copyright © 2006 by pearson prentice-hall. all rights reserved slides developed by les wiletzky...

Slides developed byLes Wiletzky Copyright © 2006 by Pearson Prentice-Hall. All rights reserved

PowerPoint Slides to AccompanyESSENTIALS OF BUSINESS AND

ONLINE COMMERCE LAW1st Edition

by Henry R. Cheeseman

Chapter 19Agency and EmploymentChapter 19Agency and Employment

Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. 19 - 2

Agency (1 of 2)

Agency relationships are formed by the mutual consent of a principalprincipal and an agentagent

Agency is the fiduciary relationshipfiduciary relationship “which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act.”


Agency (2 of 2)

Agency LawAgency Law – The large body of common law that governs agency A mixture of contract law and tort law

PrincipalPrincipal – The party who employs another person to act on his or her behalf

AgentAgent – The party who agrees to act on behalf of another


Principal-Agent Relationship (1 of 2)

PrincipalPrincipal

AgentAgent Third PartyThird Party

Agency Agency ContractContract

Contract with third Contract with third party on behalf of party on behalf of

principalprincipal

Principal’s Principal’s obligation to obligation to perform the perform the contractcontract


Principal-Agent Relationship (2 of 2)

An employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf

The extent of this authority is governed by any express agreement between the parties and implied from the circumstances of the agency


Express Agency An agency that occurs when a principal and

an agent expressly agree to enter into an agency agreement with each other Exclusive agency contract Power of attorney

Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written


Implied Agency An agency that occurs when a principal and

an agent do not expressly create an agency The agency is implied from the conduct of the

parties The extent of the agent’s authority is

determined from the particular facts and circumstances of the particular situation Incidental authority


Apparent Agency Agency that arises when a principal creates

the appearance of an agency that in actuality does not exist

When an apparent agency is established, the principal is estoppedestopped from denying the agency relationship

It is the principal’s actions (not the agent’s) that create an apparent agency


Agency by RatificationAn agency that occurs when:

1. A person misrepresents himself or herself as another’s agent when in fact he or she is not, and

2. The purported principal ratifies (accepts) the unauthorized act


Summary: Formation of Agency Relationships (1 of 2)

Type of Agency

Definition Enforcement of the Contract

Express Authority is expressly given to the agent by the principal.

Principal and third party are bound to the contract.

Implied Authority is implied from the conduct of the parties, custom and usage of trade, or act incidental to carrying out the agent’s duties.

Principal and third party acts are bound to the contract.


Summary: Formation of Agency Relationships (2 of 2)

Type of Agency

Definition Enforcement of the Contract

Apparent Authority created when the principal leads a third party into believing that the agent has authority.

Principal and third party are bound to the contract.

By Ratification Acts of the agent committed outside the scope of his authority.

Principal and third party are not bound to the contract unless the principal ratifies the contract.


Duty of Compensation A duty that a principal owes to pay an agreed-

upon amount to the agent either upon completion of the agency or at some other mutually agreeable time

If there is no agreement as to the amount of compensation, the law implies a promise that the principal will pay the agent the customary fee paid in the industry


Duty of Performance (1 of 2)

An agent’s duty to a principal that includes:

1. Performing the lawful duties expressed in the contract, and

2. Meeting the standards of reasonable care, skill, and diligence implicit in all contracts


Duty of Performance (2 of 2)

An agent who does not perform his or her express duties or fails to use the standard degree of care, skill, or diligence is liable to the principal for breach of contract

An agent who has negligently (or intentionally) failed to perform properly is also liable in tort


Duty of Accountability A duty that an agent owes to maintain an

accurate accounting of all transactions undertaken on the principal’s behalf

This duty also requires the agent to: Maintain a separate account for the principal,

and Use the principal’s property in an authorized

manner


Termination of Agency by Acts of the Parties

An agency may be terminated by the following acts of the parties:

1. Mutual agreement

2. Lapse of time

3. Purpose achieved

4. Occurrence of a specified event


Termination of Agency by Operation of Law

An agency is terminated by operation of law, including:

