Principal Agency and Labor Laws: Legal Obligations and Protections - Prof. Janine S. Hille, Study notes of Business and Labour Law

Download Principal Agency and Labor Laws: Legal Obligations and Protections - Prof. Janine S. Hille and more Study notes Business and Labour Law in PDF only on Docsity! Chapter 28 (672-681) Principal’s Liability for Contracts The principal is bound by the acts of an agent if 1. the agent has authority, or 2. the principal, for reasons of fairness, is estopped from denying that the agent had authority, or 3. the principal ratifies the acts of the agent. Authority: (3 types) Express and Implied authority are actual because the agent is truly authorized to at for the principal. Apparent authority, the principal is liable even though the agent was not authorized Express: words or conduct that reasonably interpreted, cause the agent to believe the principal desires her to act on the principals account. In cases of ambiguity about the principals intent, the courts look at the principals objective manifestation, not his subjective intent.(actions, not thoughts) Any kind of communication can pass on the authority Implied Authority: unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it. The law assumes that the agent has authority to do anything that is reasonably necessary to accomplish her task. Apparent Authority: a principal can be liable for the acts of an agent who is not, in fact, acting with authority if the principals conduct causes a third party reasonably to believe that the agent is authorized. The principal has not authorized the agent, but has done something to make an innocent third party believe the agent is authorized. Estoppel: No one may claim that a person was not his agent, if he knew that others thought the person was acting on his behalf, and he failed to correct their belief. He is estopped from denying an agency relationship. Ratification: if a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound by the act as if he had originally authorized it. He has ratified the act. Event if the agent acts w/o authority, the principal can decide later to be bound by her actions as long as these requirements are met. Agent indicates to the third party that she is acting for a principal Principal knows all the material facts of the transaction Principal accepts the benefit of the whole transaction, not just part Third party does not withdraw from the contract before ratification. *Estoppel applies when the alleged principal does not ant the benefit of he contract, but delays in telling the innocent third party of the mistake. Ratification uses the benefit by not telling innocent third party of mistake. Subagents: Intermediary agents: someone who hires subagent for the principal. Not liable to the principal for misdeeds of the subagent unless she was negligent in hiring. When an agent is authorized to hire a subagent, the principal is liable for the acts of the subagent as he is for the acts of a regular agent. Agent’s Liability for Contracts: agent’s liability on a contract depends upon how much third party knows about the principal. Disclosure is agents best protection against liability. Fully Disclosed Principal: Agent is not liable for any contracts she makes on behalf of a fully disclosed principal. (fully disclosed if third party knows of his existence and his identity) Partially disclosed principal: Third party can recover from either agent or principal. (not more than she is owed, must be split if from both) (partially disclosed if third party knew of his existence but not his identity) Undisclosed principal: Third party can recover from either agent or principal. (Undisclosed if third party did not know of his existence) Principal is always liable but the agent is not unless the principal’s identity is a mystery. Contract with an undisclosed principal is binding, law permits concepts of an undisclosed principal out of commercial necessity. Exceptions: third party is not bound to contract with undisclosed principal if 1. contract specifically provides that the third party is not bound to anyone other than the agent 2. or agent lies about principal because she knows third party would refuse to contract with him. Unauthorized agent: if agent has no authority (express, implied, or apparent) principal is not liable to third party but agent is. Principal’s liability for torts: master is liable for physical harm caused by the negligent conduct of servants within the scope of employment. Respondent superior: master (principal) is liable for agents misbehavior whether ornot principal was at fault. (agents are always liable for their own torts) Chapter 30 Employment Law An employee at will could be fired for a good reason, a bad reason, or not reason at all. Employment Security National Labor Relations Act (NLRA, or Wagner Ac) Created the National Labor Relations board to enforce labor laws Prohibits employers from penalizing workers who engage in union activity (for example, joining a preexisting union ro forming a new one: Requires employers to “bargain in good faith” with unions. Family and Medical Leave Act (FMLA) Guarantees both men and women up to 12 weeks of unpaid leave each year for child birth, adoption, or medical emergencies for themselves or a family member. Applies to companies with at least 50 employees and have been with company for at least a year. Must return to same or equivalent job with same pay and benefits. COBRA: Consolidated Omnibus Budget Reconciliation Act Former employees and their family members must be allowed to continue their health insurance for 18 months after leaving their job. Employees must pay for it themselves, up to 102% of cost. Applies to any company with 20 or more workers. Wrongful