LAW, BUSINESS, &

SOCIETY
11th
Edition

McGraw-Hill

2015 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

Distinguish between an employee and

an independent contractor
Identify potential legal challenges an
employer faces in the hiring process
Describe employers liability under the
doctrine of respondeat superior
Analyze claims of negligent hiring,
supervision, and retention
12-2

Learning Objectives

Explain employees rights under the

Fair Labor Standards Act
Describe the role of the Occupational
Safety and Health Administration
(OSHA) in protecting employees health
and safety at work
Describe the benefits, coverage, and
requirements for bringing a successful
claim under workers compensation law
12-3

Learning Objectives

Discuss workplace drug testing and the

legal challenges it faces
Describe the Family and Medical Leave
Act (FMLA)
Distinguish between defined benefit
and defined contribution pension plans

12-4

Learning Objectives

Analyze whether a dismissed at-will

employee may bring a claim of
wrongful discharge
Recognize the purpose and
requirements of the employment
eligibility verification form (I-9)

12-5

Managing Lawsuits
Addressing and mitigating the risk of
employment-related lawsuits is important
in management decision making
Government regulations and court
decisions have broadened employee
rights
Volatile economy, downsizing, and other
forces have contributed to higher levels
of employee litigation

12-6

Job Classification

Employment-related legal rights and

responsibilities depend on the
relationship between employer and
worker
Long-term direct relationships are being

replaced with nontraditional staffing

arrangements

12-7

Differences Between Employee

and Independent Contractor

Independent contractor
Person who enters into a contractual

relationship with an organization to

perform a specific task

Determined by degree of control

Business that hires an independent
contractor is not required to comply
with employment and labor law
standards
12-8

Classification Problems

Employers improperly classify workers

to reduce financial and legal burdens
Fair Labor Standards Act
Protects employees and requires payment

of federal minimum wage and overtime pay

Voluntary Classification Settlement

Program
Provides criteria to reclassify workers as

employees for tax purposes

12-9

Legal Problems in Selection

and Hiring

Rsum fraud
Candidates exaggerate job responsibilities

and skills, make false education claims,

and inflate job titles

Background checks
Create discriminatory impact on certain

groups ability to gain employment

States have passed legislation to limit the
use of credit checks
12-10

Legal Problems in Selection

and Hiring
Enforcement guidance on the use of criminal
background checks have been issued
Employers check the online reputation of job
applicants

Inappropriate questions
Certain questions expose employers to

potential liability for discrimination

Restrictive covenants
Agreements providing employees will not

compete with their employer, solicit

customers, or pass on trade secrets
12-11

Legal Problems in Selection

and Hiring

Arbitration
Employees are asked to sign agreements

specifying that disputes with employer will be

settled by arbitration
Cheaper, faster, and less adversarial for the
employers

References
Exposes employers to defamation, and

misrepresentation or negligent referral suits

State courts provide the protection of a
qualified privilege
12-12

Liability

Enterprise is not liable for acts of its

independent contractors
Employers bear legal responsibility for
employees accidents or wrongs
Liability arises from the doctrine of

respondeat superior

12-13

Liability

Scope of employment
Employers are liable to third parties for

harm caused by intentional or negligent

acts of employees on the job
Finding of employer liability does not excuse
the employee from personal liability

12-14

Liability
Questions that determine whether the

harm occurred within scope of employment

Was the employee subject to the employers
supervision?
Was the employee motivated by a desire to
serve the employers business interests?
Did the problem arise substantially within
normal working hours and in a work
location?
Was the act in question of the general kind
the employee had been hired to perform?
12-15

Negligence

Employers are directly liable for

negligence in:
Hiring or retaining an employee who

subsequently causes harm to a third party

Careless training or supervision

Employer is liable for acts outside the

scope of employment under negligence
liability

12-16

Case: Negligent Hiring,

Supervision, and Retention

Case
Yunker v. Honeywell, Inc.
496 N.W.2d 419 (Minn.App. 1993)
District court

Issue
Did Honeywell have a duty to Kathleen

Nesser to exercise reasonable care in

hiring, retaining, or supervising Randy
Landin?
12-17

Fair Labor Standards Act

(FLSA)

