14. CASE: LGA INDUSTRIES: EMPLOYING UNDOCUMENTED IMMIGRANTS
I. OVERVIEW:
This incident gives students an opportunity to discuss the requirements of the immigration and
Control Act passed by Congress in 1986. At the same +me, it places students in an ethical dilemma in
terms of Mar+n’s suspicion about the behavior of the company. Most of the real life situation involving
the employment of undocumented immigrants are quite similar to the one described in the incident.
Too many companies given the pressures of keeping wages down and the scarcity of unskilled labor have
risked hiring illegal immigrants. Prior to 1986, it was not illegal for employers to use undocumented
immigrants. It was only illegal for the employees themselves to misrepresent their status. However,
once the immigration Reform and Control Act was passed in 1986, it became illegal for companies to
employ illegal immigrants. Recent legisla+on passed in 2005 and 2006 have increased employer
responsibility for verifying employment eligibility.
II. OBJECTIVES:
1. To familiarize students with the requirements of immigration and Control Act of
1986 and more recent legisla+on.
2. To place students in an ethical dilemma that requires action.
III. DISCUSSION:
Since 2000, an estimated 850 000 unauthorized immigrants have entered the United States each
year. Currently there are estimated to be between 11 and 12 million illegal immigrants living within
the United States. Congress has been involved in <erce debates about how to deal with the =ow,
most of which originates from latin America and Mexico. Two-thirds of arrivals get jobs, many at
low wages. The public view on immigrants is mixed, but polls indicate a majority believes employers
should be penalized for employing illegal immigrants. President Bush has proposed several pieces of
legisla+on to stem the +de of immigrants from Mexico. In 2005, House of representative passed
the Border protection An+-terrorism and Illegal immigration Control Act of 2005, which emphasizes
enforcement and border security. The Comprehensive immigration Reform Act of 2006 passed by
the US Senate on May 25, 2006 includes more than just border security. It includes a guest worker
program and employer-based skilled worker provisions. Title III (Sec+on 301) of the Act makes it
unlawful for an employer to hire, or to recruit or refer for a fee, or continue to employ, an alien for
employment in the United States knowing, or with reckless disregard, that the alien is unauthorized
to work.
Some commentators argue the heavily amended bill that the Senate <nally approved — one of the
most sweeping and comprehensive immigration reform proposals ever to be passed by either house
of Congress — is a mul+-headed monster, composed of a myriad complex and poorly integrated
provisions. To complicate maDers further, several states are considering passing their own
legisla+on. The states bordering Mexico are in particular keen to strengthen <nes to companies who
knowingly employ illegal immigrants. At the +me of preparing this manual, a conference commiDee
was working to reconcile the diEerences between the Senate and House bills.
There are, however, common areas in the bills. Both bills require the establishment of an
electronic system to expedite the veri<ca+on of a new hire’s eligibility for employment in the USA.
Employers would have three working days in which to check new employee eligibility. This eligibility
would be con<rmed or discon<rmed as part of a national employment veri<ca+on system. A pilot
program showed 63 percent support for such a system in a survey conducted by Society for Human
Resource Management (SHRM). Both bills would increase civil penal+es for recruiting, hiring, and
referral viola+ons ranging from $ 4,000 to $ 40, 000 depending on the viola+on. additionally, the
legisla+on would bar employers from obtaining a Federal government contract, grant or agreement
or would debar employers currently holding for <ve years if the Secretary determines the employer
is a repeat violator or has been convicted of employing illegal immigrants. The whole reform eEort
should be understood within the broader context of homeland security reforms in light of 9/11 and
the goal to beDer protect US borders.
IV. ANSWERS TO CASE QUESTIONS:
1. What factors appear to be aEec+ng LGA’s staJng practice?
The major factors include the shortage of labor in the town. The company appears to be
experiencing diJculty in hiring from its traditional labor pool of high school graduates as young people
leave the town for bigger ci+es. Also given the location of the company, the town is probably aDrac+ng a
large number of immigrants who are aDracted by the prospects of employment. LGA also appears to
2. Who is responsible for meeting the requirements of the immigration and Reform
and Control Act in respect of the completion of I-9 Forms?
The U S Congress passed the immigration Reform and Control Act (IRCA) in 1986 and mandated
the I-9 employment veri<ca+on requirement. IRCA was designed to discourage the employment of illegal
immigrants and, in so doing, discourage illegal immigration into the United States. The I-9 form is used to
verify both the identity of all employees hired aLer November 6, 1986, and their eligibility to work in the
• Employees hired prior to November 7, 1986, and con+nuously employed by the same
employer.
• Employees hired for private, casual domestic work on an irregular basis.
