THE BENEFITS AND BURDENS OF EMPLOYMENT



THE BENEFITS AND BURDENS OF EMPLOYMENT

Introduction (Private Ordering and Its Limitations) and Chapter 1: The Stakes of “Employment”

Pp. 3-26 (distinguishing “employee” from “independent contractor”).

Employees are defined as an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right of to control by the master. IC is someone who performs a service but his physical conduct is not controlled by master, and retains control over how and where he performs his duty, the manner of performance. The courts have established tests basically founded on this common law principle. Page 6 lists the factors you look at:

1- employers control

2- employee in business

3- skill required and how much supervision is required how is it usually done in that area

4- Who supplies the tools

5- length of time of job

6- what the parties think the relationship is (more relevant the more equal the bargaining power of the parties)

7- whether the principal is in business

8- part of the regular business?

9-method of payment, by hour or job

Federal statutes mostly apply to employees and not independent contractors so it matters a lot how these relationships are structured. However, statutes have been particularly vague in their definition of employees and courts have relied on common law definitions that rely on control of performance. And SCOTUS has said that congress is aware of it, so if they want to change the definition they can but until such time, they will continue to define it as the common law tests did.

The higher education level or skill set, the more you’d benefit from being classified as an independent contractor. The lower, the more benefits you get from being an employer.

Why should people care how employers structure their employment contracts? Public policy issues.

CASES:

MC.CARY V WADE: auto accident with truck carrying logs for someone else. Injured sue everyone. Was the truck carrying the logs acting as an independent contractor or as an employee of Wade, the company with the contract to supply logs to Georgia Pacific. If employee, wade is liable under respondeat superior. As an employer, you’re responsible for the torts of your employee committed in the scope of their employment, but not if they’re independent contractors (unless employer intended consequences or there was an non-delegable duty ). Court held that Wade was not vicariously liable because the logger guy was an independent contractor since he was not controlled by Wade, Wade did not pay the logger, the guy cut and logged his own trees and took them to GP on his own. GP structures that so that it limits its liability. It buys logs brought to them, it does not go get truckers to bring them in. Court uses Miller v. Shell oil co test and it basically lays out that the master did not have control over manner of performance. Logger was independent. (see page 7 if needed). Plaintiff argues that Richardson test requiring public policy test to determine liability applies, but the court says that not in this case, because this is not a case where the company denies having an employer/employee relationship by claiming they are merely an IC, because in this case they truly are IC.

Fitzgerald v. Mobil Oil case: truck and trailer were owned by someone who leased the equipment to Mobile. Guy who drives it falls off the truck and wants to sue mobile on tort. Mobile claims that the employee’s sole remedy is worker’s comp. Guy claims he’s not employee. Court applies economic realities test. Very much like control test:

1- control of workers duties

2- right to hire, fire or discipline

3- Payment of wages

4- performance of duties as an integral part of employer’s business.

Mobile had structured the relationship as an independent contractor because trucks were dangerous. Since Mobile had paid into the no-fault system weighed heavily towards the court finding that they were employers. Mobile had a lot of control over his job even though there was a third company involved. And it was not something where he could have decided to not show up like the McCary case above. And there was a prerequisite that he pass the Mobile oil test. As far as paying the premiums for WC the public policy says that this is an incentive for them to continue to pay the premiums into the system.

If the cases were reversed, since the test for workers comp is much broader than the test for respondeat superior, chances are that mobile would win by saying the driver was an IC.

Courts in all these cases have said that even though the contracts are relevant and important, they are not controlling. Contracts are always interpreted and even if you say IC, what is the reality, what does conduct of the parties really say?

NATKIN V WINFREY: photographer sues HARPO because it used the pictures without permission. Harpo thought the photographers were employees and therefore the pictures were the property of HARPO. The two guys say they were independent contractors. In order for HARPO to win, they have to be owners of pictures and they have to produce an agreement saying this was work made for hire. Harpo did not. So were they employees? Ct lays out test by SCOTUS that basically point to control again and since HARPO did not control most of the means and ways in which the pictures were taking, they were IC’s and thus owned their own pictures. HARPO could have contracted to have an agreement drafted and signed for work for hire.

You cannot contract out of statutory requirements or protections. Likewise, you cannot contract in to statutory requirements or protections if you’re not entitled to them.

So why would you ever hire employees instead of IC’s? most workers want that, you own their designs and productions, you get loyalty and morale and you get to keep your good workers.

You can try your best to structure it as IC but the court may find them as employees and you need to plan for that as well.

From book: respondeat superior: employers are liable for torts committed by employees in the scope of employment. IC on the other hand, you’re not liable for their conduct with exceptions: undelegable duties (Puerto rico escalators), or if you know or encouraged the tortuous conduct.

Workers comp: test is different. Wider net. Broader interpretation. Icy cream case. But reduces your liability as a company by inducing you to pay a premium and protect your workers.

As an employee you have some federal and state protections you don’t have as an IC.

distinguishing “employer” from “employee”.

Clackamas Gastroentorology associates v. Wells: 14 employees and 4 doctors. Woman sues because she was fired and that’s against the American with Dissabilities Act and she was discriminated against. The ADA did not apply to them because the ADA only applies to companies with more than 15 employees (PP: so smaller companies can enter the competitive field w/o worrying about legalities that may sink them). But, were the doctors employees or not? They claimed to be by the fact that they had ERISA benefits as employees. But the court said that since the ADA did not helpfully define what an employee was, they were going to use the common law definition and the common law test of control level which was the test used by EEOC (equal employment opportunity commission) . But this is a test that was created to determine whether a person is an IC or an employee. Moreover, Ginsburg criticizes the fact that they claim benefits under ERISA but want to have it the other way for ADA. But Spitko points out that different statutes have different purposes so there’s s different test for whether you’re an employee or not for each different statute. She thinks the doctors actually fit the restatement view of employee and that the court is shrinking from the inquiry because as the doctors work there they really are acting as employees not employers. The test the court uses has nothing to do with the reality. If one doctor resigned as a shareholder and worked as a doctor, the size of the firm would not change but the result would. How does that fit the purpose of the ADA?

The court remanded the case so we still don’t know the outcome.

From the book: Not all employees are covered under every law, just the protected class.

Usually managers or employees do not have a liability. But there are certain exceptions when more than the entity would be liable. High ranking, supervisory personnel may be liable under FLSA. Likewise, those who assist in violations of FMLA (family …leave act)

Yates v. Hendon: doctor who stashes away money in retirement account under ERISA but he’s in bankruptcy proceedings and his creditors claimed that he shouldn’t have been able to even have the account because he is not an employee since he runs the whole show (he’s a one man show as a doctor). But under ERISA, the statute allows him to do so even if he is a controlling member of a corporation. The public policy was to encourage people to set up individual retirement accounts. The court does not look at the common law because ERISA doesn’t define the term employee any better than ADA, but they chose to look at other provisions in the law (ERISA) where they can get clues as to legislative intent and the public policy they were pursuing: to create an incentive to have plans that benefit both the employees and the employers because it will facilitate employee benefit plans and that’s a good thing.

rise of “contingent” labor as a challenge to traditional categories.

From book: Temps and independent contractors are considered contingent labor since they don’t have a huge and deep relationship with the employers. Contingent workers are growing more and more. How do we go about protecting these kind of people? Otherwise companies will entirely shift to CW so they can avoid the formal protections already established by statutes to protect regular employees. FLSA (Fair Labor Standards ACT: passed during depression requires employers to pay a minimum wage as well as overtime (one and a half times their regular pay) pay for hours worked beyond 40 hours. Also banned discrimination by sex in pay and child labor.

Ansoumana v. Gristede’s Operating Corp: Duane/Reade hired Hudson who hired people to deliver foods and stuff to clients of Duane/Reade. They were paying them 30$ a day at most, in violation of FLSA. Court mentions the rule is FLSA. Hudson has contracts that say that they are IC’s only and no benefits would be paid etc. Duane had a lot of control of how and when the labor was done. You cannot contract out of statutory protections so it doesn’t matter what the agreement says, it is not controlling here. Also, the court determines that both Hudson and Duane and the individuals are all employers because the FLSA contemplates that you may have more than one employer: an employer includes any person acting directly or indirectly in the interest of an employer. Managers and owners can be deemed employers where they have overall operational control of the corporation, possess ownership of it or controls significant functions of the corporation. Duane Reade wanted employees but not treat them as employees so they were trying to avoid paying them minimum wage and they cannot do that.

Why not hold individuals personally liable for violation of other laws but we do for violations of FLSA? It would be too much of a deterrent if we did and no one would want to be a manager. It would have a chilling effect on business if it did, whereas enforcing FLSA, it has to do with salaries and hours and thus it’s easier to enforce something they actually have control over.

Microsoft case: highly skilled group of workers who were there as temps and then integrated them substantially into the company. All contract said they were IC and did not have benefits and could not participate in the 401K and the stock option plan. Some of them were offered jobs, others were not and went to work to an placement company and others did not. They sued because they wanted to be employee so they could participate in the plans. The IRS came after MS because these people were considered employees as per common law approach and they had to be paying taxes and doing things right as per the IRS. So MS conceded that they were employees but that they should not be getting these benefits. Court says that if they were employees, there’s no question that they had the right to participate. Dissent says no, they were not employees, they were freelancers and they signed an agreement that said they did not have the right to participate and hence they were being paid higher salaries than other employees as consideration for not taking benefits. So how can the court now go back and interpret the contract any other way but the way it clearly speaks?

As a lawyer, you should see that the drafting needs to be clearly done to say that whether a court finds you to be an employee you may not participate in benefits plan. You cannot contract out of statutory protections but you can contract out of others which are not (Oprah’s case).

PRIVATE ORDERING AND DEFAULT TERMS

Chapter 2: The ‘At-Will” Default Rule and Its Limits

Pp. 65-77 (introduction to the “at-will” principle).

Presumption that all contracts are at will. The P has the burden of proving that the relationship was not at will and the court will look for some out of the ordinary evidence that this was not an at will contract.

In at will, both parties are free to leave for any reason including no reason at all. It’s very hard as a P to win a case that you were not at will because there’s a bias against it. It is a default: both parties can agree to have a different agreement. But the great majority of employees are at will. But sometimes by their behavior, employers imply a non-at-will employment. The corporate culture seems to say that unless you mess up you will not be fired. They do it for corporate morale, etc.

Not everything you learn in contract law applies to employment law. Many doctrines are broken or stretched in EL.

Two cases that illustrate how strong the at will presumption is and the two courts strongly support it but they take a slightly different approach.

Notes from book:

• Employment as a a rule is at will in US. By any side.

• The case of Hanson v. Central printing where an employee got assurances by VP in a letter that he would offer him employment for 40 hours a week every year until he retires of his own choosing and he did not accept the other employment, and then was fired, shows the principle of Additional consideration: absent an express term of employment or additional consideration to the employer, a contract is deemed terminable at will. Some additional considerations that were deemed so were foregoing a valid legal claim against the employer, and stopping a competing business, but not as in Hanson’s case, foregoing another job offer as that is considered desirable of every employee. Working for Central printing was already something that he was bound to do and that naturally would require him to not work for someone else. Court says that the lack of mutuality (given it was a unilateral contract) is not fatal to the P’s case, but the lack of additional consideration is. However, when talking about fairness they do bring up mutuality since it would not be fair to bind one and not the other.

However, consideration can be given for any number of things at once, there doesn’t have to be a one to one ratio. He gave up a job and worked for his wages. So it’s a different result to say that his forebearing the second job is not consideration for his contract for life assurance. But in this case one of them is saying you can work for life and the other is not bound to stay for life, so mutuality is an issue (unilateral contracts) and you cannot really bind an employer for life because that’s too long and it would not be fair. So when you have a contract that says you have a job for life, cts usually interpret it as an off hand comment that doesn’t mean they meant that but an at will employment.

If they had agreed to a fixed term (3 years) the courts would be more willing to do it, because damages are easier to calculate and it’ less vague as well.

• Contracts of employment for life are ambiguous as far as calculating damages so courts don’t enforce them often.

• In Greene v Oliver Realty, the court discusses the reasons and rationales presumably behind the at will presumption: freedom of contract (although sometimes it prevents it), mutuality of obligation (although there doesn’t have to be an equality of obligation, no adequacy measurements), common experience (both parties prefer at will), and procedural protection against vexatious lawsuits (lest all employees sue for wrongful termination and juries are more likely to be sympathetic to the employee and not the employer and there’s a built in bias because juries are composed of employees not employers. So we stack the deck against the employee because it is stacked against the employer.) and fairness and equity (employers could not recover from employees or force them to work for them) . He had agreed to work at a lower rate than union in exchange for having a lifetime job. He worked 24 years for the original company and then 9 for the new company and they fire him later even after he had explained to the new VP what the arrangement was with the old people. But the main tenet of Greene is that additional consideration is not to be taken as an absolute requirement to find enforceable a life contract, merely as one more factor that could help to determine the parties’ intent, very much in the tradition of modern contract theories that look at all circumstances. So even though they talk about the other rule where additional consideration is required, they go for the rule where they only look at it as a potential factor. They remand the case so jury can look at all circumstances. So we don’t take the language of a contract at face value because employers sometimes use language as aspirational and not as binding.

• More and more courts are looking at employment contracts and implying more security in them and using contract theory to read those employment contracts. For that reason, in Montana, business agreed to establish META (model employment termination act) which gives them the right to terminate for cause and sets a cap on damages.

CONTRACT BASED DOCTRINES THAT EAT AWAY AT THE AT WILL PRESUMPTION:

I- Promissory estoppel: The good thing about promissory estoppel is that you don’t have to prove a contract.

Pp. 77-88 (reliance on offers of employment (promissory estoppel). Grouse v. group health plan, inc. Seminal case. Where guy quits his job and declines another offer and when he calls to see where to report in the job he took, they tell him someone else took it! He claims estoppel. Company claims that it would produce the anomaly of giving him more protections than if he had reported to work for the first day and court says, no because estoppel would also work on the first day since he needs to prove he could satisfy the boss. An employee has the right to perform his duty to the satisfaction of his employer. Damages are calculated at what he was making before, not what he would make in the new job.

In Goff-hammel v obstetricians and Gynecologists, the court uses Grouse as precedent and rules that Goff Hammel had relied to her detriment and reasonably and foreseeably on the offer to work and then was fired the day before starting so she’s entitled to recover damages as per her previous salary. Dissent says that should not happen because promissory estoppel cannot be applied where there is no contract and only an at will employment. The court differentiates between her claim for employment breach of contract (which they say she loses because at will applies) and her claim for estoppel which she wins because she proves that she foreseeably and reasonably relied on the offer. Other courts have also held that it is unreasonable to rely on a promise of at will employment. But how long would a claim for promissory estoppel be good? What period? Maybe the probationary period that’s normal in that company or that industry?

If your contract says that there’s a probation period, you can argue that theirs is a reasonable assumption that you will be given the opportunity of proving yourself.

There’s a very low rate success in promissory estoppel cases within employment law. But, promissory estoppel is always added on in every wrongful termination and employment claim and he called them throw away claims. As the other cases develop, these ones fall by the wayside and are never thought of again, so that could account for why the rate is so low.

Hypo: The new company just lost a big contract and you were told not to show up for the first day. Why would the P lose? The fact that there is good faith and also the reliance is only reasonable as long as there is an enterprise going on, not reasonable to rely that they would hire you no matter what. So if others are being let go, why should this person have a job that others who have proven themselves do not anymore. Since it is a estoppel claim and not a contract claim (estoppel claim is not the same and is a lesser claim) the ct would give the employer more leeway to make decisions regarding economic conditions than if it were a contract claim. The remedy is also different. For estoppel they get what they were getting before: so old job: 1500 new job 1600 2 months later they find a 1400 job. Under estoppel, (reliance damages) they get 1500 for two months, and 100 for the assumed duration (or whatever way they do it) of the new job at 1400. If you had a contract, you get actual damages? (so 1600 for two months and then 200 for the duration of the 1400 job as calculated.

Schoff v. Insurance company: guy with misdemeanors who doesn’t write that on his application b/c the employer told him that only felonies count to be bonded and that he should not worry. He was charged with felony but not convicted, and the underwriters don’t bond him and he gets fired. He asserts a promissory estoppel claim b/c they told him not to worry. The ct says that they didn’t say that he would not be fired if he were not bonded and they also didn’t promise him that he would be bonded no matter what. So ct finds for defendant b/c that was not what they promised him.

II- Pp. 88-102 (assurances of continued employment (oral and implied contracts).

Shebar v. Sanyo: he was in sales for many years at Sanyo and he thought he would never get promoted b/c he was not Japanese. He got job at Sony and when he resigned, the president of Sanyo ripped his resignation and says he has a lifetime job and that they would not accept his resignation, that his performance was good, and he was married to Sanyo. He declined the Sony job. When he called the head hunter he was told that Sanyo was actively trying to replace him. He confronts the Prez and they deny it. Two months later the new prez fires him and he brings a lawsuit alleging a breach of oral contract. Sanyo motions for summary judgment and there is an appeal.

Ct remands the case and reverses the summary judgment because they say that a jury could find that he had given additional consideration for the permanent offer of employment since he gave up his sony offer. They say that not all forebearance will count but this one does!

Both of the following are rare and not well advised: So we require additional consideration and other factors to prove that’s what they intended.

Contract for life: employment at will. Check with him on this whole part because it is confusing as far as terminology.

Just cause contract: only can be fired for just cause. Only protects employee from arbitrary termination. So this is not so foolish and protects the employer b/c they can fire you for just cause.

When an employee breaches the contract by not performing (he cannot do it) then you can fire him even if it’s a contract for life. But it’s a higher standard.

Hypo: what if Shebar argued promissory estoppel: it would be a stronger case than Grouse and the nurse case because Sanyo actually knew, not just foreseeable, that he was declining Sony’s offer. Also, as a defendant you can pull a statute of frauds defense although it could be defeated b/c he could potentially die within the year.

IMPLIED CONTRACTS:

When you work at a company a certain policy, expectation or culture develops that gives you clues as to what is expected and how things are done in that company , but at what point does it become legally binding? Implied contracts still have the requirements of contracts: offer, consideration, acceptance, but some of these are implied from conduct.

Wayne Pugh v. See’s Candies: worked from dishwasher to member of the board and VP. When everything was going well, after a business trip to Europe, he was fired and not given reasons for termination. (he was annoying to his boss in Europe). The court remands with instructions because they find a prima facie case for a contract for life implied from conduct. The court delineates the factors to look at and they all have to do with personnel practices and policies and assurances of lifetime employment or other communications or conduct. Ct decided that it was an error for the court to respondent’s motion for non-suit because the ct is not to look into adequacy of consideration, so there can be one consideration given for several promises. The ct found an implied contract because he had been told by VP many years ago that his future was guaranteed as long as he did his job. And that should be consideration (the fact that he stayed and did his job) enough for the company refraining from arbitrary dismissal. Therefore, since he had a prima facie case for an implied contract, it was error to grant non-suit. He eventually lost on the actual lawsuit, because not only did he have to demonstrate he had an implied contract, but also that the employer was in breach.

Pugh Factors from this case to determine whether there is an implied in fact K:

1- personnel policies or practices of employer

2- employee’s longevity of service

3- actions or communications by the employer reflecting assurances of continued employment, and

4- industry practices

Implied in fact K is one in which an agreement to be legally bound is implied from the circumstances, albeit without any clear oral or written communication between parties. The totality of circumstances must be examined to determine whether the parties conduct considered in the context of surrounding circumstances gave rise to an implied in fact K limiting the employer’s termination rights. These two cases suggest that longevity and consistent advancement may be necessary although not sufficient facts from which a ct can discern an implied in fact K.

Page 101: problem 2.2:

Implied in fact can be found easier than oral K because there is no consideration. Promissory estoppel: has to be foreseeable he would rely, reasonable to rely, and detrimental. He did rely, and it was foreseeable.

Problem 2.3: do not reply by email. Walk into office and match the offer as far as salary only. Don’t negotiate by email. 2.3.b-)Now there’s an oral contract and a mess. You can also dismiss employee whenever you want and just offer a severance pay that’s higher than normal to release her claim if you need to.

III- Pp. 102-122 (written employment manuals and policies).

Are manuals, handbooks and policy manuals legally binding as contracts or are they merely advisory, in light of the fact that employer’s policy is there?

Wooley v. Hoffman La Roche

Isssue: whether certain terms in a company’s employment manual may contractually bind the company?

Holding: absent a clear and prominent disclaimer, an implied promise contained in an employment manual that an employee will be fired only for cause may be enforceable against an employer even when the employment is for an indefinite term and would otherwise be terminable at will.

PP: manual provides certain protections for employees and should be required to honor it. Ct also talks about unilateral contracts where the manual could be considered a unilateral offer to be accepted by performance, when the employees come to work, Therefore, since they passed around the manual and the employees come to work, it has been accepted. But, is there a meeting of the minds if the employee doesn’t know what the manual says? But ct says where the employer has created an instinct obligation then it should be bound because he wanted to induce loyalty and continued employment. Also, they probably did it to avoid unionization, but apparently the manual was only distributed to the upper echelon managers or employees. So arguably they got what they bargained for b/c people will rely on the manual. Ct also says that all they need to do is write in the manual that:

1- there is no promise of any kind by the employer contained in the manual

2- regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions w/o having to consult anyone and w/o anyone’s agreement, and

3- that the employer continues to have absolute power to fire anyone with or without good cause.

Conner v. City of Forest Acres: woman who is reprimanded several times for dress code and other vlolations. She is fired and files grievance. The grievance committee votes to reinstate, the city doesn’t. She sues. She had signed acknowledgement forms for the handbooks and such handbook said that nothing here limits the city’s rights to dismiss. Also says that is a guideline and is subject to change with little notice and is not a K. Also it lists 23 behaviors and a process for discipline that SHALL BE progressive. But later it says that there is no requirement for it to be progressive!

City claims there is no K in the handbook. And the disclaimer is conspicuous so the guidelines not always need to be followed.

Issue: is it reasonable for employee to think that this is a binding contract even if the face of the disclaimer?

The ct says that since most employees would see it as modifying their at –will agreement, there is an issue of material fact about the fact that SHALL was used and maybe that controls. So case goes back to ct.

Demasse v ITT corp.:

Continuing to employ is the consideration and continuing to work is acceptance by employee. This is no where most cts are. This is the case where the employees could not be laid off before less senior people were fired, and then there is a change in the handbook that says that co. can always change policies assuming they give notice. Ct says they cannot modify the manual in this way because the notice was so late that it would make the original promise illusory and the employees need to be notified and give positive assent, not just assent by continuing to work. The employer has not given any additional consideration because they’re obligated not to fire them already. So no affirmative assent and no additional consideration from employer. Employer has to demonstrate that employee knew about modification and assented. But in Wooley, they said that employee did not need to know about the manual to have it be effective. The point was that they cannot change the rules so that all previous rules that were relied upon by employees are gone whenever the employer wants to. There must be some extra consideration and assent. How about reasonable notice? That would qualify.

Problem 2-5: according to Wooley, was it reasonable for the employees to think that there is an implied contract. So they had stronger basis for reliance than wooley. To modify a contract you need to give notice, and maybe some consideration, although it depends on what jx. Demasse would not allow the modification. Questions to ask: Was there reasonable notice? Under Demasse (minority) wants to see separate consideration and acceptance by more than just coming to work. In California they just imply acceptance by coming to work and consideration is implied as well(?). However, since they had the enhanced benefits without negotiating for it or even accepting it (they had no choice), PB should have obtained a waiver saying that waived right to sue in exchange for enhanced benefits. However, the benefits were irrelevant in CA, only the reasonable notice mattered but you should offer to pay extra raise or some other consideration, AND always send a paper they sign saying they accept, that way you cover your ass in every jx.

Chapter 3: Written Contracts and Expressly Negotiated Terms of Employment

Pp. 123-124 (skipping the Speer case), 128-139 (job security and contract ambiguity). Most employers don’t have a written contract and they are usually only done for high powered executives.

Cave Hill Corporation v. Hiers: K was ambiguous? He was hired as sales person and K said from this date to that but K also said they would give him a 30 day notice. So he claims they can only fire him for cause, Ct says, unambiguous because the 30 day term trumps the implication that this is a fixed term K that can only be terminated for cause. It doesn’t say what’s grounds for termination and we cannot even imply it b/c there’s the 30 day clause. Nothing in K talks about just cause and the disclaimer trumps.

So even a fixed term K is not a guarantee of perennial job. And K’s with notice provisions are usually treated as definite term agreements for the duration of the period.

Parol Evidence Rule: contemporaneous or previous agreements not included in a K may or may not be acceptable in trial. If it’s fully integrated (especially as expressed in an integration or merger clause) you can only accept parole evidence to explain ambiguous terms never to add or contradict. If not fully integrated, then you can use for adding or explaining, but not to contradict. Always to interpret ambiguous terms. Subsequent agreements are ok to show. Except if there is a no oral modification clause or if you’re in a jx that says that any modification requires additional consideration (most do).

When you have a stated rate of pay related to a term (like 250,000 per year) that only fixes the rate, not the period as per the American rule/

Pp. 139-158 (just cause to terminate). Just cause is implied in fixed term K’s because Argument is that if there is certain behavior the employee has breached the agreement not the employer. So they can fire you for cause because you have breached, not them.

Esbensen v. Userware Int. Software company and computer programmer. K said agreement is effective june1, for a period of one year, however this agreement may be terminated earlier by either party by giving two weeks notice” . Issue: is the contract at will or term? There’s a motion in limine to accept parole evidence of an oral agreement concerning good cause. P claims there is an implied just cause requirement. Ct says that in the terms are ambiguous and so they remand to trial ct.

