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Employment Law:

Share this document Chapter 1: Introduction

Employment-at-Will rule : an employer or employee may unilaterally terminate the

employment relationship at any time, for any reason, absent prior agreement to the
contrary. (employer does not even need a reason to discharge)
• The termination must not violate common law (i.e. wrongful discharge in
violation of public policy) or statutory law, (i.e. antidiscrimation law).
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Chapter 2: Legal Boundaries of the Employment Relationship

- companies would rather have their employee’s many times defined as independent
contractors so they do not have to give them the protections which are reserved for

#
employee’s under employment law. Government generally wants them to be
employees so they can have the benefit of the taxes.

- The CONTROL test: (for establishing an employer’s vicarious liability)

Email distinguished employee’s from independent contractors

o Common law factors considered by the court in the control test :
! Behavioral Control : (factors) – whether the employer has the right to
direct and control the work
• When and where to do the work
Did you find this document useful? •

•
What tools or equiptment to use

•
What
Whereassistants to hire
to purchase supplies and services
• What work must be performed by a specified individual

! $
• What order or sequence to follow
• TRAINING – employees often receive training while
independent contractors usually do not
! Financial Control:
• The extent to which the worker has reimbursed business

•
expenses
Extent of (independent contractors (independent
the worker’s investment have more expenses)
contractors are
Is this content inappropriate? Report this Documentpresumed to invest more)
• Extent to which workers makes services available to others
(independent contractors offer their services to a wider
market)
• How the business pays the worker (independent contractors
are usually paid a flat fee whereas employees get a wage
hourly, weekly, or yearly)
• The extent to which the worker can make a profit or loss
(independent workers generally can whereas employees
cannot)
! Type of Relationship:

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Page 1 of 36
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• Whether the parties have a written contract describing the

relationship they intend to create
• Whether the business provides the worker with employment-
like benefits (such as insurance, pension, vacation pay, and
sick pay)
• Whether the relationship is expected to be permanent or
indefinite (indicates employment) verses a specified project or
period (independent contractor)
•

aThe
keyextent
aspecttoofwhich the services
the business’s performed
regular by(ifthe
activity soworker
then theare
business is presumed to be more likely to retain the right to
control the worker’s activity)
- Economic Realities test: (6 factors which indicated employee status) – factors are
un-weighted and non-dispositive
o 1. a limited amount of the workers investment in facilities and equipment
o 2. the nature (close supervision) and degree of control (high) retained or
exercised by the company
o 3. the workers limited opportunities for profit and loss
o 4. the small degree of the workers independent initiative, judgment, and
foresight in open market competition with other required for the success of
the operation
o 5. the high degree of permanency of the work relationship
o 6. The broad extent to which the services are an integral part of the
company’s business

I. LEGAL BOUNDARIES OF THE EMPLOYMENT RELATIONSHIP

THE IDEA OF EMPLOYEE STATUS

DICHIARA’S LIST FROM OUTLINE:

I. Employee v. Independent Contractor
A. Employee v. independent contractor
(1) Degree of alleged employer’s right to control the manner in
which the work is to be performed
(2) Alleged employee’s opportunity for profit or loss
depending
(3) Alleged Employee’s investment in equipment or materials
required for his task
(4) Whether the service rendered requires a special skill
(5) The degree of permanence of the working relationship
(6) Whether the services rendered were an integral part of
alleged employer’s business

I. EMPLOYEES V. INDEPENDENT CONTRACTORS

Cases that we looked at distinguish independent contractors and employees. The courts
look at:
• You have the control test and the economic realities test
o Economic realities test is more based on formalism
• Factors that the court look at to determine whether one is an independent
contractor or an employee:
o Behavioral control
Fiscal control

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Page 2 of 36
 o Fiscal control
o Benefits: if the employer or complaint is providing benefits than you are
more likely to be an employee
o Relationship and length: if the relationship is an indefinite length then you
are more likely to be considered an employee because as an employee you
are “at-will.” If there is a contract in place then you are more likely to be
an independent contractor.
! Finite period of time in generally an independent contractor
o Training the worker receives
! More supervision would be an employee and training for a job
would also signal an employee
o Ability to profit or maximize your earning potential
! Independent contractor has the ability to make a profit and
maximize whereas an employee doesn’t

National Labor Relations Board v. Hearst: (Over – ruled and is now bad law) -
o Facts : News publishers refuse to collectively bargain with union
representing paperboys because they didn’t consider them
“employees” under the NLRA.
o Holding : Union should be allowed to collectively bargain because
the paperboys are employees under NLRB.
o Rule: In determining whether person is IC or Employee look at
“economic realities” of the situation (i.e. newsies rely on the wages
paid by publishers, publishers set the minimum price on papers, give
them equipment, etc).
o The United States Supreme Court , interpreting the National
Labor relations Act, held that when particular worker are
“subject, as a matter of economic fact, to the evils the statute was

designed should
workers to eradicate, “ such
fall within theasprotection
abject economic dependency, these
of the statute
notwithstanding the “technical legal classification” of the workers
as independent contractors.

• This case has been overruled and is now bad law

o Has been over-ruled for legislative reasons

• Facts: the newsboys were selling newspapers and worked under various
managers. The court ruled that the newsboys were employees . The court
applied the control test .
o What if the newsboys had the ability to set their own price for the papers?
! In this case it would be a little more difficult analysis because they
control their profits in this case but then again this is only one
factor among the many to look at and consider to make the
determination
• The price is only one factor whereas the courts look at a
whole list
• The courts really look at CONTROL and how much control
the entity has over the work.

Nationwide Mutual Insurance Co. v. Darden: - The Supreme Court favorably cited
Reid and again held that Congress’s failure to provide a meaningful definition

demonstrated it’s intent that the common law control test would apply.
o Facts : Nationwide allowed P to enroll in company retirement plan
so long as he sold their insurance. Contract provided that P would
forfeit this retirement plan if he sold other insurance within a year of
termination. P is terminated and begins selling other insurance.
Nationwide rescinds his retirement plan and P sues under ERISA.
o Holding : Remanded to determine whether P is “employee” under
Agency Test
o Rule: Where the statute is unclear as to how to determine whether
P is an “employee,” the Court should employ a common-law “agency
theory including factors such as:
o Factors that the court looked at:
! The skill required
! The source of the instrumentalities and tools
! The location of the work
! Duration of the relationship between the parties
! Whether the hiring party has the right to assign
additional projects to the hired party
! The extent of the hired party’s discretion over when
and how long to work
! The method of payment
! The hired party’s role in hiring and paying
assistants
! Whether the work is part of the regular business of
the hired party
! Whether the hiring party is in business
! The provision of employee benefits
! Tax treatment of the hired party

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 • Darden was an individual trying to get some benefits and wanted to be an
employee and his employer wanted him to be an independent contractor. The
court used the control test and the court ruled that there was a question of fact
involved and remanded.

Clackamans Gastroenterology Associates v. Wells – the court held that the common
law control test applies
o Facts : P files suit alleging that she was fired in violation of the
ADA. D argues that ADA does not apply because they do not meet
the 15-employee threshold necessary for ADA to apply. P argues that
the 4 physicians that own the practice should be counted as employees.
o Issue: Whether a “shareholder-director” is an “employee” under
the ADA.
o Holding : “Shareholder-directors” or a Professional Corporation
can be employees if sufficient control is exerted over them as in a
typical master-servant relationship. Reversed and remanded
o Rule: Control Test : Developed six factors test which are
relevant to the inquiry whether a shareholder/director is an employee:
! 1. whether the organization can hire or fire the
individual or set the rules and regulations of the
individuals work
! 2. whether and if so to what extent the organization
supervises the individual’s work
! 3. whether the individual reports to someone higher
in the organization
! 4. whether and if so to what extent the individual is
able to influence the organization
!5. whether the parties intended that the individual
be an employee, as expressed in written agreements
or contracts
! 6. whether the individual shares in the profits,
losses, and liabilities of the organization
• The bookkeeper had been terminated and was suing under the ADA provisions
which had a minimum employee requirement. The court remanded the issue but
left them with the common law control test.
• We have a situation where the employee is seeking protection under the ADA but
you need at least 15 employees for protection.
• Issue is whether the four physicians (partners) in the practice are also
counted as employees or just shareholders .
o Real partner = shareholder = equity relationship in the company

Vizcaino v. Microsoft Corp. - Vizcainzo stands for the proposition that employers
may not designate a worker’s status for purposes of ERISA and other employment

laws merely by contractually affixing the label.

o Facts : Microsoft employs two workforces—one of “core”

employees and one of “freelancers”—that essentially do the same
work under the same supervision. The difference is the freelancers
signed a contract that states they were ICs ineligible for health and
retirement plans but received more pay. P sues under ERISA
o Holding : Freelancers were entitled to retroactive benefits because
they were employees.
o Rule: An employer may not contract a way around a statutory
or common-law definition of an employee . Labeling someone an
“independent contractor” in an agreement doesn’t necessarily make
them one.

• Can the IRS really be neutral when they are deciding whether someone is an
employee or independent contractor since their primary job is to collect money for
the government
• The dispute here is that there were temporary workers (contingent workforce;
independent contractors) contracted as full-time workers without all the benefits
and health insurance so they sued.
o The court determined in this case that they were employees
o Simply having an employee sign a statement saying they are independent
contractors when they are actually functioning as employees is not valid
• The court made a review of Microsoft: they were being sarcastic in the fact the
Microsoft made this determination in good faith.
Connor v. Pier Sixty:
• The factors that the court found dispositive were that they were supervised by the
same people that pier sixty was supervised and they provided both with training
and uniforms
• Basically all the allegations in the complaint by the plaintiffs, the court has to
accept as true

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 o
It’s very hard for a court to dismiss a case based on the employee and
independent contractor distinction.

NOTE: Some employment laws exclude certain employees from coverage. (See FLSA
exemptions).
- Many employment rights are non-waivable. Courts have held that employee
agreements to waive FLSA minimum wage and overtime rights are unenforceable.
o Some employment rights are waiveable: i.e. the right to a jury trial mat be
waived by signing an arbitration agreement and the right to participate in
ERISA employee benefit plan is valid so long as the waiver is voluntary and
knowing.
o An employer MAY NOT use a contract to make an end run around a
common law or statutory definition of employee!! (Vizcaino)

II. STATUTORY EXEMPTIONS, SMALL EMPLOYERS, AND JOINT

EMPLOYEES
- Employment statues often exempt certain types of employers either from the
definition of a covered employer or from ebing subject to some or all of the statutory
provisions.
o Small employer exemption : some employment statutes contain an
exemption for small employers.
What about small employers? Do all of the employment laws apply to them?
- Why for the ADA to apply for example, do you have to have 15 employees for it to
apply? What’s the reasoning?
o The primary reasoning is the cost of compliance. It will cost you more to
comply with all of these regulations if there are only 2 or 3 employees.
Government says it’s too large of a burden to make these smaller businesses
apply because the costs for them would be too great.
! The employees of these small businesses can have remedies under
state law even if they can’t depend on the remedies of the federal
ADA law.

Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003)

o Facts : Ps are non-English-speaking workers that finished clothing
for several contracting corporations through Liberty. They brought
suit against Liberty alleging overtime and minimum wage violations
under the FLSA.
o Issue: Whether garment manufacturers who hired contractors to
stitch and finish pieces of clothing were “joint employers” within the
meaning of the FLSA.
o Holding : Vacated and remanded with new test
o Rule: Economic Realities test: 6 factor test:
o Whether [employer]’s premises and equipment are used for P’s
work
o Whether Contractor Corp. had a business that could shift as a unit
from one putative joint employer to another.
o The extent to which Ps performed a discrete line-job that was
integral to Liberty’s process of production
o Whether responsibility under the contracts could pass from one
subcontractor to another without material changes
o The degree to which the [employer] or their agents supervised P’s
work; and
o Whether Ps worked exclusively or predominantly for the
[employer]
• Issue: court trying to figure out whether these plaintiffs working in
the garment industry were joint employees. The court discusses
which test should be used in determining this.

Joint employees:
- Under the FLSA, joint employment exists where

o 1. employers arrange to share a worker’s services

o 2. one employer is working in the interest of another employer in relation to
the employee
o 3. the employers share control over the employee or a company employing an
employee control or is controlled by another company
Factors pertinent to the economics realities test for considering joint employees:
o Whether [employer]’s premises and equipment are used for P’s
work
o Whether Contractor Corp. had a business that could shift as a unit
from one putative joint employer to another.
o The extent to which Ps performed a discrete line-job that was
integral to Liberty’s process of production

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 Whether responsibility under the contracts could pass from one
o
subcontractor to another without material changes
o The degree to which the [employer] or their agents supervised P’s
work; and
o Whether Ps worked exclusively or predominantly for the
[employer]
THE HIRING PROCESS

III. LEGAL RESTRICTIONS ON JOB ACCESS

Wardwell v. Board of Education :

- Facts : A schoolteacher brought an action under federal civil rights statutes
questioning the constitutionality of a rule adopted by the Board of Education of the
City of Cincinnati requiring all teachers in the Cincinnati schools hired after a given
date to establish residence within the city's school district within 90 days of
employment.
o Holding : The right to INTRAstate travel is not protected by the
Federal Constitution and that there was rational basis for the school
board's residency requirement.
o Rule: Government employer can restrict job access where it has
rational bases for basis for restrictive measures such as:
o (1) hiring teachers who are highly motivated and deeply
committed to an urban educational system ,
o (2) teachers who live in the district are more likely to vote for
district taxes , less likely to engage in illegal strikes, and more likely
to help obtain passage of school tax levies,
o (3) teachers living in the district are more likely to be involved in
school and community activities bringing them in contact with
parents and community leaders and are more likely to be committed to
the future of the district and its schools,
o (4) teachers who live in the district are more likely to gain
sympathy and understanding for the racial, social, economic, and

urban problems of the children they teach and are thus less likely to be
considered isolated from the communities in which they teach,
o (5) the requirement is in keeping with the goal of encouraging
integration in society and in the schools.
o

What if a custodian is applying to the school district and the school says that they must
also relocate?
•

Should
o
thisyou
All rulewould
apply to him?
need is aIfrational
it applies to teachers
reason betweenwhy
thenot to the
hiring custodian?
process and
this requirement.
• Should costs be considered? What if the town is extremely costly to live in?
• Why else would cities want people to live in the communities where they work?
o They can get to work on time, the quality of their work would be better, to
recycle taxes, help your own community by cutting down on
unemployment.

-City lifted the requirement to have been living in the city for certain jobs because they
were not getting enough qualified applicants for the position.

Collins Food International v. INS :

o Facts : Collins, through a store manager, hires an employee from
Sizzler’s in California to work at a Sizzler’s in Phoenix. When
employee shows up to work he doesn’t have his working documents so
he is not allowed to work. The next day he returns and presents
driver’s license and fake SSI card. INS fines Collins for hiring an
alien to work.
o Holding : offering alien a job prior to verification of documents
could not support finding of constructive knowledge, and employer
complied with verification requirement.
o Rule: Employers need not verify documents prior to extending an
offer to work but must before commencing employment.
• Employer offered the job on the telephone and accepted his forged
documentation. The INS charged the employer with hiring an alien.
o The court held that the employer was not required to check the
documentation before the employee began working for wages and also
that the documentation only needed to reasonably appear to be valid to
meet the verification requirement.

IV. EMPLOYER INFORMATION-GATHERING

(A) INTERVIEWS
Lysak v. Seiler Corp, 614 N.E.2d 991 (Mass. 1993)
o Facts : In interview woman tells employer without solicitation that
she is done having children. She is terminated after she discloses that
she is pregnant. It comes out that she was pregnant—and knew of it—

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 during the interview. P brings sex discrimination suit against
employer.
o Holding : employer was entitled to discharge employee on basis of
her unsolicited and false statement at time of interview when she knew
she was pregnant
o Rule: Employer can terminate employee for giving knowingly
false information on an interview.
• What if a private employer made the same requirements of relocation which was
seen in the Wardwell case?
o When you have a government actor then you have constitutional
consideration in any policy that you have, if you are a private employer
you can make any sort of rules you want as long as they are not
discriminatory.
! A job offer which requires you to live within a certain mileage of
the office, it is perfectly alright for this employer to do so
• The government will not interfere in private hiring
practices unless they are illegal or discriminatory.
• Private employers can really set whatever parameters they
want as long as they are not discriminating.

(B) Employment References - Whenever an employer publicizes the reasons for

firing an employee, gives a negative reference to a subsequent employer, or discloses
sensitive employee information to other employees, there is a risk that the employer
will be subject to either a defamation or invasion of privacy claim.

• DOES AN EMPLOYER HAVE A LEGAL OBLIGATION TO PROVOIDE

A REFERANCE FOR A FORMER EMPLOYEE??
o NO but if the employer does decide to provide a reference then it must be
factual
o the employer can simply say that they do not give references and simply
avoid a lawsuit altogether
! Does the employer have an obligation to inform the new
prospective employer of the negative activity?
• Do we want to instill a burden on the former employer to
make them divulge this information?
o What if the prospective employee is applying for a
job as a janitor in a school and he was fired form the
last school for molesting a child?

Singer v. Beach Trading Co., 876 A.2d 885 (N.J. Super Ct. App. Div. 2005)

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o Facts : Employee is terminated from new job when her old job
tells the employer that she was not a VP but a customer service
representative. She sues for negligent misrepresentation .
o Holding : Reverse and remand to use new negligent
misrepresentation test.
o Rule: Employer can be held liable for the negligent
misrepresentation of a former employee's work history if:

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 misrepresentation of a former employee's work history if:
o (1) the inquiring party clearly identifies the nature of the inquiry;
o (2) the employer voluntarily decides to respond to the inquiry,
and thereafter unreasonably provides false or inaccurate
information ;
o (3) the person providing the inaccurate information is acting
within the scope of his/her employment ;
o (4) the recipient of the incorrect information relies on its accuracy
to support an adverse employment action against the plaintiff; and
o (5) plaintiff suffers quantifiable damages proximately caused by
the negligent misrepresentation.

• Defamation: defamation focus on reputational injuries to persons as a result

of false statements being published to others about them
o
False and defamatory statementrd
o Unprivileged publication to a 3 party
o Has to be some sort of negligent dissemination of the information on the
publisher
o Has to be some kind of harm or special harm caused by the publication
• Defenses to Defamation are :
o Truth : truth of the statement
o Privileged communication: conditional privilege of common interest
(whether the new employer should know why the former employer was
terminated such as a criminal offense) " this conditional privilege is
eliminated by the presence of malice or reckless disregard!!
• For non-public figures: to have a defamation claim you have to have a false
statement that is published to a third party and is only a negligent dissemination
standard.
• To have a defamation claim involving a public figure there has to be malice which
is reckless disregard
• Conditional privilege is a defense to a defamation claim: As a general matter,
employers have a conditional privilege to publish the reasons for an employee’s
termination to other employee’s.
o A plaintiff wants to overcome this claim by showing malice which is a
knowingly false statement or reckless disregard for the truth (actual
malice standard)
o Abuse of the privilege may also occur if the alleged defamer engages in
excessive publication of the defamatory statement ‘by speaking

defamatory words in the presence of persons whose knowledge of them in

unnecessary to the protection of the interest in question.’

Lewis v. Equitable Life Assurance Soc’y, 389 N.W. 2d 876 (Minn. 1986)
• Gross insubordination case: the employees were not fired for performance reasons
because they were good performers.
o The court finds that in an action for defamation the public

Defamation: elements –
• False statements
• Publication
• Negligent dissemination
• Harm

Malice replaces negligence only when you have a person that is a public figure!!!
(the test is the same but your substituting negligence for malice)

Public figure – celebrity, senator, congressman, even a police office or doctor or nurse
has been held to be a public figure (depends on the circumstances of the case)

Qualified Privilege – has to be a common interest; it has to be a good faith dissemination

and you have to weigh the public policy interests as well
- the need to share the information and your balancing public policy concerns and
there is a common interest
*If the employer makes this publication with malice then the privilege does not apply and
it is not a defense or qualified privilege.

(c) Invasion of Privacy – invasion of privacy claims based on pubic disclosure of

private facts focus on the violation of the employee informational privacy interests
when true statements of fact are disclosed to the general public and the public has
no legitimate concern in knowing those facts.

Different from defamation claims because hey involve (1) a true statement of facts, and
(2) the focus, rather than on publication to a third party, is on unwanted publicity to the
public at large.

Eddy v. Brown, 715 P.2d 74 (Okla. 1986) – the court considered a public
disclosure of private facts claim in the contxt of a supervisor disclosing to
a limited number of other employees that the plaintiff had seen a

psychiatrist.
because only aThe court
small REJECTED
group a claim
of co-workers of told,
were unreasonable publicity
and this tort
normally requires that the general public be informed.
o Facts : A couple of Eddy’s co-workers make fun of him after they
out—through his medical record—that he is undergoing psychological
evaluation. P sues for IIED and invasion of privacy. Claim for

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Page 8 of 36
 intentional infliction of emotional distress and invasion of privacy.
Plaintiff worked for the oil refinery dept of texco and he claimed that
his employer had him evaluated with a psychiatrist and the employer
claimed it was for employment records and that his supervisor was
legitimately concerned for his mental health. The court found that
there was no intrusion because they believed the employer was acting
in good faith. The foreman told the coworkers and made the
publication that he was getting psychiatric help so he is suing for
invasion of privacy. The court holds that this was a legitimate concern
for the employer to have the employee go for a psychiatric evaluation
and there were not enough people told to meet the publicity
requirement.
o Holding : Because psychiatric visits legitimate concerns of his
supervisor, they were not actionable as unreasonable intrusion upon
employee’s seclusion. Furthermore, since only a few people knew
about the psych visits, it did not amount to “publicity.”
o Rule: Invasion of privacy:
o Publicity
! “Publicity” means that the matter is made public, by
communicating it to the public at large , or to so many persons that the
matter must be regarded as substantially certain to become one of
public knowledge ... The difference is not one of the means of
communication ... [but] one of a communication that reaches, or is
sure to reach the public.
! Rest. 2d Torts § 652D
o Unreasonable
o Given as a private fact

• The court applied a three part test:

o 1. publicity
o 2. unreasonable
o 3. given as a private fact

• The court is obviously concerned about publication and if the information goes
beyond the company but the court doesn’t even address this because they simply
say that not enough people were told about the information
o The bigger question in this case is: by disseminating to just 2 employees
isn’t the company essentially telling the whole company?
o Why is the court making the assumption that this information was just
limited to those few people?
! The court can only rely on the record and cannot assume that they
have told other people
o Different states have different venues regarding if they are employee or

employer friendly

Bratt v. IBM Corp., 785 F.2d 352 (1st Cir. 1986)

o Facts : P sues IBM for right of privacy for:
o (1) disclosing P’s use of a company wide open-door policy;
o (2) circulating memos that said he was paranoid and had mental
problems; and
o
(3) allowed
without IBM’s physician to discuss P’s medical problems
P’s permission.
o Holding :
o (1) discussion of open-door policy is permitted because it’s not
intimate or highly personal
o (2) circulating memos about P’s mental health was not invasion of
privacy because it was not widely disseminated and limited to
managers that would work with P.
o (3) REVERSED and REMANDED because a reasonable fact-
finder could have found that IBM gave P a reasonable expectation of
privacy in providing an “in-house” doctors—even though the doctor
that disclosed this was not “in-house” but a “local examining
physician.”
o Rule: Invasion of Privacy balancing test:
o Balance
! the degree of intrusion on privacy created by this disclosure
Against
! the legitimate business interest in that information held by the
employees to whom the disclosure was made.
Nelson v. NASA: (this case is bad law now but not for the ruling we are using it for)
• Science support staff is applying for renewal of contract with NASA and the
NASA application process consists of a background investigation. NASA claims
they need financial history, emotional and mental stability, alcohol abuse
statement etc. Their excuse for all this information was national security issues.
The employees are asking for injunctive relief.

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 The employees are asking for injunctive relief.
• Injunction entails balancing the merits of likelihood of success on the merits vs.
irreparable harm/monetary
• The government has to show when prying into someone’s personal
background:
o Heightened scrutiny standard so they have to show legitimate state
interest and the government’s action have to be narrowly tailored to
meet the legitimate interest.
• The court found that all of these questions into a person’s background is too broad

and othe If
court
theyishad
notnarrowed
narrowly the
tailoring its actions
questions to meet
specifically theitinterest
then of security.
might have been
justified.
o The court also said that the choice facing these employees was simply that
they either disclose the confidential and private information to potentially
have their rights violated or you lose your job

! This turns up to be a no win situation and this is why the court

granted the injunction in this case

Is it a legitimate concern for employers to ask about the financial background of their
prospective employees, credit checks or about their previous mental conditions?
• Probably depends on the position and the type of job you are trying to get

V. NEGLIGENT HIRING/RETENTION

Malroney v. B&L Motor Freight, Inc., 496 N.E.2d 1086 (Ill. App. 1986)
o Facts : D trucking company hires truck driver. On the application
it asks if he has committed any vehicular or criminal offenses. He says
no. The answer is not verified by D. While on duty, the trucker picks
up hitch-hiker (P) and sexually assaults her. P sues D under
respondeat superior.
o Holding : Employer has duty to entrust truck to competent
employee fit to drive a truck with a sleeping compartment.
REMANDED to determine whether hiring was negligent. The court
holds that the existence of a duty is not contingent on forseeablility
alone . The court says that in this summary judgment motion there was
an issue of fact concerning whether the employer had a duty to make a
more detailed background investigation
o Rule: Negligent Hiring Elements :
o Duty – trucking company employer has duty to public to entrust
truck to competent employee.
o Breach
o Causation
o Damages

Keller v. Koca, 111 P.3d 445 (Colo. 2005)

o Facts : D owned drycleaners where Uzan was GM and had keys to
the store but was not allowed to let 3rd parties in during non business
hours. Uzan lets in a 12-year-old (P) during non-business hours and
sexually assaults her. P sues.
o Holding : Employer did not owe duty to victim, since harm to her
was not foreseeable risk.
o Rule: Duty element requires foreseeability.

o The court said it was not foreseeable that the employer should envision
this situation from happening
! Should the employer have had the foresight that this would happen
and taken preventative measures?
• The court did leave open the possibility that this girl can
have some sort of premises liability action

o But the court will not place the blame or

responsibility on the employer
! If you place the blame on the employer in
this case then where do you draw the line for
the future? When does the employer’s
responsibility end then?
- The forseeablility aspect gets rolled into the duty aspect

Kadlec v. Medical Center v. Lakeview Anesthesia Associates, 527 F.3d 412

(5th Cir. 2008)
o Facts : Anesthesiologist lets patient lapse into vegetative state at
current job. Admits to on-duty narcotic use. Current employer sues

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Page 10 of 36
 current job. Admits to on-duty narcotic use. Current employer sues

old employer
omissions for employee’s
of the negligent misrepresentation
drug use. on old referrals and
o Holding :
o (1) defendants had duty not to make affirmative misrepresentations
to clinic in their referral letters concerning anesthesiologist;
o (2) statements in PC shareholders' referral letters were materially
misleading; but
o (3) hospital's referral letter that did not recommend
anesthesiologist to clinic was not affirmatively misleading;
o (4) defendants did not have duty to disclose in their referral letters,
absent misleading statements;
o Rule: Employer does not have a duty to disclose, but if they
choose to disclose, they have a duty to not make affirmative
misrepresentations concerning previous employees.

• The new employer sues Lakeview for intentional misrepresentation and also for
negligent misrepresentation.
o Intentional misrepresentation requirements:
Misrepresentation of a material fact
•

Made with intent to deceive

•

Causing justifiable reliance with resultant injury

•

o Negligent misrepresentation elements:

Legal duty on part of defendant to supply correct information
•

Breach of that duty which can occur by omission or affirmative

•

misrepresentation
Breach must have cause damages to the plaintiff based on the
•

plaintiff’s reasonable reliance on the misrepresentation

TESTING OF APPLICANTS AND EMPLOYEES

VI. POLYGRAPH AND PERSONALITY TESTS

Soroka v. Dayton Hudson Corp., 1 Cal. Rptr 2d 77 (Cal.Ct. App. 1991).
o Facts : Target security applicants brought class action suit against
the company for requiring them to submit to a psychological

screening. The test involved questions of religious beliefs and sexual

orientation.
o Holding : Target's preemployment requirement of psychological
screening violates both the constitutional right to privacy and statutory
prohibitions against improper preemployment inquires and
discriminatory conduct by inquiring into its applicants' religious
beliefs and sexual orientation
o Rule: Under California Constitution, any violation of the right to
privacy of job applicants must be justified by a compelling interest.
o There is no compelling interest to ask a store security officer about
sexual orientation or religion .
o The employer’s justification for asking questions about religion
and sexual orientation was that these questions were to measure
emotional stability. The court says there is no correlation between
asking about emotional stability through asking someone about their
religion or sexual orientation.

Chapter 9: Employee Privacy Protections

- Congress passed the Employee Polygraph Protection Act of 1988 which makes it
unlawful for an employer to require or request an employee or applicant to submit to
a polygraph o ruse the results of such tests, except in limited circumstances.
- The act does not apply to public employees (because they have constitutional
protections), national defense and security contractors, security guard firms, and drug
manufacturers and distributors.

VII. DRUG TESTING AND THE CONSTITUTION

- The laws of workplace drug testing are divided into public employment (where the
14th amendment applies) and private employment (where employees must rely on
either statutory schemes or common law theories like the tort of invasion of privacy.)
- Public employees and the 14th amendment:
o Public employers must satisfy a less stringent “reasonableness” standard in
order to engage in drug testing.
! Public employees are most likely to be successful in challenging drug
testing regimes in situations where employees are not involved in
dangerous, sensitive work or where there is no evidence to suggest
that employees have been using drugs.
! Random drug testing have been allowed for employment positions
such as teachers because they play an impressionable role in the lives
of young children.

National Treasury Employees Union v. Von Raab, 489 U.S. 656 (1989) - the
question presented was whether federal customs agents could be
subjected to drug urinalysis testing as a condition of their being promoted
or transferred, even though there was no history of a drug problem in the
Customs Service. Using a constitutional balancing test, the court noted

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Page 11 of 36
 that the immediacy of a government concern and the minimal nature of
the intrusion outweighed the individuals privacy interest and permitted
the government to drug test customs agents.
o Facts : Customs agents are notified and subjected to drug testing
prior to promotion/transfer
o Issue: Whether federal customs agents could be subjected to drug
urinalysis testing as a condition of promotion or transfer even where
there’s no history of a drug problem.
o Holding : Urinalysis does not violate 4th Amendment because
Government has a reasonable interest in drug testing customs officers
—immediacy of the government concern outweighs the minimal
intrusion.
o Rule: DRUG TESTING Balancing:
o public need for the program
against
o the individual's privacy concerns implicated by the tests to
determine whether a warrant, probable cause, or some level of
individualized suspicion is required in this particular context.

Chandler v. Miller, 520 U.S. 305 (1997)(contrast with Von Raab) – the court
struck down a state statute in Georgia that required random drug testing
of candidates for public office.
o Facts : State statute in Georgia requires those running for public
office to submit to a drug test.
o Holding : Georgia's requirement that candidates for state office
pass a drug test does not fit within the closely guarded category of
constitutionally permissible suspicionless searches
o Rule: Where public safety is not genuinely in jeopardy, Fourth
Amendment precludes suspicionless search, no matter how
conveniently arranged.

- For private sector employees : such challenges usually maintain that the process of
specimen collection invades employee’s privacy or that the test itself reveals
sensitive private information.
o Private employees rely on legal arguments based on state constitutional
provisions, statutory regimes, or common law doctrines but are generally less
successful than their public employee counterparts.

VIII. DRUG TESTING (CONCLUSION)

19 Solid Waste Dept. Mechanics v. Albuquerque; 156 F.3d 1068 (10 th Cir.
1998)
o Facts : City employees challenge city’s alcohol- and drug-policies
on the grounds that they are violations of 4th and 14th Amendments.
o Holding : City's program requiring drug testing of trash truck

mechanics not authorized to drive city vehicles on streets and

highways was not warranted by a special need , and thus constituted

unreasonable search and seizure
o Rule:
o Balancing Test Explained : In balancing intrusion on individuals'
privacy interests against promotion of legitimate governmental
interests, for purposes of determining whether program for drug testing
of government employees constitutes unreasonable search and seizure,
court examines on one side the nature of the privacy interest upon
which the search at issue intrudes and the character of the intrusion
that is complained of, and, on the other side, considers the nature and
immediacy of the governmental concern at issue and the efficacy of
the challenged test for meeting it.

Luedtke v. Nabors Alaska Drilling Inc., 768 P.2d 1123 (Alaska 1989)
o Facts : Brothers working on Alasking drilling rigs are fired by
private employer after refusing to submit to a drug test.
o Holding : (1) drug testing program did not violate state
constitutional right to privacy; (2) employer's actions did not give rise
to cause of action for invasion of privacy; and (3) discharge of
employees did not violate implied covenant of good faith and fair
dealing.
o Rule: With private employer (at-will doctrine!), the state
constitution must afford a right to privacy to invalidate drug test
program.
- Private employees will likely have a difficult time mounting state constitutional or
common law challenges to private work place drug testing programs as long as some
basic procedural benchmarks, concerning notice and timeliness, are followed by the
employer.
WORK ENVIRONMENT
IX. GROOMING AND DRESS
Kelley v. Johnson, 425 U.S. 238 (1976)
o Facts : Policeman brought suit under the Civil Rights Act of 1871
challenging validity of county's hair grooming regulation for the male
members of its police force. The regulation required short hair, no

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Page 12 of 36
 members of its police force. The regulation required short hair, no
sideburns, moustaches, beards or goatees except for medical reasons.
o Holding : Police force regulations were not arbitrary enough to
deprive an officer of his liberty because they were rationally related in
fostering an “esprit de corps” and making officers readily identifiable
to the public.
o Rule: Choice of organization, dress and equipment for law
enforcement personnel is a decision entitled to the same sort of
presumption of legislative validity as are state choices designed to
promote other aims within the cognizance of the state's police power.

Jespersen v. Harrah’s Operating Co, Inc., 444 F.3d 1104 (9 th Cir. 2006)
o
Facts : Female bartender at a casino is told to wear make-up. She
refuses and is terminated. She brings a suit against the casino under
Title VII sex discrimination.
o Holdings :
o requirement that only female employees wear makeup was
insufficient to establish prima facie Title VII sex discrimination based
on disparate impact;
o Court of Appeals would not take judicial notice of asserted fact

that
thanita cost
malemore moneytoand
employee took with
comply moreemployer's
time for a female employee
grooming policy;
and
o grooming policy did not constitute impermissible sex stereotyping,
as would establish that gender played a motivating role in employer's
policy.
o Rule: Private employees may reasonably regulate the grooming
and dress of their employees.

PROTECTING PRIVACY ON THE JOB

X. CONSTITUTIONAL AND STATUTORY RESPONSES
- Fourth Amendment protections (searching offices) – in deciding whether public
employees have such protections, the court should first decide whether the employee has
a reasonable expectation of privacy in different parts of her office. If so, the court should
next balance the privacy interests of the employee against the legitimate interests of the
employer in running an efficient governmental workplace. The “special needs” for
legitimate work-related, non-investigatory intrusions and investigations for work-
related misconduct mean that it is not necessary to obtain a warrant based on
probable cause in this context. Such searches are instead judges by overall
reasonableness .

