1
whole or in part.
Employment, Immigration,
and Labor Law
gaining, the employment-at–will doctrine, employees’ privacy rights, workers’ compensation, workplace safety,
whistleblowing, and retirement and security income are among the topics discussed.
usually determined the terms of employment.
2 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
fire workers for good, bad, or no cause in response to changing economic conditions. If an employee was
injured on the job, it was difficult for him or her to recover from the employer, because an employee was
considered to have assumed the risks of employment when he or she accepted the job.
The nature of employment changed with the Industrial Revolution, beginning about 1760 in Europe and
development, they were given considerable freedom under the law to respond to changing conditions—
With increasing industrialization, the size of corporate employers and the number of workplace hazards
increased. Employers discouraged employees’ collective activities to improve conditions, but as labor gained
political influence, legislators responded with minimum wage, maximum hour, child labor, and other laws. At
the end of the nineteenth century, the courts generally sided with business and struck many of these laws as
I. Employment at Will
Under the at-will employment doctrine, employers can fire workers for good, bad, or no reasons.
A. EXCEPTIONS TO THE EMPLOYMENT–AT-WILL DOCTRINE
• In a few states, all employment contracts are considered to contain an implied covenant of
good faith. If an employer fires an employee arbitrarily or unjustifiably, the employee can claim
breach of this covenant.
• Under this exception (the most widespread common law exception to the at-will doctrine), an
employer may not fire a worker in violation of a fundamental public policy. The policy must be
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 3
• Whistleblowers may be protected for public policy reasons. Federal and state statutes may
also offer protection.
CASE SYNOPSIS—
policy to prohibit retaliation against an employee for complaining. When Waddell told his supervisor, Sophia
Darling, to file certain financial documents more promptly, she fired him. Waddell filed a suit against the
Institute, alleging breach of an implied employment contract under the whistleblower policy. From a dismissal,
Waddell appealed.
A state intermediate appellate court affirmed. The Institute’s whistleblower policy was implemented after
Waddell was hired. And Waddell did not pass up other job opportunities based on the policy. The failure to
show detrimental reliance on the whistleblower policy undercut the claim for an implied contract. This made
Notes and Questions
In many countries, discharging an employee is more difficult and costly for the employer than it is
in the United States. Why? Employment laws in many other countries are more restrictive of their
employers’ ability to discharge their workers. Typically, workers may be discharged only for the most serious
ANSWER TO “THE LEGAL ENVIRONMENT DIMENSION”
QUESTION IN CASE 10.1
protected by the whistleblower policy because they lacked merit.
4 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
QUESTION IN CASE 10.1
Is the at-will employment doctrine fair to employees? Why or why not? The at-will tradition offers
some benefits to employees. An employee working at will, for example, can leave his or her employment at
any time without fear of breaching an employment contract.
applying the doctrine would violate public policy.
B. WRONGFUL DISCHARGE
Federal statutes and state court rulings provide exceptions to the at-will doctrine in actions based on a
A. CHILD LABOR
Children under fourteen can work in only limited occupations, children under sixteen cannot work full–
time except for a parent under certain circumstances, and children under eighteen cannot work in
hazardous jobs or in jobs detrimental to their health and well being.
Employees who agree to work more than forty hours per week must be paid no less than one and a half
times their regular pay for all hours over forty. Excepted from federal overtime regulations are employees
who earn more than a specified amount per week and devote their efforts to certain duties.
1. Executive Employees
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 5
whole or in part.
Over thirty million workers in the United States telecommunicate, up from fewer than twenty million at the
end of the last decade. Between eight and ten million U.S. workers now telecommunicate full-time—never
laying eyes on, or feet in, a physical office building. As often happens, though, a spurt in technology—mainly
due to the growth in Internet use—has caused real-world conditions to leap ahead of the law. After all,
overtime-pay requirements for employees in computer-related occupations. Under the regulations, these
employees can qualify as “professionals” and thus be exempt from the overtime-pay requirements. When an
employee falls within this (or any other) exemption to the overtime-pay requirements of the Fair Labor
Standards Act, the employee is not entitled to be paid time and a half for overtime hours.
Just because employees work in a remote location—telecommute—does not mean that they are exempt
from the overtime-pay requirements or the minimum-wage laws. Any employer who misclassifies employees
as exempt from these regulations may be subject to both criminal and civil penalties. Under all circumstances,
employers are required to monitor the hours worked by nonexempt telecommuting employees, even if doing
so presents a challenge. Today there are software programs that will monitor hours of work for a
specialties, such as programming and analysis. Individuals operating computers or manufacturing, repairing,
or maintaining computer hardware are also not included in the professional exemption for overtime pay.