Naturally excluded test: Is the term argued about one that would normally be excluded from a K? In Ca, the modern approach would tend to allow the inclusion of extrinsic evidence that would be excluded in other jxs.

problem 3.2 page 139. Even if you have an unsigned memo, it is not fatal to your claim, b/c you can have an oral agreement. The prez said it was too specific. So that helps employee establish there is really a K and the issue is what terms apply.

Just cause to terminate: Ct has found there is a K that requires Just cause to terminate. What now?

Benson v AJR: was son of owner and company is sold but he’s asked to stay on as safety manager. They had agreement that said he would be guaranteed employment for 8 years. Co could terminate with a days notice but would have to continue paying for 8 years, unless it is for reasons:

Dishonesty, felony, voluntary termination by guy. After that there is a manual that says that they can fire anyone for using drugs and they will be tested. He’s tested positive, is asked if he knows anyone using drugs and remains silent. They fire him after results. He sues for 8 years of salary since firing him for drug use is not within the acceptable grounds since they fired him for drug use. He claims they need to pay him, co says no. Problem is that they fire him for the wrong grounds not on K. But since he stood there silently and admitted to being dishonest, co claims they have grounds. So they remand to determine whether the company really fired him because he was dishonest or because he used drugs.

Usually employer has burden of proving that its decision was motivated by cause.

It’s a bad idea to enumerate examples of what would constitute cause. And if you do, say that list is not limited and you reserve the right to determine what else might constitute cause b/c it goes contrary to the interests of the company.

Material Breach analysis: material breach is a substantial breach going to the root of the contract and it excuses the other party from performance.

Uintah Basin Medical Center v. Hardy:

Pathologist who gets fired. Term says that they can give 90 days notice to each other. No specific term just “K will continue to bind parties until terminated after 9 days written notice for just cause. So Hospital claims that just cause can include economic exigencies. He claims that only other reasons are just cause. Ct says that employers have to be able to terminate employee for legitimate business reasons in the interest of improving client services as long as justification is not pretextual , only for fair and honest cause as opposed to capricious, trivial, Bad faith unrelated to business goals. Two kinds of bad faith: fixed term K or indefinite term K: Fixed term has to be performance based b/c otherwise it eviscerates the purpose of having the fixed term. In an indefinite term, you’re just saying I won’t fire you arbitrarily. Although the K can override these two rules, of course.

So ct in here remands w/ instructions to adopt the reasonableness good faith approach: the employer can be wrong as long as it reasonable believed in what it believed to be true and if they were true it would be just cause. Other jx only admit it if the employer actually turned out to be right about the reasons to fire , and finally other jx, give deference to employers b/c they may know more than they can prove and b/c we cannot make decisions for employer. The good faith approach says the we should not second guess the employer, not too much of an imposition but we will not take assertions at face value.

Interpreting express compensation agreements

Nadherny v Roseland: Developer with the vesting issue where vesting was ambiguous as to whether it meant the entitlement or the being paid. Çt send it back down for resolution of vested ambiguity

p. 159-172 (special compensation issues - including implied duty of good faith and fair dealing).

Fortune v. Cash Register company: He is a salesman and is supposed to get compensated at 75% if territory is his at time of order, 25% if its his at delivery, and 100% if both times. They make a mega sale and pay him only 75%, fire him but then keep him and don’t pay him the additional 25% because they fire him again. Ct invokes the covenant of good faith. You can prove this by circumstantial evidence, timing of the termination, etc. Anything that might prove that they did it to not have to pay the incentive compensation. ROL: where commissions have to be paid for work preformed by employee, employer’s decision to terminate at will has to be in good faith. This is not necessarily implicit in every contract at will. Just this one because commissions were earned and expected sort of!

Courts usually restrict the recovery to value of benefits accrued through past performance, the ones vested at the time of sale. Cts differ on degree of certainty permitted for anticipated benefits (renewals of policies, for instance) but it is generally agreed that future wages cannot be recovered as would be under breach of contract case (whether implied or express), nor are punitive damages available. But if an employer incentivates performance through a bonus plan and then terminates before payments are due he arguably unjustly enriches.

Check problem on171. Firing had nothing to do with cheating him out of something he had earned as per a special compensation like a bonus or commission. It was in good faith, he got more money as severance, the company did not know the stock went up but could have gone down, and the company fired him because they were downsizing, not because they wanted to avoid paying him the extra stock.

TORT-BASED PROTECTIONS FOR WORKERS:

Chapter 4: The Public Policy Exception to the At-Will Rule

Pp. 175–202 (the common law public policy exception to the at-will rule). Many jx’s recognize a tort action against an employer who violates some public policy and then fires the employee in some way associated with that violation. The firing itself is tortious (main difference between this chapter and chapter 5 where there was another type of tortious conduct harming the employee) . There’s a public interest that overrides the private interest of the parties to contract with each other. Some statutes protect employees who engage in conduct required or permitted by public policy: whistleblowing, participating in a jury, reporting OSHA violations, requesting rights under worker’s comp. Some states only admit tort actions authorized by statute and do not allow anything but because assume the statute would have said it if allowed. They claim that this is the kind of matter the legislature would be better equipped to decide since they have a better pulse on the public and hence public policy. Others will allow it. And usually when there is already a statute (against sex discrimination, for instance) you cannot also sue in tort for it because the statute already provides a cause of action.

Mostly, employers can do whatever they want as egregious as it may seem to reward or punish those who serve their interest, but not if those actions taken against the employee impinge on the external world. So when it involves third parties, then it arguably becomes a public policy case.

And does the employee have to be right or simply reasonably believe she was right?

Four broad categories of exception:

1- refusing to violate the law (will not perjure myself in front of legislature)

2- performing an obligation imposed by the law (jury duty)

3- claiming a benefit arising from employment (workers comp)

4- whistleblowing provision: reporting conduct that violates pp.

Important to focus on the public policy aspect of it, not your duty as employee. So if you get fired for reporting a worker who is stealing pencils, then you are not protected. It has to benefit the public at large.

Fitzgerald V. Salsbury: Company asked Fitzgerald whether they should fire worker who failed to shut down some valve that created a danger. He says no b/c he’s been an employee for 25 years and this is a first mistake. Manager then said he needed to think like a foreman and that they would probably be sued by Koresh (worker) and he needed to figure out where his loyalties lie. F did not respond and was fired anyway hours after the other guy. There was a pattern of firing people who testified against company in other actions and a whole chain of those leading to this case. So F sues arguing that it violates pp to fire him b/c he would testify in the case against company and that violates the pp of having people give truthful testimony in court . Co argues they did b/c he failed to supervise effectively.

Ct sets out the elements for the PP exception to at will rule:

• Engagement in a protected activity (clear public policy) (the law really is “clear and substantial” but that’s on the next case)

• Discharge

• Causal connection between conduct an discharge

A clear public policy which would be adversely affected by dismissal of employee

Ct argues that the clarity element goes to the notice requirement. If employer doesn’t know how can he prevent violation? But where to find whether a clear policy exists if it has not yet been identified: statues, constitutions and says other courts have looked at judicial decisions or administrative decisions. But it has to be only recognized and clearly defined b/c you would eviscerate at will if not and would transform it into a good will doctrine which is counter to the spirit of at will.

Ct declines to expand the public policy behind title 6 or 7(?) discrimination laws to a case where he (koresh) was fired in retaliation not in discrimination, since it was not explicit in the law that retaliation whistleblowing was also protected conduct as is discrimination whistle blowing. Besides, he never told company that Koresh should not be fired because it’s illegal to fire in retaliation, he just said not to fire him b/c he had been there long and this is first mistake.

Jeopardy element: show that dismissal for engaging in conduct jeopardizes or undermines public policy and would have a chilling effect by discouraging conduct.

Ct does find a violation of the public policy for requiring truthful testimony in a legal proceeding. It’s a well recognized value and when employer, through intimidation or retaliation engage in conduct that jeopardizes this then they are at fault. Ct views F’s good faith intent to engage in testifying for koresh as being as protected as the actual action! And it would also discourage others from doing so.

ROL: The dismissal of an employee can jeopardize public policy when the employee has engaged in conduct consistent with PP, w/o a request from employer to violate pp just as it can when the employee refuses to engage in conduct inconsistent with pp when requested by the employer. The focus is on the adverse actions of the employer.

Courts have applied this pp thing to disciplinary actions as well. This use is not loved because it would call into question the ability of a company to act freely. Also, the employee does not have to be right he just needs to reasonably think that it is true.

Rackley v. Fairmont west: old people home. Daughter in law of resident asked that her mother in law not be told when the check came. Rackley doesn’t know that this had been requested and calls the daughter in law, allegedgly screaming and yelling that she was stealing from her mother in law (when in reality, she was preventing escape and wanting mom to buy a wheel chair). Rackley says that she was fired in violation of clear and substantial policy. Ct defines elements as:

1- her employment was terminated

2- clear and substantial public policy existed

3- P’s conduct implicated that clear and substantial policy

4- termination and conduct in furtherance of policy are connected.

Ct defines clear as:

• Plainly defined in constitution

• Laws

• Judicial decisions

Also substantial is defined as being overreaching importance to the public as opposed to the parties only. Public at large rather than particular employee and employer.

Ct end up deciding that there is nothing clear in any statute or judicial decision and that the only on point law is an administrative law and they will not infer pp from administrative decisions (dissent points out that ad agencies are basically implementing a policy and law that came from legislature and therefore should be admitted).

Pp. 202-225 (statutes creating public policy causes of action).

There have been some states that have created some statues that create causes of action based on public policy Conscientious employee protection act in NewJersey, for instance and Minnessota. The difference with a public policy tort is that it is not necessary that there is a violation of statute but merely the public policy underlying it and we also look to administrative regulations etc and when there is a statute, the public policy tort is not used because it is not necessary since it cuts down on the at will doctrine which we have a lot of respect for and it is only used as a gap filler when you don’t have a law that gives you a cause of action. Even when you have a sexual harassment in a place where fewer than 15 employees, ct may not go for PP tort because the legislature had a reason for limiting it to bigger companies and cts act deferentially.

NJ’s CEPA: has a written requirement that the employee should notify in writing the employer to give the employer a reasonable time to correct the problem before going public.

Roach v. TRW: He wins over CEPA because TRW was government contractor and had a plethora of ethical standards and he complains to supervisor and hotline of attorneys about the alleged violations of co-employees and nothing is done and then he is fired. He did not do it in writing but he did call the hotline in compliance of company policy and the court probably construed that call as constructively satisfying the writing requirement.

Also he could have brought a breach of contract cause b/c the handbook required him to do just what he did and implied a promise that nothing would be done to him that would be detrimental, so in essence they violate the contract by firing him for doing what he was required to do.

Most cases require reasonable belief (must have something that the reasonable man would agree with you, so it’s not so out of left field) and some require objective good faith(left field but not trying to annoy anyone, Less standard than reasonable belief)

Federal Sarbanes Oaxley has created some causes of action for whistleblower protection, although there is more to SOX than just that and it was created in the wake of Enron and WorldCom. Section 806 protects whistleblowers who report accounting fraud at publicly traded companies for reporting on suspect accounting practices whether it is done inside organization, government agencies or as part of shareholder lawsuit. Has to prove that 1-he engaged in the protected activity, 2-employer knew of the protected activity, 3-he suffered an unfavorable personnel action and 4-the participation in the activity was a contributing factor to the detrimental decision against the employee. Contributing factor is less burden than significant factor and it is less than but for causation or even proximate cause. It needs to be proven by preponderance of evidence, whereas employer needs to defend by showing that he would have reached the same result even in absence of protected behavior by clear and convincing evidence. Employee does not need to show actual violation but merely that he reasonably believed that there was a violation. It also apparently authorizes jury trials under SOX. SOX also requires the underlying statute or regulatory rule to be violated something like a securities statute.

Collins v. Beazer Homes: She is hired conditionally for 90 days and she starts complaining about her boss paying an ad company, building houses in the wrong land, sales team being unhappy, etc. A higher manager starts investigating the issue and actually does discipline someone b/c of it and eventually she gets fired and sues. The person who fired her said that he didn’t even know about the complaints (but he did), and the fact they disciplined the other manager reveals that the company did think it was protected activity and the ct said so(the language used said “these are grave accusations and should be investigated). Therefore the company knew there was protected activity. Ct goes on by discussing the way you can prove your case: Plaintiff needs to show by preponderance of evidence that 1-he engaged in the protected activity, 2-employer knew of the protected activity, 3-he suffered an unfavorable personnel action and 4-the participation in the activity was a contributing factor to the detrimental decision against the employee. Defendant can still win if he proves by clear and convincing evidence that absent the protected activity they would have reached the same decision. But the burden shifting happens because the P’s prima facie case makes it look suspicious. The framework is similar to title 7 framework. As far as contributing factor, you can use proximity of date of firing to the action to prove that it was a contributing factor. So you don’t have to show but for causation because the burden shifts to defendant to show that it was not but for !!! So why require less of the employee? The employer has more of the evidence, and also it has to do with the fact that the employer did do something wrong by considering the protected activity at all, so the statute is liberally construed, and it’s hard to assign weights and if anyone had to prove the weights at all, it has to be the defendant.

Chapter 5: Traditional Torts in the Employment Relationship

Mostly only intentional torts remain to be used b/c negligence is covered by workers’ comp which is a compromise that sets up a no-fault system that covers employee completely for damage or disease but caps the amount. Intentional torts are rare in employment cases, and most cases use torts as ancillary causes. Should a tort apply to at will? Yes, because even at will is still a contract.

Intentional Interference with the employment relationship.

Your co-employee could be a third party interfering in a contract, but Should you boss be considered as intentionally interfering with employment? Well, he represents the second party in the case because he’s an agent of the employer. Split in jx: some say yes he can b/c contract is between company and employee and boss is only an agent and thus a third party, others say no because boss is the employer because he has the right to fire, and yet others say that if agent is acting on behalf of his employer in scope of employment then he cannot be considered a third party.

Kumpf v. Steinhaus: Lincoln Wisconsin manager who owns 20% of stock is fired by the reorganization of the Lincoln Life insurance co. Mr. Steinhaus , the president of Lincoln Life, took over as president of the newly merged Lincoln Wisconsin and Lincoln Chicago and Kumpf says that his sole motive was that he would get commissions on what the merged company made. Issue is that Kumpf says that even if his own greed was only a contributing factor, he should be found liable. Ct says no, b/c it has to be the sole motive, and not if he’s acting out of personal benefit. But he can gain and be greedy because greed is not an improper motive because the only exception to the at will rule is violation of public policy and greed doesn’t violate public policy. (Spitko doesn’t understand how these are linked). To find improper motive the ct talks about collateral test: if object is to put pressure upon the P and coerce him into complying with D’s wishes in some collateral matter: If Steinhaus had fired Kaumpf because he didn’t marry his daughter it would be collateral. In a non-collateral issue the court sees how they are related and why the court should not interfere in business decisions.

Problem: 5.1 on page 238.

• If she gets fired there’s a tortious interference with her employment. But it’s her boss, so does that count as third party? Even if he was an agent, he was not acting within scope of employment. Also, SOX because it’s a publicly held company and this is a violation of public policy.

Defamation:

Meaning of publication

What is defamatory?

Restatement of TORTS: Truth is an absolute defense.

1- defamatory false statement concerning another (where it tends to harm the reputation of another and lowers him in the eyes of the community) or deter others from associating with him or her. So almost anything you say can be defamatory, so it’s better to not give any references or just serial rank and number. In some jx actions are also included (spitko being thrown off campus by security guard)

2- an unprivileged publication to a third party (even if within the company) (self publication is available in some jx. If you’re forced to publish the defamation by having to tell a prospective employer why you were fired, then it amounts to publication)

3- Fault amounting to at least negligence on the part of the publisher (could be malice: clear and convincing evidence that he either knew or was reckless disregard or had improper motive)

4- Either actionability of the statement irrespective of the special harm OR the existence of special harm caused by publication.

There’s usually a balancing of interest and first amendment rights. If you’re suing a media outlet, usually first amendment prevails. If you sue an individual you’re likely to win.

GMR v. Jackson: guy who gets hired to get government contracts and then gets fired and his boss tells their contractors that he mismanaged the company and lost them 3 million. He sues for defamation and wins and D loses and then sends a remititur to get the damages reduced and ct does that. Jackson appeals. Ct reverses remititur because there was proof of defamation and malice (clear and convincing evidence that he either knew or was reckless disregard or had improper motive) .The ct says the statements made by boss to the contractors were not qualified privilege (made in good faith) under the theory that he was within the context of his job and was merely an opinion and he’s entitled to that. But in here since he admitted

What about hear say?

What about the fact that he immediately found a job, hence there was no harm?

Read the Shannon case on page 249. Actually read what you didn’t read from 244 to 276 now!

Qualified privileges: (defeated by actual malice, made by someone who has no interest, etc) 1-all communications must be bona fide ( not good faith belief, but good intent, her motive, not whether she actually believed it, because even if she actually believed it because the fault element of the tort says that you can still find them liable if they were negligent), 2-made by a party who has an interest, or a duty to communicate the subject matter, and 3-made to a party who has a corresponding interest or duty. This policy is public policy because we want to protect the public’s interest in the flow of information. If made with malice (knowledge, reckless disregard or improper motive) privilege is lost.

Privileges are Qualified or absolute: absolute privileges confer immunity from liability regardless of motive. Ie; communicating the reasons behind a discharge to a court or agency. Qualified means that if made with malice, you are not immune. Burden lies with defendant to prove it is subject to a qualified privilege. Then P has to defeat the privilige. And Malice is more than negligence, so D either knew it to be false, or acted with reckless disregard for the truth.

You can get compensatory damages, damages for emotional distress, and punitive damages.

Tell tina she doesn’t have a claim yet. Nothing has been published unless you consider publication when the manager tells the VP her work is not up to standards. The comment can be considered opinion and we don’t know that it is false. It could be qualified privilege b/c there’s a need to know within the company why she was fired. Can she defeat it by proving malice? If so, she could defeat the qualified privilege. But the case is weak. She can negotiate a good reference.

As far as the second part where he is called by prospective employer. There’s still qualified privilege but if there is malice she can defeat it again.

Qualified privilege: By person who said it because she had an interest in saying it to someone who also had an interest in hearing it. Can be overcome is malice is proven either b/c person knew or acted with reckless disregard for the truth.

Truth as defense: yes, but in some states burden to prove truth is on defendant and others say burden is on P to show falsity.

So, you need:

Defamatory statement: that lowers his status within the community or lowers the desirability of associating with him.

Publication: communication, either verbal or written to other than person defamed. Could even be intracompany. Compelled self publication counts. Actions can be considered publication: guards accompanying you out of the company.

Actual damage? Is this needed?

Pp. 253-261 (intentional infliction of emotional distress).

Prudential insurance case: Subbe-Hirt v. Baccigalupi: root-canaling case where the jerk is totally berating the woman and “trimming her bush” so that she quits. She shows him a letter from her doctor to place in her personal file regarding why she could not be subjected to stress. He disregards the letter and tells her he will not put it on her personal file. Intentional infliction of emotional distress is the extreme and outrageous character of the conduct that is beyond all bounds of of decency and not to be tolerated by civilized community. Moreover, if the person knows the victim is succeptible particularly to emotional distress by reason of some mental or physical condition, then it is outrageous conduct.

His intention was clearly established by the pattern presented. But the second question is whether he succeeded. The fact she was under stress and he had knowledge of her succeptibility won her the case.

Congress limited the language to outrageous etc because it did not want to open the floodgates of litigation to every garden variety emotional harm to further erode the at will doctrine. Important factor in determination is whether the D is abusing a position of power over P. Actor is never liable where he has done no more than to insist upon his legal rights in a permissible case, eventhough he knows it will cause distress.

Pp. 261-265 (fraud).

Intentional misrepresentation (specificity of representation may be needed)

Negligent misrepresentation, ( no need to prove intent. Very hard to prove)

Failure to disclose when there is a duty to do so

For the purpose of inducing an action (employment, purchase, etc)

There is justifiable reliance.

Sanyo and Sony case: he has an easier case proving fraud than breach of contract. He did not have a written contract. Here you can get punitive damages, but K you don’t. He was an at will employee, but he can prove they did an intentional misrepresentation b/c they intended to fire him all along and strung him along. You may have breachof K if you can prove that indeed you entered into the K with the intention to breach it.

Pp. 265-270 (limitations on actions).

Worker’s comp usually precludes tort actions.

Did the legislature intend it to be included in the workers comp statute?

Revlon case where she tries to comit suicide because of sexual harrasment and then has accident. Not included into workers comp

Federal pre-emption: field preemtion when legislature has occupied the field in such a way as to show they intended to pre-empt. Under National Labor Relations act provides cause of action and federal ct jx for violation of collective bargaining agreements.

PROTECTING WORKER AUTONOMY

Chapter 6: Workplace Privacy Protections

Pp. 273-276 (introduction and Problem 6-1).

Very difficult to bring a suit for violation of privacy in workplace, esp in private jobs.

Types of employer conduct that implicate privacy rights:

• Physical and psychological testing

• Investigatory interrogations

• Monitoring and surveillance

• Inquiries into or prohibitions on of-site conduct

• Revelations of private matters

competing interests of privacy and employer’s interest in keeping their systems and computers used for the business interests must be balanced.

Pp. 276-302 (sources of privacy protection).You need to figure out the source of that protection:

• I- constitution, either state or federal: some states have protections. Mostlt 4th amendment right against illegal search and seizure. You may also have an equal protection claim. 4th amendment is only for government employees, not private. But the analysis is done in much the same way. Cts look to that.

Ortega sets out the step by step analysis of how to determine there’s been a privacy violation. Government said employee did not have a reasonable expectation of privacy because he’s an employee of the government. Ct says no, he does. Two step process: 1- Did the employee have a reasonable expectation of privacy. 2- was the employer’s intrusion of privacy reasonable in view of the employee’s reasonable expectation. AS far as reasonableness of expectation, ct looks at the space, office procedures and practice, what’s being invaded (purse or desk?), the amount of people who come through in a day, was it his own office, did he share the office, HIGHLY CONTEXTUAL, HIGHLY FACTUAL ENQUIRY. We look also at what the person does and for whom to determine whether his expectation wsa reasonable, and look at society to also figure out what society would be able to withstand and take.

Scalia dissents and criticizes because the rule doesn’t really help anyone, is not a bright line rule. Would that be more protective or less protective? Cts need to say, in that case, what is within limits and what is not. He wants less discretion. Another criticism is that the employer would be able to contract out of privacy expectations by saying you shouldn’t have any. Scalia’s approach would not because the court would tell you what you can expect.

Employers don’t need a warrant or probable cause. Probable cause is only used in criminal context and office managers would not know to get a warrant, and it would be burdensome to require warrant because you need to get stuff from an office or file cabinet if the employee did not come today. So how do we need? In asking whether an intrusion was reasonable, we look at whether it was reasonable in its inception and in its scope (Particularized suspicion). 1- When there are reasonable grounds to suspect the search will turn up misconduct, rather than randomly search offices. Is there a reason for thinking employee is engaged in a conduct. 2- Or there has to be some work related investigatory purpose: I need a file. (In California it has been discussed that maybe you shouldn’t drug test an employee unless you have suspicion).

As far as scope, is the manner of the search reasonably related to the purpose of the search. What we’re doing and how we’re doing it and why. So the bigger the reason, the more intrusive you’re allowed to be.

Problem in 276: inception is what caused manager to do this? He has personality conflicts. Not a good thing. Scope: went on personal hotmail account.

California also protects rights to privacy in private companies as well as government employees.

• II- Tort : may be based on a public policy set out in the constitution: Borse v Piece Goods Shop, Inc. (read this case!) She refuses to submit to urinalisis testing and to personal property searches. Does she have a tort claim for wrongful discharge under PA law? She claims the tort of wrongful discharge under PP by the constitution and the court turns around and uses intrusion into seclusion tort (most used tort in employment law) (intruding into private space) but if you object before it happens, you don’t actually have a tort! If they fire you, you have a public policy tort. If you consent, then you don’t have a case. That’s why as employer, you always want to have consent.

She pleads it one way (under pp tort) and ct says there’s a better way. She pleads PP under constitution and that only applies to state actors. Ct says that’s not good b/c they are private actors and they cannot violate the provision. But you can sue under tort as public policy based on the embedded policies in those statutes or constitutions. However, ct rejected that. Ct says that there is a tort for intrusion into seclusion and she should plead that.

Ct goes through a balancing test: the employers interest in the drug testing program to keep a drug free workplace v. the employee’s privacy interest. The urinalisis is a very intrusive test. Of course it’s very relevant to know what the person does b/c society would be more tolerant of testing depending on the context which rules the need for testing. 3rd circuit decides that the supreme ct of PA would decide that it does violate the employee’s privacy rights. In general, searching property is less intrusive and more allowed than searching body, and you have a higher expectation of privacy in your body than in your property. So PA supreme ct would recognize that firing someone for not submitting to the urinalisis which would be an instance of intrusion into seclusion and therefore tortious in itself. BUT this is common law, so there’s no statute to hang your case on and there is no public interest that is a general public interest, only the employee’s. So what’s the public interest?

So they disallow the wrongful discharge because of public policy under constition right to privacy but tells her that she can use the wrongful discharge under public policy against intrusion into seclusion tort. So, the deal is not that she suffered the tort of invasion, she did not. But she suffered the wrongful discharge for not wanting to go against the public policy against intrusion into seclusion!!!

• III- Statute based protection: no federal or state statutes that protect privacy in private workplace, except protection against polygraph in pre-employment. Unless employee to be is security guard or drug something. (p294). As far as current employees, you cannot unless they have been suspected of taking things???

• IV- Contract: P 296.Rulon-Miller v. IBM: She wins on the tort claim below for intentional infliction of emotional distress.

She was dating the employee of a rival company and gets fired. She claims breach of contract. There was a memo that sort of sets up policy for the company. And there’s always the contract set out by company behavior and usage, etc.

