Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1
Chapter 34
Employment, Immigration, and Labor Law
INTRODUCTION
Every business student should have a basic familiarity with general laws in the area of employment. This
chapter looks at some of the significant laws that regulate employment and the workplace. Unions and collective bar-
CHAPTER OUTLINE
I. Employment at Will
Under the at-will employment doctrine, employers can fire workers for good, bad, or no reasons.
A. COMMON LAW EXCEPTIONS TO THE EMPLOYMENT-AT-WILL DOCTRINE
1. Exceptions Based on Contract Theory
• Some courts have held, based on employees’ reasonable expectations, that an implied con-
tract exists between employer and employee under an employer’s handbook, personnel bul-
2 UNIT SEVEN: AGENCY AND EMPLOYMENT
ADDITIONAL BACKGROUND—
Employment at Will
In the early years of this nation’s history, most Americans were self-employed. For these individuals,
problems arising from employment relationships did not exist. For those who were employed, employers
usually determined the terms of employment.
Generally, contract, tort, and agency law governed employment relationships before the twentieth
century. Most employment contracts were considered to be “at will,” which meant either party could termi-
nate the contract at any time for any reason, unless a particular period was specified. Generally, employers
could 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.
2. Exceptions Based on Tort Theory
In a few cases, discharge may give rise to a tort cause of action (an abusive discharge may result
3. Exceptions Based on Public Policy
• Under this exception (the most widespread common law exception to the at-will doctrine), an
CHAPTER 34: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 3
B. WRONGFUL DISCHARGE
Federal statutes and state court rulings provide exceptions to the at-will doctrine in actions based on a
wrongful-discharge theory. Punitive damages have been awarded against employers.
II. Wages, Hours, and Layoffs
• The Davis-Bacon Act requires federal contractors to pay “prevailing wages” to their employees.
A. CHILD LABOR
Children under fourteen can work in only limited occupations, children under sixteen cannot work full-
B. MINIMUM WAGES
The current federal minimum wage is stated in the text. Tips received by employees can reduce the
C. OVERTIME PROVISIONS ABD EXEMPTIONS
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.
CASE SYNOPSIS—
Case 34.1: Bailey v. TitleMax of Georgia, Inc.
Santonias Bailey was an employee of TitleMax of Georgia, Inc. Bailey’s supervisor told him that TitleMax
did not pay overtime, so he regularly worked off the clock. His supervisor also edited Bailey’s time records to
report fewer hours than he actually worked. Bailey quit TitleMax and filed a suit in a federal district court
against the employer to recover for the unpaid overtime under the Fair Labor Standards Act (FLSA). TitleMax
4 UNIT SEVEN: AGENCY AND EMPLOYMENT
..................................................................................................................................................
Notes and Questions
Should Congress increase the minimum wage? To what level? The answer to this question involves
policy considerations across the entire political spectrum—to what degree should government regulate
ADDITIONAL CASES ADDRESSING THIS ISSUE —
Overtime Exemptions
Cases in which overtime exemptions were at issue include the following.
• Jones v. Virginia Oil Co., 69 Fed. Appx. 633 (4th Cir.2003) (unpublished) (per curiam) (manager who
spent 75 to 80 percent of her time performing basic line-worker tasks held exempt because she “could
simultaneously perform many of her management tasks”).
ENHANCING YOUR LECTURE—
EMPLOYMENT ISSUES IN THE VIRTUAL WORKPLACE
CHAPTER 34: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 5
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
DO OVERTIME AND MINIMUM-WAGE LAWS APPLY TO THE VIRTUAL WORK FORCE?
Not until the early 1990s did the U.S. Department of Labor issue regulations defining exemptions to the
overtime-pay requirements for employees in computer-related occupations. Under the regulations, these
NONEXEMPT EMPLOYEES IN COMPUTER-RELATED OCCUPATIONS
The professional exemption does not apply to trainees or to entry-level employees in computer
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.
REGULATING THE SAFETY OF AT-HOME WORK SITES
The Occupational Safety and Health Administration (OSHA) did not issue a formal directive on home-
office safety until 2000. At that time, OSHA stated that it would not conduct home-office inspections and
would not hold employers liable for their employees’ home offices. It also stated that it did not expect
employers to inspect the home offices of their telecommuting employees.
6 UNIT SEVEN: AGENCY AND EMPLOYMENT
IMPLICATIONS FOR THE BUSINESSPERSON
1. Simply designating an employee as a telecommuting employee whose work site is no longer a physical
2. Because OSHA may in the future change its audit requirements for remote work sites, businesses are
FOR CRITICAL ANALYSIS
Why might telecommuting employees sometimes accept being wrongly classified (and not being
paid overtime)? Under what scenario might a home-based employee sue his or her employer for
injuries in the home office?
D. LAYOFFS
Restructuring an operation or downsizing a workforce means a layoff. Under the Worker Adjustment and
Retraining Notification (WARN) Act of 1988—
• Employers with at least one hundred full-time workers must provide sixty-days’ notice before
implementing a mass layoff or closing a plant that employs more than fifty full-time workers.
III. Family and Medical Leave
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.
A. COVERAGE AND APPLICATION
The FMLA covers employers (public and private) with fifty or more employees who have worked for their
employers for at least a year. An eligible employee may take up to twelve weeks of leave within a
twelve-month period—
• To care for new children.
• To care for an adopted or foster child within one year of the child’s placement.
CHAPTER 34: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 7
An eligible employee may take up to twenty-six weeks of leave within a twelve-month period to care for a
family member with a serious injury or illness incurred as a result of military duty.