Objectives
Establishment of a minimum wage
Flexible ceiling on hours worked weekly
Child labor protection
Equal pay for equal work regardless of

gender

12-18

Fair Labor Standards Act

(FLSA)

Minimum wage
Federal minimum wage was increased to

$7.25 per hour in 2009

Overtime
Workers are entitled to receive at least 1

times their regular pay rate

Student interns
Interns assisting employers in daily

operations have a right to minimum wage

and overtime
12-19

Occupational Safety and

Health Administration (OSHA)

Responsible for ensuring safe

workplaces
Occupational Safety and Health Act
Imposes a duty on employers to provide a

workplace free of recognized hazards

Standards
OSHA enforces health and safety standards
Identifies and seeks to correct specific
workplace hazards and problems
12-20

Occupational Safety and

Health Administration (OSHA)
Ergonomics
OSHA employs a system of voluntary
ergonomics guidelines and general duty
authority
Violence
Employers are focused on spotting and
protecting against employees aggression

12-21

Occupational Safety and

Health Administration (OSHA)

Variances
Permanent - Granted if strict workplace

safety is ensured
Temporary - Permits additional time to put
in place the necessary compliance
measures

12-22

OSHA Information
Requirements

Right to know
Employee hazard communication standard
Protects employees from the dangers
associated with chemicals and toxins in the
workplace
Material safety data sheets (MSDS)
Must be developed by chemical
manufacturers and importers for all
chemicals

12-23

OSHA Information
Requirements

Records
Businesses must maintain records listing

and summarizing work-related injuries,

illnesses, and deaths
Smaller companies engaged in
nonhazardous activities are exempted

OSHA citations of imminent dangers on the

job must be posted at the job site

12-24

OSHA Information
Requirements

Enforcement
Through unannounced on-site inspection
Citations can be issued if violations are
discovered during the inspection process
OSHA is criticized for increasing production

cost by imposing inflexible expectations

Severe Violator Enforcement Program
Concentrates on employers who engage in
willful, repeated, or failure to abate
violations
12-25

Workers Compensation

States provide workers compensation

not requiring a lawsuit
Employers are compelled to participate
in workers compensation by:
Purchasing insurance privately
Contributing to a state-managed fund
Being self-insured

12-26

Workers Compensation

Benefits
Medical and rehabilitation expenses with

partial income replacement

Injury benefits - One-half to two-thirds of
regular wages
Death benefits - As per the wages of the
deceased

Coverage - 90 percent of the labor

force
Most on-the-job injuries are covered
12-27

Workers Compensation

Legal requirements
Injuries, illnesses, and deaths are

compensable where the harm:

Arose out of the employment
Occurred in the course of employment

12-28

Case: Workers Compensation

Case
Wait v. Travelers Indemnity Company of

Illinois
240 S.W.3d 220 (Tenn. S.Ct. 2007)

Issue
Plaintiff filed a complaint seeking workers

compensation benefits when she was

severely injured by a neighbour in her
home
12-29

Employee Privacy

Privacy on the job

Employer oversight includes:
Appearance policies, drug tests
Integrity tests, personality tests, and
surveillance

Privacy off the job

Critics argue wellness programs overstep

boundaries in the employment relationship

Employers restrict office relationships to
certain degree
12-30

Monitoring

Employers can lawfully monitor

workers attendance, performance, email, and use of the Internet
Establishing a clear, written workplace

policy is a good practice

Electronic Communications Privacy Act

Prohibits private individuals, organizations

from intercepting wire, oral, or electronic

communications
12-31

Monitoring
Exceptions
Prior consent by one of the parties to the
communication
Employer monitoring in the ordinary course
of business

Some states prohibit an employer to

obtain personal social media account
credentials of workers

12-32

Case: Monitoring

Case
Koeppel v. Speirs
2010 Iowa App. LEXIS 25 (Ct.App. Iowa

2010) (unpubd op.)