If someone has just cause protection, it automatically protects their privacy rights because if it’s not related to job performance, then it’s a violation of the just cause clause.

Consent is not an absolute defense, but it may shift the burden to the P having to prove that there was duress or undue influence, etc.

Why do you want to drug test? What do you want to accomplish and how can we do the test, by what means, that it would be narrowly tailored to your compelling interest.

First find an interest of the employee: bodily searches: fluid or body, take the highest scrutiny, then searches of the workplace and finally just monitors etc. at the least level of scrutiny.

So you can either have a warrant to have a search, or individualized specific probable cause or suspicion, OR an emergency, OR have a compelling interest or a reasonable interest depending on how invasive the intrusion on privacy is (the more invasive, the more compelling an interest you need to have. And the more compelling an interest, the more deference the court will give to the employer, especially if you have an issue concerning safety of the public or employees. Then you balance the interests of the employer vs the interests of the employee and figure at that point the second part of the enquiry by looking at how the invasion was done (so reasonably and narrowly tailored and with a nexus to the employer’s compelling interest) and weigh that with the reasonable expectation of privacy of the employee.

However, in the national treasury the ct does not say you must have a compelling interest, just that the government has one.

Nexus requirement: not only why are you doing this testing, or intruding, but also how does it fit into the reason you had to do it. How related is it to achieving your goals. Whether it’s narrowly tailored or simply related depends on what kind of invasion and what kind of interest the employer has, the more compelling the more deference you get.

National Treasury Employees Union v. Von Raab: Customs agents sue the commissioner because he institutes a policy of drug testing to test anyone for promotion or employment in drug interdiction, in positions where they need to carry a weapon or people who have access to classified information. They bring a fourth amendment claim against unreasonable search and seizure.

The court then has to determine whether it was unreasonable in view of the employee’s expectation or privacy (Ortega): 1- did the employee have a reasonable expectation of privacy and if so 2- was the employer’s invasion reasonable. Ct says you don’t need probable cause, or individualized suspicion. The court brings up COMPELLING INTEREST. Which sort of goes against Ortega b/c Ortega says reasonable, and now they say compelling. B/c in Ortega it was less invasive they were searching a desk. IN this case, they are requiring a urinalissis so it is more invasive. So they need a compelling interest, However, the ct they have it but when they look at the interest of the employee, they should have a lesser expectation of privacy than other employees if you are working in these areas, so they employ a very deferential standard to the reasonableness analysis in Ortega. So they find that even though the employee has an interest in bodily integrity and dignity, the government’s compelling interest in keeping customs people on the straight and narrow so they will not shoot innocents, or be bribed, or give away the classified information, they uphold the policy. The court however, remands the part that relates to the people who handle classified information.

Scalia’s dissent is that there is no showing that there is an actual problem and there’s no showing that that’s the solution. He points out that people who own diamonds are as likely to be bribed as those who are drug addicts because the bribe can be in money and they can then buy drugs!

Soroka v Dayton Hudson Corp: Target hires people after testing them psychologically if they are security guards. They are unarmed. The test had a bunch of questions relating to religious beliefs and sexual beliefs and they want people who will follow rules and traditions of society. So they sue because they were not hired. Ct says the Ca constitution guarantees the right to privacy and the employees and applicants (b/c the constitution does not make a difference between them as far as rights) and this test asked about things that were protected. They bring up the nexus requirement and in this case clearly it doesn’t have it because your religion or sexual preference or orientation have nothing to do with this. The ct says that the test measures social conformity and anyone who is a bit different would not qualify. As far as the constitution , they say that it doesn’t proect against all invasions as some are deemed ok. But what’s the standard to be used: Target says reasonableness and ACLU says it should demonstrate a compelling interest. Ct decides that Target has a compelling interest but the test does not have the required nexus: how does sexual or religious orientation have any bearing on the job of security officer at target? Target did not show that. And the problem is the validity of the test.

FEHA claim: Fair Employment and Housing Act: employer cannot discriminate on basis of religious creed unless pursuant to a permissible defense: job relatedness is an affirmative defense. Permissible only on showing that selction process is sufficiently related to an essential function of the job (ie the job is for a rabbi!). once P establishes prima facie, burden shifts to employer to show it is job related.

Labor code claim: you cannot discriminate on basis or political beliefs and gay rights were big then and there were no statutes against discrimination for sexual orientation so the ct tap dances around and says that gay issues are political and the question on sexual orientation was a politically inclined question!

Offsite activities: Not a lot of protection. Drinking, smoking, blogging, political affiliation, etc. The at will perception is so big that we have not instituted any policies or laws against employers who retaliate for activites like that. Blogging is public, things that are protected are usually private. Also, these are not intrusive, the ones we protect tend to be intrusive.

Also they are more amorphous and difficult to define.

So, in all, there’s very little protections of privacy in the workplace.

The negative” side of privacy: how employers can restrict even more Privacy on the workplace.

Simmons: Works for CIA and policy says computer is only for official business. His office is his own. He downloads a bunch of child pornography and company hired to monitor finds this and downloads his hard drive remotely and then they even go into his office without a warrant . Later on they obtain a warrant and keep digging. He sues on fourth amendment right against search and seizure. Analysis:

Ortega based:

• Did employee have a reasonable expectation of privacy? Nope! There was a policy even though his office was private. But in light of the office policy and operational realities, he was on notice that his internet use was not private. So not objectively reasonable. Policy completely destroyed his expectation of privacy. However, he di9d have a reasonable expectation of privacy as long as his office search.

• Did employer invade and if so was search reasonable in inception and scope? yes, the government warrantless search was reasonable in inception and scope because they had reason to believe he was engaged in impermissible activity that happened to be criminal as well, so it was within the “special need for the efficient and proper operation of the workplace” so they did not need a warrant because it was not a criminal search that would have needed a warrant, but an employment circumstance where you don’t need a warrant.

Feminist Women’s Health Center v. Superior Court:

P gets hired for helping self-help classes. She did not understand that “demonstrated self help” meant she has to do one, which meant she had to do a self pelvic exam and undress in front of others. She refuses several times and then applies to another position and gets there and eventually gets fired. She sues under tort of wrongful termination supported by Cal constitution protection of privacy. Sets out three elements for P to show:

• A legally protected privacy interest

• Reasonable expectation of privacy

• Conduct by defendant constituting a serious invasion of privacy.

Ct says that after P shows that, D needs to show a negation of any element OR invasion was justified b/c of countervailing interests. P then shows that there were feasible alternatives with lesser impact on privacy. D can also show consent, unclean hands, etc as defense.

Ct ends up finding that she consented and that there was a countervailing interest on part of employer. So even though she did have an interest, she did not have a reasonable expectation, and the invasion was ok because it was done to further a compelling interest (or rather a countervailing interest that would further the mission of the health center).

Can we limit employers’ rights to restrict employee’s rights to privacy by contracting them away? There are some things that you cannot contract away, especially if they are statutorily given, like no polygraphs no genetic testing.

SEE TEST SECTION FOR SYNTHESIZED RULE FOR PRIVACY!

Chapter 7: Workplace Speech and Association Protections :

In much the same way as privacy, here courts see whether there is a source of protection for the speech and if there is they do a balancing test (pickering). Not a lot of protection for speech in any case, but even less in private context than in public workplace.

Pp. 343-376 (the public workplace): Connick: Myers does not want to transfer and does a survey which some consider a mini-insurrection. Only one of the questions refered to whether employees felt compelled to donate to political campaigns and could be considered public concern. The ct applies pickering test:

1- whether the speech at issue a matter of public concern. If not, we’re done. If it is, and the P has carried that burden we go on to balance:

2- Balance the governmental interest in “the effective and efficient fulfillment of its responsibilities to the public”, or how disruptive is this speech to the efficient operation of an office with the person’s first amendment freedom of speech.

3- was the speech the cause of the firing or discipline?

The courts only protect speech that is a matter of public interest because the at will doctrine is so strong and deference to employers is always there. So the D has the burden of proving his interest outweighs the employees interest. Then the burden shifts to the P to show causation: he was fired because of this speech that was done in the public interest. Employee grievances are not matters of public concern. And even if you only communicate it within the office it could still be protected if it is a public concern.

But what is a matter of public concern? Ct eventually in other cases decides that talk about elected officials, political, social or other community concerns things that non-employees would be also talking about, or newsworthy stuff (a subject of legitimate news interest)

Garcetti v. Ceballos: Another DA who is not in agreement with the DA prosecuting a case b/c he doesn’t think the evidence is there as the DA says. He is fired. Ct says MAIN RULE is that if the speech is made within the scope of his duties it’s not protected because they are speaking as employees and not private persons. Dissent does not like the absolute rule and says that we should balance. But Majority says they don’t want to have judicial interference every time something is said at work. Also, if they did that they would be allowing employees to constitutionalize their grievances about employer and they don’t want that. Also if a person speaks as any person would be speaking then it’s protected but within the scope of employment is not speaking as a regular person. Ct says that if Ceballos had gone to the press, that may very well have been protected because it would have been seen as public interest if he had complained about the DA mishandling case. He would be acting as a citizen with more knowledge than others but a citizen nonetheless. Not the same to speak on an area of expertise as it is to speak about that area at work when you are required to do so by your job. One is expertise another is within scope. But since he did not, he’s not. Ct does not apply Pickering/Connick test because the speech here is within scope of employment. Arguably, the speech here is more worthy of protection, it was not because of the context in which it was made. So it encourages employees to go outside and call the press which would be more disruptive than working through the channels and giving notice to fix the problems, so it works perversely against the policy of limiting disruption.

In the case of privacy, the employer could set up an environment that decreases the expectation of privacy. Up until Garcetti, you could not contract out of protections for speech, after Garcetti, arguably, you could have a job description so broad that includes anything related to speech so that anything you say falls within the scope of your employment. I assume in that case the ct would look at the reality and the nexus of the speech with the job.

In cases of association, it is the same thing. And in both cases, the lower employee you are the more rights you have. You’re not seen as the face of the company, your activities don’t influence the company that much.

Speech not related to work: arguably not this following case: A precedent case NTEU says that speech that is not related to work is protected.

City of San Diego v. Roe: Policeman that sells video of himself in police garb, although not SDPD, undressing and masturbating, he sells it on EBAY along with SDPD uniforms, underwear and other stuff. The ninth says this is unrelated to work speech and therefore protected and that it is an issue of public interest! SCOTUS reverses. They say it is work related because we know he presents himself as policeman and sells SDPD uniforms. Also not an issue of public interest. Not in this cases because it’s so close, but in other cases, how close does the nexus need to be to be considered related to work?

Public policy: you can state one when you’re fired because you took advantage of a right. BUT if your right is already protected by a statute like the California family leave act, there is already a remedy provided and courts are reluctant to give more remedy if theres already one.

Pp. 376-390 (the private workplace).

Problem on page 375:

Question 1-

Analysis: 1- not within his scope. Not in his job description.

2- Matter of public interest (not his opinion, but the topic itself is a matter of public interest)

3- Balance pickering-connick: Very disruptive to the workplace b/c they want an efficient non-disruptive work environment and Rasmussen was creating a hostile work environment. There is a statute that prohibits sex-orientation discrimination so his email creates a hostile work environment based on sexual orientation. Interest of the person: he was not anonymous, he was exercising his first amendment freedom of expression and religion. But he was told not to do it to harass others and in subordination he said he would continue to do it.

Question 2:a- not ok to do. The employer has a higher interest if he mentions the company name. there’s even a security issue here. The employer’s interest would outweigh the employee’s

B- maybe not pickering but the NT whatever test because it’s outside the workplace and pickering doesn’t apply. No nexus to work.

C- Pickering again because it’s within the workplace; And his interest in high and there is a political speech which is definitely public interest.

3- not have the event, set up a blog where people may consent to log into to weigh in with their opinion; garzetti-ize the email at work: any email to nectar or from nekatr is work related, for ie.

Private: you don’t have as many protections. And you don’t have the 1st amendment either in a private employer. BUT Labor relations act says that :

Concerted activities :preparation for group activity of matter of potential common concern.

Mutual aid and protection: reasonably work related

Only to work related issues: ie conditions of employment.

This is not valid for Public employees and amazingly enough it protects you when it IS work related which is not the case in pickering.

So you’re left with that and contract or tort remedies based on public policy.

Novosel case: Guy refuses to sign a petition for no-fault insurance in PA. He is discharged. Ct, in an ununsual decision, decides that if there is a public policy that’s violated then there is a tort for wrongful discharge. Then the ct says that the freedom of association under the constitution and state constitution is important and shows public policy. So the source of the tort is the first amendment in both state and federal constitutions. But, usually constitutional stuff doesn’t apply to private actors. The policy is against suppression of speech by government not private actors. So the great majority of cts. Doesn’t follow novosel. Another court in Edmonson says that an employee does not have a cause of action against a private employer who terminates him because of the exercise of the employees constitutional right of free speech.

THERE REALLY IS NO PROTECTION OF SPEECh in A PRIVATE SETTING with very few exceptions.

WORKPLACE PROPERTY RIGHTS AND RELATED INTERESTS

Chapter 8: Competition, Employee Loyalty, and the Allocation of Workplace Property Interests:

Competing interests:

livelihood and the ability to make a living with your chosen profession.(employee’s interest)

Maximizing competition (society’s interest)

Protection of companies’ clients, workforce and resources and IP. (employer’s interest)

Other theme is private ordering: how much K’s should be able to expand or contract any existing rights.

Difference between trade secret and confidential information; Conf you can use after you leave (if there is no onctractual limitation or an employer interest) trade secrets you cannot.

Pp. 393-401 Fiduciary duties of current employees:

Scanwell freight case: there was no covenant no contract but he is setting up a competing company while he’s working for Scanwell, he does not renew the lease on the office and then the office is used for the new company he sets up with the competitor. You have a duty not to compete with employer while there but you do have the right to make preparations while employed. Breach of fiduciary or loyalty duties happens when the employee goes beyond the mere planning and preparation and actually engages in direct competition which is to gain advantage over a competitor. Even a slight assistance to a direct competitor can constitute a breach of the duty of loyalty. Loyalty and fiduciary duty is being used interchangeably. Test:

• 1- an employee must not while employed, act contrary to employer’s interest.

• 2- However an employee may agree with others to compete upon termination of the employment and may plan and prepare for competing enterprise while still employed

• 3- but an employee may not while still employed, go beyond mere planning and preparation and act in direct competition with employer

The higher the employee the higher the duty of loyalty and fiduciary duty

How about telling customers that you’re leaving? Rule is an employee may advise current customers of his employer that he will be leaving. However, any pre-termination solicitation of employees or clients violates the duty of loyalty.

Tortious interference with K: elements:

• Intentional (so they have to know there is a previous contract) interference with a proposed or existing economic relationship

• With an improper motive or by use of improper means AND

• Damage beyond the fact of interference itself.

• Make sure the person accused of this is not a party to a K: so if it’s an employee doing this,

Pp. 401-430 post-employment restraints on competition – disputes over skills and training, and disputes over information:

Covenants not to compete and issues with trade secrets.

• REM METALS: Specialized welder who is really good and asks for a 50 cent increase in salary and doesn’t get it. He had signed a non-compete agreement signed and goes to work for a competitor company. Ct looks at RULE:

o Consideration for the agreement,

o Partial or restricted in its operation in respect to Duration, scope, geographical limitations,

o Must be reasonable in affording a protection to competing interests:

▪ Employees’ interest in working: how much of a burden will this be to the employee finding other jobs,

▪ employer’s interest in enforcing the agreement: is the covenant reasonable to enforce this interest, and

▪ the public’s interest in competition

• Among illegitimate interests are preventing employees from leaving. Even if training had cost thousands of dollars and hours it would not make a difference (accc to Spitko). In this case, he came with some training and testimony proved that their training and procedures were no different from the training and procedures of competitors so therefore it was not a trade secret. Law and Economics analysis is that the employer pays less while in training so since employee is basically paying for his own training he gets to take it with him. The burden of proof is on the employer to establish the existence of trade secrets, information or relationships which pertain PECULIARLY to the employer or other special circumstances sufficient to justify enforcement of such a restrictive covenant. Most employees won’t know about the law and what a covenant not to compete so make sure that you act as if the agreement is not enforceable. In this case they lost 25K for not giving him the extra 50 cents.

• If there is an injuction for the employee not to work, the company is usually required to put up a bond so that if it later is determined the case was for the employee, he can take the bond as compensation for his lost wages etc.

CTI: When you draft a covenant not compete make sure you’re balancing the scope so that if you want it national make it short time or viceversa. Covenants are in K misappropriation of trade secrets is an action in torts. I discussed this case. Get notes from Monica.

Inevitable disclosure doctrine: the person cannot divorce himself from his knowledge and will inevitably use it in his next job. Pepsi case of manager who gets hired by Snapple. Pepsi tries to enjoin him. Trial court does enjoin him. He had a confidentiality but not a non-compete. Pepsi sues and gets injunction b/c he will use his knowledge. So in a sense it’s an implied covenant not to compete. They will inevitably disclose or use confidential information like marketing plans. So in this you don’t need to show misappropriation or even trade secrets. Pepsi was not expecting to win. This is a way to get around the elements and requirements of the trade secret appropriation. This person has this knowledge and how can they possibly separate what they know. Typical tsm case the remedy is an injuction. Here you get a remedy of don’t even work fir this people. You use it if you have a non-compete that is not enforceable. Can you do the new job without relying on info from the old job? That’s the key question. How similar are the jobs, how similar are the employers, how difficult would it be for the person to do this job without the info gained on the previous job?

Earthwebb v SCHLACK: Ct holds the inevitable disclosure doctrine is not applicable here. Cts don’t really accept this doctrine widely. Ct says to use only in cases where employee has same position doing the same things, etc. Ct says they’re hostile because the P is asking to imply a covenant not to compete where there was not one before and it’s brought under a TSM rubric, since they could have had a non-compete. Here they did have a non-compete in the contract but what they agreed was to not compete directly with the employer, but doesn’t apply here because he’s not directly competing. They probably made it this narrow to enhance the enforceability of the covenant not to compete. First thing we need is an employer’s protectable interest (FOR EXAM: look for this first! If you don’t have a protectable interest, you’re done), then employee’s interest, then scope of agreement: job description, time line, geography. They’re all interrelated. If you expand one, you need to shrink another one to make it reasonable. You need reasonable limits. In this case they had a reasonable agreement, they just lost. In part because they drew it so narrowly. If you’re in an all or nothing jx, if they strike one down, the whole thing is invalid. If you’re in a blue line jx, they strike down the offensive part and the rest needs to be grammatically logic and intact. In a partial enforcement jx, you have the court revising and changing the agreement to make it enforceable. In this case, the court finds that one year is too long for internet anything b/c everything changes so quickly. They find that the employer did not have a protectable interest in having a one year clause.

Problem on page 426: COPY THIS ANALYSIS ON EXAM TIPS PAGE. This was his analysis:

She could be sued for breach of contract or missapropriation of trade secrets in tort. (or both). As a client you’d prefer the non-compete. In this case, not clear whether the competitor is in the production of medical equipment. The agreement is poorly drafted, overly broad and probably not enforceable. But, the first question to ask is does the employer have an interest? Yes, if it’s a trade secret. But not for three years because they’re developed in two years. So time limit: no, too much. Scope: too broad: otherwise providing assistance to competitors. Geographical: none. So, it seems unenforceable. Three approaches: (see how he discussed policy. Do the same in exam)

All or nothing: not enforceable. Bad side is that you defeat the purpose of the intent to contract. Good side is that it would encourage people to write better contracts so courts would not have to deal with so many cases: Too onerous for the court system. Unequal bargaining power, discouraged to leave his job b/c he doesn’t know it’s unenforceable, encourage person with the most power not to overreach.

Blue lining: only eliminate the offensive non enforceable parts. So you may want to draft the K in a way that even if someone took a pencil and eliminated that, the rest would still be coherent. If you have a complete mess you cannot enforce it. So if you have a K that says: 25 miles or whatever is reasonable. The ct can cross out the 25 miles and still have a valid agreement.

Partial enforcement: the court revises the agreement and basically re-writes it to make sense.

CA DOES NOT ENFORCE NON-COMPETE AGREEEMENTS.

Copywright: if created within scope of employment, employer owns the copywright unless contractually agreed to otherwise.

Patents: inventor owns it unless he was hired to invent this.

There may be a K saying that anything you invent within the next three years is also ours. JX’s would look at the same factors as non-compete.

Pp. 430-450; 450-453 (post-employment restraints on competition cont’d: disputes over customers and co-workers; new frontiers in non-competition and private ordering).

Hopper v All Pet Animal Clinic:

Three year non compete with 5 mile radius, for small animal practice. First oral agreement did not include non compete. Memorialized does include it but no extra consideration which is required. But she then signed an addendum with the non compete where her salary was raised by $500 a month. She then starts her own practice and he offers she can buy him off for 40K. She declines and says it is not worth the paper it’s written on. Ct looks at employer’s interest: keeping clients. Interest of public: We’re good b/c there are enough vets going around so they can go to any other one. Employee’s interest: working. So what’s the agreement: 5 miles: reasonable. Small animal: good, she can work on horses in Wyoming. Three year: unreasonable b/c 1 year would be enough to train a person to replace her.

So in this case, what’s the remedy? Injunction. But if she was not enjoined, it would be moot at this point three years down, so they would get damages. In this case, she was enjoined. If she was enjoined for three years, she could recover for the other two extra years from the employer’s bond posted to cover the injunction.

What if termination is involuntary? Can you enforce the agreement. Jx split. Does that mean that they’re worthless as a competitor so that enforcing the agreement would be useless? Can you still get the benefits of the non compete if you fire them.

Non competes are also not enforceable for doctors or lawyers.

OCI: test:

1- Is there a near permanent relationship with the clients? The more service oriented the industry the closer the relationship to clients.

2- Whether “ but for” the employee’s association with the company he would not have had access to the clients.

3- confidential information test: was the information basically classified and took considerable effort to create.

At the end of chapter we see some things people are doing to ensure non-competes since some states don’t allow them. One of them is a sit-out pay: if you don’t compete, I’ll pay your salary for a year. Also a forfeiture of a severance pay if you do compete, agreements between companies not to recruit from each other but this goes against anti-trust so don’t do it.

STATUTORY PROTECTIONS FOR EMPLOYEES

*We will skip all of Chapter 9 (Antidiscrimination) and most of Chapter 10 (Accommodating Worker’s Lives). I cover this material in depth in my Employment Discrimination course.

Chapter 10: Accommodating Workers’ Lives

SKIM pp. 625-627 with an eye toward orienting yourself to the FMLA reading that begins on p. 661; read 661-687 (Family and Medical Leave Act).

Family Medical Leave Act of 1993.

Only for covered and qualifying employees: Must work within a company site where there are at least 50 employees within 75 miles. Full time and have worked there for at least one year and at least 1250 hours for the last 12 months.

Only for qualifying employers: 50 employees or more

Birth of a child or adoption if taken within 1 year of event.

Illness of close family member (your own, spouse, parents, child)

12 weeks unpaid leave, BUT the employer may require or employee may select to first take any unused paid vacation time or sick leave, so that you don’t end up taking 14 weeks off (2 of vacation and 12 of FMLA).

Employer cannot fire you and must reintstate you in same or equivalent place when you return, and not to take away a benefit, although employee can be required to pay for his own premium payment part. And any accrual stays there: time stops. You’re not entitled to anything you would not have gotten if you had not taken FMLA.

Under FMLA you’re entitled to claims for interference and retaliation claims. Interference is when employer prevented you from claiming a benefit you were entitled to. Retaliation is a higher burden to show that employers’ actions were motivated by impermissible retaliatory or discriminatory animus.

FMLA provides for personal liability for managers.

CALIFORNIA HAS PAID LEAVE. It mirrors FMLA. Leave is concurrently with FMAL, so why take federal leave? Ca includes domestic partners as well as spouses. California has a separate pregnancy leave, not covered under FMLA unless serious condition. Who pays for paid leave? We all do in short term disability insurance.

Cases: so FMLA is painted as a sexual discrimination legislation. Discrimination against men!

Hibbs v. Nevada Dept. of Human resources: Guy was denied leave to care fir his wife after an accident. FMLA says it applies to public employees as well. Issue is: is it constitutional for congress to abrogate the state’s immunity from lawsuits (11th amendment) under their powers under section 5 of the 14th amendment? Ct says yes. Congress had evidence that there was gender discrimination in employment practices not only by private people but also by states. Since it is gender disc, we look at it with high scrutiny and find that it is proportional and congruent with the evil it is trying to cure. Ct says congress has the power not only to remedy but also to act prophylactically to prevent the kind of discrimination the court has already identified (gender disc) because if section 5 did not mean that, it would be useless to pass a law that simply parrots the 14th amendment. This decision sort of goes against Garret and Kimmel decisions because in those decisions that dealt with ADA and ADEA the court was not dealing with a heightened scrutiny protected classification. So the state only had the burden of proving rational basis for ADA and ADEA, whereas for title 7 and this act they di have to prove compelling interest. The court finds that title vii and pregnancy discrimination act already prevent discrimination on account of gender, so we don’t need more anti-discrimination provisions we need substantive benefit granted by congress and hence they abrogate the state’s immunity and create a cause of action against any violation. So the whole deal is that by passing an act that allows men to take the leave, it won’t be only women taking the leave and employers won’t have any incentives left to hire only men.

Selmi note: talks about the vicious circle of women take more time off and employers then have less of an incentive to do so. Also, for those who don’t and who don’t have children, they also pay for the ones who do because employers still think that guilt by association is possible.

The idea behind FMLA is that companies will learn to see that critical life events happen and people should deal with that.

Rationale of this decision suggests that an individual could not take the FMLA for his own illness. Because even if the congress had evidence to prove that there was gender discrimination by the states in employment practices, they did not have any evidence to prove discriminatory practices against sick people and neither are sick people protected category.

