torts

Respondeat superior

“Let the boss answer”

Principals act through agent

• Principal may do almost anything through an agent

• Some principals may only act through agents– Corporations– LLCs– Cooperatives– You get the idea

Relationship depends on consent

• Principal’s consent• Express or implied• Lets principal have control over agent• Does not always depend on intent of parties– Motive of agent, for individual actions– Dealings with third parties

Consent may be inferred from conduct

• Ratification by principal– Approval after the fact– Accepting benefits

• Actions• Course of dealing• Circumstantial evidence

Principal only responsible for acts done within authority of agent

• “Scope of authority”• Express– Explicit delegation of authority

• Implied– To do what is necessary of express authority

Apparent authority

• Not “real” authority• Actions outside scope of authority– Actions accepted by principal

• Third parties rely on past dealings– Reliance on what looks like authority

Principal’s liability

• Acts done within scope of authority

• Intent to benefit principal

• Unauthorized acts that are ratified– Not disavowed– Benefits retained

Employment Law

Issue number 1: Who is an employee?

Why do we care?

• Employees have certain rights– Including tax withholding

• Non-employees (contractors) have rights through agreement

• Employers mischaracterize employees as contractors

• Not just temporary vs. permanent

Different, but similar, definitions

• State common-law– Depends on control over worker

• US Department of Labor– “Is this worker’s principal source of income?”– Wage and hour laws– Pensions and benefits– Not most common test– DOL not proactive• Depends on complaints

The most commonly used definition is from your friends:

IRS tries to make sure employees are not wrongly called contractors

• Unpaid withholding– “Contractors” pay too much

• Proactive– Does not rely on complaints– Gets too many 1099 forms

• Test developed– Series of factors looked at

IRS factors fall into three groups

• Behavioral control

• Financial control

• Relationship

Behavioral control

• When/where to work• Tools equipment to use• Where to purchase– Tools– Supplies

• Who does what work• Order/sequence to follow• Whom to hire to assist

Financial control

• Unreimbursed expenses• Extent of worker’s investment• Marketing of worker’s services• How/when worker is paid• Profit or loss

Relationship

• Written contracts• Employee benefits– Insurance– Pension

• Permanent/indefinite• Services essential part of business– What does employer sell to public?

All factors are considered; no one is the most important.

Internships

Rules for unpaid internships with private employers

1. Training similar to educational environment2. Experience for benefit of intern3. Intern does not displace regular employees;

works under close supervision4. No immediate advantage to employer5. Intern not necessarily entitled to job at end of

internship, and6. Employer and intern understand intern is

unpaid

Exceptions

• Government agencies• Non-profits• Charitable volunteers

Rights of employeesIt’s not an oxymoron.

Minimum wage

• State (Minnesota)– $6.15 per hour– If employer has annual receipts <$625,000, $5.25 per

hour– No tip credit

• Federal– $7.25 per hour– Tip credit

• More than $30 per month in tips• Must pay at least $2.13 per hour

If there is a conflict between state and federal minimums, higher

wage controls

Overtime pay

• All “non-exempt” employees• 1 ½ times regular hourly rate for every hour

over 40 in a week– Week=168 consecutive hours– No averaging for multiple week in pay period– No lump-sum payment– No waiver– 1 ½ times employee’s regular pay, not minimum

Non-exempt employees

• Entitled to overtime• All employees presumed non-exempt– Exemptions must be proven

• Any employee paid <$455 per week

Exempt employees

• Not entitled to overtime– Not covered by minimum wage

• Employee must be paid a salary– At least $455 per week

• Focus on job description– Primary duties of job

Categories of exemptions

• Executive• Administrative• Professional– Learned– Creative

• Computer• Outside sales

Learned professional

• Primary duty is work requiring advanced knowledge– Discretion and judgment

• Knowledge in a field of science or learning

• Knowledge acquired through advanced education

Creative professional

• Primary work requires invention, imagination, originality, or talent

• Recognized field of creative endeavor

Worker’s compensation

• Covers all employees• Absolute liability for workplace injuries– Injury arises out of employment relationship– No showing of fault

• No right to sue for injuries– No common-law defenses for employer

• Schedule of benefits

Worker’s comp benefits

• Medical expenses– Past– Future

• Lost wages– Percentage– Defined period of time

• Payment for loss of limb/death/disability– According to schedule

• Retraining

OSHA

• Occupational Safety and Health Act• Workplace free of identified hazards• Does not give a right to sue– Evidence of negligence

Unemployment insurance

Unemployment insurance

• Funded by employers– Premium based on employer’s experience

• Covers employees who lose their jobs– No fault of their own– Good cause attributable to employer

• Ineligible– Voluntary quits– Fired for misconduct

Benefits

• Percentage of wages– Based on yearly average– Paid for thirteen weeks

• Other assistance– Retraining– Job search help

• Employee must show good faith efforts to get a job

Employee leave

• Time off– Unpaid– Continue insurance– Keep seniority, if possible

• Certain obligations/activities– Military service– Jury duty– Voting (Minnesota, not in Wisconsin)– School activities

Family-medical leave

State• State employees• Employers with more than

21 employees• Birth or adoption of a child

only• Six weeks in one year• May be added to sick time

or vacation time– Cannot be combined with

federal time

Federal• Federal employees• Employers with more than

50 employees at one site• Birth, adoption, serious

medical condition of self or family member

• Twelve weeks in one year

Drug-alcohol testing

• Required for some jobs• Any employer may

require– Written policy– Analysis done by

licensed lab– Positive results

confirmed by retest

Miscellaneous rights

• No polygraph testing• Wages paid at least

monthly– Paid within 24 hours of

demand, if you’re fired

• Rest breaks

• See your personnel file– Every 6 months, or– Once after you leave– Make request in writing– Explain disagreements in

writing– Disagreement must be

included in file

Not rights

• Holidays• Vacations• Fringe benefits• Severance pay• Notice before firing• Privacy– Employer may monitor work-related calls– May monitor other areas for security

Contrary to what you may think, there is no absolute right to:

Employment at Will“They can’t fire you for . . .”