Bodewig v. K-Mart, Inc, 635 P.2d 657 (Or. App. 1981)

o Facts : K-Mart employee is accused by customer of shorting her
change. The employee is searched and subsequently strip-searched.
She sues K-Mart and customer under theory of outrageous conduct.
o
Holding :
o Rule:

Vega-Rogriguez v. Puerto Rico Tel. Co., 110 F.3d 174 (1 st Cir. 1997)
o Facts :
o Holding :
o Rule: (1) employees lacked objectively reasonable expectation of
privacy against disclosed, soundless video surveillance while toiling
in open and undifferentiated work area;
o (2) employees lacked fundamental right to be free from
surveillance; and

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Page 13 of 36
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o
(3) surveillance did not violate employees' substantive due
process rights

XI. COMMON LAW RESPONSES

Smyth v. Pyllsbury Co., 914 F. Supp. 97 (E.D. Pa. 1996)
o Facts : Employee is discharged for what he send over company e-
mail
o Holding :
o Rule: Termination of at-will employee for sending inappropriate
e-mail did not violate public policy.
o Reasonable expectation of privacy was lost when he sent out
the e-mail over the company server.

Catalano v. GWD Management Corp., 2005 WL 5519861 (S.D. Ga. March 30,
2005)
o Facts : McDonalds strip search case
o
Holding :
o Rule:

XII. OFF-WORK ACTIVITY

- the has to be some nexus between the employee’s off- duty conduct and the business of
the employer.

Rulon-Miller
female employee v. IBM
was Corp., 162 her
fired after Cal.supervisor
App. 3d 241 (1984) – top
discovered she performing
was having a
romantic relationship off-duty with a competitors employee. Th eocurt foidn
that the firing violated the company’s own policy and amounted to a wrongful
discharge. Court also granted intentional infliction of emotional distress as well
because they found that the manner in which the employee was fired was
extreame and outrageous. The court went on to suggest that that an employee
who is fired for romantic off-duty conduct might also have a cause of action in
those states which recognize claims for breach of the implied covenant of good
faith and fair dealing.
• IBM tried to fire an employee that was dating a previous employee that now
worked for a competing corporation. The company had already known about the
relationship before her promotion, she was also a good performer at the company.
The manager called her in after the promotion and said she would have a week to
decide whether she wants her job or to pursue the relationship. The manager then
calls her in the next day and says that she is transferred and at some point fired.
Miller brings a claim of wrongful discharge and intentional infliction of
emotional distress . IBM had a policy of employer privacy and protection of off
work activates as long as they did not affect the work situation or performance.
The employee prevails in this case.

o What if there was a relationship between employees of two competing

corporations who had essential information about the businesses and profit
seeking plans?
! If there is a policy to protect the privacy of the employee (such
as in the IBM case) the employer might win if the jury got the
same jury instruction as in this case which would balance the
privacy interest of the employee and the business interest of the
company.

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Page 14 of 36
 company.
o Is it sufficient for a company to say that this person has a conflict of
interest because they are in the position to share our company secrets with
other people? Is this even is privacy interest?
! At- Will employment means that you can be fired anytime for
anything

McCavitt v. Swiss Reinsurance America Co., 237 F.3d 166 (2d Cir. 2001 )
• Two employees of Swiss co were dating each other and the plaintiff was passed
over for a promotion and brought attention to this to his manager. The employee
was soon fired and he claims that he cannot be fired for his recreational off work
activities. The federal court looks at the highest court in the state of New
York and decides whether dating was seen as a protected recreational
activity. The court decides that dating is NOT a recreational activity.
o look at the sources form where you’re coming up with your causes of
action.
o The whole point of these dating cases is to talk about privacy and to what
extent employers can hold your private life against you to terminate you or
to where they cannot judge you based upon it.
! Exceptions are contracts, promissory estoppel, good faith and fair

o Absent dealing, public policy

a constitutional rightexceptions.
or a statutory right or a contract,
employment is at will and the employer can fire anybody for any
reason .

**only one state that does not have at-will employment is Montana – you need to have
an express statement of cause.

Poirier v. Mass. Dept. of Correction :

FREEDOM OF EXPRESSION ON AND AWAY FROM THE JOB

The public Sector:
- for public employee to make out First Amendment retaliation claims based on their
speech, they must
o Prove that the conduct at issue was constitutionally protected, and that it was
a substantial or motivating factor in the termination. If the employer

discharges that burden, the government can escape liability by showing that it
would have taken the same action even in the absence of the protected
conduct.
Important considerations in carrying out this balance include whether the statements in
question impair the disciplinary authority of superiors, the harmony among co-workers,
the close working relationships for which personal loyalty and confidence are necessary,
of the performance of the employee’s duties or the regular operation of the enterprise.

**if you want first amendment protection is has to be speech and it has to be aimed at a
matter of public concern.
- the protection only applies when it is a matter of public concern!!!!!!!!!!!!!

Rankin v. McPherson, 483 U.S. 378 (1987) – provides an example of the fact
intensive nature of this analysis. A Texas constable fired an employee
after overhearing her say after the Regan assassination attempt that they
should get him next time. The court overturned the employee’s
termination, finding that the statement, when taken in context was an
indirect comment on Regan’s policies and was not literally a threat to kill
the president. Consequently, the statement was protected as a statement
concerning a matter of public concern and the court went on to find that
under the ‘Pickering’ balance, the first amendment right of the employee
outweighed the efficiency interest of the employer.
o Facts : Data-entry employee in county constable office is
terminated because she says, “if they go after him again, I hope they
get him,” in reference to an assassination attempt on the president.
o Holding : (1) statement by employee, made in course of
conversation with coemployee addressing policies of President's
administration, that, “if they go for him again, I hope they get him”
dealt with matter of public concern, and
o (2) constable's interest in discharging clerical employee in
constable's office for making statement did not outweigh employee's
rights under First Amendment.
o

o
Rule : Protected
to determine Work
whether Speech
public Balancing
employer Test :discharged
properly
employee for engaging in speech is whether speech may be fairly
characterized as constituting speech on matter of public concern

• McPherson was appointed as a deputy constable and was conditional for a 90 day
period. All she did was solely data entry and had no contact with the public. She
made a statement after Regan had been shot that, “if they go for him again, I hope
they get him.” The boss asked her about this and she admitted it and they fired
her. One of her justifications was due to the fact that she was African American
and that Regan had not done anything for the African American people.
o The court implements a balancing test to determine whether the speech
was protected. (pg 8 of the case)

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 ! Balance between the interests of the employee commenting on
matters of public concern verses the interests of the state as an
employer and providing sufficient services.
• Public concern:
o Issue was about president
o The court found that the remark was made in a private context and she
didn’t know anyone else was listening. She wasn’t discrediting the agency
and she was not a policy maker.
o The court found that she was terminated in violation of her first
amendment rights because in the balancing test, her rights trumped

the employers.
! There was no dispute that she was fired due to the comment she
made at work.
! The court found that she was commenting on a matter of public
concern.
• The dissent’s concern about this case in general was that
we are expanding the range of protected speech and pretty
much ruling that anyone who is not a policy maker can say
anything they want and we can take no action.

Curay-Cramer v. Ursuline Academy, 450 F.3d 130 (3d Cir. 2006)

o Facts : Former teacher at private Catholic school sued school,
individual school officials, and others, alleging that her termination
after signing pro-choice advertisement in local newspaper constituted
retaliation for protected speech and sex discrimination in violation of
Title VII and Pregnancy Discrimination Act
o
Holding : (1) teacher did not engage in protected activity when she
signed newspaper advertisement, precluding retaliation claim, and
o (2) sex discrimination claim was not cognizable, since it would
necessitate court's assessment of relative severity of violations of
church doctrine, in violation of First Amendment.

- Catholic school teacher had signed a petition for pro-choice rights and was
also involved with Planned Parenthood. The president of the school consults
with
resignthe
asBishop
opposed and
to she was
being fired.
fired andThe
theyschool gave
also said hershe
that an could
opportunity to job
keep her
if she recanted and said she was pro-life. She sues under the gender
discrimination ordinance and the court determines that this has nothing to do
with an illegal employment practice but rather goes to a religious tenement.
o She also has a retaliation claim here
o By saying she was pro-choice; she basically was not protesting any
employment practice here.

For the private workplace :

- Novosel has not been upheld in any other court!!! The current state of the law
is that unless private sector workers have statutory or contractual protections,
such as under a state Hatch Act, individual employment contract, or company
handbook, they remain without workplace protection for their political
affiliations of beliefs.

Novosel v. Nationwide Insurance Co., 721 F.2d 894 (3d Cir. 1983) – based on
the tort of wrongful discharge, in violation of public policy, the ocurt
found that the employer’s termination was in violation of Pennsylvania’s
public policy because that policy encompassed rights of political
expression and association derived from both the federal and
Pennsylvania state constitutions.
o Facts : employee was fired by his employer after he refused to
lobby on a political issue on the employer’s behalf.
o
Holding : (1) former employee's allegations of discharge for
refusal to participate in former employer's lobbying effort and his
privately stated opposition to company's political stand stated claim for
wrongful discharge under Pennsylvania law;
o Rule: Factors to be considered in discharge for refusal to
participate in lobbying:
o whether, because of speech, employer was prevented from
efficiently carrying out its responsibilities ,
o

whether speech
responsibilities , impaired employee's ability to carry his own
o whether speech interfered with essential and close working
relationships , and
o whether manner, time and place in which speech occurred
interfered with business operations.

Jordan v. Ector County, 516 F.3d 290 (5th Cir. 2008)

o Facts : Two County Clerk employees run for County Clerk. When

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 o Facts : Two County Clerk employees run for County Clerk. When
one wins (Morgan), the other (Jordan) stays on but is demoted. After
an incident where Jordan goes into a locked judge’s office, Morgan
fires her. It comes out that Morgan fires her because they were about
to run against each other again.
o Holding : employee engaged in protected activity involving hybrid
of speech and political affiliation
o Rule: For a public employee to prevail on a First Amendment
retaliation claim , she must prove that: (1) she suffered an adverse
employment decision; (2) she was engaged in protected activity; and
(3) the requisite causal relationship between the two exists
o She is trying to enforce the first amendment right of political
activities.
o The court engages in a balancing test Pickering – Connick
o Matter of public concern – the court finds that there is a
matter of public concern and you are balancing this against

the employers interest of having an efficiently run

workplace
o The ultimate opinion in this case was that the employee prevailed
because the court seems to think that she was fired because of the
rivalry going on between her and her boss.
o The court focused on the fact that they were rivals
! If other employees in the clerks office had done the
same thing and weren’t terminated than the
employer has a problem. The motivating factor in
Jordan’s termination could have been the fact that
she was a rival.
! When you are practicing and you have a
discrimination claim like this, the key thing that
you want to look at is how the company treated
other people in the similar situation .

II. DISCHARGE AND TERMINATION OF EMPLOYMENT

A. THE EMPLOY MENT AT-WILL RU LE

Employment at Will Doctrine : the employer can fire you for pretty much any reason
and you can leave for any reason. The employment relationship can be terminated by
either party for any reason or no reason at all at any time.
o This doctrine may seem to favor employers
Distinguishing between reason and good reason: just because you have a reason does not
mean that it is enough for someone to be terminated for. i.e. being 5 minutes late to work.

Chapter 4: (exception in Montana)

- Today at-will employment is the baseline legal rule in every American State
except Montana, which in 1987 enacted the Wrongful Discharge from
Employment Act. (under this statue, after an employee has passed a
probationary period, the employer cannot fire the employee absent ‘good
cause,’ which the statute defines as “reasonable job-related grounds for

dismissal basedoperation,
the employer’s on a failure
orto satisfactorily
other legitimateperform
businessjob duties, disruption of
reason.”