Russell v. North Broward Hospital: case of woman who gets fractured elbow and ankle and was terminated for excessive absenteeism at work. But even before accident she was being reprimanded for absenteeism. The regulation of the FMLA says a “serious health condition” involving “continuing treatment” the statute itself doesn’t define that. But, dept of labor is regulatory agency and it says a period of incapacity of three consecutive days. The court defines it as three whole days and not three partial days as she was absent. She also challenges that the definition of three days being necessary for finding serious health condition as invalid. Ct says that dept. of labor is regulatory agency and they can get to decide what it is, not the ct and the court has to defer to regulatory agency under Chevron, if the ct finds that the regulatory agency’s interpretation of the statute is a permissible interpretation. You have to give notice to employer within a reasonable time (1 or 2 days after finding out), that you will be requiring the leave. But as an employer you have to be aware of what the FMLA is and how sick is mom, and whether they qualified, and you have to do record keeping as well so you know when they’re done with it.

Distinction between interference and retaliation: First establish that P qualifies. Then the distinction that applies goes to the burdens. Interference all you need to prove is that you were entitled to it and they interfered. Their burden to prove you did not qualify or they did not interfere. Retaliation is an adverse action after you take the leave and because you took the leave. Plaiintiff’s burden to prove they retaliated. Mc Donald Douglas test: P proves retaliation, burden shifts to D to prove why it was not and then the P has to prove that their defense is pretextual. Read note 5 after case.

You can also qualify for protection under FMLA and ADA. What you need to prove is different for both. Briken ankles is not an ADA because not permanent disability, but you may qualify for FMLA. You’re entitled to a broader series of accommodations under ADA. ADA accommodation doesn’t run out after 12 weeks.

Final note: FMLA provides for personal liability for managers ( as well as FLSA Federal Labor Standards Act) and unlike title seven and other civil rights statutes.

FLSA: Only covers some employees and some employers. You’re required to pay one and a half times the hourly salary for every hour you work over 40 hours a week. Exemptions from it if you are administrator or executive or artistic employee. See chapter 11.

Get notes from someone who was here last Thursday.

Chapter 13: managing the risks and costs of liability in employment disputes: you can manage some risks by establishing the kind of relationship you want to establish, ie. Whether you establish it as at will employment or as an employee or as a consultant or part time employee, etc. You can contractually get out of many things.

• Preventive measures and corrective action: see p.865-66. For publix supermarket policy. It does not have an express anti-retaliation policy. Also, you may be complaining to someone who doesn’t know anything about harassment and their response might not be the best.

• Sexual harassment: behavior has to be unwelcome and there’s a subjective prong and an objective prong. the perception must be that she was being harassed and a reasonable person would have also thought it was harassment.

o Has to be severe, or pervasive.

Difference between

o tangible employment action: inflicts direct economic harm on the employer or A supervisor brings power of the company to bear. So, when you’re not given certain assignments, you’re not promoted, you’re giving menial tasks. Quid pro quo used to be the standard, but scouts couched it as some tangible change in employment. It’s the supervisor doing this. There is vicarious liability for company as opposed to negligence. Burden is on defense to establish reasonableness of policy

o and harassment: co-workers. You are still liable but under a negligence standard so the burden is on the P to prove. But if the harassment is by the supervisor then you are still liable under vicarious liability. Demonstrate harassment was severe or pervasive. After this is proven , the employer has the burden of establishing an ellerth defense or to prove that it was not severe or pervasive. A single incident of harassment is never enough to find severe or pervasive. So a rape may not be enough. So, if you report too quickly, you may not have undergone severe or pervasive. If you report too slowly, then you can apply the alec defense. (Ellerth defense?)

o Defenses: did the employer have an effective policy for preventing and responding to sexual harassment and secondly did the employee unreasonably delay taking advantage of such policy. This is the Ellerth defense?

• Watson v Home Depot: P worked for one year and she got reprimanded for being in car when she was supposed to be at cash register. There’s a two week training program. They had a good anti-harassment policy and makes it clear how to report and how to deal with this. She says she was there for the training. She alleges that she was raped by supervisor. She waited a week before complaining after the reprimand. So did she fail to take reasonable actions to report sexual harassment. After she reports the harassment the co. investigates and interviews 21 people and no one can corroborate her story and the date she gave was even wrong because the alleged manager had an alibi. No one can substantiate the allegations so it cannot conclude that it is true. HD suspended the manager and put the plaintiff on leave with pay. Offered to transfer to another store and it also transfers the manager to another store. The case hinged on the reasonableness of the victim in not taking swift advantage of policy. The Alec test is disjunctive: You had a reasonable policy and the P failed to take advantage of that policy. So the problem is for the P to determine when to complain because cts may decide that you were too quick to report b/c it was only one time. The ct decided that even if she had been raped, being afraid of retaliation or traumatized was not enough, she was still unreasonable in delaying the reporting.

What’s a good policy against harassment?

• Define what constitutes harassment.

• Set up procedure to deal with it for both the victim and the company.

o The procedure could be a hotline, reporting to someone in HR, make sure you have multiple avenues for reporting , both within chain and outside the chain and even outside the company like a law firm. (especially if company is small).

o If you have a report, your responsibility under title 7 is to investigate even if the reporter asked you not to investigate.

• Williams v. Spartan Communications: Supervisor and employee alleged that her supervisor sexually assaulted her and made her watch r rated videos in a van. He admits to the video and he is fired with five months severance in exchange for him not suing them. So they responded very promptly and the employee waited 3 years to report the issue, yet she wins. Under Ellerth you have to have a reasonable policy. But the ct says that having it on paper is not enough and there’s enough stuff on the record for a jury to decide that the policy was not effective. There were so many facts pointing to an old boys network that it was clear that the reporting was discouraged.

• Problem 13-1: should add a clause on non retaliation and also adding the policy against harassment on age or disability. Also ask to see something as to how employer is training on this. Add any language to protect on basis of religion, national origin or anything else that may be in your state statute as protected category.

o

Risk Management Techniques:

• Conducting layoffs: WARN act: workers adjustment and retraining act: if you’re laying off 1/3 of your workforce and that’s at least 50 workers, or you’re laying off at least 500 workers, you need to give them 60 days notice or pay them 60 days. Exceptions: if you’re closing the plant but you’re trying to not scare creditors or customers or it really hit you by surprise and was not foreseeable (Arthur Andersen case) then you don’t have to give notice. You cannot aggregate sites to have a claim(Phillips case).

o Releases:

▪ You cannot waive your right to sue prospectively (as in an application for jobs) under a federal employment law. You can settle or even before your suit, but only after there was injury or damage or violation. CANNOT DO THAT!!!! PLEASE NOTE THIS!!! YOU CANNOT SETTLE WITH RESPECT TO DISCRIMINATION THAT HAS NOT HAPPENED YET. Why? b/c it would encourage employers to discriminate in ways that federal law prohibits. That’s the policy. This is bound to be on exam as per his comments. Which means that you also cannot sign a release for future claims that may arise that you may not know about.

▪ Big thing is that it needs to be knowingly and voluntarily entered into. Only then is a release of an employment claim valid. Cts usually talk about the totality of circumstances (903) to determine whether the release was entered into knowingly and voluntarily. That’s for federal employment claims. This preceeded the OWBPA.

▪ Make sure you put all releases there: FMLA, ADEA, Title VII, etc and even tell them clearly what those acts protect so they know what they are releasing.

o The OWBPA (Older workers benefit protection act) has a more stringent standard. See page 902. This is under ADEA.

▪ Written in a manner meant to be understood

▪ Has to mention act ADEA.

▪ Waiver specifically refers to claims and or rights arising under this chapter.

▪ Individual does not waive any rights that might arise after the date the waiver is executed.

▪ Person advised to consult an attorney. Etc.

o To err on the side of safety, you always want to structure your releases so they comply with this act because it is more stringent than the knowing and voluntary standard. It takes discretion away from judge because it meets the totality of circumstances factors for the knowing and voluntary test. It also standardizes forms at a company if all releases comply with this regardless of age of employee.

o Phillips case: Ratification: under the knowing and voluntary standard, if you ratify by keeping the money after you realize it’s a voidable release because it violates something, then you don’t have a claim. You have to tender back the money. UNLESS you’re suing under ADEA in which case you don’t have to return the consideration because more than likely they would have spent it and not be able to give it back. You cannot give it back after obtaining relief in the lawsuit but before you sue.

o FLSA you cannot release or settle claim without dept. of labor being involved.

o Cannot give up your right to file an administrative charge with EEOC or other governmental agency. You may not be able to sue in court, but they can. Policy is that EEOC has authority to investigate on behalf of public. Sometimes they sue on your behalf and get money. They cannot not pay you your money because that would be illegal since it is a retaliatory practice. They regulate title VII, and others. ASK HIM WHICH CLAIMS. Public policy is that you must be allowed to complain to the government so they can investigate on behalf of public.

o Back pay, front pay, damages for emotional distress, severance pay is all taxable and employer may withhold taxes. So ALWAYS REMEMBER TO TELL COMPANY TO WITHOLD TAXES. Taxes are done UNLESS it is for physical injuries.

• Problem 13.5:

o Release is not specific. It doesn’t mention ADEA and therefore he can sue under that and SCOTUS has said he does not have to tender back the money.

o The severance doesn’t say that it is IN CONSIDERATION for giving up his rights to sue.

o It doesn’t comply with OWBPA requirements.

Arbitration Agreements:

• Largely governed by Federal arbitration act of 1925. Section 2 says any arbitration contract is enforceable except if it would not ba enforceable under state law on a ground that would invalidate any contract. You cannot have a special state law that only applies to arbitration contracts that does not apply to other contracts. Also, this act pre-empts state law. ANY Connection to interstate commerce is enough to bring it under the FAA of 1925. Hard to imagine a contract that does not fall into this (maybe family law?). There’s a section that excludes contracts of employment from FAA, but section one does not mean what it says according to SCOTUS! Language is to be given a very narrow interpretation for this section! So only people who travel or carry goods across state lines (truck drivers, seamen, railroad drivers, etc). But, you can put it into a separate agreement, not in their employment contract.

• No implied arbitration agreements, it has to be written. Cts have been more reluctant to uphold agreements to arbitrate if they are just in employment handbook.

• To get out of arbitration agreement you defend by saying duress, fraud, unconscionability. This is the area that’s bigger in the arbitration arena. You need both procedural and substantive unconscionablity: how big is the letter, where was it located, how much time was person given to read it and examine with attorney, etc. Substantive are terms that are very oppressive of one side only. Famous case is Gilmer. Does the FAA trump the ADEA which is later or title VII? The statutes don’t say that the cases cannot be arbitrated. So it seems that the ct says that as long as you can vindicate your rights, you’re just choosing a different forum, and the regulatory agencies can still investigate and bring cases. Unconscionability actually has teeth in the context of employment arbitration agreements.

• So get out of this how to structure an agreement, and when to and when not to arbitrate.

o Circuit city case. This case had already been to the supreme ct and decided that section 1 of the act DID apply to employment contracts. Employees sue for sexual harassment and Circuit city motions to compel arbitration. There’s a federal policy in favor of arbitration so cts usually look at everything with a bias in favor of arbitration. There’s an agreement to arbitrate, It is a take it or leave it agreement. It required employees to submit their claims for arbitration But NOT CC to use arbitration. So it’s a one way agreement. Ct says that it proves that it is unconscionable. “The 9th circus” says that it is a contract of adhesion so it is procedurally unconscionable (which is not always or typically sufficient to render it unconscionable: other factors would be limited time or no time to review, vague or not understandable language). The fact that it is a one street, goes to the substantive unconscionability. Typically, again, cts don’t look at sufficiency of consideration and mutuality. Not as bad as an agreement which says that one party can change the rules anytime but the other does not, because in essence one is bound the other is not. CC could have probably saved it by stating that they would also arbitrate their claims (especially seeing that arbitrators usually favor the company), unless they have a trade secret missapropriation injunction that you need and can only get in ct. Substantive has to do with terms that are unduly harsh or oppressive. Procedurally we look at equilibrium between parties AND the extent to which the contract clearly discloses its terms. ALSO, when you have an agreement to arbitrate you cannot so structure the agreement as to diminish legal remedies they have a right to under a federal law (never do that). They did that! Also don’t do it so that only employee is bound to arbitrate. And you should not require the employee to split the cost of arbitration (you may want to so they don’t bring frivolous law suits) but this ct says that it ALONE would have been sufficient to invalidate the agreement. So, if you’re giving up substantive rights, it will not be enforceable. Acc to the Supreme court, if you have a possibility that the fees will discourage the lawsuit, it is not enough to prove unconscionability, you need to prove a probability, not just a possibility. So in this case the ct says it is procedurally unconscionable because it is a contract of adhesion, and substantively unconscionable b/c it eliminates some substantive rights regarding the remedies available. Also, b/c of the lack of mutuality it goes to procedural unconscionability. “some modicum of bilaterality is required”. * If the party can change rules at anytime it is considered illusory.*

o Greentree standard: P has to prove that there’s a likelihood that the fees are going to discourage him from vindicating a claim, not just a possibility.

o You Cannot contract out of discovery. It is allowed.

o You can always waive your right to compel arbitration and sometimes you should if it’s a bogus case that you could have gotten kicked out on summary judgment in ct. but not in arbitration b/c they don’t do summary judgments.

o In arbitration the standard is the standard used for plain contracts not the knowing and voluntary standard or the more stringent OWBPA. So even if you are arbitrating an ADEA case you cannot apply the standard used for releases. In releases you’re giving up a substantive right so we have some procedural safeguards to comply with. IN arbitration agreements, since they are prospective you cannot give up substantive rights, you’re just changing the forum so we don’t need the procedural safeguards.

• Martindale v. Sandvick: this ct decides that an arbitration agreement between the employee and employer. Majority approach: consideration can be the agreement to employ you and sometimes continued employment is also ok as consideration for a subsequent agreement. The normal pressure an employee faces to get the job is not enough to make the agreement unenforceable: I needed the job is not a good argument. In this case there is also a contract of adhesion but that in and of itself does not render the contract unenforceable.

o Remember that you cannot treat an arbitration agreement in any way a K would not be looked at.

o According to California, there are five minimum requirements (page 926) These are factors from Armendariz.:

▪ 1- neutral arbitrators.

▪ 2- provide for more than minimum discovery.

▪ 3- require a written award.

▪ 4- all types of relief available in ct. have to be available in arbitration.

▪ 5- not require employees to pay either unreasonable costs or any arbitration fees as a condition of access to the arbitration forum. These are the factors Ca sup. Ct determine would be procedurally safe for the employee’s rights. If you don’t comply with these, the K is unconscionable and therefore not enforceable as any other K would not be either, so you’re not treating arbitration differently but exactly the same way.

Problem on page 928:

As employer is cheaper and easier to arbitrate rather than litigate. Much less discovery and since you’re in control of the information you don’t get blindsided by information. You get to change the decision maker since you don’t have a jury, you have a white, older white male who is professional and more sympathetic to employers, typically don’t award punitive damages. (they get paid to be arbitrators and if they give punitive awards, they get struck down from the panel. You get one preemptive strike against one member of the panel, no reasons asked). You have a repeat player advantage so they know you more. It’s harder for employee to get a lawyer b/c the case has to be worth a certain amount to be taken. For the employee, you can be pro-se and don’t have to worry about rules of evidence. The case is scheduled.

How to introduce it to employees: sell it to them and potentially introduce it only to new hires and not people who have been before or use it when you promote someone so you phase it in.

At will presumption:

Rule in Hanson: additional consideration is required to find a valid contract for life

Rule in Greene: Additional consideration is not a requirement but simply a factor to be taken into consideration in determining whether there is a valid contract for life employment.

Promissory Estoppel:

Rule in Grouse: You can use estoppel to collect damages from a company that doesn’t even allow you start your work.

Rule in Goff-H. You can use estoppel to collect damages if you have not yet started but you need to prove that you reasonably and foreseeably relied to her detriment.

Exam will be able to be taken out. He’s gone December 13th, so before that. 3 ½ hours and you can check it out and return it anytime as long as it’s 3 hours. Half of grade is the law and half is the policy. Write about the policy. Why is this good policy. Open book, open notes. BRING THE BOOK. STUDY AND PRACTICE ALL PRACTICE QUESTIONS> suggestion is that this will be the exam! Two questions:

¾ of grade for first one. Hypo that covers a majority of stuff. General analysis of situation and find issues and attack them. Black letter law and interests and policy TALK ABOUT POLICY.

SECOND question is a book question. A problem there. Tag book by sections. Pick up exam at noon so you can have the four hours. Use blind grade number. Three pages including a cover. So one page per question.

You can email him until the 13th only. You can take it until the 19th only.

For test about privacy:

Always look for source of protection:

Constitution

Statute

Contract

Tort of wrongful termination based on public policy? Bt remember you still need to base this on const. statute, case law, or administrative rules.

Then

• reasonable expectation of privacy: Check for company policies, which reduce expectation

• invasion of that privacy by employers

• invasion was reasonable (D to present there was a huge countervailing interest job related) in :

o inception (goes to the nexus with employment of job relatedness) and

o scope (how did they do it and was it narrowly tailored to interest sought) (Allow P to show feasible alternatives were possible)

• Was there consent as in the female health case?

For Speech: See

1- Is it within scope of employment? Yes: not protected (under Garzetti) No,

2- does it address an issue of public interest or concern? No, not protected. Yes, then do the balance:

3- balance with Pickering-Connick test to see whether the employer’s interest in having a workplace functioning efficiently and effectively with no disruption and the employee’s interest and public interest.

4- prove causation; you were fired because of protected speech.

5- figure out if public or private employer. If private you have even less protections: only some statutes, implied contract (maybe suggesting you can only be fired for good cause) and public policy tort:

• refusal to break the law,

• whistleblower

• exercising a right she had under the law

• She was exercising a duty under the law as in you’re subpoenaed.

If not at work: look for nexus as per NT whatever test. Check San Diego v Roe case for the name of the test. Higher burden for employer because less nexus.

Trade secrets and work property:

First thing we need is an employer’s protectable interest (FOR EXAM: look for this first! If you don’t have a protectable interest, you’re done)

Trade secret: has value in the fact that is not publicly known, not readily ascertainable to others or competitors and has been reasonably protected as a secret.

Missapropriation: is when the person knew or had reason to know that the information was confidential and he is now using it without permission from the owners.

Problem on page 426: COPY THIS ANALYSIS ON EXAM TIPS PAGE. This was his analysis:

o She could be sued for breach of contract or missapropriation of trade secrets in tort. (or both). As a client you’d prefer the non-compete. In this case, not clear whether the competitor is in the production of medical equipment. The agreement is poorly drafted, overly broad and probably not enforceable. But, the first question to ask is does the employer have an interest? Yes, if it’s a trade secret. But not for three years because they’re developed in two years. So durational scope: no, too much. Job Scope: too broad: otherwise providing assistance to competitors. Geographical scope: none. So, it seems unenforceable. Three approaches: (see how he discussed policy. Do the same in exam)

o All or nothing: not enforceable. Bad side is that you defeat the purpose of the intent to contract. Good side is that it would encourage people to write better contracts so courts would not have to deal with so many cases: Too onerous for the court system. Unequal bargaining power, discouraged to leave his job b/c he doesn’t know it’s unenforceable, encourage person with the most power not to overreach.

o Blue lining: only eliminate the offensive non enforceable parts. So you may want to draft the K in a way that even if someone took a pencil and eliminated that, the rest would still be coherent. If you have a complete mess you cannot enforce it. So if you have a K that says: 25 miles or whatever is reasonable. The ct can cross out the 25 miles and still have a valid agreement.

o Partial enforcement: the court revises the agreement and basically re-writes it to make sense.

o

Principle of additional consideration says that foregoing another job is not enough consideration (as would be quitting a business or foregoing a valid legal claim) to support a job for life. However, in the Sanyo case, he gives up a job and they deem it enough consideration. What’s the discrepancy? Both this guy and Hanson had had assurances of jobs for life.

Workplace investigations: discrimination, disabilities, harassment and how the co is being ran.

Do a thorough, impartial and quick review of what’s at the bottom of it.

Role of in house counsel. If you do investigation you cannot turn around and defend the person. You assign HR to investigate and train them on who to interview. Investigation should be conducted under supervision of legal dept so that it is privileged. Sometimes you will turn a rogue manager out on his own so he can be sued and not the company

FIND OUT WHAT THE COMPLAINANT WANTS TO ACHIEVE

Standard of proof:

Beyond reasonable doubt

Clear and convincing evidence

Preponderance of evidence

Good faith investigation and reasonable conclusion: supreme court said you cannot hold a company to the standard of a trial court: it is sufficient to fire an employee if you conduct an investigation that is in good faith and reaches a reasonable conclusion and so you fired them. So this protects the company as long as company can prove this standard.

Choosing the investigator:

• Objectivity: neutral outside of the issue. The more serious the matter, the more you go to outside counsel so you can conduct your investigation fairly and in good faith.

• Experience: people who have done this before and who has dealt with this issue

• Availability: six or seven attorneys who can be called b/c they’re all busy and timeliness is of the essence. Usually within two weeks and the more serious it’s one week

• Cost: the more serious allegations the more you’re willing to pay

• Familiarity: someone who is familiar with the industry so they can hit the ground running.

• Styles: aggressive, try to anger the witness or more laid back. Who do you chose for each case and for each person who needs to be investigated.

Initial meeting with complainant- preparation:

• Understand company policies, procedures, organizational structures and disciplinary procedures.

• Employee handbook: how complaint is made, etc

• Learn everything you can about dept. personnel involved, relationships among these people and others around them

• Prepare as though for a deposition

• Have an outline and don’t stick to it

• Prepare questions in advance

• Review relevant docs:

o Personnel files of complainant and accused

o Prior complaints

o Any statements

o Any audio and video tapes

o Internal correspondence regarding complaint

Purpose of the meeting:

o Identify all issues

o Gather relevant facts including names of witnesses for every fact

o Instill confidence in complainant that you are impartial and will be thorough.

What happens:

o Intro and explanation of process

o Inform them this is not confidential but you will not share information unnecessarily. Just the need to know basis: accused, manager, etc.

o Need to be completely honest

o Reiterate the company’s no retaliation policy to everyone you interview. However, if witnesses refuse to comply and cooperate since the manual says you have to, if they don’t it’s insubordination and you can get fired. If it’s the accused you tell them you’re trying to investigate and that you will come to a conclusion anyway and that you will note that they refused to cooperate.

o Ask if they are comfortable that you can be impartial.

You interview the accuser first and immediately after that you do the accused.

Get the facts:

o What?

o Who?

o Where?

o When?

o Why?

o How?

o See if there are notes

o Has anyone else have similar concerns

o What have you not told me that you think I should know

o Give them your card so they can get back in touch with you

o Tell them you may be following up with them

o Remind them of non-retaliation policy

o Kept confidental -limited disclosure

o They should not disclose information to anyone or tell anyone about the meeting

o Thank them for time

Follow up with complainant:

o Confirm the issues raised by employee and what is to be investigated, CYA because it clarifies what you will investigate and they can let you know if you are missing something

o Set forth basis of each allegation

o ID witness and complaints

o Set issues

o No retaliation and if anyone does something get back to me

To record or not:

o Usually not. Less cooperation, holds back info, consent isssues, etc.

Speaking to the accussed:

o Analyse issues and understand what causes of action can be brought to company

o Ensure accused understands you are impartial

o Talk about every detail and every issue

o Take detailed notes under every issue and every fact

o Prepare summary right after

o Obtain info on each issue

o Every defense must be explored thoroughly

o Show sensitivity to the scared person

o Cover everything you covered with the other person so you get witnesses, etc.

Proper questioning techniques:

o Detailed outline but don’t worry about sticking to it

o Ask what they ultimately want

o Understand what facts are necessary to resolve the issue.

o Ask about every detail

o Start with broad sweeping questions

o Ask leading questions

o Ask difficult questions

o Follow up on prior questions if facts change

o Commit them to their positions

• If you have a complaint on Monday, Tuesday you start investigating and Wednesday, you separate the people if they are in supervisory capacity by suspending the accused, and by Thursday he was terminated, then the company has done everything they could and it is lawsuit proof or at least more protected.

Interviewing witnesses various types:

o Reluctant witness

o Witness who loves the limelight

o Witness with an ax to grind

Assessing credibility:

o Behavior/ demeanor: body language, eye contact, averting eyes or gaze, “I don’t recall” statements accompanied by demeanor

o Cooperation

o Logical statements

o Consistency of assertions

o Corroborating evidence: documents that support, other witnesses

o Circumstantial evidence

o Your experience

Report and Conclusion:

o What was the issue

o Who did you talk to

o What are your findings (not recommendations)

o Examine objective facts in chronological order to reach a logical conclusion

o Weigh the evidence based on the credibility of witnesses (explain why no credibility)

o What motivation did each person have including witnesses?

o Was anything anyone said found to be unfair?

o Make your best judgments as to what really happened.

o Findings:

▪ Were any policies violated?

▪ Did you find witnesses credible? And why not?

▪ Detailed written report should be prepared for counsel

▪ Identify issues being investigated

▪ ID docs reviewed

▪ Id witnesses, testimony (summary) and dates interviewed

▪ Findings

Concluding matter:

o Results communicated to complainant and accused. “we concluded there may have been inappropriate conduct and it has been remedied.

o No discussion of discipline due to privacy concerns *you cannot tell them what happened to employee because there are privacy rights in CA* So even if he goes to training you cannot tell complainant other than it was remedied. Witnesses are not told anything!

Reassure victim of non-retaliatory policy and that they need to contact you if retaliation happens later.

o Counseling Clients:

Beginning and end of employment relationship. Usually they don’t look for advise at the beginning at hiring process. But she does look at their hiring documents and process to make sure they’re in compliance.

At termination she does get calls.