District court

Issue
Koeppel sued Speirs alleging invasion of

privacy for placing a camera in the

bathroom with the intent to view her
12-33

Drug Testing

To address workplace drug problems,

employers:
Provide information about illicit drug abuse
Have written workplace policies
Offer employee assistance programs (EAPs)

Drug-Free Workplace Act of 1988

Applies to employers who:
Have contracts of $100,000 or more with the
federal government
Receive aid from the government
12-34

Drug Testing in Law and

Practice

Drug testing is regulated by state law

Private-sector drug testing is lawful in
the following situations
Preemployment testing
In association with periodic physical

examinations
For cause
Post accident testing
Follow-up testing
12-35

Drug Testing in Law and

Practice

Random testing produces legal issues

Legality of drug testing is determined
by a balancing test
Employees right to privacy is balanced

against the employers business needs

12-36

Legal Considerations Influencing

Drug-Testing Practices
U.S. constitution
Fourth Amendment forbids unreasonable searches and
seizures
State constitutions
Offer privacy protection to public-sector employers
Federal statutes
Drug testing that fails to treat all individuals equally can
violate Civil Rights Act or Americans with Disabilities Act
State and local statutes
Testing restraints are relaxed
Common law claims
Provide a challenge to drug testing
12-37

Employee Benefits and

Income Maintenance

Patient Protection and Affordable Care

Act
Employers with 50 or more employees that

do not provide health insurance coverage

will face penalties

Consolidated Budget Reconciliation Act

Requires employers to permit departing

employees to retain group health coverage

at their own expense
12-38

Family and Medical Leave Act

(FMLA)

Entitles employees to take jobprotected, unpaid leave for certain

family-related or medical reasons
Allowed to 12 weeks of leave in a 12-

month period
Covers employers with 50 or more
employees

12-39

Unemployment
Compensation

Social Security Act

Provides for unemployment insurance

program

Federal government and states are

engaged in a cooperative system
Helps protect the temporarily unemployed

Workers who quit or who are fired for

misconduct are ineligible
12-40

Worker Adjustment and

Retraining Notification Act

Requires firms with 100 or more

employees to provide 60 days notice if
they lay off one-third or more workers

12-41

Pensions

Defined benefit plans

Provide specified monthly payments upon

retirement

Defined contribution plans

Specify in advance the match employer will

provide to go with employees contributions

Cash balance plan

Benefits are maintained in individual

accounts, expressed in terms of an

accumulated lump sum
12-42

Pensions

Employee Retirement Income Security

Act - Regulates funds to help ensure
their long-term financial security
Pension Benefit Guaranty Corporation
Insures defined benefit plans

Pension Protection Act

Requires companies to adequately fund

pension plans

Employer-provided pension and health

care benefits for retirees are at risk
12-43

Termination: Protection from

Wrongful Discharge

At-will employee
Not under contract for a definite period of

time, and can be fired at any time

Exceptions
Labor laws protecting union workers
Equal employment opportunity laws that
forbid the dismissal of an employee for
discriminatory reasons

12-44

Judicial Limitations on At-Will

Principles

Express or implied employment

contracts
Implied covenant of good faith and fair
dealing
Public policy
Tort actions
Available to dismissed employees to seek

compensatory and punitive damages

12-45

Case: Employment
Termination

Case
Lloyd v. Drake University
686 N.W.2d 225 (lowa S.Ct. 2004)
District court

Issue
Lloyd alleged that Drake University

violated public policy and committed the

tort of wrongful discharge by firing him for
upholding criminal laws
12-46

American Immigration Law

H-1B visa program

Brings foreign workers to the U.S. to fill

positions requiring special expertise

Immigration Reform and Control Act

Requires employers to verify that each new

hire is a U.S. citizen or foreign national

with permission to work in the country
Must complete an employment eligibility
verification form (I9)
12-47

Enforcement of Immigration
Law

Focuses on:
Hiring of illegal immigrants
Illegal discrimination against applicants

based on citizenship status or national

origin

E-Verify
Determines an employees eligibility to

work in the United States

Compares information reported on an
employees Form I-9 with federal records
12-48