Moreover, just because an employee relies heavily on computers or computer software in his or her work
does not qualify that person for a professional exemption.
Under most circumstances, junior programmers, programmer trainees, keypunch operators, and
office safety until 2000. At that time, OSHA stated that it would not conduct home-office inspections and
6 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
would not hold employers liable for their employees’ home offices. It also stated that it did not expect
processes are provided or required to be used in an employee’s home office. Additionally, employers are
required to keep OSHA injury and illness records for any work-related injuries and illnesses that occur in
home work environments (these records will be discussed further later in this chapter). In contrast, OSHA has
not applied these record-keeping requirements to virtual workers working out of their cars, hotel rooms, and
airports, for example. At some point in the future, however, OSHA may audit remote work-sites and increase
state and federal laws. If an employee did not fall under a professional or management exemption prior to her
or his switch to the virtual work force, then once that switch is made, overtime requirements will still apply.
2. Because OSHA may in the future change its audit requirements for remote work sites, businesses are
well advised to take reasonable preventive measures. That is to say, businesses should encourage remote
injuries in the home office?
D. LAYOFFS
Restructuring an operation or downsizing a workforce means a layoff.
Notice must be sent to workers and their union representatives, state and local government
agencies, part-time and seasonal workers.
b. Remedies for Violations
These include fines of up to $500 per day. Employees can recover up to sixty–days’ back pay and
The Family and Medical Leave Act (FMLA) of 1993 protects employees who need time off work for family or
medical reasons. Most states have similar laws.
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 7
whole or in part.
• To care for an adopted or foster child within one year of the child’s placement.
• To care for a seriously ill spouse, child, or parent.
• To care for themselves if a serious health condition prevents performing essential job functions.
• To deal with any nonmedical emergency arising out of the fact that the employee’s spouse, son,
daughter, or parent is a covered military member on active duty.
employee were working. After the leave, the employee must be restored to his or her original, or a
comparable, position. Key employees—those whose pay falls within the top 10 percent of the
workforce—are excepted.
C. VIOLATIONS
by the Occupational Safety and Health Administration (OSHA). Employers have a general duty to keep
the workplace safe. OSHA establishes specific safety standards.
1. Notice, Records, and Reports
Employers must comply with notice, recordkeeping, and reporting requirements.
• If an employee dies or five or more employees are hospitalized, the U.S. Department of Labor
must be notified within eight hours. A complete inspection of the premises is mandatory.
2. Inspections
Generally, an employer cannot discharge an employee who files a complaint with OSHA or who, in
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 9
whole or in part.
In return, workers cannot sue for the injuries, even if caused by an employer’s negligence (and
employers cannot argue standard negligence defenses).
V. Income Security
Government programs are designed to protect employees and their families by covering the financial impact
B. MEDICARE
Medicare is administered by the Social Security Administration for people sixty-five years of age and
older and for some under sixty-five who are disabled.
subject to the Medicare tax.
C. PRIVATE PENSION PLANS
The Employee Retirement Income Security Act (ERISA) of 1974 regulates private pension funds. The
Pension Benefit Guaranty Corporation provides timely, uninterrupted payments of voluntary, private-plan
2. Investment of Pension Funds
Under ERISA, pension managers must invest pension funds cautiously.
D. UNEMPLOYMENT INSURANCE
Under the Federal Unemployment Tax Act of 1939, employers pay into a fund that pays proceeds to
whole or in part.
E. COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 prohibits the elimination of a
2. Payment
A worker who opts to continue coverage must pay a premium plus an administrative fee.
F. EMPLOYER-SPONSORED GROUP HEALTH PLANS
to offer health-insurance benefits and may receive tax credits to offset the cost. The cost to an employee
must not exceed 9.5 percent of their income. Violations of these provisions are subject to fines and
penalties.
VI. Employee Privacy Rights
1. Employee Privacy Protection
• Privacy rights are protected at common law (invasion of privacy) and under the U.S.
Constitution (First, Third, Fourth, Fifth, and Ninth Amendments) and state constitutions.
from restraining speech by blocking Web sites.