The employer has the major responsibility to ensuring the I-9 information is collected
+meously. The regulation are quite speci<c in that it is the employer’s responsibility to assure
that the employee <lls in the correct information and signs and dates the form. Failure to
provide accurate information on the I-9 can make the employer liable. Employees must indicate
their current status, either as citizens/nationals of the U.S., lawful permanent residents (“green
3. If you were Mar+n, what would you do now?
Students will be quite involved in deba+ng Mar+n’s dilemma. They will be keen to focus on
determining the best action for Mar+n depending on whether LGA’s actions are viewed as deliberate or
based on poor management. Hence, the key question in the case is: whether or not LGA is knowingly
accepting false documents or has not been diligent in monitoring the performance of the employment
15. CASE: THE BROKEN EMPLOYMENT CONTRACT?
I. OVERVIEW
This case describes the termina+on of Arthur Wayne from his job aLer <ve years of service. The
case requires students to determine whether Wayne had an employment contract with EcoCare and
whether he was wrongfully discharged. The case allows for a full discussion of the employment-at-will
doctrine and its applicability. Topical areas include employment-at-will, termina+on policies, grievance
procedures, performance management, employee discipline, and employee rights.
II. OBJECTIVES
1. To help students understand the legal complexi+es involved in discharging
employees.
2. To introduce students to the “employment-at-will” doctrine.
3. To allow students to evaluate what cons+tutes “just cause” in termina+on decisions.
III. DISCUSSION
This case is quite eEec+ve in discussing the legal complexi+es involved in termina+ng
employees. This case is based on Toussaint vs. Blue Cross & Blue Shield of Michigan, Michigan Supreme
Court, 1980, 115. LRRM. 4708. The major issues in this case are whether there was an agreement to
terminate Wayne’s employment only for just cause (that is did he have an employment contract with
EcoCare which stated that he could only be <red for just cause or was his employment subject to the
“employment-at-will” doctrine?) and if so whether Wayne had been discharged for good cause. The
former issue is very important and raises the per+nent question of whether Wayne’s employment was
subject to the U. S. common law doctrine of “employment-at-will.” If the “employment-at-will” defense
can be used by the employer, then the company would be unrestricted in its right to terminate
employees.
The employment-at-will (EAW) doctrine protects an employer’s right to discharge workers for
good, bad, or no reason at all. In recent years, however, a spate of judicial rulings has led to restriction.
These restric+on include (1) public policy exception–where an employer’s discharge contravenes a
well-established public policy, e.g. an employee is terminated because he/she refused to commit an
unlawful act; (2) duty of good faith and fair dealing–where the employer acts in malice or bad faith, e.g.
<ring a worker who is about to be vested in the company’s pension plan; and (3) implied contract
rights–where the employer’s personnel manual or other policies imply a contract of employment (this
restric+on arose out of the court’s ruling in the Toussaint case). The heart of the issue focuses on an
employer’s right to terminate employees based on business and organizational objective and an
employee’s right to fair treatment and job security. A corollary issue that students should discuss in their
analysis is the changes needed at EcoCare to prevent any future problems.
The root of the problem for EcoCare seems to be embedded in the lack of poor training of
managers involved in the hiring process. Bell’s statements to Wayne were somewhat irresponsible;
especially, her comment that she “did not know of anyone ever being discharged.” Further, students
should point out that Bell did not follow company policies in handling Wayne’s performance problems.
The Supervisory Manual outlines a detailed procedure for handling discipline problems. It appears that
Bell did not follow the steps outlined. It is debatable whether or not Wayne’s alleged conduct falls under
one of the reasons jus+fying immediate termina+on. Bell’s comments to the personnel director, Chris
Miller, seem to imply that Wayne was terminated for insubordina+on. It is possible that his conduct fell
under dishonesty and falsi<ca+on of company’s records. It is not clear that Bell or Findlay had any proof
on who had altered the odometers. Several students will point out that Wayne was unable to give his
supervisors an adequate explanation of the discrepancies and as such EcoCare has the right to terminate
him. Nevertheless, even if his behavior warranted immediate termina+on, the company’s policies clearly
state that an employee should <rst be suspended and then the supervisor should consult with the
personnel department about subsequent actions. Neither Bell nor Findlay consulted with Personnel.
There are several alternative that students can propose for the case. From the perspec+ve of
the company president and the Board of Trustees students could propose that they place Wayne on
suspension until a full investigation can be launched. In any case it is clear that the company’s own
policies were not followed. On the longer-term more general issue, students should propose changes in
the company’s pre-employment hiring process and its administration of discipline. For example, while
the policy manual stresses “fair and consistent” treatment of all employees, supervisors should be
trained in using the policy to avoid future occurrences of the problems experienced by Wayne.
IV. ANSWERS TO CASE QUESTIONS
1. Did Wayne have an employment contract either oral or wriDen with EcoCare? Why
or Why not?