Death of the principal or agent Insanity of the principal or agent Bankruptcy of the principal Impossibility of performance Changed circumstances War between the principal’s and agent’s

countries


Wrongful Termination of an Agency or Employment Contract The termination of an agency contract in

violation of the terms of the agency contract

The nonbreaching party may recover damages from the breaching party

The distinction between the powerpower and the rightright to terminate an agency is critical


Agency: Contract Liability (1 of 2)

A principal who authorizes an agent to enter into a contract with a third party is liable on the contract

The third party can enforce the contract and recover damages if the principal fails to perform it


Agency: Contract Liability (2 of 2)

The agent can also be held liable on the contract in certain circumstances

Liability depends on whether the agency is classified as: Fully disclosed Partially disclosed Undisclosed


Fully Disclosed Agency An agency that results if the third party

entering into the contract knows: That the agent is acting as an agent for a

principal, and The actual identity of the principal

The principal is liable to the third party

The agent is not liable


Partially Disclosed Agency An agency that occurs if:

The agent discloses his or her agency status but does not reveal the principal’s identity, and

The third party does not know the principal’s identity from another source

Both the principal and the agent are liable to the third party if the principal fails to perform the contract


Undisclosed Agency An agency that occurs when the third party is

unaware of either: The existence of an agency, or The principal’s identity

Both the principal and the agent are liable to the third party if the principal fails to perform the contract


Tort Liability to Third Parties The principal and the agent are each

personally liable for their own tortious conduct The principal is liable for the tortious conduct

of an agent who is acting within the scope of his or her authority

The agent only is liable for the tortious conduct of the principal if he or she directly or indirectly participates in or aids and abets the principal’s conduct


Summary: Tort Liability of Principals and Agents to Third Parties (1 of 2)

Agent’s Conduct Agent Liable

Principal Liable

Negligence Yes The principal is liable under the doctrine of respondeat superior if the agent’s negligent act was committed within his scope of employment.


Summary: Tort Liability of Principals and Agents to Third Parties (2 of 2)

Agent’s Conduct Agent Liable

Principal Liable

Intentional Tort Yes Motivation Test: The principal is liable if the agent’s motivation in committing the intentional tort was to promote the principal’s business.

Yes Work-Related Test: The principal is liable if the agent committed the intentional tort within work-related time and space.


Independent Contractor PrincipalsPrincipals employ persons or businesses who

are not employees to perform certain tasks on their behalf These persons and businesses are called

independent contractors The crucial factor in determining whether a

person is an employee or an independent contractor is the degree of controldegree of control that the principal has over that person


Liability for Independent Contractor’s Contracts A principal can authorize an independent

contractor to enter into contracts Principals are bound by the authorized

contracts of their independent contractors If an independent contractor enters into a

contract with a third party on behalf of the principal without express or implied authority from the principal to do so, the principal is not liable on the contract


Liability for Independent Contractor’s Torts A principal is generally not liable for the

tortious conduct of independent contractors it hires

Independent contractors are personally liable for their own torts

The rationale behind this rule is that principals do not control the means by which the results are accomplished


Exceptions: Where a Principal is Liable for the Torts of an Independent Contractor There are several situations where the law

imposes liability on a principal for the tortious conduct of an independent contractor he or she has hired: Inherently dangerous activities Negligence in the selection of an independent

contractor


The right of workers to form, join, and assist labor unions is a statutorily protected right in the United States.


Federal Labor Union Statutes Norris-LaGuardia Act (1933) National Labor Relations Act (NLRA) (1935)

Also known as the Wagner Act Labor-Management Relations Act (1947)

Also known as the Taft-Hartley Act Labor-Management Reporting and Disclosure

Act (1959) Also known as the Landrum-Griffin Act

Railway Labor Act (1926 as amended 1934)

Norris-LaGuardia Act (1933) National Labor Relations Act (NLRA) (1935)

Also known as the Wagner Act Labor-Management Relations Act (1947)

Also known as the Taft-Hartley Act Labor-Management Reporting and Disclosure

Act (1959) Also known as the Landrum-Griffin Act

Railway Labor Act (1926 as amended 1934)