Discharge: prohibits an employer from firing a worker for a bad reason. Public Policy: prohibits an employer from firing a worker for a reason that violates basic social rights, duties, or responsibilities. Primarily applied when employee refuses to violate law or insists upon exercising a legal right or performing a legal duty. Refusing to violate law: employees may not be discharged for refusing to break the law. Exercising a legal right: an employer may not discharge a worker for exercising a legal right if that right supports public policy. Performing a legal duty: courts have consistently held that an employee may not be fired for serving on a jury. Whistleblowing: employees who disclose illegal behavior on the part of their employer. Protected under the following situations: The False Claims Act: permits anyone to bring a suit against a person (corporation) who defrauds the government. Prohibits employers from firing workers who file suit under the statute. Receives between 15 and 30 percent of any damages awarded to government. Constitutional Protection for Government Employees: Gov’t cannot retaliate against public employees who “blow the whistle” as long as employee is speaking out on a matter of public concern. Statutory Protection for Federal Employees: Congress passed Civil Service Reform Act and Whistleblower Protection Act which prevent retaliation against federal employees who report wrongdoing. Employees of Publicly Traded Companies: Sarbanes Oxely act projects employees of UTC who provide evidence of fraud to investigators. Entitled to reinstatement, back pay, and attorney’s fees. State Statutes: all states have statutes that protect whistleblowers from retaliation. Common Law: most courts will prohibit discharge of employees who report illegal activity that relates to their own jobs. Contract Law: Courts are increasingly willing to enforce employer’s more casual promises (written or oral) Truth in Hiring: oral promises made during the hiring process can be enforceable, even if not approved by the company top executives. Employee Handbooks: an employee handbook creates a contract Covenant of good faith and fair dealing: prohibits one party to a contract from interfering with the others right to benefit under the contract. In some cases, courts will imply a covenant of good faith and fair dealing in an at-will employment relationship. Tort Law: Defamation: employers may be liable for defamation when they give false and unfavorable references about a former employee. More than half of the states; however, recognize a qualified privilege for employers who give references about former employees. Qualified Privilege: employers are liable only for false statements that they know to be false or that are primarily motivated by ill will. Generally courts have held that employers do not have legal obligation to disclose information about former employees. In some recent cases, when a former worker is potentially dangerous employers do have an obligation to disclose this information. Intentional infliction of emotional distress: employers who condone cruel treatment of their workers face liability under the tort of intentional infliction of emotional distress. Safety and Privacy in the Workplace: Workplace Safety: Occupational Safely and Health Act (OSHA) to ensure safe working conditions - Employers must comply with specific health and safely standards. - Employers are under a general obligation to keep their workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm” to employees. - Employers must keep records of all workplace injuries accidents - Occupational safety and health administration (OSHA) may inspect workplaces to ensure that they are safe. May assess fines for violations and order employees to correct unsafe conditions. Employee Privacy: Off-Duty Conduct: permit any lawful activity when off-duty. Alcohol and Drug Testing: gov’t employees can only be tested for drug and alcohol if they show signs of use or they are in a job where this type of abuse endangers the public. Lie Detector Tests: Employee polygraph protection act: employers may not require or egen suggest an employee or job candidate submit to a lie detector test except as part of an ongoing investigation into crimes that have occurred. Electronic Monitoring of the Workplace: Financial Protection Fair Labor Standards Act: (FLSA) regulates wages and limits child labor. Does not apply to managerial, administrative, or professional staff. Minimum Wage: 5.15 per hour, some states higher. Overtime pay: does not limit # hours per week that employee can work, but requires paid time and a half for hours over 40. Child Labor: prohibits oppressive child labor (children under 14 may only work in agriculture and entertainment. 15 year olds can work limited hours, 16 and 17 year olds may work unlimited hours at no hazardous jobs. Workers Compensation: ensure that employees receive payment for injuries incurred at work. Fixed, certain recovery. Social Security: pays benefits to workers who are retired disabled or temporarily unemployed and to the spouses and children of disabled or deceases workers. Federal Unemployment Tax Act (FUTA) provides support to unemployed. Pension Benefits: Employee Retirement Income Security Act (ERISA): protects workers covered by private pension plans. Aimed in particular at protecting benefits of retired workers if their companies subsequently go bankrupt. Employee benefits vest after 5 years of employment. Employment Discrimination: Equal Pay Act of 1963: an employee may not be paid at a lesser rate than employees of the opposite sex for equal work. Equal work: tasks that require equal, skill, effort, and responsibility under similar working conditions. Employer will be liable unless pay difference is based on merit, productivity, seniority, or some factor other than sex. Title VII: prohibits employers from discriminating on basis of race, color, religion, sex, or national origin. 