Hiring and its documents:

• 1-Job description/ job posting: accurate (make sure you update set up routine where HR of functional manager will check periodically and make sure the description is accurate and describes the actual current description). Include whether the job is exempt from overtime although this will not make it dispositive.

• 2- Application (this is where it starts): besides employment history it can serve as a place where the applicant concedes that any lies are ground for firing or not hiring, where they can consent to background check, they can also collect applicant flow information (it’s voluntary and employers maintain the info for government programs where reporting is required or encouraged: race, gender, ethnicity, veterans status, etc).( how you store it is important, you need to remove it from packet before you pass it on to the hiring people so no allegations of discrimination can happen, for instance if they have just claimed they’re disabled or a minority)

• 3- Interview guidelines forms: structure is good to help managers that cannot come up with good information and lawful questions. Also it should be consistent across applicants. You cannot ask about disabilities but you can ask about an applicant’s ability to perform the job. But if there are some safety concerns (seizures for drivers) you can request a medical exam post offer and make sure it’s within the very strict limits.

• 4- Formal job offer: Written communication. Key terms, what job, what compensation, at will or other arrangement (one year contract attached), it may lay out these other docs: this offer is contingent on you signing the non-disclosure agreement or whatever. At this point you send out all other docs.

• Contract

• At will agreement (typically in job offer letter or as stand alone)

• Background checks

• Assessment test (personality tests, intelligence tests, aptitude tests).

• Confidentiality agreement: state specific laws about what can be contained in them

• Non compete, non disclosure, non solicitation agreements: state specific laws about what can be contained in them

• Arbitration agreement: state specific laws about what can be contained in them. With these things, you may run into bluelining, meaning that the courts will blueline anything they don’t like or is not enforceable but enforce the rest.

• Government docs: IRS< SS> DHS (INS: I-9).

• Drug testing policy (usually a consent on application and on employee handbook)

• Medical exams docs post offer.

• Employee handbook/benefits forms: usually given after acceptance. The longer it is the less likely the employee will read it, but it’s important b/c here you assemble the important information, rules and regulations. You make them sign off that they received and read it and knows what’s in it. That way you know or can claim that they know the policies

Terminating employees:

• Four theories of the kinds of challenges a terminated employee might bring about the decision:

o Violation of public policy (retaliation, whistle blowers): who is aware of the fact that this person complained and did that person have anything to do with this termination? If the terminating person did not know about complaint, then it cannot be retaliation. Public policy is where lawyers get creative and can change laws. Proving motivation is the hard thing. Proving that the decision was motivated by certain factors is very hard.

o Breach of contract: at will? Contract? Implied contract?

o Discrimination/ retaliation: what sort of protected characteristics or behavior does the employee show. She has a list of factors that CANNOT influence any employment decision. Have they filed a claim? If they have any of these characteristics, ask how they have been treated and whether that was different from other employees. If they’re fired for a policy or rule, do you consistently enforce the policy? If it’s not enforced against the males, why are you enforcing it against females?

o Tort (fraudulent inducement to take the job: someone quits a job, relocates and then it’s terminated. Tough claim to make. Sanyo case.

• When someone calls you to ask whether a firing is ok, you run through the four categories above and assess the risk. Now, there are other risks: decreased morale, loss of a valuable highly skilled employee, etc. These are business risks and not within your expertise but you may offer this advise anyway to take into consideration.

• If we’re talking about performance, ask if there have been performance reviews, have they been warned or counseled, is it sufficiently severe that it warrants termination on first offense, what about the comparers (how others were treated in similar situation), has company gotten employee’s side of story? Easy to do and often ignored at a high price. Pressure clients to do that and watch for legalities: does he need another employee there? Can lawyer be there? Does union rep need to be there?

• You can also get a release from employee when he’s let go.

Human perspective: how do you communicate it? How much notice? If it’s security situation, where at the very moment you terminate all his access is terminated. Cannot be diminishing and humiliating and embarrassing.

•

THE BENEFITS AND BURDENS OF EMPLOYMENT

Introduction (Private Ordering and Its Limitations) and Chapter 1: The Stakes of “Employment”

I- THE STAKES OF EMPLOYMENT:

A- Pp. 3-26 distinguishing “employee” from “independent contractor”.

Employees are defined as an agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right of to control by the master. IC is someone who performs a service but his physical conduct is not controlled by master, and retains control over how and where he performs his duty, the manner of performance. Page 6 lists the factors you look at:

1- employers control

2- employee in business

3- skill required and how much supervision is required how is it usually done in that area

4- Who supplies the tools

5- length of time of job

6- what the parties think the relationship is (more relevant the more equal the bargaining power of the parties)

7- whether the principal is in business

8- part of the regular business?

9-method of payment, by hour or job

Federal statutes mostly apply to employees and not independent contractors SCOTUS will continue to define it as the common law tests did.

The higher education level or skill set, the more you’d benefit from being classified as an independent contractor. The lower, the more benefits you get from being an employer.

CASES:

MC.CARY V WADE: auto accident with truck carrying logs for someone else. If employee, wade is liable under respondeat superior: employer responsible for the torts of your employee committed in the scope of their employment, but not if they’re independent contractors (unless employer intended consequences or there was an non-delegable duty ). Court held that Wade was not vicariously liable because the logger guy was an independent contractor since he was not controlled by Wade, Wade did not pay the logger, the guy cut and logged his own trees and took them to GP on his own. Plaintiff argues that Richardson test requiring public policy test to determine liability applies, court: not in this case. not a case where the company denies having an employer/employee relationship by claiming they are merely an IC.

Fitzgerald v. Mobil Oil case: truck and trailer were owned by someone who leased the equipment to Mobile. Guy who drives it falls off the truck and wants to sue mobile on tort. Mobile claims that the employee’s sole remedy is worker’s comp. Guy claims he’s not employee. Court applies economic realities test. Very much like control test:

1- control of workers duties

2- right to hire, fire or discipline

3- Payment of wages

4- performance of duties as an integral part of employer’s business.

Mobile had structured the relationship as an independent contractor because trucks were dangerous. Since Mobile had paid into the no-fault workers comp. public policy reduces your liability as a company by inducing you to pay a premium and protect your workers.

test for workers comp is much broader than the test for respondeat superior, chances are that mobile would win by saying the driver was an IC.

the contracts are relevant and important, they are not controlling. what is the reality, what does conduct of the parties really say?

NATKIN V WINFREYIn order for HARPO to win, they have to be owners of pictures and they have to produce an agreement saying this was work made for hire. HARPO did not control most of the means and ways in which the pictures were taking,

B-distinguishing “employer” from “employee”.

Clackamas Gastroentorology associates v. Wells: The ADA did not apply to them because the ADA only applies to companies with more than 15 employees were the doctors employees or not? common law test of control level which was the test used by EEOC (equal employment opportunity commission) page 29. But this is a test that was created to determine whether a person is an IC or an employee.

Usually managers or employees do not have a liability. certain exceptions when more than the entity would be liable. High ranking, supervisory personnel may be liable under FLSA. Likewise, those who assist in violations of FMLA (family …leave act)

Yates v. Hendon: doctor who stashes away money in retirement account under ERISA but he’s in bankruptcy proceedings and his creditors claimed that he shouldn’t have been able to even have the account because he is not an employee since he runs the whole show (he’s a one man show as a doctor). But under ERISA, the statute allows him to do so even if he is a controlling member of a corporation. The public policy was to encourage people to set up individual retirement accounts. The court does not look at the common law because ERISA doesn’t define the term employee any better than ADA, but they chose to look at other provisions in the law (ERISA) where they can get clues as to legislative intent and the public policy they were pursuing: to create an incentive to have plans that benefit both the employees and the employers because it will facilitate employee benefit plans and that’s a good thing.

C-Rise of “contingent” labor as a challenge to traditional categories.

Ansoumana v. Gristede’s Operating Corp: Duane/Reade hired Hudson who hired people to deliver foods paying them 30$ a day at most, in violation of FLSA. FLSA contemplates that you may have more than one employer: an employer includes any person acting directly or indirectly in the interest of an employer

Why not hold individuals personally liable for violation of other laws but we do for violations of FLSA? It would be too much of a deterrent if we did and no one would want to be a manager. It would have a chilling effect on business if it did, whereas enforcing FLSA, it has to do with salaries and hours and thus it’s easier to enforce something they actually have control over.

Microsoft case: As a lawyer, you should see that the drafting needs to be clearly done to say that whether a court finds you to be an employee you may not participate in benefits plan. You cannot contract out of statutory protections but you can contract out of others which are not (Oprah’s case).

II- PRIVATE ORDERING AND DEFAULT TERMS

Chapter 2: The ‘At-Will” Default Rule and Its Limits

A- JOB SECURITY AND AT WILL EMPLOYMENT: Pp. 65-77 (introduction to the “at-will” principle).

Presumption that all contracts are at will. The P has the burden of proving that the relationship was not at will and the court will look for some out of the ordinary evidence that this was not an at will contract.

In at will, both parties are free to leave for any reason including no reason at all. It’s very hard as a P to win a case that you were not at will because there’s a bias against it. It is a default: both parties can agree to have a different agreement. But the great majority of employees are at will. But sometimes by their behavior, employers imply a non-at-will employment. The corporate culture seems to say that unless you mess up you will not be fired. They do it for corporate morale, etc.

Not everything you learn in contract law applies to employment law. Many doctrines are broken or stretched in EL.

Two cases that illustrate how strong the at will presumption is and the two courts strongly support it but they take a slightly different approach.

Notes from book:

• Employment as a a rule is at will in US. By any side.

• The case of Hanson v. Central printing where an employee got assurances by VP in a letter that he would offer him employment for 40 hours a week every year until he retires of his own choosing and he did not accept the other employment, and then was fired, shows the principle of Additional consideration: absent an express term of employment or additional consideration to the employer, a contract is deemed terminable at will. Some additional considerations that were deemed so were foregoing a valid legal claim against the employer, and stopping a competing business, but not as in Hanson’s case, foregoing another job offer as that is considered desirable of every employee. Working for Central printing was already something that he was bound to do and that naturally would require him to not work for someone else. Court says that the lack of mutuality (given it was a unilateral contract) is not fatal to the P’s case, but the lack of additional consideration is. However, when talking about fairness they do bring up mutuality since it would not be fair to bind one and not the other.

However, consideration can be given for any number of things at once, there doesn’t have to be a one to one ratio. He gave up a job and worked for his wages. So it’s a different result to say that his forebearing the second job is not consideration for his contract for life assurance. But in this case one of them is saying you can work for life and the other is not bound to stay for life, so mutuality is an issue (unilateral contracts) and you cannot really bind an employer for life because that’s too long and it would not be fair. So when you have a contract that says you have a job for life, cts usually interpret it as an off hand comment that doesn’t mean they meant that but an at will employment.

If they had agreed to a fixed term (3 years) the courts would be more willing to do it, because damages are easier to calculate and it’ less vague as well.

• Contracts of employment for life are ambiguous as far as calculating damages so courts don’t enforce them often.

• In Greene v Oliver Realty, the court discusses the reasons and rationales presumably behind the at will presumption: freedom of contract (although sometimes it prevents it), mutuality of obligation (although there doesn’t have to be an equality of obligation, no adequacy measurements), common experience (both parties prefer at will), and procedural protection against vexatious lawsuits (lest all employees sue for wrongful termination and juries are more likely to be sympathetic to the employee and not the employer and there’s a built in bias because juries are composed of employees not employers. So we stack the deck against the employee because it is stacked against the employer.) and fairness and equity (employers could not recover from employees or force them to work for them) . He had agreed to work at a lower rate than union in exchange for having a lifetime job. He worked 24 years for the original company and then 9 for the new company and they fire him later even after he had explained to the new VP what the arrangement was with the old people. But the main tenet of Greene is that additional consideration is not to be taken as an absolute requirement to find enforceable a life contract, merely as one more factor that could help to determine the parties’ intent, very much in the tradition of modern contract theories that look at all circumstances. So even though they talk about the other rule where additional consideration is required, they go for the rule where they only look at it as a potential factor. They remand the case so jury can look at all circumstances. So we don’t take the language of a contract at face value because employers sometimes use language as aspirational and not as binding.

• More and more courts are looking at employment contracts and implying more security in them and using contract theory to read those employment contracts. For that reason, in Montana, business agreed to establish META (model employment termination act) which gives them the right to terminate for cause and sets a cap on damages.

B- CONTRACT BASED DOCTRINES THAT EAT AWAY AT THE AT WILL PRESUMPTION: ORAL AN IMPLIED K’S RIGHTS TO JOB SECURITY.

1-Reliance on offers of employment: Promissory estoppel: The good thing about promissory estoppel is that you don’t have to prove a contract.

Pp. 77-88 (reliance on offers of employment (promissory estoppel). Grouse v. group health plan, inc. Seminal case. Where guy quits his job and declines another offer and when he calls to see where to report in the job he took, they tell him someone else took it! He claims estoppel. Company claims that it would produce the anomaly of giving him more protections than if he had reported to work for the first day and court says, no because estoppel would also work on the first day since he needs to prove he could satisfy the boss. An employee has the right to perform his duty to the satisfaction of his employer. Damages are calculated at what he was making before, not what he would make in the new job.

In Goff-hammel v obstetricians and Gynecologists, the court uses Grouse as precedent and rules that Goff Hammel had relied to her detriment and reasonably and foreseeably on the offer to work and then was fired the day before starting so she’s entitled to recover damages as per her previous salary. Dissent says that should not happen because promissory estoppel cannot be applied where there is no contract and only an at will employment. The court differentiates between her claim for employment breach of contract (which they say she loses because at will applies) and her claim for estoppel which she wins because she proves that she foreseeably and reasonably relied on the offer. Other courts have also held that it is unreasonable to rely on a promise of at will employment. But how long would a claim for promissory estoppel be good? What period? Maybe the probationary period that’s normal in that company or that industry?

If your contract says that there’s a probation period, you can argue that theirs is a reasonable assumption that you will be given the opportunity of proving yourself.

There’s a very low rate success in promissory estoppel cases within employment law. But, promissory estoppel is always added on in every wrongful termination and employment claim and he called them throw away claims. As the other cases develop, these ones fall by the wayside and are never thought of again, so that could account for why the rate is so low.

Hypo: The new company just lost a big contract and you were told not to show up for the first day. Why would the P lose? The fact that there is good faith and also the reliance is only reasonable as long as there is an enterprise going on, not reasonable to rely that they would hire you no matter what. So if others are being let go, why should this person have a job that others who have proven themselves do not anymore. Since it is a estoppel claim and not a contract claim (estoppel claim is not the same and is a lesser claim) the ct would give the employer more leeway to make decisions regarding economic conditions than if it were a contract claim. The remedy is also different. For estoppel they get what they were getting before: so old job: 1500 new job 1600 2 months later they find a 1400 job. Under estoppel, (reliance damages) they get 1500 for two months, and 100 for the assumed duration (or whatever way they do it) of the new job at 1400. If you had a contract, you get actual damages? (so 1600 for two months and then 200 for the duration of the 1400 job as calculated.

Schoff v. Insurance company: guy with misdemeanors who doesn’t write that on his application b/c the employer told him that only felonies count to be bonded and that he should not worry. He was charged with felony but not convicted, and the underwriters don’t bond him and he gets fired. He asserts a promissory estoppel claim b/c they told him not to worry. The ct says that they didn’t say that he would not be fired if he were not bonded and they also didn’t promise him that he would be bonded no matter what. So ct finds for defendant b/c that was not what they promised him.

2- Pp. 88-102 (assurances of continued employment :oral and implied contracts.

ORAL:

Shebar v. Sanyo: he was in sales for many years at Sanyo and he thought he would never get promoted b/c he was not Japanese. He got job at Sony and when he resigned, the president of Sanyo ripped his resignation and says he has a lifetime job and that they would not accept his resignation, that his performance was good, and he was married to Sanyo. He declined the Sony job. When he called the head hunter he was told that Sanyo was actively trying to replace him. He confronts the Prez and they deny it. Two months later the new prez fires him and he brings a lawsuit alleging a breach of oral contract. Sanyo motions for summary judgment and there is an appeal.

Ct remands the case and reverses the summary judgment because they say that a jury could find that he had given additional consideration for the permanent offer of employment since he gave up his sony offer. They say that not all forebearance will count but this one does!

Both of the following are rare and not well advised: So we require additional consideration and other factors to prove that’s what they intended.

Contract for life: employment at will. Check with him on this whole part because it is confusing as far as terminology.

Just cause contract: only can be fired for just cause. Only protects employee from arbitrary termination. So this is not so foolish and protects the employer b/c they can fire you for just cause.

When an employee breaches the contract by not performing (he cannot do it) then you can fire him even if it’s a contract for life. But it’s a higher standard.

Hypo: what if Shebar argued promissory estoppel: it would be a stronger case than Grouse and the nurse case because Sanyo actually knew, not just foreseeable, that he was declining Sony’s offer. Also, as a defendant you can pull a statute of frauds defense although it could be defeated b/c he could potentially die within the year.

IMPLIED:

When you work at a company a certain policy, expectation or culture develops that gives you clues as to what is expected and how things are done in that company , but at what point does it become legally binding? Implied contracts still have the requirements of contracts: offer, consideration, acceptance, but some of these are implied from conduct.

Wayne Pugh v. See’s Candies: worked from dishwasher to member of the board and VP. When everything was going well, after a business trip to Europe, he was fired and not given reasons for termination. (he was annoying to his boss in Europe). The court remands with instructions because they find a prima facie case for a contract for life implied from conduct. The court delineates the factors to look at and they all have to do with personnel practices and policies and assurances of lifetime employment or other communications or conduct. Ct decided that it was an error for the court to respondent’s motion for non-suit because the ct is not to look into adequacy of consideration, so there can be one consideration given for several promises. The ct found an implied contract because he had been told by VP many years ago that his future was guaranteed as long as he did his job. And that should be consideration (the fact that he stayed and did his job) enough for the company refraining from arbitrary dismissal. Therefore, since he had a prima facie case for an implied contract, it was error to grant non-suit. He eventually lost on the actual lawsuit, because not only did he have to demonstrate he had an implied contract, but also that the employer was in breach.

Pugh Factors from this case to determine whether there is an implied in fact K:

1- personnel policies or practices of employer

2- employee’s longevity of service

3- actions or communications by the employer reflecting assurances of continued employment, and

4- industry practices

Implied in fact K is one in which an agreement to be legally bound is implied from the circumstances, albeit without any clear oral or written communication between parties. The totality of circumstances must be examined to determine whether the parties conduct considered in the context of surrounding circumstances gave rise to an implied in fact K limiting the employer’s termination rights. These two cases suggest that longevity and consistent advancement may be necessary although not sufficient facts from which a ct can discern an implied in fact K.

Page 101: problem 2.2:

Implied in fact can be found easier than oral K because there is no consideration. Promissory estoppel: has to be foreseeable he would rely, reasonable to rely, and detrimental. He did rely, and it was foreseeable.

Problem 2.3: do not reply by email. Walk into office and match the offer as far as salary only. Don’t negotiate by email. 2.3.b-)Now there’s an oral contract and a mess. You can also dismiss employee whenever you want and just offer a severance pay that’s higher than normal to release her claim if you need to.

3- Pp. 102-122: written employment manuals and policies.

Are manuals, handbooks and policy manuals legally binding as contracts or are they merely advisory, in light of the fact that employer’s policy is there?

Wooley v. Hoffman La Roche

Isssue: whether certain terms in a company’s employment manual may contractually bind the company?

Holding: absent a clear and prominent disclaimer, an implied promise contained in an employment manual that an employee will be fired only for cause may be enforceable against an employer even when the employment is for an indefinite term and would otherwise be terminable at will.

PP: manual provides certain protections for employees and should be required to honor it. Ct also talks about unilateral contracts where the manual could be considered a unilateral offer to be accepted by performance, when the employees come to work, Therefore, since they passed around the manual and the employees come to work, it has been accepted. But, is there a meeting of the minds if the employee doesn’t know what the manual says? But ct says where the employer has created an instinct obligation then it should be bound because he wanted to induce loyalty and continued employment. Also, they probably did it to avoid unionization, but apparently the manual was only distributed to the upper echelon managers or employees. So arguably they got what they bargained for b/c people will rely on the manual. Ct also says that all they need to do is write in the manual that:

1- there is no promise of any kind by the employer contained in the manual

2- regardless of what the manual says or provides, the employer promises nothing and remains free to change wages and all other working conditions w/o having to consult anyone and w/o anyone’s agreement, and

3- that the employer continues to have absolute power to fire anyone with or without good cause.

Conner v. City of Forest Acres: woman who is reprimanded several times for dress code and other vlolations. She is fired and files grievance. The grievance committee votes to reinstate, the city doesn’t. She sues. She had signed acknowledgement forms for the handbooks and such handbook said that nothing here limits the city’s rights to dismiss. Also says that is a guideline and is subject to change with little notice and is not a K. Also it lists 23 behaviors and a process for discipline that SHALL BE progressive. But later it says that there is no requirement for it to be progressive!

City claims there is no K in the handbook. And the disclaimer is conspicuous so the guidelines not always need to be followed.

Issue: is it reasonable for employee to think that this is a binding contract even if the face of the disclaimer?

The ct says that since most employees would see it as modifying their at –will agreement, there is an issue of material fact about the fact that SHALL was used and maybe that controls. So case goes back to ct.

Demasse v ITT corp.:

Continuing to employ is the consideration and continuing to work is acceptance by employee. This is no where most cts are. This is the case where the employees could not be laid off before less senior people were fired, and then there is a change in the handbook that says that co. can always change policies assuming they give notice. Ct says they cannot modify the manual in this way because the notice was so late that it would make the original promise illusory and the employees need to be notified and give positive assent, not just assent by continuing to work. The employer has not given any additional consideration because they’re obligated not to fire them already. So no affirmative assent and no additional consideration from employer. Employer has to demonstrate that employee knew about modification and assented. But in Wooley, they said that employee did not need to know about the manual to have it be effective. The point was that they cannot change the rules so that all previous rules that were relied upon by employees are gone whenever the employer wants to. There must be some extra consideration and assent. How about reasonable notice? That would qualify.

Problem 2-5: according to Wooley, was it reasonable for the employees to think that there is an implied contract. So they had stronger basis for reliance than wooley. To modify a contract you need to give notice, and maybe some consideration, although it depends on what jx. Demasse would not allow the modification. Questions to ask: Was there reasonable notice? Under Demasse (minority) wants to see separate consideration and acceptance by more than just coming to work. In California they just imply acceptance by coming to work and consideration is implied as well(?). However, since they had the enhanced benefits without negotiating for it or even accepting it (they had no choice), PB should have obtained a waiver saying that waived right to sue in exchange for enhanced benefits. However, the benefits were irrelevant in CA, only the reasonable notice mattered but you should offer to pay extra raise or some other consideration, AND always send a paper they sign saying they accept, that way you cover your ass in every jx.

III- Chapter 3: Written Contracts and Expressly Negotiated Terms of Employment

A- job security and contract ambiguity: Pp. 123-124 , 128-139. Most employers don’t have a written contract and they are usually only done for high powered executives.

Cave Hill Corporation v. Hiers: K was ambiguous? He was hired as sales person and K said from this date to that but K also said they would give him a 30 day notice. So he claims they can only fire him for cause, Ct says, unambiguous because the 30 day term trumps the implication that this is a fixed term K that can only be terminated for cause. It doesn’t say what’s grounds for termination and we cannot even imply it b/c there’s the 30 day clause. Nothing in K talks about just cause and the disclaimer trumps.

So even a fixed term K is not a guarantee of perennial job. And K’s with notice provisions are usually treated as definite term agreements for the duration of the period.

Parol Evidence Rule: contemporaneous or previous agreements not included in a K may or may not be acceptable in trial. If it’s fully integrated (especially as expressed in an integration or merger clause) you can only accept parole evidence to explain ambiguous terms never to add or contradict. If not fully integrated, then you can use for adding or explaining, but not to contradict. Always to interpret ambiguous terms. Subsequent agreements are ok to s how. Except if there is a no oral modification clause or if you’re in a jx that says that any modification requires additional consideration (most do).

When you have a stated rate of pay related to a term (like 250,000 per year) that only fixes the rate, not the period as per the American rule/

B- Pp. 139-158 (just cause to terminate). Just cause is implied in fixed term K’s because Argument is that if there is certain behavior the employee has breached the agreement not the employer. So they can fire you for cause because you have breached, not them.

Esbensen v. Userware Int. Software company and computer programmer. K said agreement is effective june1, for a period of one year, however this agreement may be terminated earlier by either party by giving two weeks notice” . Issue: is the contract at will or term? There’s a motion in limine to accept parole evidence of an oral agreement concerning good cause. P claims there is an implied just cause requirement. Ct says that in the terms are ambiguous and so they remand to trial ct.

Naturally excluded test: Is the term argued about one that would normally be excluded from a K? In Ca, the modern approach would tend to allow the inclusion of extrinsic evidence that would be excluded in other jxs.

problem 3.2 page 139. Even if you have an unsigned memo, it is not fatal to your claim, b/c you can have an oral agreement. The prez said it was too specific. So that helps employee establish there is really a K and the issue is what terms apply.

Just cause to terminate: Ct has found there is a K that requires Just cause to terminate. What now?

Benson v AJR: was son of owner and company is sold but he’s asked to stay on as safety manager. They had agreement that said he would be guaranteed employment for 8 years. Co could terminate with a days notice but would have to continue paying for 8 years, unless it is for reasons:

Dishonesty, felony, voluntary termination by guy. After that there is a manual that says that they can fire anyone for using drugs and they will be tested. He’s tested positive, is asked if he knows anyone using drugs and remains silent. They fire him after results. He sues for 8 years of salary since firing him for drug use is not within the acceptable grounds since they fired him for drug use. He claims they need to pay him, co says no. Problem is that they fire him for the wrong grounds not on K. But since he stood there silently and admitted to being dishonest, co claims they have grounds. So they remand to determine whether the company really fired him because he was dishonest or because he used drugs.