Buian v. Jacobs and Co., 428 F.2d 531 (2d Cir. 1970)
o Facts : P is offered a contract to work in Saudia Arabia offering a
MONTHLY salary for an 18-month contract. He is terminated after
arriving in Saudia Arabia
o Holding : provision of employment contract that ‘it is scheduled
that your assignment in Saudi Arabia will continue for a period of 18
months' was merely one of expectation and was not sufficient to
convert employment relationship terminable at will to contract of

specific duration, particularly where contract specifically permitted

employee to work as long as he desired.
o Rule: An employment contract not specifically intended by the
parties to be any certain duration creates employment relationship
which is terminable at will by either party without cause and
without liability.
o The employee sues under breach of an employment
contract; the employee says that the letter was a contract
! The court rules that the letter was not an intended
contract and was terminable at any time. The
contract was not supposed to be for a given
duration. The carefully chosen language of the

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Page 17 of 36
 letter also
court by the employer
found helped
that there wasthem out here.
no mutual The
obligation
of the parties.
! The employee relied on this job promise but he
didn’t give up his job, his travel expenses were
covered.

If you have at-will employment and your job is taken away, you don’t really have
any remedy. Even under promissory estoppel theory, the most you could probably
get is something like your moving expenses.

B. E ROSI ON OF EMP LO YME NT AT WI LL

Chapter 5 - Contract Erosions of Employment at Will
- since the employment at-will rule is a default rule, it can be changed by
contract (the contract can be written or oral, express or implied, definite term
or satisfaction) or through a contract with the employer and union (this is
called a collective bargaining agreement).
o Definite term contracts:
! Written contract that specifies a length of time, or limits the
circumstances under which the employer may discharge the
employee -> this is no longer employment at will!!
• Issues:
o Which standard of discharge should be implied
into an employment contract that is silent on
that issue:
! Most courts would imply a “just cause”
standard into the term contract if it was
silent on issues of termination or
discharge.
o What does just cause mean?

! Well drafted employment contracts will

outline what just cause is for
termination, but most do not.
! Each party will argue from their own
point of view as to why their action are
correct or justified
o With what consequence can an employee quit

during
! aMost
termcourts
contract?
have held that employment
contracts should be interpreted
symmetrically and that employee’s, like
employers, may terminate the
employment contract for just cause.
o Oral Contracts:
! Although many times these agreements can be upheld in court,
the problems which arise are:
• Nearly every employee has heard language form his
employer assuring job security
o This might just be words of encouragement
which the employee takes to be a legally
enforceable promise
o Employers could avoid such misunderstandings
by constantly reminding employees that they are
employed at will and can be fired at any time
with no notice and for no good reason.
• Second problem is that many courts require the
employee to show not only that the employer made
contractual representations, but also that the employee
furnished additional consideration, beyond continued
employment, in reliance on those representations.
• Third problem is proving exactly what was said years
afterward.
• Fourth problem is the statue of frauds – nullifies oral
contracts which are not performable within one year.
o If an employee asserts a contract for
employment ‘until retirement’ most courts will
refuse enforcement if the employee is young
and therefore not within retirement age. (But
what if the employee were to win the
lottery????)

(i.e.THE PUBLIC
whistle POLICY
blowing, EXCEPTION
exercising - or constitutional) etc.)
a right (statutory
Chapter 6: Tort erosions of employment at will (employment torts)
- Employment tort remedies are far more generous than employment contract
remedies.

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Page 18 of 36
 - Wrongful discharge in violation of public policy :
o The public policy allows the employee to serve the public interest
notwithstanding the employer’s displeasure (public policy tort still applies
even if a contract is signed; this cannot be waived)
! Public policy: 2 ways it can be defined
• 1. require that the public policy be articulated in a
constitution, statute, regulation, or judicial holding
• 2. much broader way is to only require that the employee
articulate a public good or civic duty

Gantt v. Sentry Insurance, 4 Cal. Rptr. 2d 874 (Cal. 1992)

o Facts : Employee is demoted and ultimately terminated for
supporting a co-worker who has claimed sexual harassment against
their employers.
o Holding : employee who was terminated in retaliation for
supporting co-worker's claim of sexual harassment stated cause of
action for tortious discharge against public policy
o Rule: At-will employee possesses tort action when:
o he or she is discharged for performing act that public policy
would encourage ,
o or for refusing to do something that public policy would
condemn
o Addresses a public policy issue – a woman was being sexually
harassed at work and her boss (plaintiff) supported her and took up her
side in advocating for her with upper management. The plaintiff was
advocating on behalf of another who was a subject of sexual
harassment. Ultimately he was demoted from his managerial position

down at
looks to ita as
sales rep positiondischarge
a constructive and he couldn’t
and he keep his books
ultimately so he
left the job.
Bruno (woman), along with complaining to the supervisor also
complained to DFEH (dept. of fair employment of housing). The
plaintiff had cooperated with the investigation of DFEH and as a result
he was demoted.
o Constructive discharge is when your employer makes
your work environment so horrible that you are forced
to resign.
! Finding a new job before you resign affect your
damages award but you can still bring the claim.
o The court says that there was a public policy violation and
they found the public policy in the statute; the anti-
discrimination statute of California.
! The court generally went though a thought
process which asked would you want the public
to do what the plaintiff did without impunity.
(Do we want to encourage this as a public policy

matter? Do we want people to report decimation

who aren’t themselves victims of
discrimination?)
• The answer here is yes
o There has to be an adverse action as well (such as a
demotion or discharge) to bring this claim.
o
The court was also looking at public policy questions of
(along with the discouragement of discrimination)
employees feeling comfortable to cooperate or tell the truth
without the fear of being fired.

Arres v. IMI Cornelius Remcor, Inc., 333 F.3d 812 (7 th Cir. 2003)
o Facts : Employee suggested to employers that they terminate
people who may have fraudulent SSI cards. Employer tells her to

notify
becausetheshe
employees
believes ittotocorrect the error. She refuses to do this
be unlawful.
o Holding : fact that employee may have had federal remedy against
employer under Immigration Reform and Control Act did not
automatically preclude employee's state law tort claim of retaliatory
discharge
o Rule: Public Policy exception is allowed even if the employee
asserting it is incorrect about the law which he or she is trying to
uphold.
o A theory of retaliatory discharge under Illinois law requires an
employee to show:
o (1) that she had been discharged;
o (2) that her discharge was in retaliation for her activities; and
o (3) that her discharge violated a clearly mandated public policy of
the state of Illinois.

• An agency came back to the defendant and said that 10% of the staff didn’t fill
out their W2 forms correctly and the information (Social Security Numbers)
didn’t line up. The company sought legal counsel and sent letters out to correct
the information and supplement it. Arres refuses to cooperate and process
because she believes the people are still lying and wont process the information
and she gets fired because the company says that this was poor performance. She

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Page 19 of 36
 and she gets fired because the company says that this was poor performance. She
brings suit.
o The court says that the employers attempt to supplement the information
was reasonable but this employee took it upon herself to be judge and jury
and everything else without consulting anybody and ultimately lost her
job.
! Although she believed what they were doing was against the
law, she probably didn’t go about her objection the right way.
! The court did not find a public policy exception because she
took action in to her own hands for her own idiosyncratic view
of what the law is.

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You really can’t have employees freelancing and doing

•

their own thing when the employer is asking the employee

to do something reasonable here.
o In some cases it is warranted for the employee to
blow the whistle but here the employer is acting in a
reasonable manner.
CEPA – conscientious employee protection act (NJ)

Serrano v. Christ Hosp., 2007 WL 4462723 (N.J. Super Ct. App. Div. 2007)
• Plaintiff was employed as a security at a hospital and had signed a confidentiality
agreement. The plaintiff had to interpret for an elderly woman who thought to
have meningitis and she also had grandchildren who may have had it. (She saw
him cough and she said that the kids shouldn’t go to the school.) The school
asked why the children were being pulled out of class and the secretary tells them
and is subsequently fired for disclosing the information. The family sues.
o
The
this. hospital wins oncourt
The appellate summary
looks judgment but the issue
at the procedural appellant
that court
there overturns
are no
findings of fact and the judge is not clear.
o Regarding the public policy issue the court says that even though
there is not specific statute to allow this, there is a public policy
interest. The court balances the idea of confidentiality with laws that
are in effect to protect children .
! There is also a public policy interest in the confidentiality of
patients but there are exceptions to this interest.
• The court says that there is a public policy here that raises
the interest of children above people like us.
o The court reverses the decision.
o The court here is using a balancing act of conveying confidential
information and protecting young children. (these are the two public
policy issues in play)
! The interest of children here outweighs but the court will let the
jury here decide which one outweighs for sure without being
definitive.
• The court left this decision up to the jury

Public policy claims can arise when there is a statutory or constitutional right. They
can also arise when you refuse to commit an unlawful act or if you are exercising a
statutory right.
- The manner in which you go about trying to establish this public policy
exception is also important. (i.e. the example of the case where the
employee was fired for breaking out into a fist fight while trying to
prevent someone from drunk driving. Although the intentions were
noble, the employee could have gone about accomplishing this in a better
manner!!)
o There is a means by which you try to enforce the public policy or
whistle blow that the courts look at.

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 For the exam you just have to say that there is a public policy exception that could apply
but don’t necessarily need to know the circuit.
XIII. BREACH OF CONTRACT TERMS
Breach of Contract Terms :
- For a contract you need to have an offer, acceptance, consideration.
o There can be two kinds of contracts – unilateral or bilateral
o Terms of a contract are bargain for exchange

Gordon v. o
Matthew
Facts : Bender & Co.,
Employee 562 F.Supp.
is terminated right1286 (N.D.
before Ill. 1983)
the 8-year mark of
employment where his pension would have kicked in.
o Holding : Employer could not terminate (in bad faith) prior to the
vesting of pension to avoid paying the pension.
o Rule: Employee at will may not be deprived of commissions , in
large part “earned” prior to separating from employer, by discharge
made in bad faith and intended to deprive employee of the
commissions.

• Gordon sold overpriced law books. There wasn’t an employment contract and
they both worked very well and after a while they downsized his district and there
was a letter which said that he has to perform to satisfaction and meet the same
sales performance in order to continue. There was no time set. If he met his
goals, he would be taken off probation and be stored to same status as he was
before. The offer here is dependant upon the satisfactory performance of the
plaintiff. Gordon gets fired and he filed 12 count complaints.
o
The court says that satisfactory performance is a subjective standard as
compared to just cause. Satisfactory performance is applied in every
contract.
! Just cause was not spelled out anywhere in the companies policy
so isn’t that essentially subjective as well?
• The court says that they should have had employment
termination based on just cause rather than satisfactory
performance.
o
The court here says its not a contract;
! Unless you have an express written contract it’s very difficult
that the court will enforce a contract claim just based on oral
promises or discussion.

Scribner v. Worldcom, Inc., 249 F.3d 902 (9th Cir. 2001)

o Facts : Employee is terminated by his employer when they are
trying to sell a division of the corporation. The corporation frames the
termination as “for cause” to avoid having to honor stock options to
employee.

o Holding : committee breached duty of good faith and fair dealing it

owed under Washington law when it found employee's termination to
be with cause for purposes of option contracts
o Rule: Once again, you cannot deprive an employee of bargain-for
terms (pensions, stock options) by operating in bad faith.

- Here we have a stock option contract. Scribner was terminated to facilitate an

asset sale and he was fired without cause. This case is about what cause is or
is not. The court granted summary judgment for the employee and the
appellate court upheld. The court looked at the contract and it wasn’t clear
exactly whether there was just cause provision and exactly what just cause
meant. The terms of the contract were interpreted by the stock option
committee who reviewed Scribner’s case and they determined that he was
terminated for cause. The purported cause in this case the court determined
was a performance related term.

Pugh v. See’s Candies, Inc., 171 Cal. Rptr 917 (Cal. Ct. App. 1981 ) –.
o Facts : Wayne Pugh, a 32 year employee of See’s Candies, had
started as a dishwasher and worked his way up to Vice President of
Production, and a member of the board of directors. Prior to his
termination, See’s enjoined a record setting year for which Pugh was
largely responsible, and See’s never gave Pugh any indication that his

performance
form was less
a trip, See’s firedthan
himstellar.
withoutNonetheless,
explanation. when
PughPugh
sued returned
for breach
of contract.
o Holding : Court of appeals held that employers conduct can give
rise to an implied promise not to act arbitrarily creating an implied in
fact contract. Conduct which created this implied in fact contract
was the duration of Pugh’s employment, the commendations and
promotions he received, that apparent lack of any direct criticism

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Page 21 of 36
 promotions he received, that apparent lack of any direct criticism
of his work, the assurance of job security he was given, and the
employers acknowledged practice of not terminating
administrative personnel except for good cause.
o Rule: ** a later case retreated this case by clarifying that long
tenure is one factor in the determination of an implied in fact
employment contract, but it cannot alone form such a contract.