Based on the facts in the case, Wayne did not have a contract with EcoCare in the normal sense
of the word. However, in the actual court case on which this is based, the court held that “… while
employers are free to enter into employment contracts terminable at will without assigning cause, an
2. What problems, if any, do you see with EcoCare’s pre-employment process?
The major problem with their process seems to be in not training their supervisors on how to
answer employee questions about job security. Clearly, Bell thought she was accurately portraying the
3. Can an employer’s wriDen personnel policies ever be construed as a contract
between an employer and an employee?
Yes, in Toussaint vs. Blue Cross & Blue Shield, the court held that “statements of company policy
and procedures can give rise to rights enforceable in contract.” However, many courts will not recognize
such a contract unless the employer has made speci<c promises of continued employment. The
diJculty here is that there has not been a de<ni+ve Supreme Court case on the “employment-at-will
doctrine” and consequently its current status rests upon the interpreta+on of the rulings of a host of
the decision in Toussaint, an employee who argues that personnel policy or an employee manual creates
a right to continued employment must still iden+fy an oral or wriDen assurance of job security. The
4. Was Wayne terminated for “just cause”? Why or why not?
This question is debatable. Some students will argue that the Bell and Findlay probably believed
that Wayne had tampered with the odometers because he was unable to oEer a good explanation for
the discrepancy. If they believe this, then his conduct might be subject to immediate termina+on. On
the other hand, one could argue that Wayne’s previous performance had been above average and that
there had not been any other disciplinary problems. Therefore he should have been given more
5. How can companies protect themselves against a claim of “wrongful discharge”?
There are several actions that companies can take to protect themselves against charges of
wrongful discharge.
Review all personnel policy handbooks or other statements to employees for any
implied contract language. Many experts suggest that companies include
Design and implement a fair discipline procedure to assure due process for
Set up a grievance process for handling employee cases–models are available in
Have an on-going performance evaluation system where employee performance is
Do not engage in termina+ons that may violate exception to the
16. EXERCISE: The Older Worker Ques+onnaire
I. OBJECTIVES
1. To familiarize you with typical stereotypes toward older
workers and the managerial implication of these stereotypes.
2. To provide you with factual information regarding older
workers.
II. OUT–OF-CLASS PREPARATION TIME: 10 minutes to complete the Older Worker Ques+onnaire
shown in the text.
III. IN-CLASS TIME SUGGESTED: 20–30 minutes for group and class discussion of all items on the
Older Worker Ques+onnaire.
IV. PROCEDURES: SEE TEXT
V. SOLUTIONS:
The answers provided below are based on the referenced sources. It is important to note that
that not all studies may agree with these answers. When presen+ng these answers, the important point
to make is that many employees stereotype older workers and this aEects how they behave toward
these workers and, ultimately, how these older workers behave toward them.
1. False. Studies have shown that as a general rule, older employees are typically more sa+s<ed than
are younger ones. A Conference Board study showed that 49% of workers aged 35-44 were sa+s<ed
with their job vs. 58% for workers over the age of 65. (Conference Board Reports Today, February 28,
2. False. Employees aged 50-65 use on average 1.4 to 2.2 +mes as much health care as workers in their
3. True. At least one study shows that employers value older workers loyalty, work ethic, reliability, and
4. True. By 2012, 20% of the workforce is expected to be over the age of 55. (AARP Press Center, 2005)
5. False. 68% of workers aged 50-70 say they plan to work in their retirement years. (AARP Press
6. True. A study of 5000 re+rees found that 64% of them aged 55-65 stated that not be valued by the
7. True. The typical unemployment rate for those over 55 has been about 6% since 1949. (Employment
8. False. The average re+ree received only $1,153 in social security each month in 2008.
(www.socialsecurity.gov web site, January, 2010)
9. False. According to a national Academy of Sciences report, as persons age there is some reduction in
pupil size together with a loss in accommoda+ng capacity. The 20 year old eye receives about six +mes
10. False. Older workers can receive reduced social security bene<ts at age 62. Workers born in 1960 or
later do not receive full social security bene<ts until they are 67. Workers can postpone receiving
11. False. Workers older than 50 have been found to be more motivated to exceed job expectation
12. True. Employers view older workers as more produc+ve, at least as aDrac+ve in terms of
13. True. Older Workers do take longer to learn new materials compared to when they were younger or
with performance of a younger person. However, much of this diEerence can be explained by variables
14. False. The Age discrimination in Employment Act applies to workers age 40 and above. (EEOC
website, January, 2010)
15. False. Younger workers miss LESS work due to injuries and illness than older workers. Workers over
16. True. reffective or hands-on approaches are among the best ways for older workers to learn. 90%
18. True. Older workers generally do have slower reaction +mes than do younger people, and this
appears to be true regardless of the kind of reaction that is measured. However, the diEerence in
19. True. On average, workers over the age of 45 say they have worked 15.5 years with the same <rm,
20. False. Studies of taste and smell sensitivity show that they decrease with age. All <ve senses tend to