Usually employer has burden of proving that its decision was motivated by cause.

It’s a bad idea to enumerate examples of what would constitute cause. And if you do, say that list is not limited and you reserve the right to determine what else might constitute cause b/c it goes contrary to the interests of the company.

Material Breach analysis: material breach is a substantial breach going to the root of the contract and it excuses the other party from performance.

Uintah Basin Medical Center v. Hardy:

Pathologist who gets fired. Term says that they can give 90 days notice to each other. No specific term just “K will continue to bind parties until terminated after 90 days written notice for just cause. So Hospital claims that just cause can include economic exigencies. He claims that only other reasons are just cause. Ct says that employers have to be able to terminate employee for legitimate business reasons in the interest of improving client services as long as justification is not pretextual , only for fair and honest cause as opposed to capricious, trivial, Bad faith unrelated to business goals. Two kinds of bad faith: fixed term K or indefinite term K: Fixed term has to be performance based b/c otherwise it eviscerates the purpose of having the fixed term. In an indefinite term, you’re just saying I won’t fire you arbitrarily. Although the K can override these two rules, of course.

So ct in here remands w/ instructions to adopt the reasonableness good faith approach: the employer can be wrong as long as it reasonable believed in what it believed to be true and if they were true it would be just cause. Other jx only admit it if the employer actually turned out to be right about the reasons to fire , and finally other jx, give deference to employers b/c they may know more than they can prove and b/c we cannot make decisions for employer. The good faith approach says the we should not second guess the employer, not too much of an imposition but we will not take assertions at face value.

C- SPECIAL COMPENSATION ISSUES: p. 159-172 including implied duty of good faith and fair dealing.

1- Interpreting express compensation agreements.

Nadherny v Roseland: Developer with the vesting issue where vesting was ambiguous as to whether it meant the entitlement or the being paid. Çt send it back down for resolution of vested ambiguity

2- IMPLIED DUTY OF GOOD FAITH

Fortune v. Cash Register company: He is a salesman and is supposed to get compensated at 75% if territory is his at time of order, 25% if its his at delivery, and 100% if both times. They make a mega sale and pay him only 75%, fire him but then keep him and don’t pay him the additional 25% because they fire him again. Ct invokes the covenant of good faith. You can prove this by circumstantial evidence, timing of the termination, etc. Anything that might prove that they did it to not have to pay the incentive compensation. ROL: where commissions have to be paid for work preformed by employee, employer’s decision to terminate at will has to be in good faith. This is not necessarily implicit in every contract at will. Just this one because commissions were earned and expected sort of!

Courts usually restrict the recovery to value of benefits accrued through past performance, the ones vested at the time of sale. Cts differ on degree of certainty permitted for anticipated benefits (renewals of policies, for instance) but it is generally agreed that future wages cannot be recovered as would be under breach of contract case (whether implied or express), nor are punitive damages available. But if an employer incentivates performance through a bonus plan and then terminates before payments are due he arguably unjustly enriches.

Check problem on171. Firing had nothing to do with cheating him out of something he had earned as per a special compensation like a bonus or commission. It was in good faith, he got more money as severance, the company did not know the stock went up but could have gone down, and the company fired him because they were downsizing, not because they wanted to avoid paying him the extra stock.

TORT-BASED PROTECTIONS FOR WORKERS:

IV-Chapter 4: The Public Policy Exception to the At-Will Rule

A-Pp. 175–202 the common law public policy exception to the at-will rule.

Many jx’s recognize a tort action against an employer who violates some public policy and then fires the employee in some way associated with that violation. The firing itself is tortious (main difference between this chapter and chapter 5) . There’s a public interest that overrides the private interest of the parties to contract with each other. Some statutes protect employees who engage in conduct required or permitted by public policy: whistleblowing, participating in a jury, reporting OSHA violations, requesting rights under worker’s comp. Some states only admit tort actions authorized by statute and do not allow anything but because assume the statute would have said it if allowed. They claim that this is the kind of matter the legislature would be better equipped to decide since they have a better pulse on the public and hence public policy. Others will allow it. And usually when there is already a statute (against sex discrimination, for instance) you cannot also sue in tort for it because the statute already provides a cause of action.

Mostly, employers can do whatever they want as egregious as it may seem to reward or punish those who serve their interest, but not if those actions taken against the employee impinge on the external world. So when it involves third parties, then it arguably becomes a public policy case.

And does the employee have to be right or simply reasonably believe she was right?

Four broad categories of exception:

1- refusing to violate the law (will not perjure myself in front of legislature)

2- performing an obligation imposed by the law (jury duty)

3- claiming a benefit arising from employment (workers comp)

4- whistleblowing provision: reporting conduct that violates pp.

Important to focus on the public policy aspect of it, not your duty as employee. So if you get fired for reporting a worker who is stealing pencils, then you are not protected. It has to benefit the public at large.

Fitzgerald V. Salsbury: Company asked Fitzgerald whether they should fire worker who failed to shut down some valve that created a danger. He says no b/c he’s been an employee for 25 years and this is a first mistake. Manager then said he needed to think like a foreman and that they would probably be sued by Koresh (worker) and he needed to figure out where his loyalties lie. F did not respond and was fired anyway hours after the other guy. There was a pattern of firing people who testified against company in other actions and a whole chain of those leading to this case. So F sues arguing that it violates pp to fire him b/c he would testify in the case against company and that violates the pp of having people give truthful testimony in court . Co argues they did b/c he failed to supervise effectively.

Ct sets out the elements for the PP exception to at will rule:

• Engagement in a protected activity (clear public policy) (the law really is “clear and substantial” but that’s on the next case)

• Discharge

• Causal connection between conduct an discharge

A clear public policy which would be adversely affected by dismissal of employee

Ct argues that the clarity element goes to the notice requirement. If employer doesn’t know how can he prevent violation? But where to find whether a clear policy exists if it has not yet been identified: statues, constitutions and says other courts have looked at judicial decisions or administrative decisions. But it has to be only recognized and clearly defined b/c you would eviscerate at will if not and would transform it into a good will doctrine which is counter to the spirit of at will.

Ct declines to expand the public policy behind title 6 or 7(?) discrimination laws to a case where he (koresh) was fired in retaliation not in discrimination, since it was not explicit in the law that retaliation whistleblowing was also protected conduct as is discrimination whistle blowing. Besides, he never told company that Koresh should not be fired because it’s illegal to fire in retaliation, he just said not to fire him b/c he had been there long and this is first mistake.

Jeopardy element: show that dismissal for engaging in conduct jeopardizes or undermines public policy and would have a chilling effect by discouraging conduct.

Ct does find a violation of the public policy for requiring truthful testimony in a legal proceeding. It’s a well recognized value and when employer, through intimidation or retaliation engage in conduct that jeopardizes this then they are at fault. Ct views F’s good faith intent to engage in testifying for koresh as being as protected as the actual action! And it would also discourage others from doing so.

ROL: The dismissal of an employee can jeopardize public policy when the employee has engaged in conduct consistent with PP, w/o a request from employer to violate pp just as it can when the employee refuses to engage in conduct inconsistent with pp when requested by the employer. The focus is on the adverse actions of the employer.

Courts have applied this pp thing to disciplinary actions as well. This use is not loved because it would call into question the ability of a company to act freely. Also, the employee does not have to be right he just needs to reasonably think that it is true.

Rackley v. Fairmont west: old people home. Daughter in law of resident asked that her mother in law not be told when the check came. Rackley doesn’t know that this had been requested and calls the daughter in law, allegedgly screaming and yelling that she was stealing from her mother in law (when in reality, she was preventing escape and wanting mom to buy a wheel chair). Rackley says that she was fired in violation of clear and substantial policy. Ct defines elements as:

1- her employment was terminated

2- clear and substantial public policy existed

3- P’s conduct implicated that clear and substantial conduct

4- termination and conduct in furtherance of policy are connected.

Ct defines clear as:

• Plainly defined in constitution

• Laws

• Judicial decisions

Also substantial is defined as being overreaching importance to the public as opposed to the parties only. Public at large rather than particular employee and employer.

Ct end up deciding that there is nothing clear in any statute or judicial decision and that the only on point law is an administrative law and they will not infer pp from administrative decisions (dissent points out that ad agencies are basically implementing a policy and law that came from legislature and therefore should be admitted).

B- Pp. 202-225: statutes creating public policy causes of action: STATES AND FEDERAL.

There have been some states that have created some statutes that create causes of action based on public policy Conscientious employee protection act in New Jersey, for instance and Minnessota. The difference with a public policy tort is that it is not necessary that there is a violation of statute but merely the public policy underlying it and we also look to administrative regulations etc and when there is a statute, the public policy tort is not used because it is not necessary since it cuts down on the at will doctrine which we have a lot of respect for and it is only used as a gap filler when you don’t have a law that gives you a cause of action. Even when you have a sexual harassment in a place where fewer than 15 employees, ct may not go for PP tort because the legislature had a reason for limiting it to bigger companies and cts act deferentially.

NJ’s CEPA: has a written requirement that the employee should notify in writing the employer to give the employer a reasonable time to correct the problem before going public.

Roach v. TRW: He wins over CEPA because TRW was government contractor and had a plethora of ethical standards and he complains to supervisor and hotline of attorneys about the alleged violations of co-employees and nothing is done and then he is fired. He did not do it in writing but he did call the hotline in compliance of company policy and the court probably construed that call as constructively satisfying the writing requirement.

Also he could have brought a breach of contract cause b/c the handbook required him to do just what he did and implied a promise that nothing would be done to him that would be detrimental, so in escence they violate the contract by firing him for doing what he was required to do.

Most cases require reasonable belief (must have something that the reasonable man would agree with you, so it’s not so out of left field) and some require objective good faith(left field but not trying to annoy anyone, Less standard than reasonable belief)

Federal Sarbanes Oaxley has created some causes of action for whistleblower protection, although there is more to SOX than just that and it was created in the wake of Enron and WorldCom. Section 806 protects whistleblowers who report accounting fraud at publicly traded companies for reporting on suspect accounting practices whether it is done inside organization, government agencies or as part of shareholder lawsuit. Has to prove that 1-he engaged in the protected activity, 2-employer knew of the protected activity, 3-he suffered an unfavorable personnel action and 4-the participation in the activity was a contributing factor to the detrimental decision against the employee. Contributing factor is less burden than significant factor and it is less than but for causation or even proximate cause. It needs to be proven by preponderance of evidence, whereas employer needs to defend by showing that he would have reached the same result even in absence of protected behavior by clear and convincing evidence. Employee does not need to show actual violation but merely that he reasonably believed that there was a violation. It also apparently authorizes jury trials under SOX. SOX also requires the underlying statute or regulatory rule to be violated something like a securities statute.

Collins v. Beazer Homes: She is hired conditionally for 90 days and she starts complaining about her boss paying an ad company, building houses in the wrong land, sales team being unhappy, etc. A higher manager starts investigating the issue and actually does discipline someone b/c of it and eventually she gets fired and sues. The person who fired her said that he didn’t even know about the complaints (but he did), and the fact they disciplined the other manager reveals that the company did think it was protected activity and the ct said so(the language used said “these are grave accusations and should be investigated). Therefore the company knew there was protected activity. Ct goes on by discussing the way you can prove your case: Plaintiff needs to show by preponderance of evidence that 1-he engaged in the protected activity, 2-employer knew of the protected activity, 3-he suffered an unfavorable personnel action and 4-the participation in the activity was a contributing factor to the detrimental decision against the employee. Defendant can still win if he proves by clear and convincing evidence that absent the protected activity they would have reached the same decision. But the burden shifting happens because the P’s prima facie case makes it look suspicious. The framework is similar to title 7 framework. As far as contributing factor, you can use proximity of date of firing to the action to prove that it was a contributing factor. So you don’t have to show but for causation because the burden shifts to defendant to show that it was not but for !!! So why require less of the employee? The employer has more of the evidence, and also it has to do with the fact that the employer did do something wrong by considering the protected activity at all, so the statute is liberally construed, and it’s hard to assign weights and if anyone had to prove the weights at all, it has to be the defendant.

V-Chapter 5: Traditional Torts in the Employment Relationship

Mostly only intentional torts remain to be used b/c negligence is covered by workers’ comp which is a compromise that sets up a no-fault system that covers employee completely for damage or disease but caps the amount. Intentional torts are rare in employment cases, and most cases use torts as ancillary causes. Should a tort apply to at will? Yes, because even at will is still a contract.

A- Intentional Interference with the employment relationship.

Your co-employee could be a third party interfering in a contract, but Should you boss be considered as intentionally interfering with employment? Well, he represents the second party in the case because he’s an agent of the employer. Split in jx: some say yes he can b/c contract is between company and employee and boss is only an agent and thus a third party, others say no because boss is the employer because he has the right to fire, and yet others say that if agent is acting on behalf of his employer in scope of employment then he cannot be considered a third party.

Kumpf v. Steinhaus: Lincoln Wisconsin manager who owns 20% of stock is fired by the reorganization of the Lincoln Life insurance co. Mr. Steinhaus , the president of Lincoln Life, took over as president of the newly merged Lincoln Wisconsin and Lincoln Chicago and Kumpf says that his sole motive was that he would get commissions on what the merged company made. Issue is that Kumpf says that even if his own greed was only a contributing factor, he should be found liable. Ct says no, b/c it has to be the sole motive, and not if he’s acting out of personal benefit. But he can gain and be greedy because greed is not an improper motive because the only exception to the at will rule is violation of public policy and greed doesn’t violate public policy. (Spitko doesn’t understand how these are linked). To find improper motive the ct talks about collateral test: if object is to put pressure upon the P and coerce him into complying with D’s wishes in some collateral matter: If Steinhaus had fired Kaumpf because he didn’t marry his daughter it would be collateral. In a non-collateral issue the court sees how they are related and why the court should not interfere in business decisions.

B-Defamation:

Restatement of TORTS: Truth is an absolute defense.

1- defamatory false statement concerning another (where it tends to harm the reputation of another and lowers him in the eyes of the community) or deter others from associating with him or her. So almost anything you say can be defamatory, so it’s better to not give any references or just serial rank and number. In some jx actions are also included (spitko being thrown off campus by security guard)

2- an unprivileged publication to a third party (even if within the company) (compelled self publication is available in some jx. If you’re forced to publish the defamation by having to tell a prospective employer why you were fired, then it amounts to publication)

3- Fault amounting to at least negligence on the part of the publisher (could be malice: clear and convincing evidence that he either knew or was reckless disregard or had improper motive)

4- Either actionability of the statement irrespective of the special harm OR the existence of special harm caused by publication.

There’s usually a balancing of interest and first amendment rights. If you’re suing a media outlet, usually first amendment prevails. If you sue an individual you’re likely to win.

GMR v. Jackson: guy who gets hired to get government contracts and then gets fired and his boss tells their contractors that he mismanaged the company and lost them 3 million.

Qualified privileges: (defeated by actual malice, made by someone who has no interest, etc) 1-all communications must be bona fide ( not good faith belief, but good intent, her motive, not whether she actually believed it, because even if she actually believed it because the fault element of the tort says that you can still find them liable if they were negligent), 2-made by a party who has an interest, or a duty to communicate the subject matter, and 3-made to a party who has a corresponding interest or duty. This policy is public policy because we want to protect the public’s interest in the flow of information. If done with malice knowledge, reckless disregard or improper motive, you lose the privilege.

Privileges are Qualified or absolute: absolute privileges confer immunity from liability regardless of motive. Ie; communicating the reasons behind a discharge to a court or agency. Qualified means that if made with malice, you are not immune. Burden lies with defendant to prove it is subject to a qualified privilege. Then P has to defeat the privilige. And Malice is more than negligence, so D either knew it to be false, or acted with reckless disregard for the truth.

You can get compensatory damages, damages for emotional distress, and punitive damages.

C-Pp. 253-261 (intentional infliction of emotional distress).

Prudential insurance case: Subbe-Hirt v. Baccigalupi: root-canaling case .

Intentional infliction of emotional distress is the extreme and outrageous character of the conduct that is beyond all bounds of of decency and not to be tolerated by civilized community. Moreover, if the person knows the victim is succeptible particularly to emotional distress by reason of some mental or physical condition, then it is outrageous conduct.

Congress limited the language to outrageous etc because it did not want to open the floodgates of litigation to every garden variety emotional harm to further erode the at will doctrine. Important factor in determination is whether the D is abusing a position of power over P. Actor is never liable where he has done no more than to insist upon his legal rights in a permissible case, even though he knows it will cause distress.

D-Pp. 261-265 Fraud AND OTHER MISREPRESENTATION.

Intentional misrepresentation (specificity of representation may be needed)

Negligent misrepresentation, (no need to prove intent. Very hard to prove)

Failure to disclose when there is a duty to do so

For the purpose of inducing an action (employment, purchase, etc)

There is justifiable reliance.

Sanyo and Sony case: he has an easier case proving fraud than breach of contract. He did not have a written contract. Here you can get punitive damages, but K you don’t. You may have breachof K if you can prove that indeed you entered into the K with the intention to breach it.

E-Pp. 265-270 limitations on TORT actions.

Worker’s comp usually precludes tort actions.

Did the legislature intend it to be included in the workers comp statute?

Revlon case where she tries to commit suicide because of sexual harassment and then has accident. Not included into workers comp

Federal pre-emption: field pre-emption when legislature has occupied the field in such a way as to show they intended to pre-empt. Under National Labor Relations act provides cause of action and federal ct jx for violation of collective bargaining agreements.

PROTECTING WORKER AUTONOMY

VI- Chapter 6: Workplace Privacy Protections

Pp. 273-276 (introduction and Problem 6-1).

Very difficult to bring a suit for violation of privacy in workplace, esp in private jobs.

Types of employer conduct that implicate privacy rights:

• Physical and psychological testing

• Investigatory interrogations

• Monitoring and surveillance

• Inquiries into or prohibitions on of-site conduct

• Revelations of private matters

PP: competing interests of privacy and employer’s interest in keeping their systems and computers used for the business interests must be balanced.

A-Pp. 276-302 (sources of privacy protection).

You need to figure out the source of that protection:

1- constitution, either state or federal: some states have protections. Mostly 4th amendment right against illegal search and seizure. You may also have an equal protection claim. 4th amendment is only for government employees, not private. But the analysis is done in much the same way. Cts look to that.

Ortega: step by step analysis of how to determine there’s been a privacy violation. Government said employee did not have a reasonable expectation of privacy because he’s an employee of the government. Ct says no, he does. Two step process: 1- Did the employee have a reasonable expectation of privacy. 2- was the employer’s intrusion of privacy reasonable both in scope and inception in view of the employee’s reasonable expectation. AS far as reasonableness of expectation, ct looks at the space, office procedures and practice, what’s being invaded (purse or desk?), the amount of people who come through in a day, was it his own office, did he share the office, HIGHLY CONTEXTUAL, HIGHLY FACTUAL ENQUIRY. We look also at what the person does and for whom to determine whether his expectation was reasonable, and look at society to also figure out what society would be able to withstand and take.

criticism is that the employer would be able to contract out of privacy expectations by saying you shouldn’t have any. Scalia’s approach would not because the court would tell you what you can expect.

Employers don’t need a warrant or probable cause. PP: Probable cause is only used in criminal context and office managers would not know to get a warrant, and it would be burdensome to require warrant because you need to get stuff from an office or file cabinet if the employee did not come today. So how do we need? In asking whether an intrusion was reasonable, we look at whether it was reasonable in its inception and in its scope (Particularized suspicion). 1- When there are reasonable grounds to suspect the search will turn up misconduct, rather than randomly search offices. Is there a reason for thinking employee is engaged in a conduct. 2- Or there has to be some work related investigatory purpose: I need a file. (In California it has been discussed that maybe you shouldn’t drug test an employee unless you have suspicion).

As far as scope, is the manner of the search reasonably related to the purpose of the search. What we’re doing and how we’re doing it and why. So the bigger the reason, the more intrusive you’re allowed to be.

California also protects rights to privacy in private companies as well as government employees.

2- Tort : may be based on a public policy set out in the constitution: Borse v Piece Goods Shop, Inc. (read this case!) She refuses to submit to urinalisis testing and to personal property searches. Does she have a tort claim for wrongful discharge under PA law? She claims the tort of wrongful discharge under PP by the constitution and the court turns around and uses intrusion into seclusion tort (most used tort in employment law) (intruding into private space) but if you object before it happens, you don’t actually have a tort! If they fire you, you have a public policy tort. If you consent, then you don’t have a case. That’s why as employer, you always want to have consent.

• She pleads it one way (under pp tort) and ct says there’s a better way. She pleads PP under constitution and that only applies to state actors. Ct says that’s not good b/c they are private actors and they cannot violate the provision. But you can sue under tort as public policy based on the embedded policies in those statutes or constitutions. However, ct rejected that. Ct says that there is a tort for intrusion into seclusion and she should plead that.

• Ct goes through a balancing test: the employers interest in the drug testing program to keep a drug free workplace v. the employee’s privacy interest. The urinalisis is a very intrusive test. Of course it’s very relevant to know what the person does b/c society would be more tolerant of testing depending on the context which rules the need for testing. 3rd circuit decides that the supreme ct of PA would decide that it does violate the employee’s privacy rights. In general, searching property is less intrusive and more allowed than searching body, and you have a higher expectation of privacy in your body than in your property. So PA supreme ct would recognize that firing someone for not submitting to the urinalisis which would be an instance of intrusion into seclusion and therefore tortious in itself. BUT this is common law, so there’s no statute to hang your case on and there is no public interest that is a general public interest, only the employee’s. So what’s the public interest?

• So they disallow the wrongful discharge because of public policy under constitution right to privacy but tells her that she can use the wrongful discharge under public policy against intrusion into seclusion tort. So, the deal is not that she suffered the tort of invasion, she did not. But she suffered the wrongful discharge for not wanting to go against the public policy against intrusion into seclusion!!!

3- Statute based protection: no federal or state statutes that protect privacy in private workplace, except protection against polygraph in pre-employment. Unless employee to be is security guard or drug something. (p294). As far as current employees, you cannot unless they have been suspected of taking things???

4- ContractUAL PRIVACY PROTECTION:

P 296.Rulon-Miller v. IBM: She wins on the tort claim below for intentional infliction of emotional distress.

She was dating the employee of a rival company and gets fired. She claims breach of contract. There was a memo that sort of sets up policy for the company. And there’s always the contract set out by company behavior and usage, etc.

Check for Just cause clause: If someone has just cause protection, it automatically protects their privacy rights because if it’s not related to job performance, then it’s a violation of the just cause clause.

Consent is not an absolute defense, but it may shift the burden to the P having to prove that there was duress or undue influence, etc.

Why do you want to drug test? What do you want to accomplish and how can we do the test, by what means, that it would be narrowly tailored to your compelling interest.

First find an interest of the employee: bodily searches: fluid or body, take the highest scrutiny, then searches of the workplace and finally just monitors etc. at the least level of scrutiny.

So FOR TEST: you can either have a warrant to have a search, or individualized specific probable cause or suspicion, OR an emergency, OR have a compelling interest or a reasonable interest depending on how invasive the intrusion on privacy is (the more invasive, the more compelling an interest you need to have. And the more compelling an interest, the more deference the court will give to the employer, especially if you have an issue concerning safety of the public or employees. Then you balance the interests of the employer vs the interests of the employee and figure at that point the second part of the enquiry by looking at how the invasion was done (so reasonably and narrowly tailored and with a nexus to the employer’s compelling interest) and weigh that with the reasonable expectation of privacy of the employee.

However, in the national treasury the ct does not say you must have a compelling interest, just that the government has one.

Nexus requirement: not only why are you doing this testing, or intruding, but also how does it fit into the reason you had to do it. How related is it to achieving your goals. Whether it’s narrowly tailored or simply related depends on what kind of invasion and what kind of interest the employer has, the more compelling the more deference you get.

B- BALANCING EMPLOYEE AND EMPLOYER INTERESTS:

National Treasury Employees Union v. Von Raab: Customs agents sue the commissioner because he institutes a policy of drug testing to test anyone for promotion or employment in drug interdiction, in positions where they need to carry a weapon or people who have access to classified information. They bring a fourth amendment claim against unreasonable search and seizure.

The court then has to determine whether it was unreasonable in view of the employee’s expectation or privacy (Ortega): 1- did the employee have a reasonable expectation of privacy and if so 2- was the employer’s invasion reasonable. Ct says you don’t need probable cause, or individualized suspicion. The court brings up COMPELLING INTEREST. Which sort of goes against Ortega b/c Ortega says reasonable, and now they say compelling. B/c in Ortega it was less invasive they were searching a desk. IN this case, they are requiring a urinalissis so it is more invasive. So they need a compelling interest, However, the ct they have it but when they look at the interest of the employee, they should have a lesser expectation of privacy than other employees if you are working in these areas, so they employ a very deferential standard to the reasonableness analysis in Ortega. So they find that even though the employee has an interest in bodily integrity and dignity, the government’s compelling interest in keeping customs people on the straight and narrow so they will not shoot innocents, or be bribed, or give away the classified information, they uphold the policy. The court however, remands the part that relates to the people who handle classified information.

Scalia’s dissent is that there is no showing that there is an actual problem and there’s no showing that that’s the solution. He points out that people who own diamonds are as likely to be bribed as those who are drug addicts because the bribe can be in money and they can then buy drugs!

Soroka v Dayton Hudson Corp: Target hires people after testing them psychologically if they are security guards. They are unarmed. The test had a bunch of questions relating to religious beliefs and sexual beliefs and they want people who will follow rules and traditions of society. So they sue because they were not hired. Ct says the Ca constitution guarantees the right to privacy and the employees and applicants (b/c the constitution does not make a difference between them as far as rights) and this test asked about things that were protected. They bring up the nexus requirement and in this case clearly it doesn’t have it because your religion or sexual preference or orientation have nothing to do with this. The ct says that the test measures social conformity and anyone who is a bit different would not qualify. As far as the constitution , they say that it doesn’t protect against all invasions as some are deemed ok. But what’s the standard to be used: Target says reasonableness and ACLU says it should demonstrate a compelling interest. Ct decides that Target has a compelling interest but the test does not have the required nexus: how does sexual or religious orientation have any bearing on the job of security officer at target? Target did not show that. And the problem is the validity of the test.

FEHA claim: Fair Employment and Housing Act: employer cannot discriminate on basis of religious creed unless pursuant to a permissible defense: job relatedness is an affirmative defense. Permissible only on showing that selection process is sufficiently related to an essential function of the job (ie the job is for a rabbi!). once P establishes prima facie, burden shifts to employer to show it is job related.

Labor code claim: you cannot discriminate on basis or political beliefs and gay rights were big then and there were no statutes against discrimination for sexual orientation so the ct tap dances around and says that gay issues are political and the question on sexual orientation was a politically inclined question!

*Offsite activities: Not a lot of protection. Drinking, smoking, blogging, political affiliation, etc. The at will perception is so big that we have not instituted any policies or laws against employers who retaliate for activites like that. Blogging is public, things that are protected are usually private. Also, these are not intrusive, the ones we protect tend to be intrusive.

Also they are more amorphous and difficult to define.

So, in all, there’s very little protections of privacy in the workplace.

The negative” side of privacy: how employers can restrict even more Privacy on the workplace.

C- PRIVATE ORDERING: CONSENT AND LIMITS OF RESASONABLE EXPECTATIONS:

Simmons: Works for CIA and policy says computer is only for official business. His office is his own. He downloads a bunch of child pornography and company hired to monitor finds this and downloads his hard drive remotely and then they even go into his office without a warrant . Later on they obtain a warrant and keep digging. He sues on fourth amendment right against search and seizure. Analysis:

Ortega based:

• Did employee have a reasonable expectation of privacy? Nope! There was a policy even though his office was private. But in light of the office policy and operational realities, he was on notice that his internet use was not private. So not objectively reasonable. Policy completely destroyed his expectation of privacy. However, he di9d have a reasonable expectation of privacy as far as his office search.

• Did employer invade and if so was search reasonable in inception and scope? yes, the government warrantless search was reasonable in inception and scope because they had reason to believe he was engaged in impermissible activity that happened to be criminal as well, so it was within the “special need for the efficient and proper operation of the workplace” so they did not need a warrant because it was not a criminal search that would have needed a warrant, but an employment circumstance where you don’t need a warrant.

Feminist Women’s Health Center v. Superior Court:

P gets hired for helping self-help classes. She did not understand that “demonstrated self help” meant she has to do one, which meant she had to do a self pelvic exam and undress in front of others. She refuses several times and then applies to another position and gets there and eventually gets fired. She sues under tort of wrongful termination supported by Cal constitution protection of privacy. Sets out three elements for P to show:

• A legally protected privacy interest

• Reasonable expectation of privacy

• Conduct by defendant constituting a serious invasion of privacy.

Ct says that after P shows that, D needs to show a negation of any element OR invasion was justified b/c of countervailing interests. P then shows that there were feasible alternatives with lesser impact on privacy. D can also show consent, unclean hands, etc as defense.

Ct ends up finding that she consented and that there was a countervailing interest on part of employer. So even though she did have an interest, she did not have a reasonable expectation, and the invasion was ok because it was done to further a compelling interest (or rather a countervailing interest that would further the mission of the health center).

Can we limit employers’ rights to restrict employee’s rights to privacy by contracting them away? There are some things that you cannot contract away, especially if they are statutorily given, like no polygraphs no genetic testing.

SEE TEST SECTION FOR SYNTHESIZED RULE FOR PRIVACY!

For test about privacy:

Always look for source of protection:

Constitution

Statute

Contract

Tort of wrongful termination based on public policy? Bt remember you still need to base this on const. statute, case law, or administrative rules.

Then

• reasonable expectation of privacy: Check for company policies, which reduce expectation

• invasion of that privacy by employers

• invasion was reasonable (D to present there was a huge countervailing interest job related) in :

o inception (goes to the nexus with employment of job relatedness) and

o scope (how did they do it and was it narrowly tailored to interest sought) (Allow P to show feasible alternatives were possible)

• Was there consent as in the female health case?

VII-Chapter 7: Workplace Speech and Association Protections :

In much the same way as privacy, here courts see whether there is a source of protection for the speech and if there is they do a balancing test (pickering). Not a lot of protection for speech in any case, but even less in private context than in public workplace.

A- Pp. 343-376 (the public workplace):

Connick: Myers does not want to transfer and does a survey which some consider a mini-insurrection. Only one of the questions refered to whether employees felt compelled to donate to political campaigns and could be considered public concern. The ct applies pickering test:

1- whether the speech at issue a matter of public concern. If not, we’re done. If it is, and the P has carried that burden we go on to balance:

2- Balance the governmental interest in “the effective and efficient fulfillment of its responsibilities to the public”, or how disruptive is this speech to the efficient operation of an office with the person’s first amendment freedom of speech.

3- was the speech the cause of the firing or discipline?

The courts only protect speech that is a matter of public interest because the at will doctrine is so strong and deference to employers is always there. So the D has the burden of proving his interest outweighs the employees interest. Then the burden shifts to the P to show causation: he was fired because of this speech that was done in the public interest. Employee grievances are not matters of public concern. And even if you only communicate it within the office it could still be protected if it is a public concern.

But what is a matter of public concern? Ct eventually in other cases decides that talk about elected officials, political, social or other community concerns things that non-employees would be also talking about, or newsworthy stuff (a subject of legitimate news interest)

Garcetti v. Ceballos: Another DA who is not in agreement with the DA prosecuting a case b/c he doesn’t think the evidence is there as the DA says. He is fired. Ct says MAIN RULE is that if the speech is made within the scope of his duties it’s not protected because they are speaking as employees and not private persons. Dissent does not like the absolute rule and says that we should balance. But Majority says they don’t want to have judicial interference every time something is said at work. Also, if they did that they would be allowing employees to constitutionalize their grievances about employer and they don’t want that. Also if a person speaks as any person would be speaking then it’s protected but within the scope of employment is not speaking as a regular person. Ct says that if Ceballos had gone to the press, that may very well have been protected because it would have been seen as public interest if he had complained about the DA mishandling case. He would be acting as a citizen with more knowledge than others but a citizen nonetheless. Not the same to speak on an area of expertise as it is to speak about that area at work when you are required to do so by your job. One is expertise another is within scope. But since he did not, he’s not. Ct does not apply Pickering/Connick test because the speech here is within scope of employment. Arguably, the speech here is more worthy of protection, it was not because of the context in which it was made. So it encourages employees to go outside and call the press which would be more disruptive than working through the channels and giving notice to fix the problems, so it works perversely against the policy of limiting disruption.

In the case of privacy, the employer could set up an environment that decreases the expectation of privacy. Up until Garcetti, you could not contract out of protections for speech, after Garcetti, arguably, you could have a job description so broad that includes anything related to speech so that anything you say falls within the scope of your employment. I assume in that case the ct would look at the reality and the nexus of the speech with the job.

In cases of association, it is the same thing. And in both cases, the lower employee you are the more rights you have. You’re not seen as the face of the company, your activities don’t influence the company that much.

Speech not related to work: arguably not this following case: A precedent case NTEU says that speech that is not related to work is protected.

City of San Diego v. Roe: Policeman that sells video of himself in police garb, although not SDPD, undressing and masturbating, he sells it on EBAY along with SDPD uniforms, underwear and other stuff. The ninth says this is unrelated to work speech and therefore protected and that it is an issue of public interest! SCOTUS reverses. They say it is work related because we know he presents himself as policeman and sells SDPD uniforms. Also not an issue of public interest. Not in this cases because it’s so close, but in other cases, how close does the nexus need to be to be considered related to work?

Public policy: you can state one when you’re fired because you took advantage of a right. BUT if your right is already protected by a statute like the California family leave act, there is already a remedy provided and courts are reluctant to give more remedy if there’s already one.

Pp. 376-390 (the private workplace).

Problem on page 375:

B- THE PRIVATE WORKPLACE:

you don’t have as many protections. And you don’t have the 1st amendment either in a private employer. BUT Labor Relations Act says that :

Concerted activities :preparation for group activity of matter of potential common concern.

Mutual aid and protection: reasonably work related

Only to work related issues: ie conditions of employment.

This is not valid for Public employees and amazingly enough it protects you when it IS work related which is not the case in pickering.

So you’re left with that and contract or tort remedies based on public policy.

Novosel case: Guy refuses to sign a petition for no-fault insurance in PA. He is discharged. Ct, in an unusual decision, decides that if there is a public policy that’s violated then there is a tort for wrongful discharge. Then the ct says that the freedom of association under the constitution and state constitution is important and shows public policy. So the source of the tort is the first amendment in both state and federal constitutions. But, usually constitutional stuff doesn’t apply to private actors. The policy is against suppression of speech by government not private actors. So the great majority of cts. Doesn’t follow novosel. Another court in Edmonson says that an employee does not have a cause of action against a private employer who terminates him because of the exercise of the employees constitutional right of free speech.

THERE REALLY IS NO PROTECTION OF SPEECh in A PRIVATE SETTING with very few exceptions.

So, let’s see if I get this right: if you’re a private employee, and you need protection for either speech or privacy, it needs to come in the form of a public policy based tort hooked onto state or federal statutes and not from constitution because the constitution only applies to government, is that correct?

WORKPLACE PROPERTY RIGHTS AND RELATED INTERESTS

VIII- Chapter 8: Competition, Employee Loyalty, and the Allocation of Workplace Property Interests:

PP: Competing interests:

livelihood and the ability to make a living with your chosen profession.(employee’s interest)

Maximizing competition (society’s interest)

Protection of companies’ clients, workforce and resources and IP. (employer’s interest)

Other theme is private ordering: how much K’s should be able to expand or contract any existing rights.

Difference between trade secret and confidential information; Conf you can use after you leave (if there is no contractual limitation or an employer interest) trade secrets you cannot.

A-Pp. 393-401 Fiduciary duties of current employees:

Scanwell freight case: there was no covenant, no contract, but he is setting up a competing company while he’s working for Scanwell, he does not renew the lease on the office and then the office is used for the new company he sets up with the competitor. You have a duty not to compete with employer while there but you do have the right to make preparations while employed. Breach of fiduciary or loyalty duties happens when the employee goes beyond the mere planning and preparation and actually engages in direct competition which is to gain advantage over a competitor. Even a slight assistance to a direct competitor can constitute a breach of the duty of loyalty. Loyalty and fiduciary duty is being used interchangeably.

Test:

• 1- an employee must not while employed, act contrary to employer’s interest.

• 2- However an employee may agree with others to compete upon termination of the employment and may plan and prepare for competing enterprise while still employed

• 3- but an employee may not while still employed, go beyond mere planning and preparation and act in direct competition with employer

The higher the employee the higher the duty of loyalty and fiduciary duty

How about telling customers that you’re leaving? Rule is an employee may advise current customers of his employer that he will be leaving. However, any pre-termination solicitation of employees or clients violates the duty of loyalty.

Tortious interference with K: elements:

• Intentional (so they have to know there is a previous contract) interference with a proposed or existing economic relationship

• With an improper motive or by use of improper means AND

• Damage beyond the fact of interference itself.

• Make sure the person accused of this is not a party to a K: so if it’s an employee doing this,

B-Pp. 401-430 post-employment restraints on competition – disputes over skills and training, and disputes over information:

1- DISPUTES OVER SKILLS AND TRAINING

Covenants not to compete and issues with trade secrets.

• REM METALS: Specialized welder who is really good and asks for a 50 cent increase in salary and doesn’t get it. He had signed a non-compete agreement signed and goes to work for a competitor company. Ct looks at RULE:

o Consideration for the agreement,

o Partial or restricted in its operation in respect to Duration, scope, geographical limitations,

o Must be reasonable in affording a protection to competing interests:

▪ Employees’ interest in working: how much of a burden will this be to the employee finding other jobs,

▪ employer’s interest in enforcing the agreement: is the covenant reasonable to enforce this interest, and

▪ the public’s interest in competition

• Among illegitimate interests are preventing employees from leaving. Even if training had cost thousands of dollars and hours it would not make a difference (accc to Spitko). In this case, he came with some training and testimony proved that their training and procedures were no different from the training and procedures of competitors so therefore it was not a trade secret. Law and Economics analysis is that the employer pays less while in training so since employee is basically paying for his own training he gets to take it with him. It is too difficult to separate out the skill from the employee and to not have this rule would be too much of an infringement on the right to leave

• The burden of proof is on the employer to establish the existence of trade secrets, information or relationships which pertain PECULIARLY to the employer or other special circumstances sufficient to justify enforcement of such a restrictive covenant. if the training/the skill relates to a trade secret, then that would be a legit. Interest that would justify the enforcement of a non compete agreement

• Most employees won’t know about the law and what a covenant not to compete so make sure that you act as if the agreement is not enforceable. In this case they lost 25K for not giving him the extra 50 cents.

• If there is an injunction for the employee not to work, the company is usually required to put up a bond so that if it later is determined the case was for the employee, he can take the bond as compensation for his lost wages etc.

2- DISPUTES OVER INFORMATION:

When you draft a covenant not compete make sure you’re balancing the scope so that if you want it national make it short time or viceversa. Covenants are in K , misappropriation of trade secrets is an action in torts.

CTI CASE

One employee signed a covenant not to compete

And all the employees signed a confidentiality agreement

they all leave, without the software being completed

they create a new company, and created a program that was very much like the product they were working on at their other job

the employer brings two claims

• misappropriation of trade secrets

o what is a trade secret

▪ it has to be something you tried very hard to keep secret (having non disclosure agreements, even if they arent enforceable, can go to things like was this a trade secret because it shows you are tyring to keep something a secret)

▪ has actual economic value from the fact that it is not readily known, and that it cannot be readily ascertainable by others (the classic example is the formula for coke)

• the court ultimately holds that there is no misappropriation of a trade secret: there is a line that can be drawn between confidential information and trade secrets, but it is hard to do… it is hard to think of an example of something that is confidential and not a trade secret… but the line has been and will continue to be drawn

• why did CTI fail to establish a trade secret in this case

• because CTI took stuff that was already known to create their product, so therefore the court says that it is readily ascertainable—the stuff was readily ascertainable, and when they combined it, that was also readily ascertainable to the public. (you can have a trade secret that is known to the public, but it is ordered in such a way that makes it have a economic value by keeping it secret and not being readily ascertainable)

• They also failed because they failed to show that the trade secret was misappropriated (even if they could have shown there was a trade secret, they could not show that it was misappropriated). the court believed the employees explanation as to why their product looked similar to CTIs product. you will almost always need circumstantial evidence like the similarities of the product and how short of a period of time between the time you left and the time you created your new product. you have to prove by a preponderance of the evidence that they misappropriated the trade secrets (used them in the new company)

a claim in K about the covenant not to compete for that one employer

• the agreement told him he couldn’t compete any where in the US, etc. etc. (see the book). the court said that the covenant not to compete was ok? see the book for the rule he just gave…

o employers interest vs.

o the public interests

o and the employees interest

• this is a case where the court draws a distinction where there was no trade secret shown, but said there was confidential information.

• there is a legit. Employer interst. so then we need to look at the employees interest. we think about the scope of the restrictions (the types of jobs the employee is being excluded from):

o the geographic scope

o and the duration

o and all of these need to not be unduly burdensome

o so we balance the employers interest against the employees interest. if you are drafting a non compete, you may have to give them one, to get the others (like cut back ont eh duration to get a national geographic region, or if you want long covenant, you may have to cut back on the geographic region). you cant have all three be very broad, because that will be an unenforceable covenant not to compete

• If you can get someone enjoined for misappropriating trade secrets, why would you also want a covenant not to compete

o these really are not co-extensive, they really do have different advantages

▪ the covenant not to compete, the interest the employer has to have doesn’t have to amount to a trade secret and you don’t have to show misappropriation, as you do if you are arguing that a person misapprorpriated a trade secret

o with the injuction for misappropriating a trade secret, you get told you cant continue using the trade secret, but it doesn’t say you cant go work for another company…so the convenant is a little broader.

• what is the doctrine of inevitable disclosure, and how does it work?

you are seeking an injunction that keeps your former employee from working for a close competitor. you are not suing to enforce a covenant not to compete (because there was NO covenant not to compete), but we still want you to enjoin them – in a sense it is an implied covenant not to compete –we want you to do so because they will inevitably disclose/use the trade secrets they learned while working for us.

o marketing ideas for the next year is usually confidential information, and not really trade secrets

o the nature of the action is that it is an action for misappropriation of trade secrets, but you don’t really have to show trade secrets or missapropriation, and you get a remedy that they cant work for another employer – so if the employer wins, it is a windfall for them!!

o But courts really don’t like the inevitable disclosure doctrine, and will only be used in the most extreme circumstances!!

o the court in the next case emphasizes that this kind of restriction ought to be left to contract

o we don’t really like these agreements because we have the principle of at will employment and when asked to enforce something like this, when there is no agreement, the court will be very unlikely to accept the doctrine!!

Inevitable disclosure doctrine: the person cannot divorce himself from his knowledge and will inevitably use it in his next job. Pepsi case of manager who gets hired by Snapple. Pepsi tries to enjoin him. Trial court does enjoin him. He had a confidentiality but not a non-compete. Pepsi sues and gets injunction b/c he will use his knowledge. So in a sense it’s an implied covenant not to compete. They will inevitably disclose or use confidential information like marketing plans. So in this you don’t need to show misappropriation or even trade secrets. Pepsi was not expecting to win. This is a way to get around the elements and requirements of the trade secret appropriation. This person has this knowledge and how can they possibly separate what they know. Typical tsm case the remedy is an injunction. Here you get a remedy if you don’t even work for this people. You use it if you have a non-compete that is not enforceable. Can you do the new job without relying on info from the old job? That’s the key question. How similar are the jobs, how similar are the employers, how difficult would it be for the person to do this job without the info gained on the previous job?

Earthwebb v SCHLACK: Ct holds the inevitable disclosure doctrine is not applicable here. Cts don’t really accept this doctrine widely. Ct says to use only in cases where employee has same position doing the same things, etc. Ct says they’re hostile because the P is asking to imply a covenant not to compete where there was not one before and it’s brought under a TSM rubric, since they could have had a non-compete. Here they did have a non-compete in the contract but what they agreed was to not compete directly with the employer, but doesn’t apply here because he’s not directly competing. They probably made it this narrow to enhance the enforceability of the covenant not to compete. First thing we need is an employer’s protectable interest (FOR EXAM: look for this first! If you don’t have a protectable interest, you’re done), then employee’s interest, then scope of agreement: job description, time line, geography. They’re all interrelated. If you expand one, you need to shrink another one to make it reasonable. You need reasonable limits. In this case they had a reasonable agreement, they just lost. In part because they drew it so narrowly. If you’re in an all or nothing jx, if they strike one down, the whole thing is invalid. If you’re in a blue line jx, they strike down the offensive part and the rest needs to be grammatically logic and intact. In a partial enforcement jx, you have the court revising and changing the agreement to make it enforceable. In this case, the court finds that one year is too long for internet anything b/c everything changes so quickly. They find that the employer did not have a protectable interest in having a one year clause.

Problem on page 426: COPY THIS ANALYSIS ON EXAM TIPS PAGE. This was his analysis:

She could be sued for breach of contract or missapropriation of trade secrets in tort. (or both). As a client you’d prefer the non-compete. In this case, not clear whether the competitor is in the production of medical equipment. The agreement is poorly drafted, overly broad and probably not enforceable. But, the first question to ask is does the employer have an interest? Yes, if it’s a trade secret. But not for three years because they’re developed in two years. So time limit: no, too much. Scope: too broad: otherwise providing assistance to competitors. Geographical: none. So, it seems unenforceable. Three approaches: (see how he discussed policy. Do the same in exam)

All or nothing: not enforceable. Bad side is that you defeat the purpose of the intent to contract. Good side is that it would encourage people to write better contracts so courts would not have to deal with so many cases: Too onerous for the court system. Unequal bargaining power, discouraged to leave his job b/c he doesn’t know it’s unenforceable, encourage person with the most power not to overreach.

Blue lining: only eliminate the offensive non enforceable parts. So you may want to draft the K in a way that even if someone took a pencil and eliminated that, the rest would still be coherent. If you have a complete mess you cannot enforce it. So if you have a K that says: 25 miles or whatever is reasonable. The ct can cross out the 25 miles and still have a valid agreement.

Partial enforcement: the court revises the agreement and basically re-writes it to make sense.

CA DOES NOT ENFORCE NON-COMPETE AGREEEMENTS.

Copywright: if created within scope of employment, employer owns the copywright unless contractually agreed to otherwise.

Patents: inventor owns it unless he was hired to invent this.

There may be a K saying that anything you invent within the next three years is also ours. JX’s would look at the same factors as non-compete.

Pp. 430-450; 450-453 (post-employment restraints on competition cont’d: disputes over customers and co-workers; new frontiers in non-competition and private ordering).

3- DISPUTES OVER CUSTOMERS AND CO-WORKERS:

Hopper v All Pet Animal Clinic:

Three year non compete with 5 mile radius, for small animal practice. First oral agreement did not include non compete. Memorialized does include it but no extra consideration which is required. But she then signed an addendum with the non compete where her salary was raised by $500 a month. She then starts her own practice and he offers she can buy him off for 40K. She declines and says it is not worth the paper it’s written on. Ct looks at employer’s interest: keeping clients. Interest of public: We’re good b/c there are enough vets going around so they can go to any other one. Employee’s interest: working. So what’s the agreement: 5 miles: reasonable. Small animal: good, she can work on horses in Wyoming. Three year: unreasonable b/c 1 year would be enough to train a person to replace her.

So in this case, what’s the remedy? Injunction. But if she was not enjoined, it would be moot at this point three years down, so they would get damages. In this case, she was enjoined. If she was enjoined for three years, she could recover for the other two extra years from the employer’s bond posted to cover the injunction.

What if termination is involuntary? Can you enforce the agreement. Jx split. Does that mean that they’re worthless as a competitor so that enforcing the agreement would be useless? Can you still get the benefits of the non compete if you fire them.

Non competes are also not enforceable for doctors or lawyers.

OSI or (Outsource international p440) test:

1- Is there a near permanent relationship with the clients? The more service oriented the industry the closer the relationship to clients.

2- Whether “ but for” the employee’s association with the company he would not have had access to the clients.

3- confidential information test: was the information basically classified and took considerable effort to create.

C- NEW FRONTIERS IN NON-COMPETITION AND PRIVATE ORDERING:

At the end of chapter we see some things people are doing to ensure non-competes since some states don’t allow them. One of them is a sit-out pay: if you don’t compete, I’ll pay your salary for a year. Also a forfeiture of a severance pay if you do compete, agreements between companies not to recruit from each other but this goes against anti-trust so don’t do it.

STATUTORY PROTECTIONS FOR EMPLOYEES

IX- Chapter 10: Accommodating Workers’ Lives

SKIM pp. 625-627, 661-687 (Family and Medical Leave Act).

A-Family Medical Leave Act of 1993. page 662

Only for covered and qualifying employees: Must work within a company site where there are at least 50 employees within 75 miles. Full time and have worked there for at least one year and at least 1250 hours for the last 12 months.

Only for qualifying employers: 50 employees or more

Birth of a child or adoption if taken within 1 year of event.

Illness of close family member (your own, spouse, parents, child)

12 weeks unpaid leave, BUT the employer may require or employee may select to first take any unused paid vacation time or sick leave, so that you don’t end up taking 14 weeks off (2 of vacation and 12 of FMLA).

Employer cannot fire you and must reinstate you in same or equivalent place when you return, and not to take away a benefit, although employee can be required to pay for his own premium payment part. And any accrual stays there: time stops. You’re not entitled to anything you would not have gotten if you had not taken FMLA.

Under FMLA you’re entitled to claims for interference and retaliation claims. Interference is when employer prevented you from claiming a benefit you were entitled to. Retaliation is a higher burden to show that employers’ actions were motivated by impermissible retaliatory or discriminatory animus.

FMLA provides for personal liability for managers.

PDA: employer needs to ignore the pregnancy but not the absence, pregnancy not protected class, cannot discriminate on basis of pregnancy alone. But does not substantive rights given.

CALIFORNIA HAS PAID LEAVE. It mirrors FMLA. Leave is concurrently with FMAL, so why take federal leave? Ca includes domestic partners as well as spouses. California has a separate pregnancy leave, not covered under FMLA unless serious condition. Who pays for paid leave? We all do in short term disability insurance.

Cases: so FMLA is painted as a sexual discrimination legislation. Discrimination against men!

Hibbs v. Nevada Dept. of Human resources: Guy was denied leave to care fir his wife after an accident. FMLA says it applies to public employees as well. Issue is: is it constitutional for congress to abrogate the state’s immunity from lawsuits (11th amendment) under their powers under section 5 of the 14th amendment? Ct says yes. Congress had evidence that there was gender discrimination in employment practices not only by private people but also by states. Since it is gender disc, we look at it with high scrutiny and find that it is proportional and congruent with the evil it is trying to cure. Ct says congress has the power not only to remedy but also to act prophylactically to prevent the kind of discrimination the court has already identified (gender disc) because if section 5 did not mean that, it would be useless to pass a law that simply parrots the 14th amendment. This decision sort of goes against Garret and Kimmel decisions because in those decisions that dealt with ADA and ADEA the court was not dealing with a heightened scrutiny protected classification. So the state only had the burden of proving rational basis for ADA and ADEA, whereas for title 7 and this act they di have to prove compelling interest. The court finds that title vii and pregnancy discrimination act already prevent discrimination on account of gender, so we don’t need more anti-discrimination provisions we need substantive benefit granted by congress and hence they abrogate the state’s immunity and create a cause of action against any violation. So the whole deal is that by passing an act that allows men to take the leave, it won’t be only women taking the leave and employers won’t have any incentives left to hire only men.