XIV. EMPLOYEE HANDBOOKS

Employment manuals:
- these manuals promote consistency in the treatment of employees, which in turn
both improves employee morale and decreases the likelihood of discrimination
suits (which are often predicated on inconsistent treatment)
- The manuals fulfills a statutory notice requirement
- The manuals can create a defense in other types of employment claims

- Employment manuals efficiently communicate to employees basic information

about the workplace
- Employment manuals can also create employment contracts
o It depends on the state as to whether the manual can be upheld even if the
employee had no knowledge about it or whether they must have read it
- An employment manual can may contractually convert at-will employment into
just-cause employment by implication
o Employers can avoid this handbook claim by adding a disclaimer into the
handbook which is 1. prominent, 2. clear, and 3. and specific, reminding
the employee that the position is at will.
- For amendments: (best way is to have a disclaimer in the front to avoid issues)
o If the handbook has a disclaimer reserving the right for the employer to
rescind or modify information, this is easy to do.
! Employer simply needs to give employee adequate notice of the
changes
o If the handbook has no such disclaimer than the employer might have to
jump through contractual hoops
! Then the modification has to be done in traditional contractual
ways through offer, acceptance and consideration, yet other courts
take the position that the promises in a manual only bind the
employer as long as they wish to be bound and yet other courts
have held that employers can unilaterally modify the job protection
promises only after a reasonable time, with reasonable notice, and
without interfering with the employee’s vested benefits.

Woolley v. Hoffman-LaRoche, Inc., 99 N.J. 284 (1985)

o Facts : P works as an engineer for D. There is no written
employment contract. After writing a report about piping problems
that his superiors did not like, he is asked to resign or be fired. P
declines. P is fired.
o Holding : absent a clear and prominent disclaimer , an implied
promise contained in an employment manual that an employee will be
fired only for cause was enforceable against employer even when
employment was for an indefinite term and would otherwise be
terminable at will.
o Rule: An employment manual can contractually obligate the
employer to the terms within it (unilateral contract!)

Bankey v. Storer Broadcasting Co., 432 Mich. 438 (1989)

o Facts :
o Holding : In Michigan, employer may unilaterally change written
discharge-for-cause policy to employment-at-will policy, even though
right to make such change was not expressly reserved from onset
o Rule: For revocation of discharge-for-cause policy to become
legally effective, reasonable notice of change must be uniformally
given to affected employees .

Nicosia v. Wakefern Food Corp., 136 N.J. 401 (1994)

o Facts : Low-level employee (P) is fired for mishandling
merchandise. P files wrongful termination suit for not following the
manual’s procedures. The manual contains a disclaimer on the first
paragraph of the first page of a 160-page manual but was only
distributed to 300 of the 3,000 of the employees.
o Holding : employee handbook created implied contract of
employment.
o Rule: Disclaimer location: In determining whether handbook is
enforceable contract of employment, courts look to reasonable
expectation of employment.

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Page 22 of 36
 expectation of employment.
o

Distribution : the handbook must be widely distributed

XV. PROMISSORY ESTOPPEL
Promissory Estoppel: (usually a second best claim that is used when a straightforward
breach of contract claim in untenable)
- The contract theory of promissory estoppel enforces promises that induce
reasonable reliance. A promissory estoppel claim can be divided into 4
elements:
o 1. a promise
o 2. which the promisor should reasonably expect to induce action or
forbearance
o 3. which does induce such action or forbearance
o 4. resulting in injustice
- Such claims are usually made the employer makes a job offer and the
prospective employee resigns her current job and moves to the employer’s
place of employment, and the employer rescinds the job offer at the last
minute. (most courts would say that the offer was illusory, as neither party
was bound to anything and the original job offer as at-will)
o Many plaintiff who move for job offers in this scenario argue that the
relocation constituted “additional consideration” sufficient to support
an implied promise by the employer to discharge only for cause.
(depends on the court if they will uphold this)

Pepsi-Cola General Bottlers, Inc. v. Woods, 440 N.E.2d 696 (Ind. App. 1982)
o Facts : P is orally promised a job with Pepsi provided that she quit

her other jobs. She discloses that her boyfriend works for Coca Cola.
She is terminated before she reports to work. She subsequently finds a
job at the Ramada. P sues on promissory estoppel theory.
o Holding : P had right of action under promissory estoppel, but
since defendant could discharge plaintiff after a single day's work
without incurring liability and since there was insufficient proof of
out-of-pocket expenses incurred in reliance on defendant's promise,
plaintiff was not entitled to recovery.

o Rule: Executory indefinite employment contract is not

enforceable, and is terminable at will of either party.
o If tenure of service cannot be determined from terms of contract,
such contract is one at will, and may be terminated at any time

• Worker is designated to start working on March 26, and is interviewed on March

6th. At the interview it comes out that her boyfriend works for Coke. The

employer
started said She
work. that had
it wasn’t a problem.
to work Pepsiatdischarged
for 26 weeks Ramada andherthen
before she found
finally even a
job that would pay her same amount as Pepsi.
o She wins at trial and was awarded $2,100 for the 26 weeks that she earned
less than she would have earned at Pepsi.
! Pepsi appeals and Pepsi wins because the court said that there
wasn’t a term contract and she could have been fired even
after 1 day. Also the damages were just too speculative and
she couldn’t show it.
! The court says that promissory estoppel is defiantly a viable claim
but there was no work contract and she could have been fired in
one day. He recovery could have been something like moving
expenses
• Promissory estoppel is a viable theory but the problem
is the damages; so you want to make sure that your
damages are reasonable in relation to the job offer and
something moving expenses etc. You have to make sure
the damages are not speculative. The damages have to
be based on reasonable action someone would take in
response to a job.
• Promissory estoppel is a contract theory but its not really a
contract, it is only to get you the damages from relying on a
promise but in a reasonable light.
• The benefit for Pepsi to appeal this judgment is so that they
wouldn’t have to pay salary; they’ll pay the moving
expenses but in any other case the salary might be much
more than the one in this case.
• If it is an at-will situation then you will not collect your
salary. It is far too speculative because you don’t really
know how long you would have worked there.

XVI. COVENANT OF GOOD FAITH AND FAIR DEALING

Implied Covenant of Good Faith and Fair Dealing:
- good faith not applicable to at-will employment:
o many courts have held that the implied covenants of good faith do not
apply to at-will.

Murphy v. American Home Products Corp., 448 N.E.2d 86 (N.Y. 1983) -

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Page 23 of 36
 o Facts : P who has no written contract is allegedly fired for
uncovering millions in illegal financial manipulations and for his age.
P argues that D was bound not to dismiss employees for reasons
contrary to public policy.
o Holding : there is no implied obligation of good faith in at-will
contract of employment
o Rule: Good Faith: (NY) an obligation of good faith and fair
dealing on the part of a party to a contract may be implied and, if
implied will be enforced. The covenant of good faith will not,
however, fetter an employer’s right to terminate an employee.

Accountant Joseph Murphy claimed that he was fired because he had told the board that
company officers were engaging in accounting improprieties. Murphy argues that the
covenant of good faith and fair dealing should be implied into his at-will employment
contract, and that because it was part of his job to report accounting improprieties, his
discharge violated the covenant. NY court of appeals refused to imply the covenant of
good faith into the at-will relationship. Any limitation to the employer’s right to fire
should come from legislature or an express contract.

He wasn’t
because heahad
contract employee
been there so he
so long tries
even to usehe
though thedidn’t
goodhave
faithaand fair dealing
contract. The
court says that you cannot have a breach of contract theory without an
underlying contract .
o Murphy also tired to alleged a public policy/whistle blowing exception!!
! He was saying that this company was engaging in fraudulent
accounting practices and he tried to blow the whistle and was fired
and now he is trying to get the state of NY to protect him.
! The court did not accept his public policy exception and said
that the legislature can deal with that if they would like to.
• **NY later passed a whistle blowing statute which says that if you were trying to
stop a public health and safety issue, you have to prove that there is a health or
safety issue (very restrictive) . In NJ, all you need is a reasonable belief that
your employer was breaking the law even if he wasn’t. There is also a one
year statute of limitations in the NY whistler blower claim.

***other courts have implied the covenant of good faith into at-will employment, but
have defined good faith narrowly to mean that employers cannot expropriate benefits
already earned by employees. (see Fortune v. National Cash Register)
Fortune v. National Cash Register, 364 N.E. 2d 1251 (Mass. 1977)
o Facts : P is employed by written contract as a salesman who
receives commission for his sales. Prior to completing a big sale, the
company terminates him.
o Holding : (1) even though salesman's contract was terminable at
will, there was an implied covenant of good faith in the contract, and
(2) evidence sustained determination that employer had discharged the
salesman in order to avoid paying certain bonuses to the salesman.

o Rule: (MA) Under covenant of good faith and fair dealing,

employer cannot terminate employee to avoid contract terms.

• Fortune worked for Cash Register and was an at-will employing. He got a salary
plus a bonus/commission. In 1963, Fortune received an order for a million dollars
for a new machine that National had developed. Fortune arranged a
demonstration and after it National placed an order for 2008 machines which was
4 million dollars worth. Fortune’s bonus would have been $96,000. Fortune was
terminated but he was asked to stay on to facilitate the transaction. Fortune only
received 75% of his bonus and National said he would not receive the rest of his
bonus. Before he was fired, the company asked him to retire but when he said no,
the company fired him.
o At trial the jury made a finding that the defendant acted in bad faith and
the jury awards him $45,000.
o
On theis appeal
there the company
no contract and theresays
wasthat they don’tatowe
employment willhim anything
so they because
can fire
anyone for any reason or no reason at all. The court found that fortune
here is entitled to the jury to render a decision based on the motivation of
your employment action. This was a very fact specific inquiry and they
did what they did in order to get out of paying Fortune his bonus and
deprived him of compensation.
o Good faith and fair dealing is generally incompatible in the at-will
doctrine and you generally need some kind of contractual basis.

The Jury found that NCR had fired Fortune on bad faith to disqualify him form his 25
percent of commission and awarded damages. Supreme Court affirmed and held that
where commissions are concerned, the employer’s decision to terminate should be made
in good faith

C. OTHER PROTECTIONS FOR EMPLOYMENT SECURITY

- Successful claims of wrongful discharge in violation of public policy typically
fall into one of four categories :
! 1. refusing to commit an unlawful act
• Examples are an employee refusing to testify and
committing perjury, defrauding employer’s customers, or

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Page 24 of 36
 committing perjury, defrauding employer’s customers, or
refusing to drive a truck which lacked a legally required
inspection sticker.
! 2. exercising a statutory right
• i.e. worker’s compensation, minimum wage, occupational
safety and health laws. (many statutes also have anti-
retaliation provisions)
! 3. fulfilling a public obligation
• i.e. being fired for participating in jury duty
! 4. whistle-blowing

• a.) source of legal protection:

o
wrongful discharge in violation of public policy
o state statutory law
o federal statutory law
o constitution
• b.) scope of legal protection
o varies by state
• c.) burdens of proof
o Some states like NY require that the employee
prove that the employee reported an employer’s
actual violation of the statute whereas states like
Ohio, conversely, protects an employee who blows
the whistle if the employee reasonably believes a
statute has been violated.

XVII. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS;

WHISTLEBLOWER STATUTES

Intentional infliction of Emotional Distress :

-Many employment statutes and torts permit an employee to recover damages for
emotional distress the employee suffers when the employer acts wrongfully
- 4 elements of the emotional distress tort:
o The defendants conduct was extreme and outrageous , beyond all
bounds of human decency
o The defendant intended to cause severe emotional distress to the
plaintiff, or acted in disregard of a high probability that its conduct
would inflict such harm
o The defendant proximately caused emotional distress to the
plaintiff and,
o The emotional distress was so severe that no reasonable person
could expect to endure it.

Dudewicz v. Norris-Schmid Inc., 443 Mich. 68 (1993)

• “Whistle-blower” case: the plaintiff got into an altercation instigated by another
employee while working at an auto-dealership. The plaintiff was trying to get a
warranty or discount for a customer getting work done on his car. The other
employee tore plaintiff’s shirt, cursed at him and left fingerprints on his shirt. The
plaintiff files a complaint which the employer learns of and tells him to drop the
complaint if he wants to keep his job. The plaintiff refuses to drop the complaint
and leaves and the employer says that he quit and he says he was fired.
o The two complaints are a public policy exception and the whistle

blower complaint.
! The public policy exception was having victims of crimes
reporting the crimes that are committed against them.

! He also alleges that he was terminated in violation of the

whistle blower protection act.
• WPA protects employees pretty broadly from any
illegal act by the employer or from another employee.
o Whistle-blower claim holding- the court reversed the lower court ruling
and found that a claim was possible because it was irregardless whether
the criminal actor was the actual employer or another employee. The
intermediate court interpreted it as only being applicable when the
employer does something criminal but the Michigan Supreme Court ruled
that it should be interpreted broadly and applies to the acts of employer or
other employees.
! What if the fight had been after work in the parking lot over
baseball issues??
• You have to look at what is considered business hours
and whether the issue of the fight matters?
o Was it during work hours, on work property,
was it about work issues?? All of these factors
matter.

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 matter.
o Public policy issue:
! The court held that if you have something that provides you
statutory protection and there is no common law protection,
then you can only have the statutory protection and there will
not be a public policy issue, your exclusive remedy will be from
the statutory protection.
• There was no common law theory that you are protected
from being charged from criminal activity by an employee
or employer so your remedy is the statutory protection.
• The dissent: the dissent believed that this was not a protected issue because it was
not really business related so the whistle blower protection would not really apply
but we might have a public policy protection.
Wilson v. Monarch Paper, 939 F.2d 1138 (5th Cir. 1991)
• Wilson worked for the Monarch Company for over 40 years and works his way
up to ‘special assistant to the president.’ His boss dies and the company hires an
evil man to take his position. The new president tells him that he will not make
anymore money and he is given three options. He can either take a sales job with
half pay, termination in 3 months, or supervisor of a warehouse which was the
same pay but lesser position. Wilson takes option number 3 but he is not a
supervisor, he is basically in charge of housekeeping and janitorial work and he
was also subject to harassment. Wilson starts to develop respiratory problems as
well as emotional problems and he starts to see a shrink. He is eventually
hospitalized and he gets shock treatment, gets put away etc. While this case is
pending, the company files a counterclaim against him for slander but the
company withdrew it.
o At the trial the jury finds for Wilson.

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! The elements of the intentional infliction of emotional distress

is:
• You have to have a defendant with emotional distress
• The conduct must be extreme or outrageous
• Emotional distress needs to be caused
• Emotional distress has to be serve
o **very difficult to prove**
o The court found that the extreme and outrageous conduct was the
degrading and humiliating manner in which he was stripped of his position
and given the position of working among people that used to work under
him.
o The court did express some reservations about applying it in the
employment context but Wilson was awarded the damages.

XVIII. WRONGFUL DISCHARGE STATUTES

Buck v. Billings Montana Chevrolet, 248 Mont. 276 (1991)
o Facts : Guy goes around buying failing dealerships. He offers the
previous owners a contract to buy the dealership on the condition that
they resign. Buck’s contract doesn’t have this condition. He is
subsequently terminated. Buck sues for: wrongful discharge, violation
of public policy
Rule: Montana law requires a legitimate business reason for termination
(cannot be arbitrary, capricious or whimsical). NO AT WILL
DOCTRINE.

***Montana is the only state in the union that does not have employment at will***

• The company that Buck worked for was sold to another company. The higher
officials were supposed to resign but not the employees. Buck was a manager and

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Page 26 of 36
 did not have to resign but he was fired. He sues for wrongful discharge.
o
In Montana you have to have a legitimate business interest for a
discharge because the state does not have employment at will.
! A legitimate business interest: cannot be completely arbitrary and
has to have some logical relationship to the business. It also takes
into account the employer’s interest to hire and fire who they want.
There has to be good cause for termination as long as the employer
has a business reason for it.
• The concern for a statute like this:
o
Forthe
in theday
employer: do we want
to day decision courts
making to be
of the involved
employers
and businesses.
! The company manual and policy said that you will have a job as
long as the company is producing, which Buck was, so he believed
he would have a job. The new owners said that they wanted to
have someone else in Buck’s position that shared their new

reasoning and loyalty and were part owners and the court said that
this was a legitimate interest and they did not find fraud.
• The company said that the values of the business would be
better held this way with managers that were part-owners.
The court said that they will buy this reasoning as long as it
only applies to upper-level people and not the lower level
employees.
! The court pretty much remands because of the employee manual
o Dissent: the dissent says that this guy was a good performer by all counts
and we are basically eliminating and rendering the statute meaningless if
we terminate him for arbitrary reasoning.

XIX. PROPERTY AND LIBERTY INTERESTS

Goetz v. Windsor School District, 698 F.2d 606 (2d Cir. 1983)
o Facts : The school believes that Goetz played a role in break-ins
occurring at the school. He asks for an extension to write reasons why
he was not involved and it is granted. He doesn’t turn it in and it
terminated.
o Holding : Goetz has no property interest in his job because he was
not implied for 5 years as required by law.
o Rule: Civil service employment positions can be legitimate
property interests.

• You have to be a public employee to have a property and liberty interest.

Goetz is suing Windsor. Goetz was a janitor and there were thefts going on at the
school and Goetz was arrested and suspended by the school district. After the
arrest, the school asked for a written confession from him and Goetz does not do
this so he is terminated. His allegation is that he was fired without due process
because he did not have the right to be heard and they fired him. Civil Service
laws do not apply to all employees.
• A liberty interest claim arises when you are defamed in the course of a
termination.
o For Goetz this was being termed a thief and the stigma attached to it
**basically, you have a property or liberty interest in your employment**

Mosrie v. Barry, 718 F. 2d 1151 (D.C. Cir. 1983 )

o Facts : Police officer criticizes his superiors and is transferred
laterally (to a worse assignment). Asserts that he is being deprived of
Due Process liberty .
o Holding : police officer was not deprived of any liberty interest
when he was publicly criticized prior to his being transferred, and thus
he was not entitled to due process protections before transfer.
o
Rule: Deprivation of liberty must involve a removal,
extinguishment, or significant alteration of an interest recognized
and protected by state law.

• Mosrie was a police officer in the homicide branch and his supervisor was Trussel
and Jefferson was the chief of police. Ultimately the allegations against Mosrie
are unfounded and he was then transferred to the 6th district which was kind of a
dead end spot and a less desirable post. (he keeps his rank and salary but looses
the likeliness of promotion) Mosrie argues that he had outside businesses losses
because he was a guest lecturer at a few places but was never invited to lecture
there again. Mosrie alleged that he was publically stigmatized.
o The court says about stigma that stigma alone does not give you a
liberty interest in your reputation. You have to have stigma plus.
The plus that was lacking here was job loss, demotion, procedural due
process violations. He was deprived of no legal rights. His legal status
was not affected, his right to get liquor was not affected. There court

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Page 27 of 36
 was not affected, his right to get liquor was not affected. There court

basically says that

constitutional claimdefamation
to a libertyalone is not
interest in enough to give rise to a
your job.
There has to be stigma plus related to the defamatory conduct. There has
o

to be something more than just stigma. Speculation is not sufficient.

There has to be more of a showing than just stigma or defamation alone.
PLANT CLOSINGS
UI – (Unemployment Insurance) – provides temporary and partial wage replacement for
experienced workers who are unemployed through no fault of their own

- two majorseparation
voluntary criteria thatand
disqualify workers form receiving UI benefits are
willful misconduct.
o A worker that leaves his or her job without good cause or engages
in conduct serious misconduct serious enough to warrant dismissal,
is not among the group of workers that the UI system was intended
to benefit.
! Good cause: examples of good cause include an employee
leaving due to sexual harassment, domestic violence
threats, compulsory retirement, a new job that unexpectedly
fails to materialize, school attendance, illness, and military
service.
! Willful misconduct mar include insubordination, violation
of company rules, absences, or drug use.
- In order to be eligible for UI benefits the worker must be willing and able
to work and also actively seeking a job. Worker must look for work, and
accept suitable employment when found to be entitled to UI
compensation. (most states assist workers in this)

**WARN- (Workers Adjustment and Retraining Notification Act) provides notice

rights to workers facing the loss of jobs as part of a plant closing or mass layoff.

a. Policy – created to diminish harmful affects of plant closing (on workers and on the
community in general), provides employees transition time to seek new jobs or retrain
and obtain swift dislocated worker assistance from the state
b. Provisions

i. Covers employees with 100 or more full-time employees

ii. Definition of Employment Loss

1. Termination of Employment that is not discharge for cause,
voluntarily quitting or retirement
2. For more than 6 months OR
3. greater than 50% reduction in work hours over a 6 month
period
4. NOTE** - employment loss does not occur even if one of these
conditions are met if the plant closing or mass layoff is the result
of a relocation or consolidation of the business and the employer
offered to transfer employees to a different site within reasonable
commuting distance with no more than a six-month break in
service.
iii. Requires 60 days notice (must be in writing) of
1. Plant Closings
a. Single site of employment that is permanently or
temporarily closed
b. AND the shutdown results in employment loss for 50
or more employees for more than 30 days
2. OR Mass Layoffs
a. A Reduction in Force (RIF) (not result of plant
closing)
b. Results in employment loss at a single site during 30
day period
i. BOTH at least 33% of employees and more 50

workers
ii. fired 500 workers are fired
OR at least
iv. EXCEPTIONS – (temporary closings do not trigger WARN or
layoffs caused by the end of a specified project, or a closing caused by a
strike or lockdown.)
1. Faltering Company Exception
a. Only applies to plant closing
b. Company must give as much good faith notice as
possible, but because notice might reduce chance of getting
financing
i. there must be a realistic opportunity to obtain the
capital
2. Unforeseeable Business Circumstance Exception
a. Applies to both plant closings and mass layoffs
b. Still must give as much notice as practical, but is not
required to give 60 days if caused by business
circumstances not reasonably foreseeable at time when

noticei. would have been

reasonably required as if caused by dramatic,
foreseeable
unexpected action outside of employer’s control
a. i.e a sudden or unexpected termination of a major
contract, a strike or other disruption at a major

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Page 28 of 36
 supplier, an unanticipated and dramatic economic
turndown, and an unexpected governmental-ordered
closing of a worksite.
3. Natural Disaster
a. the exception applies if ‘any form of natural disaster’
makes advance notice of the action impossible. However
notice is still required to the extent it is practicable, even if
after the fact.
v. impact of WARN
1. purpose: to permit workers transition time to adjust to
prospective loss of employment and facilitate re-employment
2. advance notice of plant closings associated with lower
unemployment and poverty rates three years later and lower usage
of social welfare services
c. Remedies – But Company can buy out violation from employees, so may not be
issue (no standing)
i. Up to 60 days back-pay/benefits to employee
ii. Attorney’s Fee
iii. Civil Penalty of up to $500 a day of inadequate notice

o Common Law and Statutory Responses: Local 1330, United Steel Workers v. US
Steel Corp
o Carpenter Dist Council of New Orleans v. Dillard Dept Stores Inc
o Pena v. American Meat Packing Corp
o Roquet v. Arthur Anderson LLP

XX. COMMON LAW AND STATUTORY RESPONSES

Local 1330, United Steel Workers v. U.S. Steel Corp., 631 F.2d 1264 (6 th Cir.
1980)
• Two steel plants were closing in Ohio and 3,500 employees were employed by
them. The employees were tying to set up a deal where the community could
purchase the plants and keep them running. The suit involves the congressmen,
Attorney General and the union suing the Steel Company to keep these plants
open. The court found for the steel companies and found that there was no law
out there to get a remedy under. One remedy that they said the employee’s only

chance was estoppel

promissory to keep these
claimsteel
couldplants
haveopen waspaused
at least under the
promissory estoppel.
procedure The
to look at it
because the managers had promised the employees that if the workers worked at
the plant and if it was profitable then they would keep the plant open. The
superintendant to the plant made this promise and this is important because US
Steel itself was not a part of this promise. If someone higher up in the company
had made this promise it might have been a clearer offer and more valid.
• Another argument that was made was the community interest: basically saying
that these plants are community property and you can’t shut them down because
of the impact they will have on the community.

• WARN ACT- when a plant is completely closing they have to provide a 60

day closing notice to give the employees time to look for another job.
(Worker Adjustment and Training Notification Act). You have to have at
least 100 employees for the WARN act to apply and there is a layoff of 30%
of the total workforce or at least 500 people.

• WARN act applies if you close an entire plant. (threshold is 100 employees) If
you are laying off anywhere between 50-499 it has to be 33 1/3% or more of the
entire workforce. If you have more than 500 total employees being layed of then
the WARN act is also imposed.

XXI. WARN ACT LITIGATION

Carpenter
1275 (5thDist.
Cir.Council
1994) of New Orleans v. Dillard Dept. Stores, Inc., 15 F.3d

• The WARN act also applies to the white collar division as well. Reverse
triangular merger- a wholly owned subsidiary of Dillard’s merged with Holmes
and they didn’t give a 60 day notice because they didn’t count the part time
employees. They also made an erroneous assumption because Dillard’s tried
to take the 2 weeks vacation that they owned them and use that with the 60
days.
• The WARN act didn’t apply because for faltering company, the company has to
be actively seeking capital and if the employee announces that they will be laying
off all these people, they will not be getting any money.

Pena v. American Meat Packing Corp., 362 F.3d 418 (7 th Cir. 2004)

• American meat closes their Chicago facility without giving notice to 350
employees. The plant had to stop production after one of the inspectors found rat
droppings. There were 5 USDA inspectors in site and many unsanitary
conditions. The plant had to shut down and throw away a lot of product, do
renovations, and get new coolers so they can have sanitary meant produced which
cost them a lot of money. The company is still getting non-complying notices and
finally the rodent droppings lead to a stoppage of production.

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Page 29 of 36
 finally the rodent droppings lead to a stoppage of production.
o The plant had brought in expert exterminators to stop the rats and also
hired an attorney in order to get the plant re-opened.
o Basically the plant has had a long history of unsanitary situations so

the
will court says the
not allow thatplant
this is
notnot
toreally anemployees
give its unforeseen issue
the so the
60 day court
notice.

Roquet v. Arthur Anderson :

• The DOJ got an indictment against Arthur Anderson. Unforeseen circumstances
case.

o At issue in Roquet was whether the indictment was an unforeseeable

business circumstance – in particular, whether the indictment was
foreseeable.
! The court held that it was not foreseeable because indictments
against companies, rather than individuals, were rare and the
company’s negotiations with the DOJ had not been indicted that
such an indictment was likely.
! The court stressed that the possibility of an occurrence is not
enough. Rather the business circumstance must be probable to be

considered foreseeable.

LEAVING A JOB

XXII. BREACH OF EXPRESS TERMS

Handicapped Children’s Educ. Bd. v. Lukaszewski, 332 N.W. 2d 774 (Wis.
1983)

• A speech language therapist was hired by the school board and was paid a little
over 10 grand. She had a contract for the coming school year. She gets a job
offer for better pay and tells the superintendant she wants to resign and he says to
submit a letter so they can consider it. She sends the letter but he declines and
says that she has to finish her contract. She has a hyper-tension disorder which is
being aggravated by this and she gets a doctor’s notice telling the board that she
has to quit due to the work-environment and the fact that she doesn’t want to be
there any longer and it is not good for her health. So she quits and the school
board finds another teacher to finish her class and the board has to pay more
to the new teacher. The school then sues for breach of contract to recover
the differences that they have to pay the new teacher.
o Ultimately, the outcome is that she has to pay .

XXIII. BREACH OF IMPLIED TERMS

Mercer Mgmt. Consulting, Inc. v. Wilde, 920 F. Supp. 219 (D.D.C. 1996)
• There are three defendants who used to work for Mercer who was the manager of
a consulting company. There would be no solicitation and they would not hire
anyone from Mercer for 1 year (1st agreement). The second agreement, after
working for Mercer for one year, they signed a non-compete clause that said
they could not compete within a 50 mile radius, or solicit clients . Mercer
alleged that the three breached their contract and duty of loyalty and got
confidential information and that is why the non-compete agreement needed to
be in place. The confidential information was from the client lists.
o The court says that the company has to show that the three defendants are

using thethat
and also confidential
the other material or information
people even has access to
to the
it. company’s detriment

o The court says that as long as you are still performing and being loyal to
your employer, you are not in breach if you contemplate starting a new
company or your own business.
o The employer does not suffer any damages if the employees do not leave.
•

The court The

business. findsnon-solicitation
that Mercer has a legitimate
and non-competeinterest to protect
agreement for their
one year was
reasonable in scope and protected the legitimate interest of the employer.
The interest was that it wanted to protects it’s employees and it’s clients .

***When looking at non-compete agreements :

They have to protect a legitimate interest of the employer and must be reasonable in
scope.
Three part analysis:
1. have to protect the legitimate interest of the employer
2. cant impose an undue hardship on the employee
3. can’t harm the public
Any non-compete signed by an attorney is INVALID.

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Page 30 of 36
 Any non-compete signed by an attorney is INVALID.

Garden-leave: you won’t work at all for the employer for one year but the employer is
paying you. For example if there is a non-compete for one year after you stop working,
the former employer will pay you not to work for one year.
Non-compete agreements are just per se invalid in California; the state does not like
them.
Employer can seek and injunction to not let the former employee from working for a
competitor: you have to show reparable harm to the employer and likelihood of success
on the merits.

Non-competes’ are important today due to technology and the ease with which
information can be taken and stolen.

The employer’s right to enforce a non-compete are not absolute. There are elements
that the employer has to establish as stated above.
1. The non-compete has to protect a legitimate interest of the employer. (one
thing that is not protected are potential or prospective clients because they
were not clients at the time!!)
2. the 1st is balanced against the undue burden or hardship on the employee.
(the employee has to be able to earn a living)
3. it cannot be adverse to the public interest
4. finally, it has to be reasonable in scope as far as time and area.

Courts can “Blue-Pencil” and make it so that the agreements are reasonable. (They can
change the non-compete in order to make it work and be reasonable in nature.)

III. ALTERNATIVE DISPU TE RESOLUTION

A. A RBI TR ATI ON OF EM PLO YM EN T D IS PU TES:

CHAP 3 OF CASEBOOK

XXIV. THE FEDERAL ARBITRATION ACT

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974)
o Facts :

o Holding :

o Rule:

Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth, Inc, 473 U.S. 614

(1985)
o
Facts :

o Holding :

o Rule:

Gilmer v. Interstate
o Facts : Johnson Lance Corp., 500 U.S. 20 (1991)

o Holding :

o Rule:

Circuit City v. Adams, 532 U.S. 105 (2001)

o Facts :

o Holding :

o Rule:

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Page 31 of 36
 B. AR BITR ATION A FTER C IR CUI T CITY

Hooters of America, Inc. v. Phillips, 173 F.3d 933 (4 th Cir. 1999)

o Facts :

o Holding :

o
Rule:

EEOC v. Waffle House, Inc., 534 U.S. 279 (2002)

o Facts :

o Holding :

o Rule:

C. R IGH TS O F EM PL OY EES A ND AR BI TR ATI ON

Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1378 (11th Cir. 2005)
o Facts :

o Holding :

o Rule:

Gentry v. Superior Court, 42 Cal. 4th 443 (2007)

o Facts :

o Holding :

o Rule:

Fair Labor Standards Act:

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• The purpose of the act is to protect workers by regulating child labor . It sets
minimum wage, also requires that employees get paid time and a half for
overtime and it prohibits retaliation and requires employers to keep
records .
• The idea behind it is to regulate child labor, get a fair wage, and making sure
that employees who work overtime get time and a half.
• FLA covers most employers and employee is defined as any individual
employed by an employer.
• FLA covers any party who suffers or permits one party to work but does not
apply to volunteers or independent contractors.
o The minimum wage is now $7.25. The FLA has a provision which
allows the states to set the minimum wage to be higher than what the

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Page 32 of 36
 allows the states to set the minimum wage to be higher than what the
federal minimum wage is.
• There are certain exemptions which apply to the FLA, which means that you
are not entitled to overtime.
o Non-exempt means that you are entitled to overtime and exempt
means that you are not entitled to overtime. (there are certain kinds of
jobs that do not get overtime pay.)
• Longer periods of time when you are relived form duty, such as lunch, is not
compensable time.
• Travel time
traveling for(going to and in
the business from work)
which is itnot
case compensable
is all unless
compensable you are
time.
• Exemptions to the FLSA:
o Administrative exemption
o Professional exemptions
o Executive exemption
o Certain computer employees
o Outside sales exemption

Highly compensated employee exemption: must make more than

o
$100, 000 and fit into one of the two criteria for the administrative
exemption
To fit into any exemption you have to make at least $450 a week.

The primary duty test applies to all exemptions: what is the principal job or duty that the
employee performs. Where do they spend most of their time?

Executive exemption : you must make at least $450 a week and their primary duty is the
management of the enterprise or a customarily designed division. You have to supervise
two or more to fit into this exemption. You also have to have the authority to hire and fire
employees or at least makes recommendations to hire and fire.

Administrative exemption : must earn more than $450 dollar a week. Primary duty is
performing office or non-manual work directly related to management or general
business operation of the employer or the employers customers. Primary duty must
exercise of discretion or independent judgment over matters of significance. Does the

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employee formulate policy for the company, can the employee bind the company through
contract, can the employee represent the company in handling complaints or grievances,
does the employee have the ability to deviate from established practices.

Professional exemption : must make more than $450 a week. primary duty in the field of
science or learning customarily acquired by a prolonged course of specialized instruction.
Requires a consistent application of discretion. (Learned professional exemption)

Creative professional exemption – primary duty requires the performance of work

requiring originality, creativity, talent in a field of artistic or creative endeavour.

Computer employee : your primary duty must be one of the following:

1. application of systems analysis, techniques and procedures
2. design development or documentation of computer systems or programs
you can be paid on an hourly basis but that hourly pay must be at least $23.60. No need
for the exercise of judgment in discretion.

Outside Sales Exemption : Under outside sales there is not minimum salary requirement.

An employee cannot waive their rights to overtime pay!! An employer also cannot rely
on a job title to get exemption.

Cases:
IDP v. Alvarez – this case talks about whether down-time or prep time is compensable.

The
timeworkers were
that it took complaining
them that the
to get on their company
work clothes was not paying
or outfits. The the meatpackers
court for the
said that the
standard the employers would have to meet is whether what the employee is
indispensible or integral to the work. Here the court decided that this time was integral to
the work and therefore it was compensable.

-what makes these cases valuable is that even if the issue is over an hour or two, as a
class action it is extremely valuable for an entire class of individuals and this is where the
plaintiff’s attorney makes a lot of money. The money is there if you bring the issue as a
collective suit.

Kuzinkski v. Shering Corporation – this is a mis-classification case. The employer

said that the employees are exempt from overtime (pharmaceutical sales
representatives). The representatives were being classified as sales positions even
though they weren’t sales positions. The court said that the employees are not making
any sales as classified by the statute and law.

Claudio-Gotay
hired by Becton v.
andBecton Dickonson
approved invoicesCaribe – thisguard
for security is a retaliation
hours. case. Claudio was

& ' ( )
Home Books Audiobooks Documents

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 EXCLUSIVE OFFER
/
Rengifo v. Erevos Enterprises : an employee’s rights under the FSA will not be affected

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 Related Interests

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