Yes, they can.

• General rule• Employees may be hired or fired for any

reason or no reason• Assumed that employees are at will• Exceptions to rule are limited

Contract

• May prevent firing except for good cause• Collective bargaining agreement– Sets out steps for discipline

• Civil service jobs• Academic tenure• Employment handbooks– Older cases found handbooks were contracts– Handbooks rewritten by now

Public policy

• Some law forbids firing for certain reasons• Policy that we want to encourage employees • Retaliation– Whistleblowers– Cooperate with investigation– Worker’s compensation claims

Good faith/fair dealing

• Recognized in some states• Forbids firing except– Just cause– Not for spite or malice

Discrimination

Anti-discrimination laws

• Exception to employment-at-will doctrine• State and federal law– State• Minnesota Human Rights Act

– Federal• Civil Rights Act• Age Discrimination in Employment Act• Americans with Disabilities Act

Prohibits

• Taking action relating to employment– Including benefit of employment

• Based on membership in a protected class

Employment-related action

• Hiring• Firing• Pay• Classifications• Transfer• Promotion

• Training• Benefits• Retirement or leave• Harassment• Retaliation

• Recall• Recruitment– Advertising jobs

• Testing• Use of facilities

Protected classes

• Age (over 40)• National origin• Sex• Religion

• Disability• Pregnancy• Race• Sexual preference (MN

only)

Clarifications/explanations

National origin includes:

• Ethnicity• Naturalization• Legal immigration status• Accent• Native language

Most important point:

Discrimination not unlawful if not based on membership in protected class!!!

Religion—special rules

• Reasonable accommodation for religious practice– No undue hardship for employer

• Other expression allowed• Religious organizations may require following

doctrine– If related to job

Disability—special rules

• Includes perceived disability• Disability is a limitation on major life activity• No discrimination if employee can do job with

reasonable accommodation– “Reasonable” depends on employer– Cost-effective

Proving a discrimination case

Prima facie case

• Membership in protected class• Qualified for benefit– Not necessarily best qualified

• Rejected• Position/benefit either– Remained open, or– Went to non-member of class

Burden shifts to employer

• Bona fide occupational qualification– “BFOQ”– Only person not of class can do job• Essential, not preferable

– Read very narrowly

Legitimate business purpose

• Most common defense• Other person better suited for job• Decided not to fill job• Can be rebutted by showing pretext– Sham purpose– Statistical pattern of discrimination

Mixed motive

• Motive not entirely discrimination

• Would result have been the same without discrimination?

Harassment

• Special type of discrimination• Can be actions of employees, if employer did

not stop it• Quid pro quo sexual harassment– Exchange of favors– Employer always liable

Hostile environment

• Offensive remarks or conduct

• Severe and pervasive• Management was

aware of it

Offensive

• Not necessarily directed at a particular person• Objective standard– Reasonable person– Joining in will show person wasn’t offensive

• Non-consensual

Severe and pervasive

• No escaping• Constant• Not just isolated incident• Continues after complaints

Management aware of it

• No liability without knowledge• Did nothing after complaints• Did nothing effective• No complaint process evidence of awareness• Employer knew of quid pro quo

References

Employers may disclose, without liability:

• Duties of employee• Compensation, wage history• Job description• Training, education provided by employer• Acts that resulted in firing, discipline, resignation– Violence– Theft– Harassment– Illegal conduct

May disclose, with written permission

• Written evaluations and response• Written disciplinary actions– In the last 5 years– Written response

• Written reasons for separation• All must be sent to employee at the same time

Agreements not to compete

Common-law duty

• Duty of loyalty– No competition– No steering business away

• Duty ends when employment ends• Duty may be continued by contract

Non-compete agreements set out post-employment duties

• No competition– New business– Work for competitor– Solicitation of customers– Confidentiality

• May be enforced against independent contractor

• Fired employee, if contract says

Consideration

• It’s a contract, after all• New hires– Getting the job is consideration

• Existing employees– Keeping job not enough– Raise, new duties– Keeping job after merger/sale of company may be

enough

Must be reasonable in scope and time

• Depends on individual case• No longer or wider than necessary to protect

employer– Lifetime-worldwide not reasonable– Ten year may be ok, for person selling business– For employees, usually no more than 2 to 3 years

Interpreted against employer

• Minnesota courts will revise unreasonable clauses, unless whole contract is unreasonable

• Wisconsin courts will toss whole contract if unreasonable

• North Dakota courts do not enforce• South Dakota courts limit enforcement to 2

years• Specifically enforceable

Trade secrets

Uniform Trade Secrets Act

• Defines trade secret

• Information that– Is valuable because it is not generally known– Subject of reasonable efforts to maintain security

Notice of secrecy not required

• If person who acquired know or should know of secrecy

• Circumstances

Taking a secret may be enjoined

• Injunction ends when secret no longer exists

• May require payment of royalty

• Money damages also available