Selmi note: talks about the vicious circle of women take more time off and employers then have less of an incentive to do so. Also, for those who don’t and who don’t have children, they also pay for the ones who do because employers still think that guilt by association is possible.

The idea behind FMLA is that companies will learn to see that critical life events happen and people should deal with that.

Rationale of this decision suggests that an individual could not take the FMLA for his own illness. Because even if the congress had evidence to prove that there was gender discrimination by the states in employment practices, they did not have any evidence to prove discriminatory practices against sick people and neither are sick people protected category.

Russell v. North Broward Hospital: case of woman who gets fractured elbow and ankle and was terminated for excessive absenteeism at work. But even before accident she was being reprimanded for absenteeism. The regulation of the FMLA says a “serious health condition” involving “continuing treatment” the statute itself doesn’t define that. But, dept of labor is regulatory agency and it says a period of incapacity of three consecutive days. The court defines it as three whole days and not three partial days as she was absent. She also challenges that the definition of three days being necessary for finding serious health condition as invalid. Ct says that dept. of labor is regulatory agency and they can get to decide what it is, not the ct and the court has to defer to regulatory agency under Chevron, if the ct finds that the regulatory agency’s interpretation of the statute is a permissible interpretation. You have to give notice to employer within a reasonable time (1 or 2 days after finding out), that you will be requiring the leave. But as an employer you have to be aware of what the FMLA is and how sick is mom, and whether they qualified, and you have to do record keeping as well so you know when they’re done with it.

Distinction between interference and retaliation: First establish that P qualifies. Then the distinction that applies goes to the burdens. Interference all you need to prove is that you were entitled to it and they interfered. Their burden to prove you did not qualify or they did not interfere. Retaliation is an adverse action after you take the leave and because you took the leave. Plaintiff’s burden to prove they retaliated. Mc Donald Douglas test: P proves retaliation, burden shifts to D to prove why it was not and then the P has to prove that their defense is pretextual. Read note 5 after case.

You can also qualify for protection under FMLA and ADA. What you need to prove is different for both. Broken ankles is not an ADA because not permanent disability, but you may qualify for FMLA. You’re entitled to a broader series of accommodations under ADA. ADA accommodation doesn’t run out after 12 weeks.

Final note: FMLA provides for personal liability for managers ( as well as FLSA Federal Labor Standards Act) and unlike title seven and other civil rights statutes.

X- Wage Protection: FLSA:

A- Scope of coverage:

1- employee and employer: Only covers some employees and some employers. You’re required to pay one and a half times the hourly salary for every hour you work over 40 hours a week. FLSA of 1938 (this act was passed during the depression and reflects concerns that were prevalent during the depression)

Direct regulation of wages

It has three parts

• Regulates the working of children (to protect children and to protect adults from competition from children)

• Minimum wage (reflects concern during the depression that there was no competition, so it seemed like a good idea to put in a floor so that ppl couldn’t be hired for next to nothing)

• Overtime provisions (the idea is to encourage more employers to hire more workers, so that you have two ppl working 40 hour weeks instead of one worker working an 80 hours week… thus it lowers the level of unemployment) If you refuse to work overtime, you can be fired.

FLSA is interpreted very broadly with respect to its coverage of who is an employer and who is an employee

• Use the economic reality test

• mainly looking at the degree to which the employee is dependent on his employer for his livelihood.

• Burden is on employer to prove employee is exempt.

• individuals/managers can be liable under the FLSA

2- exemptions

original and current white collar exemptions: exemptions from the FLSA. we will mostly focus on the white collar exemptions

• executives

• administrative employees

• professional employees

page 696.

these are the three main exemptions. the statute is fairly brief – the statute gives the to dept. of labor (DOL) to flush out what these things mean and they have done that. the thinking behind these three exemptions is that if you think back to why we have this statute in the first place, the thinking is that the ppl that fell into these categories didn’t need the protection that minimum wage ppl needed. these ppl make a great deal more. and its ok not to pay them time and a half for overtime because they had other fringe benefits, and have more bargaining powers. these are mandatory rules such that you cant opt out of it, but you can manipulate the job so that you make the worker qualify for the exemption. With respect to figuring out who is a bona fide exec, admin. Or a professional.

• Two part test that you must meet both of!!!!!!!!Salary and duties. Salary is $455 a week or higher. Duties see below for description.

o if a person earns a salary equivalent to 455 dollars a week. a salary is defined as pay that is not defined by the quality or quantity of your work (so not commission)

o duties test: each category has its own duties – you have to meet each of the duties for the kind of worker you are, but the new regs say that if you earn more than 100K a year, you don’t have to meet all of the req. for a particular category (either the exec or admin. Categories, it doesn’t apply to the professional), you can only meet one of them and still be exempt

▪ principal duty – how do you figure out what is a principal duty? the 2004 regs say it is not just a question of the percentage of time… it may be a relevant factor but we look at a variety of things and look at how important those things are to your job.. if they are very important you may still be exempt. CA has a very rigid approach – if you don’t do it more than 50% of your time, it is not the principal duty. But court has discretion. Primary duty means a major part, 50% or more.

o HYBRID APPROACH: If you didn’t meet all of the primary duties, but you meet one under one category of worker and one under another, you can combine them

o 100K exemption: if you meet this, you only need to perform customarily one of these exempt tasks that you usually would need to do all of them to exempt out.

o Executive: all three parts.

o 1- primary duty is management of the enterprise (hiring ppl, supervising them, giving them assignments, planning out how to do those assigments, disciplining them) – it matters what you do not what your job description is

o .2-you customarily and regularly direct the work of two or more employees;

o 3- you have the authority to hire or fire people or your input with respect to these decisions is given deference by the employer.

o Administrative: all two.

o 1-not production but administration if you are on the line and making the product, you are not an administratively exempt person, even if you are the supervisor on the line. is this person producing the product or helping facilitate the operation of the business (ie. Support ppl)? – if it is the second it is usually an administrative employee exempt.

o 2-the primary duty includes the exercise of the discretion or independent judgment with respect to matters of significant (the person is exercising judgment with respect to important matters, they get to evaluate things, and it doesn tmatter whether they are making the final decision)

o professional exemption You can have either of these two to exempt out

o specialized knowledge gained by a prolonged course of instruction (does not apply to skilled draftsman or artisans) m—this is like accountants, lawyers doctors

o or actors musicians, poets, etc. people who use creativity etc. the question is: do you meet the primary duties of each category

DALHEIM v. KDFW

Here there are bunch of ppl claiming they are entitled to overtime. Remember you don’t have to work 50% of a time at a primary duty to make it your primary duty. what he or she does that is of primary importance/value to the employer – this is how you determine whether what they are doing is their primary duty. General assignment reporters as creative professional. They are trying to take reporters and put them into the category of actors muscicians and painters. The court rejects this idea. the approach these ppl took was dictated by management. this is not a creative job, you are told to go interview this person and read into the camera. does not involve “invention, imagination or talent”. producers as creative professionals. does not fall into the creative professional exemption either. there are two contraints to their judgment that make it so they cant be creative professionals and don’t use imagination , iventiveness or talent.

Producers as administrators: the producers are involved in production and thus do not qualify for this exemption because they arent involved in administrations.

Producers as executives: they didn’t manage two ppl, and thus they could not qualify under this test. also don’t train, manage, supervise, or discipline employees and they don’t qualify for the combination exception because they don’t really meet any of the primary duties of any of the categories, so you cant make something out of nothing.

COPAS v. East bay muni utility district

Ida McClendon

• She was under the admin. Exemption

o she was serving the business and was a PR person

o it was not in producing like it was in the last case

o the product here wasa cleaning sewage, and she was not involved in that

Fox

• Executive exemption

o he showed that he supervised two employees (the opinion says he qualifies because of only this)

o but you need two more things to qualify under this exemption

o he needs to be doing management stuff

kerr

• Found as exempt as an executive

o trained supervised his employees thus managed the enterprise

o regularly supervised two employees

o and had input into their hiring

• did not qualify under the admin. Exemption

o he is running a building,

lepore

• was the osha person

o not an executive

o he didn’t supervise two or more ppl

o he was an admin. Tho

o he is involved in admin.

o And was exercising discretion with respect to important stuff

• Should we be sympathetic and require the statute to protect and pay ppl over time to ppl who are very highly compensated in the first place. We want to give employers an incentive not to overwork ppl, this is one of the reasons the statute was enacted, thus it may be good to make them pay overtime. But if the person is doing a job that cant really be broken up into a job for two ppl, you cant really incentivize them to hire two ppl.

REMEDIES

If you are sued for violating the FLSA< you have you to pay overtime you didn’t pay if you lose. Also liquidated damages provision gives a bigger incentive to pay the overtime. Attorneys fees payable to the P’s gives P’s the and their attorneys to bring these suits. Would the KDFW come out differently under the new regs? He doesn’t think so…

• PROBLEM 11-1

o Most paralegals are not exempt, but the question is are these special paralegals exempt

FLSA APPLICATION PROBLEMS:

1- compensable time:

• Pbast v. OK Gas and Electric

What counts toward that 40 hours, and beyond it? The book lays this out pretty well. Excludes travel to and from work – this is not included in your hours worked. but the SC has told us that anything that is necessary to the principal activity is part of that principal activity (like changing into your hazardous suit). if it is an integral or indespensible part of the principal activity it is included. on call time is the issue in the case we will be dealing with.

Pabst v. OK G & E

Electronic techs working for OG&E. They are required to be on call 24/7 – they work at work for 8 hours a day 5 days a week, but when they are at home, they are on call. They hav ea beeper that doesn’t really work and hav ea computer, so they really can never leave their house… because they are required to respond within 15 min. – so they have to be basically around their computer all the time. The employer said it wasn’t feasible to use a rotation system. What is the issue that everyone is fighting about? What is the big question? how much does this being on call interfere with their personal lives and activities? is the time spent predominately for the employer or employee? how much of al life can these employee have with this on call system? this is the test used throughout the circuits it just applied differently. some say you cannot be able to leave yoru house to qualify as compensable on call time. thinking about how big of a burden it is… we see that it is a very big burden to these ppl.. and thus the on call time is compensable. how could you change the structure of this system to make it better?

• They could have hired more ppl

• They could have instituted an on call rotation system

• They could have had pagers that worked

• They could have restructed but if they didn’t they should be paying over time

note 4… why didn’t OG& E say they these ppl fell under the computer exemption? Because that applies to computer programmers and software designers. How much are they earning?

BRITNEY SPEARS PROBLEM

Would these body guards be exempt under any of the exemptions?

• Exec?

• if one body guard manages the other two body guards, this is their best bet….

• Admin.?

• Professional?

• Woiuld they be entitled to overtime?

o The FLSA doesn’t require OT because you worked more than 8 hours a day, it only requires it if you work more than 40 hours a week

o In contrast, CA requires double time for working more than 12 hours a day or 40 hours a week

• Is there another line of defense? Aside from being exempt

o You could argue that they are independent K…

o You look at the amount of control britney hs over the body guards

▪ are they working for other ppl

▪ do they bring their own tools

• And should they have sued Britney in her individual capacity?

o Yes they should have, of course

• REMEMBER: the FLSA allows for individual liability

o There are also criminal penalities for violating the FLSA

• THE BURDEN IS ON THE EMPLOYER TO PROVE THE EXEMPTION!!!!!!!

o If they don’t prove anything, then they don’t get the exemption and thus they have to pay overtime

o Manual laborers are OUT, period, if you meet the primary duties of any one of the categories

o Last time we talked about the exemptions from coverage

o And if you arent exempt we have to figure out whether you are entitled to overtime

▪ We looked at on call time

2- Calculating regular rate of pay

• Most of the time it is straight forward

• But sometimes it is not

o when there is a salary, but not a fixed work week

• what is remuneration

o see the book for the this statute

o there are 8 exceptions that are excluded from “regular rate of pay”

XI- Chapter 13: managing the risks and costs of liability in employment disputes: you can manage some risks by establishing the kind of relationship you want to establish, ie. Whether you establish it as at will employment or as an employee or as a consultant or part time employee, etc. You can contractually get out of many things.

• A- Preventive measures and corrective action: see p.865-66. For publix supermarket policy. It does not have an express anti-retaliation policy. Also, you may be complaining to someone who doesn’t know anything about harassment and their response might not be the best.

o 1- anticipating and responding to hostile work environment harassment: behavior has to be unwelcome and there’s a subjective prong and an objective prong. the perception must be that she was being harassed and a reasonable person would have also thought it was harassment.

▪ Has to be severe, or pervasive.

Difference between

o tangible employment action: inflicts direct economic harm on the employer or A supervisor brings power of the company to bear. So, when you’re not given certain assignments, you’re not promoted, you’re giving menial tasks. Quid pro quo used to be the standard, but scotus couched it as some tangible change in employment. It’s the supervisor doing this. There is vicarious liability for company as opposed to negligence. Burden is on defense to establish reasonableness of policy

o and harassment: co-workers. You are still liable but under a negligence standard so the burden is on the P to prove. But if the harassment is by the supervisor then you are still liable under vicarious liability. Demonstrate harassment was severe or pervasive. After this is proven, the employer has the burden of establishing an ellerth defense or to prove that it was not severe or pervasive. A single incident of harassment is never enough to find severe or pervasive. So a rape may not be enough. So, if you report too quickly, you may not have undergone severe or pervasive. If you report too slowly, then you can apply the alec defense. (Ellerth defense?)

o Ellerth Defenses: did the employer have an effective policy for preventing and responding to sexual harassment and secondly did the employee unreasonably delay taking advantage of such policy. Purpose is to get employers on the ball with dealing with harassment.

• Watson v Home Depot: P worked for one year and she got reprimanded for being in car when she was supposed to be at cash register. There’s a two week training program. They had a good anti-harassment policy and makes it clear how to report and how to deal with this. She says she was there for the training. She alleges that she was raped by supervisor. She waited a week before complaining after the reprimand. So did she fail to take reasonable actions to report sexual harassment. After she reports the harassment the co. investigates and interviews 21 people and no one can corroborate her story and the date she gave was even wrong because the alleged manager had an alibi. No one can substantiate the allegations so it cannot conclude that it is true. HD suspended the manager and put the plaintiff on leave with pay. Offered to transfer to another store and it also transfers the manager to another store. The case hinged on the reasonableness of the victim in not taking swift advantage of policy. The Ellerth test is disjunctive: You had a reasonable policy and the P failed to take advantage of that policy. So the problem is for the P to determine when to complain because cts may decide that you were too quick to report b/c it was only one time. The ct decided that even if she had been raped, being afraid of retaliation or traumatized was not enough, she was still unreasonable in delaying the reporting.

What’s a good policy against harassment?

• Define what constitutes harassment.

• Set up procedure to deal with it for both the victim and the company.

o The procedure could be a hotline, reporting to someone in HR, make sure you have multiple avenues for reporting , both within chain and outside the chain and even outside the company like a law firm. (especially if company is small).

o If you have a report, your responsibility under title 7 is to investigate even if the reporter asked you not to investigate.

• Williams v. Spartan Communications: Supervisor and employee alleged that her supervisor sexually assaulted her and made her watch r rated videos in a van. He admits to the video and he is fired with five months severance in exchange for him not suing them. So they responded very promptly and the employee waited 3 years to report the issue, yet she wins. Under Ellerth you have to have a reasonable policy. But the ct says that having it on paper is not enough and there’s enough stuff on the record for a jury to decide that the policy was not effective. There were so many facts pointing to an old boys network that it was clear that the reporting was discouraged.

• Problem 13-1: should add a clause on non retaliation and also adding the policy against harassment on age or disability. Also ask to see something as to how employer is training on this. Add any language to protect on basis of religion, national origin or anything else that may be in your state statute as protected category.

o

B- Risk Management Techniques:

• 1-Conducting layoffs and obtaining release agreements: WARN act: workers adjustment and retraining act: if you’re laying off 1/3 of your workforce and that’s at least 50 workers, or you’re laying off at least 500 workers, you need to give them 60 days notice or pay them 60 days. Exceptions: if you’re closing the plant but you’re trying to not scare creditors or customers or it really hit you by surprise and was not foreseeable (Arthur Andersen case) then you don’t have to give notice. You cannot aggregate sites to have a claim(Phillips case). PP: is to allow people to start planning for disruption of layoff and getting another employment and if necessary obtaining new skills.

o Releases of employment claims:

▪ You cannot waive your right to sue prospectively (as in an application for jobs) under a federal employment law. You can settle or even before your suit, but only after there was injury or damage or violation. CANNOT DO THAT!!!! PLEASE NOTE THIS!!! YOU CANNOT SETTLE WITH RESPECT TO DISCRIMINATION THAT HAS NOT HAPPENED YET. Why? b/c it would encourage employers to discriminate in ways that federal law prohibits. That’s the policy. This is bound to be on exam as per his comments. Which means that you also cannot sign a release for future claims that may arise that you may not know about.

▪

▪ Big thing is that it needs to be knowingly and voluntarily entered into. Not if there’s coercion: we’re keeping your check unless you sign release. Only then is a release of an employment claim valid. Cts usually talk about the totality of circumstances (903) to determine whether the release was entered into knowingly and voluntarily. That’s for federal employment claims. This preceeded the OWBPA.

▪ Make sure you put all releases there: FMLA, ADEA, Title VII, etc and even tell them clearly what those acts protect so they know what they are releasing.

o The OWBPA (Older workers benefit protection act) has a more stringent standard. See page 902. This is under ADEA.

▪ Written in a manner meant to be understood

▪ Has to mention act ADEA.

▪ Waiver specifically refers to claims and or rights arising under this chapter.

▪ Individual does not waive any rights that might arise after the date the waiver is executed.

▪ Person advised to consult an attorney. Etc.

o To err on the side of safety, you always want to structure your releases so they comply with this act because it is more stringent than the knowing and voluntary standard. It takes discretion away from judge because it meets the totality of circumstances factors for the knowing and voluntary test. It also standardizes forms at a company if all releases comply with this regardless of age of employee.

o Phillips case: Ratification: under the knowing and voluntary standard, if you ratify by keeping the money after you realize it’s a voidable release because it violates something, then you don’t have a claim. You have to tender back the money. UNLESS you’re suing under ADEA in which case you don’t have to return the consideration because more than likely they would have spent it and not be able to give it back. You cannot give it back after obtaining relief in the lawsuit but before you sue.

o FLSA you cannot release or settle claim without dept. of labor being involved.

o Cannot give up your right to file an administrative charge with EEOC or other governmental agency. You may not be able to sue in court, but they can. Policy is that EEOC has authority to investigate on behalf of public. Sometimes they sue on your behalf and get money. They cannot not pay you your money because that would be illegal since it is a retaliatory practice. They regulate title VII, and others. ASK HIM WHICH CLAIMS. Public policy is that you must be allowed to complain to the government so they can investigate on behalf of public.

o Back pay, front pay, damages for emotional distress, severance pay is all taxable and employer may withhold taxes. So ALWAYS REMEMBER TO TELL COMPANY TO WITHOLD TAXES. Taxes are done UNLESS it is for physical injuries.

• Problem 13.5:

o Release is not specific. It doesn’t mention ADEA and therefore he can sue under that and SCOTUS has said he does not have to tender back the money.

o The severance doesn’t say that it is IN CONSIDERATION for giving up his rights to sue.

o It doesn’t comply with OWBPA requirements.

• 2-Arbitration Agreements:

o Largely governed by Federal arbitration act of 1925. Section 2 says any arbitration contract is enforceable except if it would not be enforceable under state law on a ground that would invalidate any contract. You cannot have a special state law that only applies to arbitration contracts that does not apply to other contracts. Also, this act pre-empts state law. ANY Connection to interstate commerce is enough to bring it under the FAA of 1925. Hard to imagine a contract that does not fall into this (maybe family law?). There’s a section that excludes contracts of employment from FAA, but section one does not mean what it says according to SCOTUS! Language is to be given a very narrow interpretation for this section! So only people who travel or carry goods across state lines (truck drivers, seamen, railroad drivers, etc). But, you can put arbitration agreement into a separate agreement, not in their employment contract.

o No implied arbitration agreements, it has to be written. Cts have been more reluctant to uphold agreements to arbitrate if they are just in employment handbook.

o To get out of arbitration agreement you defend by saying duress, fraud, unconscionability. This is the area that’s bigger in the arbitration arena. You need both procedural and substantive unconscionablity: how big is the letter, where was it located, how much time was person given to read it and examine with attorney, etc. Substantive are terms that are very oppressive of one side only. Famous case is Gilmer. Does the FAA trump the ADEA which is later or title VII? The statutes don’t say that the cases cannot be arbitrated. So it seems that the ct says that as long as you can vindicate your rights, you’re just choosing a different forum, and the regulatory agencies can still investigate and bring cases. Unconscionability actually has teeth in the context of employment arbitration agreements.

o So get out of this how to structure an agreement, and when to and when not to arbitrate.

▪ Circuit city case. This case had already been to the supreme ct and decided that section 1 of the act DID apply to employment contracts. Employees sue for sexual harassment and Circuit city motions to compel arbitration. There’s a federal policy in favor of arbitration so cts usually look at everything with a bias in favor of arbitration. There’s an agreement to arbitrate, It is a take it or leave it agreement. It required employees to submit their claims for arbitration But NOT CC to use arbitration. So it’s a one way agreement. Ct says that it proves that it is unconscionable. “The 9th circus” says that it is a contract of adhesion so it is procedurally unconscionable (which is not always or typically sufficient to render it unconscionable: other factors would be limited time or no time to review, vague or not understandable language). The fact that it is a one street, goes to the substantive unconscionability. Typically, again, cts don’t look at sufficiency of consideration and mutuality. Not as bad as an agreement which says that one party can change the rules anytime but the other does not, because in essence one is bound the other is not. CC could have probably saved it by stating that they would also arbitrate their claims (especially seeing that arbitrators usually favor the company), unless they have a trade secret missapropriation injunction that you need and can only get in ct. Substantive has to do with terms that are unduly harsh or oppressive. Procedurally we look at equilibrium between parties AND the extent to which the contract clearly discloses its terms. ALSO, when you have an agreement to arbitrate you cannot so structure the agreement as to diminish legal remedies they have a right to under a federal law (never do that). They did that! Also don’t do it so that only employee is bound to arbitrate. And you should not require the employee to split the cost of arbitration (you may want to so they don’t bring frivolous law suits) but this ct says that it ALONE would have been sufficient to invalidate the agreement. So, if you’re giving up substantive rights, it will not be enforceable. Acc to the Supreme court, if you have a possibility that the fees will discourage the lawsuit, it is not enough to prove unconscionability, you need to prove a probability, not just a possibility. So in this case the ct says it is procedurally unconscionable because it is a contract of adhesion, and substantively unconscionable b/c it eliminates some substantive rights regarding the remedies available. Also, b/c of the lack of mutuality it goes to procedural unconscionability. “some modicum of bilaterality is required”. * If the party can change rules at anytime it is considered illusory.*

▪ Greentree standard: P has to prove that there’s a likelihood that the fees are going to discourage him from vindicating a claim, not just a possibility.

▪ You Cannot contract out of discovery. It is allowed.

▪ You can always waive your right to compel arbitration and sometimes you should if it’s a bogus case that you could have gotten kicked out on summary judgment in ct. but not in arbitration b/c they don’t do summary judgments.

▪ In arbitration the standard is the standard used for plain contracts not the knowing and voluntary standard or the more stringent OWBPA. So even if you are arbitrating an ADEA case you cannot apply the standard used for releases. In releases you’re giving up a substantive right so we have some procedural safeguards to comply with. IN arbitration agreements, since they are prospective you cannot give up substantive rights, you’re just changing the forum so we don’t need the procedural safeguards.

o Martindale v. Sandvick: this ct decides that an arbitration agreement between the employee and employer. Majority approach: consideration can be the agreement to employ you and sometimes continued employment is also ok as consideration for a subsequent agreement. The normal pressure an employee faces to get the job is not enough to make the agreement unenforceable: I needed the job is not a good argument. In this case there is also a contract of adhesion but that in and of itself does not render the contract unenforceable.

▪ Remember that you cannot treat an arbitration agreement in any way a K would not be looked at.

▪ According to California, there are five minimum requirements (page 926) These are factors from Armendariz.:

← 1- neutral arbitrators.

← 2- provide for more than minimum discovery.

← 3- require a written award.

← 4- all types of relief available in ct. have to be available in arbitration.

← 5- not require employees to pay either unreasonable costs or any arbitration fees as a condition of access to the arbitration forum. These are the factors Ca sup. Ct determine would be procedurally safe for the employee’s rights. If you don’t comply with these, the K is unconscionable and therefore not enforceable as any other K would not be either, so you’re not treating arbitration differently but exactly the same way.

▪ Problem on page 928:

▪ As employer is cheaper and easier to arbitrate rather than litigate. Much less discovery and since you’re in control of the information you don’t get blindsided by information. You get to change the decision maker since you don’t have a jury, you have a white, older white male who is professional and more sympathetic to employers, typically don’t award punitive damages. (they get paid to be arbitrators and if they give punitive awards, they get struck down from the panel. You get one preemptive strike against one member of the panel, no reasons asked). You have a repeat player advantage so they know you more. It’s harder for employee to get a lawyer b/c the case has to be worth a certain amount to be taken. For the employee, you can be pro-se and don’t have to worry about rules of evidence. The case is scheduled.

▪ How to introduce it to employees: sell it to them and potentially introduce it only to new hires and not people who have been before or use it when you promote someone so you phase it in.

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