773-775 Difference between business entities Separate Taxable Entites: Professional Corporation Corporation Close corporation Personal Liablity for Owners: Sole Propietorship General Partnership Joint Ventures Easy to form: Sole Propietorshiop (easiest) General Partnership Joint Venture Transferable Interests (easily bought and sold) Limited Partnership Limited Liabilty Partnership Corporation Limited Liablity Company Perpetual Existence Professional corporation Limited Liability Limited liability partnership Corporation Close corporation S corporation Business trust 825-836 Managers Versus Shareholders: the inherent conflict: Managers serve at least three masters: themselves, shareholders, and other stakeholders. Managers: want to keep their jobs, and to build an institution that will survive them. Shareholders: want high stock price, right now, Stakeholders: employees, anyone who can benefit from it besides managers. Courts generally held that managers have fiduciary duty to act in the best interest of the corporation’s shareholders. Resolving Conflict: the Business Judgments Rule: - courts allow managers great leeway in carrying out responsibility to stockholders. Managers must act in good faith: Duty of Loyalty: without a conflict of interest Duty of Care: with the care that an ordinarily prudent person would take in a similar situation, and in a manner they reasonably believe to be in the best interests of the corporation. Accomplishes 3 goals: 1. permits directors to do their job. 2. keeps judges to of corporate management 3. encourages directors to serve. Duty of Loyalty: prohibits managers from making decision that benefits the at the expense of the corporation. Self Dealing: manager makes decision benefiting either himself or another company with which he has a relationship. Valid if: 1. disinterested members of board of directors approve the transaction 2. disinterested shareholders approve it 3. transaction was entirely fair to the corporation. Corporation Opportunity: prohibits managers from excluding their company from favorable deals. Managers are in violation of the doctrine if they compete against the corporation without its consent. Must ask permission first, if not, must prove company could not benefit from purchase. Duty of Care: requires officers and directors to act in the best interests of the corporation and to use the same care that an ordinarily prudent person would in the management of her own assets. Rational Business Purpose: courts generally agree in principal that directors and officers are liable to shareholders for decisions that have no rational business purpose. In practice, same courts supportive of managerial decisions. If no rational purpose, managers are liable and decision can be rescinded. Legality: unsympathetic to managers who engage in illegal behavior. Informed Decision: courts will protect managers who make an informed decision, even if decision ultimately harms company. If decision if fair to shareholders, no liability. Property Handout Outline: Property: aggregate of rights which are guaranteed and protected by the government and everything which is the subject of ownership. Real Property: land and everything permanently attached to it. Personal property: everything else Tangible: that which exists as a physical oject Intagilbe: rights that do not exist separately in physical form (copywrites, stock) “fee simple absolute” : bundle of rights, own all ownership rights. Leases and contracts for the sale of real property: Most states have statues that protect residential renters, but not for businesses. Business must makes sure standards or requirements needed are stated int eh contract. Caveat Emptor: let the buyer beware. No promises about real estate you are buying or leasing. Inspect well and look at contract terms. Joint Tenants: holding owernship of real property as undivided (act as one owner) equal owners. Equall owners. Tenants in Common- holding ownership of property with multiple owners who are not necessarily equal and who are not “undivided”. Easement- a right to use, not own, real property. An example is an easement over property for a utility to bring water or electricity to a building. Mortgage- a lien on real property; generally the property may be sold to satisfy the debt if it is not paid. In Virginia, these are called a Deed of Trust. Deed- the document that transfers ownership of real property. There are special words that need to be recited in a deed, so it is important to have a professional prepare it. Deeds must be recorded in a local government office. Title Search- In order to determine what easements, restrictions, and ownership rights are applicable to the real estate, a title search is highly recommended (and required by lenders) in order to be certain of the rights that are being transferred. Closing- when the deed is transferred, the price is paid, and obligations are settled. After closing the deed is recorded. Intellectual property: copyrights, patents and trade secrets. Copyright: Copyright protects "original works of authorship" that are fixed in a tangible form of expression. The fixation need not be directly perceptible so long as it may be communicated with the aid of a machine or device. Copyrightable works include the following categories: Arises automatically Patent: Created only when issued by USPTO Complicated, takes years to obtain, term is 20 yers. A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. Generally, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance