CHAPTER 12: THE

EMPLOYMENT AGREEMENT
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 At-Will Employment
 -At-Will Employment.
–Indefinite duration without an
express agreement.
–Employees Not Subject to the “At
Will” Rule: Public Employees,
Employees with Individual
Contracts, and Union Contracts.
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 At-Will Employment
 Wrongful Discharge.
–The Public Policy Exception: refusal
to commit an unlawful act.
• Sources of Public Policy.
• Remedies.

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 At-Will Employment
 Wrongful Discharge.
–Implied Contracts: Parties’ conduct
limits the Employer’s right to
discharge the Employee even
though there is no express
contract.

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 At-Will Employment
 Wrongful Discharge.
–Implied Covenant of Good Faith
and Fair Dealing: not recognized in
all states.
• Treatment of Stock Options.

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Statutory and Constitutional
Protection for Whistleblowers
 State Statutory Protection.
–Some states, such as California and
New York, protect whistleblowers.
–Employers cannot personnel
retaliatory action.

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Statutory and Constitutional
Protection for Whistleblowers
 Federal Statutory Protection.
–Sarbanes-Oxley Act of 2002 added
several whistleblower provisions.
• CASE 12.1 Nance v. Time-Warner
Cable, Inc. (2011). Communicating
immaterial inconsistencies to
supervisors is not protected by
Sarbanes-Oxley.
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Statutory and Constitutional
Protection for Whistleblowers
 Claims of Constitutional Protection
by Public Employees.
– In Garcetti v. Ceballos, the Supreme
Court held for the government
because the deputy DA spoke as a
prosecutor, not as a citizen.

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 Fraudulent Inducement
 Businesses may be held liable for
overzealous sales pitches to
attract highly qualified personnel
under a theory of fraudulent
inducement.

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 Noncompete Agreements
 Ancillary agreements that:
– Protect a company’s or individual’s
interests by
– Limiting a former employee’s ability to
work against the former employer.
 The agreement must be reasonable
under the circumstances of the case.
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 Noncompete Agreements
–CASE 12.2 Alex Sheshunoff
Management Services, L.P. v.
Johnson (2006). Employer’s
promise to provide special training
and confidential information
created an enforceable covenant
not to compete.
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 Recommendations for
Former Employees
 Conditional privilege (defense) to
defamation actions protects former
employers if the information given to
future Employers is fair and in good
faith and not published to third
parties. Also, Employers may be
protected if the Employee signs a
waiver and release.
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 Employer Testing &
Surveillance
 Drug tests have limited
usefulness and can be
problematic for the Employer.
 Should be part of the company
policy manual and apply to all
Employees. 

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 Employer Testing &
Surveillance
 Challenges to drug testing:
– Breach of contract.
– No justification.
– Violates privacy.
– False accusation.
– Emotional distress.
– Racial discrimination.

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 Employer Testing &
Surveillance
 Drug Testing.
–Scope of Testing Program: the
smaller the group being tested and
the more specific reasoning for
tests, the more likely courts will
uphold the test.

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 Employer Testing &
Surveillance
 Drug Testing.
–Public vs. Private Employees.
• Public Employees: protected by
Fourth Amendment from
unreasonable search and seizures
and the right to privacy.
• Private Employees: not protected.
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 Employer Testing &
Surveillance
 Drug Testing.
–State Constitutional Protections.
–State Statutory Regulations.
• A number of states have
comprehensive drug and alcohol
testing laws that require reasonable
suspicion or probable cause.
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 Employer Testing &
Surveillance
 Genetic Testing and Health
Monitoring.
–Employers want to know which
employees might be likely to be sick,
leave, or resign. Prohibited by GINA
(Genetic Information
Nondiscrimination Act) of 2008.
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 Employer Testing &
Surveillance
 Genetic Testing and Health
Monitoring.
–Genetic testing may violate Title VII
of the Civil Rights Act, and the
Americans with Disability Act.
–At least 35 states have outlawed
genetic testing.
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 Employer Testing &
Surveillance
 Polygraph Testing of Employees.
–EPPA makes it unlawful for
employers to:
• Ask an employee/applicant to take a test.
• Rely or inquire on results of test.
• Take or threaten action because of refusal.
• Take or threaten action against employee
who has filed a complaint.

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 Employer Testing &
Surveillance
 Employee Surveillance.
–Employers have a legitimate
interest in employee productivity,
but under certain circumstances
surveillance may transgress the
employee’s privacy rights.

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 Employer Testing &
Surveillance
 Employee Surveillance.
–CASE 12.3 City of Ontario v. Quon
(2010). Employee does not have
right to privacy when government
employer searches employees text
messages.

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 Responsibility for Worker
Safety
 OSHA: safe and healthy work
environment is required for
employers.
–Dealing with the Threat of
Terrorism.
–OSHA Inspections.

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 Responsibility for Worker
Safety
 OSHA.
–Record-Keeping and Posting
Requirements.
–Civil Violations.
–Federal Criminal Penalties: willful
violation causes death.

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 Responsibility for Worker
Safety
 State Analogues to OSHA.
–State Criminal Penalties:
prosecutions of managers and
companies who endanger their
employees with criminal negligence
or recklessness resulting in
employee injury or death.
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 Responsibility for Worker
Safety
 Tort Liability for Violence in the
Work
–Employers may be liable after notice
and failure to take reasonable
precautions.