2. Was There a Reasonable Expectation of Privacy?
Generally, an employer’s interests are weighed against employees’ reasonable expectations of
privacy (if employees are informed of monitoring, they cannot reasonably expect privacy).
2 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
fire workers for good, bad, or no cause in response to changing economic conditions. If an employee was
injured on the job, it was difficult for him or her to recover from the employer, because an employee was
considered to have assumed the risks of employment when he or she accepted the job.
The nature of employment changed with the Industrial Revolution, beginning about 1760 in Europe and
development, they were given considerable freedom under the law to respond to changing conditions—
With increasing industrialization, the size of corporate employers and the number of workplace hazards
increased. Employers discouraged employees’ collective activities to improve conditions, but as labor gained
political influence, legislators responded with minimum wage, maximum hour, child labor, and other laws. At
the end of the nineteenth century, the courts generally sided with business and struck many of these laws as
I. Employment at Will
Under the at-will employment doctrine, employers can fire workers for good, bad, or no reasons.
A. EXCEPTIONS TO THE EMPLOYMENT–AT-WILL DOCTRINE
• In a few states, all employment contracts are considered to contain an implied covenant of
good faith. If an employer fires an employee arbitrarily or unjustifiably, the employee can claim
breach of this covenant.
• Under this exception (the most widespread common law exception to the at-will doctrine), an
employer may not fire a worker in violation of a fundamental public policy. The policy must be
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 3
• Whistleblowers may be protected for public policy reasons. Federal and state statutes may
also offer protection.
CASE SYNOPSIS—
policy to prohibit retaliation against an employee for complaining. When Waddell told his supervisor, Sophia
Darling, to file certain financial documents more promptly, she fired him. Waddell filed a suit against the
Institute, alleging breach of an implied employment contract under the whistleblower policy. From a dismissal,
Waddell appealed.
A state intermediate appellate court affirmed. The Institute’s whistleblower policy was implemented after
Waddell was hired. And Waddell did not pass up other job opportunities based on the policy. The failure to
show detrimental reliance on the whistleblower policy undercut the claim for an implied contract. This made
Notes and Questions
In many countries, discharging an employee is more difficult and costly for the employer than it is
in the United States. Why? Employment laws in many other countries are more restrictive of their
employers’ ability to discharge their workers. Typically, workers may be discharged only for the most serious
ANSWER TO “THE LEGAL ENVIRONMENT DIMENSION”
QUESTION IN CASE 10.1
protected by the whistleblower policy because they lacked merit.
4 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
QUESTION IN CASE 10.1
Is the at-will employment doctrine fair to employees? Why or why not? The at-will tradition offers
some benefits to employees. An employee working at will, for example, can leave his or her employment at
any time without fear of breaching an employment contract.
applying the doctrine would violate public policy.
B. WRONGFUL DISCHARGE
Federal statutes and state court rulings provide exceptions to the at-will doctrine in actions based on a
A. CHILD LABOR
Children under fourteen can work in only limited occupations, children under sixteen cannot work full–
time except for a parent under certain circumstances, and children under eighteen cannot work in
hazardous jobs or in jobs detrimental to their health and well being.
Employees who agree to work more than forty hours per week must be paid no less than one and a half
times their regular pay for all hours over forty. Excepted from federal overtime regulations are employees
who earn more than a specified amount per week and devote their efforts to certain duties.
1. Executive Employees
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 5
whole or in part.
Over thirty million workers in the United States telecommunicate, up from fewer than twenty million at the
end of the last decade. Between eight and ten million U.S. workers now telecommunicate full-time—never
laying eyes on, or feet in, a physical office building. As often happens, though, a spurt in technology—mainly
due to the growth in Internet use—has caused real-world conditions to leap ahead of the law. After all,
overtime-pay requirements for employees in computer-related occupations. Under the regulations, these
employees can qualify as “professionals” and thus be exempt from the overtime-pay requirements. When an
employee falls within this (or any other) exemption to the overtime-pay requirements of the Fair Labor
Standards Act, the employee is not entitled to be paid time and a half for overtime hours.
Just because employees work in a remote location—telecommute—does not mean that they are exempt
from the overtime-pay requirements or the minimum-wage laws. Any employer who misclassifies employees
as exempt from these regulations may be subject to both criminal and civil penalties. Under all circumstances,
employers are required to monitor the hours worked by nonexempt telecommuting employees, even if doing
so presents a challenge. Today there are software programs that will monitor hours of work for a
specialties, such as programming and analysis. Individuals operating computers or manufacturing, repairing,
or maintaining computer hardware are also not included in the professional exemption for overtime pay.