National Labor Relations Board (NLRB) Administrative agency created by the National

Labor Relations (Wagner) Act: Oversees union elections Prevents employers and unions from engaging

in illegal and unfair labor practices Enforces and interprets certain federal labor

laws

NLRB decisions are enforceable in court


Organizing a Union Section 7 of the NLRASection 7 of the NLRA – gives employees the

right to join together to form a union Appropriate Bargaining UnitAppropriate Bargaining Unit – the group that

the union is seeking to represent: Must be defined before the union can petition

for an election Managers and professional employees may not

belong to unions formed by employees whom they manage


Union Elections (1 of 2)

30 percent of the employees in the bargaining unit must indicate interest in joining or forming a union

NLRB is petitioned, investigates and sets election date: Contested election Consent election Decertification election


Union Elections (2 of 2)

If a simple majority of the employees of the appropriate bargaining unit vote to join a union, the union is certified as the bargaining agent of

all the employees, even those who did not vote for the union


Illegal Interference with an Election Section 8(a) of the NLRASection 8(a) of the NLRA – makes it an unfair

labor practice for an employeremployer to interfere with, coerce, or restrain employees from exercising their statutory right to form and join a union

Section 8(b) of the NLRASection 8(b) of the NLRA – prohibits unionsunions from engaging in unfair labor practices that interfere with a union election


Collective Bargaining The act of negotiating contract terms between

an employer and the members of a union

Collective Bargaining AgreementCollective Bargaining Agreement – the resulting contract from a collective bargaining procedure

The employer and the union must bargain with each other in good faithgood faith


Subjects of Collective Bargaining(1 of 2)

Compulsory SubjectsCompulsory Subjects Wages Hours Other terms and conditions of employment

Illegal SubjectsIllegal Subjects Closed shops Discrimination


Subjects of Collective Bargaining(2 of 2)

Permissive SubjectsPermissive Subjects Size and composition of the supervisory force Location of plants Corporate reorganizations Any other subjects that are not compulsory or

illegal


Strikes The NLRA gives union management the right

to recommend that the union call a strikestrike if a collective bargaining agreement cannot be reached

A majority vote of the union’s members must agree to the action before there can be a strike


Picketing (1 of 2)

The actions of strikers walking in front of the employer’s premises carrying signs announcing their strike

The right to picket is implied from the NLRA

An employer may seek an injunction against unlawful picketing


Picketing (2 of 2)

Picketing is lawful unless it:

1. It is accompanied by violence2. Obstructs customers from entering the employer’s

place of business3. Prevents non-striking employees from entering the

employer’s premises4. Prevents pickups and deliveries at the employer’s

place of business

Picketing is lawful unless it:

1. It is accompanied by violence2. Obstructs customers from entering the employer’s

place of business3. Prevents non-striking employees from entering the

employer’s premises4. Prevents pickups and deliveries at the employer’s

place of business


Secondary Boycott Picketing A type of picketing where unions try to bring

pressure against an employer by picketing his or her suppliers or customers

Such picketing is lawful only if it is product picketing

It is illegal if it is directed against the neutral employer instead of the struck employer’s product


Illegal Strikes Several types of strikes have been held to be

illegal

They are not protected by federal labor law

Illegal strikers may be discharged by the employer with no rights to reinstatement


Illegal strikes are: Violent Strikes

Sit-Down Strikes

Partial or Intermittent Strikes

Violent Strikes

Sit-Down Strikes

Partial or Intermittent Strikes

Wildcat Strikes

Strikes during the 60-day Cooling-Off Period

Strikes in Violation of a No-Strike Clause

Wildcat Strikes

Strikes during the 60-day Cooling-Off Period

Strikes in Violation of a No-Strike Clause


Crossover Worker Individual members of a union do not have to

honor the strike They may:

1. Choose not to strike, or

2. Return to work after joining the strikers for a time


Replacement Workers Workers who are hired to take the place of

striking workers

They can be hired on either a temporary or permanent basis

If replacement workers are given permanent status, they do not have to be dismissed when the strike is over


Employer Lockout An act of an employer to prevent employees

from entering the work premises when the employer reasonably anticipates a strike


Workers’ Compensation ActsWorkers’ Compensation Acts (1 of 4) (1 of 4)

Acts that compensate workers and Acts that compensate workers and their families if workers are their families if workers are injured in connection with their injured in connection with their jobs.jobs.