CASE SYNOPSIS—
Case 34.2: Ballard v. Chicago Park District
Beverly Ballard worked for the Chicago Park District in Chicago, Illinois. She lived with her mother Sarah,
who suffered from congestive heart failure. Beverly served as Sarah’s primary caregiver with support from
Horizon Hospice & Palliative Care. The hospice helped Sarah plan and secure funds for a “family trip” to Las
Vegas, Nevada, as an end-of-life goal. To accompany Sarah as her caretaker, Beverly asked the Park District
..................................................................................................................................................
Notes and Questions
Suppose that Beverly had been one of the Park District’s “key employees.” Would the result in
B. BENEFITS AND PROTECTIONS
During the leave, an employer must continue the absent employee’s health-care coverage as if the
C. VIOLATIONS
Remedies for violations include damages, job reinstatement, promotion, costs, and fees.
IV. Health, Safety, and Income Security
A. THE OCCUPATIONAL SAFETY AND HEALTH ACT
8 UNIT SEVEN: AGENCY AND EMPLOYMENT
The Occupational Safety and Health Act of 1970 provides for workplace safety standards with oversight
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.
• Employers with eleven or more employees must keep occupational injury and illness records
for each employee and make them available to OSHA compliance officers.
2. Inspections
Generally, an employer cannot discharge an employee who files a complaint with OSHA or who, in
good faith, refuses to work in a high-risk area.
B. STATE WORKERS’ COMPENSATION LAWS
These laws establish state procedures for compensating most workers, including minors, injured on the
job. A state agency or board administers workers’ compensation claims.
1. Requirements for Receiving Workers’ Compensation
2. Workers’ Compensation versus Litigation
C. INCOME SECURITY
Government programs are designed to protect employees and their families by covering the financial
impact of retirement, disability, death, hospitalization, and unemployment.
1. Social Security
2. Medicare
• Medicare is administered by the Social Security Administration for people sixty-five years of
3. Tax Contributions
CHAPTER 34: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 9
4. Private Retirement Plans
• The Employee Retirement Income Security Act (ERISA) of 1974 regulates private pension
funds. The Pension Benefit Guaranty Corporation provides timely, uninterrupted payments of
5. Unemployment Insurance
Under the Federal Unemployment Tax Act of 1939, employers pay into a fund that pays proceeds
to unemployed individuals subject to certain requirements and limits.
6. COBRA
• The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 prohibits the elimina-
tion of a worker’s medical, optical, or dental insurance coverage on the employee’s termination
7. Employer-Sponsored Group Health Plans
Under the Health Insurance Portability and Accountability Act (HIPAA), the collection, use, and
8. Affordable Care Act
Under the Affordable Care Act (ACA), most employers with fifty or more full-time employees are
V. Employee Privacy Rights
A. ELECTRONIC MONITORING
10 UNIT SEVEN: AGENCY AND EMPLOYMENT
CHAPTER 34: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 11
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.
2. 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).
ENHANCING YOUR LECTURE—
HOW TO DEVELOP AN INTERNET POLICY
Employers that make electronic communications systems (such as access to the Internet and e-mail)
available to their employees face some obvious risks. One risk is that e-mail could be used to harass other
employees. Another risk is that employees could subject the employer to liability by reproducing, without
Remember, a small company can be bankrupted by just one successful lawsuit against it. Even if your
company wins the suit, the legal fees incurred to defend against the claim could be devastating for your
profits.
INFORM YOUR EMPLOYEES OF THE MONITORING AND OBTAIN THEIR CONSENT
First of all, you should notify your employees that you will be monitoring their Internet communications,
including their e-mail. Second, you should ask your employees to consent, in writing, to such actions.
SPELL OUT PERMISSIBLE AND IMPERMISSIBLE INTERNET USES
12 UNIT SEVEN: AGENCY AND EMPLOYMENT
Employees should be told which uses of the firm’s communications system are permissible and which
CHECKLIST FOR THE EMPLOYER
1. Inform employees that their Internet communications will be monitored, why monitoring is necessary or
desirable, and how it will be conducted.
B. OTHER TYPES OF MONITORING
1. Lie-Detector Tests
The Employee Polygraph Protection Act (1988) prohibits the use of lie detectors by most employers
2. Drug Testing
a. Public Employers
Drug tests have been held constitutional when there was a reasonable basis for suspecting a
government employee’s use of drugs or when drug use in a government job could threaten
public safety.
b. Private Employers
Some state constitutions or statutes may inhibit private employers’ testing. A collective
VI. Immigration Law
The two most important employment-related immigration laws are the Immigration Act of 1990 and the
A. THE IMMIGRATION REFORM AND CONTROL ACT
• The IRCA provided amnesty to some illegal immigrants and sanctioned employers who hired
immigrants without work authorization
CHAPTER 34: EMPLOYMENT, IMMIGRATION, AND LABOR LAW 13
1. I-9 Employment Verification
The U.S. Citizenship and Immigration Services (CIS)—part of the U.S. Department of Homeland
Security—supplies Form I-9, Employment Eligibility Verification, which an employer must complete
within three days of each employee’s hiring.
2. Documentation Requirements
• The employer must declare, under penalty of perjury, that an employee produced documents
3. Enforcement
U.S. Immigration and Customs Enforcement (ICE) officers conduct random audits and act on
4. Penalties
These include civil fines of up to $11,000 for each unauthorized employee and criminal penalties of
B. THE IMMIGRATION ACT
Persons who immigrate to the United States to work include those with special skills, or “extraordinary
ability.” To hire such individuals, an employer must petition the CIS. An immigrant employee’s ability to
stay in the United States and to switch jobs here is limited.
1. I-551 Alien Registration Receipts
An employer may hire a “self-authorized” noncitizen who (a) is a lawful permanent resident (as
2. The H-1B Visa Program
3. Labor Certification