Moreover, just because an employee relies heavily on computers or computer software in his or her work
does not qualify that person for a professional exemption.
Under most circumstances, junior programmers, programmer trainees, keypunch operators, and
office safety until 2000. At that time, OSHA stated that it would not conduct home-office inspections and
6 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
would not hold employers liable for their employees’ home offices. It also stated that it did not expect
processes are provided or required to be used in an employee’s home office. Additionally, employers are
required to keep OSHA injury and illness records for any work-related injuries and illnesses that occur in
home work environments (these records will be discussed further later in this chapter). In contrast, OSHA has
not applied these record-keeping requirements to virtual workers working out of their cars, hotel rooms, and
airports, for example. At some point in the future, however, OSHA may audit remote work-sites and increase
state and federal laws. If an employee did not fall under a professional or management exemption prior to her
or his switch to the virtual work force, then once that switch is made, overtime requirements will still apply.
2. Because OSHA may in the future change its audit requirements for remote work sites, businesses are
well advised to take reasonable preventive measures. That is to say, businesses should encourage remote
injuries in the home office?
D. LAYOFFS
Restructuring an operation or downsizing a workforce means a layoff.
Notice must be sent to workers and their union representatives, state and local government
agencies, part-time and seasonal workers.
b. Remedies for Violations
These include fines of up to $500 per day. Employees can recover up to sixty–days’ back pay and
The Family and Medical Leave Act (FMLA) of 1993 protects employees who need time off work for family or
medical reasons. Most states have similar laws.
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 7
whole or in part.
• To care for an adopted or foster child within one year of the child’s placement.
• To care for a seriously ill spouse, child, or parent.
• To care for themselves if a serious health condition prevents performing essential job functions.
• To deal with any nonmedical emergency arising out of the fact that the employee’s spouse, son,
daughter, or parent is a covered military member on active duty.
employee were working. After the leave, the employee must be restored to his or her original, or a
comparable, position. Key employees—those whose pay falls within the top 10 percent of the
workforce—are excepted.
C. VIOLATIONS
by the Occupational Safety and Health Administration (OSHA). Employers have a general duty to keep
the workplace safe. OSHA establishes specific safety standards.
1. Notice, Records, and Reports
Employers must comply with notice, recordkeeping, and reporting requirements.
• If an employee dies or five or more employees are hospitalized, the U.S. Department of Labor
must be notified within eight hours. A complete inspection of the premises is mandatory.
2. Inspections
Generally, an employer cannot discharge an employee who files a complaint with OSHA or who, in
CHAPTER 10: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 9
whole or in part.
In return, workers cannot sue for the injuries, even if caused by an employer’s negligence (and
employers cannot argue standard negligence defenses).
V. Income Security
Government programs are designed to protect employees and their families by covering the financial impact
B. MEDICARE
Medicare is administered by the Social Security Administration for people sixty-five years of age and
older and for some under sixty-five who are disabled.
subject to the Medicare tax.
C. PRIVATE PENSION PLANS
The Employee Retirement Income Security Act (ERISA) of 1974 regulates private pension funds. The
Pension Benefit Guaranty Corporation provides timely, uninterrupted payments of voluntary, private-plan
2. Investment of Pension Funds
Under ERISA, pension managers must invest pension funds cautiously.
D. UNEMPLOYMENT INSURANCE
Under the Federal Unemployment Tax Act of 1939, employers pay into a fund that pays proceeds to
whole or in part.
E. COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 prohibits the elimination of a
2. Payment
A worker who opts to continue coverage must pay a premium plus an administrative fee.
F. EMPLOYER-SPONSORED GROUP HEALTH PLANS
to offer health-insurance benefits and may receive tax credits to offset the cost. The cost to an employee
must not exceed 9.5 percent of their income. Violations of these provisions are subject to fines and
penalties.
VI. Employee Privacy Rights
1. Employee Privacy Protection
• Privacy rights are protected at common law (invasion of privacy) and under the U.S.
Constitution (First, Third, Fourth, Fifth, and Ninth Amendments) and state constitutions.
from restraining speech by blocking Web sites.
2. Was There a Reasonable Expectation of Privacy?
Generally, an employer’s interests are weighed against employees’ reasonable expectations of
privacy (if employees are informed of monitoring, they cannot reasonably expect privacy).