Workers’ Compensation Acts (2 of 4)

Depending on the state, employers are required either: To pay for workers’ compensation insurance, or To self-insure by making payments into a

contingency fund Workers’ compensation benefits vary by state

and are paid according to preset limits established by statute or regulation



Employment-Related InjuryEmployment-Related Injury To recover under workers’ compensation, the

worker’s injuries must have been employment-related

Many workers’ compensation acts include stress as a compensable work-related injury



Exclusive RemedyExclusive Remedy Workers’ compensation is an exclusive remedy Workers cannot sue their employers in court for

damages An exception occurs when an employer

intentionally injures an employee


Occupational Safety and Health Act(1 of 3)

Enacted in 1970 to promote safety in the workplace

Established the Occupational Safety and Occupational Safety and Health Administration (OSHA)Health Administration (OSHA)

Generally, all private employers are within the scope of the act

Federal, state, and local governments are exempt



The act imposes record keepingrecord keeping and reporting reporting requirementsrequirements on employers

Employers are required to post notices in the workplace informing employees of their rights under this act

OSHA is empowered to administer the act and adopt rules and regulations to interpret and enforce it



OSHA is empowered to inspect places of employment for health hazardshealth hazards and safety safety violationsviolations

If a violation is found, OSHA can issue a written citationwritten citation Requires the employer to abate or correct the

situation


Types of OSHA Standards

Specific Duty StandardSpecific Duty Standard Addresses a safety problem

of a specific duty nature e.g., requirement for a

safety guard on a particular type of equipment

Specific Duty StandardSpecific Duty Standard Addresses a safety problem

of a specific duty nature e.g., requirement for a

safety guard on a particular type of equipment

General Duty StandardGeneral Duty Standard A duty that an employer has

to provide a work environment “free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”

General Duty StandardGeneral Duty Standard A duty that an employer has

to provide a work environment “free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”


Fair Labor Standards Act (FLSA) of 1938 (and subsequent amendments)

Federal act enacted to protect workers Prohibits child labor Establishes minimum wage requirements Establishes overtime pay requirements


FLSA: Child Labor The FLSA forbids the use of oppressive child

labor

It is unlawful to ship goods produced by businesses that use oppressive child labor

The Department of Labor defines the standards for lawful child labor


FLSA: Minimum Wage and Overtime Pay Managerial, administrative, and professional

employees are exempt from the FLSA’s wage and hour provisions

Employers are required to pay covered (non-exempt) workers at least the minimum wage for their regular work hours

Overtime pay is also mandated


Minimum Wage Set by Congress and can be changed Currently, it is set at $5.15 per hour Employers are permitted to pay less than

minimum wage to students and apprentices An employer may reduce minimum wages by

an amount equal to the reasonable cost of food and lodging provided to employees


Overtime Pay An employer cannot require nonexempt

employees to work more than 40 hours per week unless they are paid one-and-a half one-and-a half times their regular pay for each hour worked times their regular pay for each hour worked in excess of 40 hoursin excess of 40 hours

Each week is treated separately


Family and Medical Act (1993) A federal statute that guarantees covered

workers unpaid time off from work for: Birth or adoption of a child Serious health problems of the worker Serious health problems of a spouse, child, or

parent The act applies to companies with 50 or more

workers as well as federal, state, and local governments


Plant Closing Act Worker Adjustment and Retraining Worker Adjustment and Retraining

Notification (WARN) Act (1988)Notification (WARN) Act (1988) Covers employers with 100 or more

employees Requires employers to give their employees

60 days’ notice before engaging in certain plant closings or layoffs

copyright © 2006 by pearson prentice-hall. all rights reserved slides developed by les wiletzky...

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