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 Responsibility for Worker
Safety
 Workers’ Compensation.
–Companies should bear the risk of
Employee injuries that occurs in the
workplace. WC can be provided
through self-insurance, purchased
from the state or a private
insurance companies.
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 Minimum Wage, Overtime,
and Child Labor
 Who Is Covered?
–Employers (not independent
contractors) involved in interstate
commerce or the production of
goods in interstate commerce.

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 Minimum Wage, Overtime,
and Child Labor
 Who Is Liable for Violations?
–Individuals as well as corporations
can be liable.
–What about state employees?

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 Minimum Wage, Overtime,
and Child Labor
 Hours Worked and Overtime.
–FLSA does not limit the number of
hours each work, only that she be
paid appropriate overtime.
• But FLSA permits state and local
governments to give “comp time”
(extra paid vacation time).
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 Minimum Wage, Overtime,
and Child Labor
 Compensation.
–FLSA requires all employees to be
compensated for hours worked.
 Minimum Wage.
–What are living wage ordinances?

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 Minimum Wage, Overtime,
and Child Labor
 Exempt Employees (from FLSA). To
qualify as exempt, employee:
– Must be paid a minimum salary amount.
– Be paid on a salary basis.
– Meet the duties test.
– Employees making less than $455/week
are non-exempt.
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 Minimum Wage, Overtime,
and Child Labor
 Child Labor.
 Modern-Day Slavery.

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 Employee Benefits
 ERISA: preempts many state laws.
–Coverage: governs most retirement
plans.
–Types of Pension Plans.
–Fiduciary Duties.
• Pension Protection Act of 2006.

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 Employee Benefits
 ERISA: preempts many state laws.
–Welfare Benefit Plans.
–Federal Preemption
–Judicial Review of Benefit
Determinations.
–Penalties.

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 Employee Benefits
 Consolidated Omnibus Budget
Reconciliation Act (COBRA).
–60 days to elect COBRA coverage.
 Health Insurance Portability and
Accountability Act (HIPPA).

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 Employee Benefits
 Patient Protection and Affordable
Care Act of 2010.
–Prohibits insurers from denying or
charging higher premiums for
preexisting conditions.
–Firms with 200 + employees
automatically get coverage.
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 Employee Benefits
 Patient Protection and Affordable
Care Act of 2010.
–Very small businesses (<25 full time)
will get tax credits to participate in
health insurance exchanges.
–PPACA has been challenged by many
states.
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 Worker Adjustment and
Retraining Notification Act
 WARN requires employers with
more than 100 employees to
provide timely notice to its
employees of a proposal to shut
down an American plant.
–Establishes procedures and
exemptions.
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 Immigration Law
 Immigration and Reform Control
Act 1986.
–Obtaining Authorization.
• Work visas for: (1) student, (2)
educational or cultural exchange
visitor, (3) professional worker from
Canada or Mexico authorized under
NAFTA, or (4) foreign employee in U.S.
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 Immigration Law
 Immigration and Reform Control
Act 1986.
–Verifying Authorization.
• I-9.
• DHS final rules (2007).

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 Immigration Law
 Legislative Reform: States Rush in
Where Congress Fears to Tread.
– Arizona passed Legal Arizona Workers
Act of 2007.
• CASE 12.4 Chamber of Commerce of the
United States v. Whiting (2011). Federal
immigration law did not preempt
Arizona’s requirement of E-Verify.
42
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Labor-Management Relations
 Applicability of NRLA:
–Covers all enterprises involved in
interstate or foreign commerce and
generally only covers working in the
United States.
–Supervisors: NLRA grants rights only
to employees, not employers.
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Labor-Management Relations
 Applicability of NRLA:
–Independent Contractors: not
covered by NLRA because they are
not employees under the common
law “right to control” test.

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Labor-Management Relations
 Union Representation Elections.
–NRLB supervises elections.
–Employees decide if they want
union representation for collective
bargaining.

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Labor-Management Relations
 Union Representation Elections.
–NRLB will only allow election if there
is an Appropriate Bargaining Unit.
–Filing a Petition: interest by at least
30% of employees who submit NLRB
union authorization cards.
• Employee Free Choice Act (proposed).

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Labor-Management Relations
 Union Representation Elections.
–Conduct of Election: regional NLRB
office conducts it.
–Objections: losing party may file for
a new election.

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Labor-Management Relations
 Unfair Labor Practices by
Employers.
–Section 8(a)(1) of the NLRA makes it
illegal for an employer to take
coercive action against employees
with regard to union activities.

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Labor-Management Relations
 Unfair Labor Practices by
Employers.
–Protection for Concerted Activities
and Use of Social Media.
–No Union Dominance or Assistance.
–No Discrimination or Retaliation.

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Labor-Management Relations
 Lawful and Unlawful Strikes,
Lockouts, and Other Economic
Action.
–Lawful: Economic and Unfair Practice.
–Unlawful: wildcat strikes or violate a
‘no strike’ provision in the contract.

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Labor-Management Relations
 Non-Strike-Related Unfair Labor
Practices by Unions.
–Unions may not force employees to
join or support its activities.
–Unions cannot force employees to
join or refrain from abandoning a
strike.
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  Global View: The Right to
Continued Employment.
 Avoiding Wrongful Discharge
Suits.
 Making Employment Decisions in
Difficult Times.
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  FCC’s New Distortion Rules and
Whistleblower Protection.

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license distributed with a certain product or service or otherwise on a password-protected website for classroom use.