Employment Law Notes Marjorie 2011 Dec 1

8/3/2019 Employment Law Notes Marjorie 2011 Dec 1

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Employment LawThe Role of Employment Law in society:

Economic, work defines social, psychology, politics,public policy: economics, healthcare, immigrations, trade policy, fiscal policy, financial

reform.Impact of changes of Employment Law:

Trends: labor markets, bargaining power, low wage section increases, outsider contractors,outsourcing, shift in how capital is being allocated economic, high-tech, information, humanresources create value, not to compete agreements. Technology: telecommuting, flexibility, part-time.

30% of the federal civil docket is employment law.Sources of Employment Law:

Common Law (C.L.) doctrine, At-Will doctrine, Contract Doctrine (K ) Labor Law, Safety &Health, etc.Employment Law lacks uniform source/ definition, lacks coherence. Various lenses through which toview employment law. NOTE: labor law deals with the Union context, however, portion of marketunionized is very small.

Themes.1. Conflict between employer interested, employee interest and broader social interest

a. Balancing Test: eg. Employee privacy depends on the circumstances, speechrights, non-competition agreements, and interest of the employers in retaininginformation vs. free movement of labor. Discrimination law.

2. Job Security term: at will vs. for causea. At-will is a de-fault rule, only MT not have the at-will default rule. Just cause need a

legally recognized reasoning for termination3. Tension between should the law create default standard to what extent should the clear

create immutable rulesa. Leave rules to parties themselves or to create immutable laws?b. To what extent should laws be waivable? eg. Time and a half pay.c. See. Pg 31. Of intro

Arguments against free K/ Private ordering1. Bargaining power2. Asymmetric information/ psychological restraints, cognitive deficiency,, so negotiate sub-

optimally3. Negative impact on 3rd parties/ society

How to think about private ordering::How the terms of an employment K are structures, where terms are waivable? how to

structure work place as a whole?, chp. 13: to what extent do we allow Ps to alter their relationship inother ways? Eg. By K? eg. Can they alter the forum? Severance agreements?

Chapter 1. The Stakes of Employment:Why does it matter if employee verse independent contractor (I.C.)? LiabilityWho is an employer/employee? When does employment law apply?What are the benefits/costs for option for an employment relationship?


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A. Distinguish Employee v. Independent Contractor:Respondeat superior Vicarious Liability , Agency Law.

Who controls who? Is there an employment relationship? REspondeat Superior: employmentrelationship and tort in the scope of employment.

McCary v. Wade:P 3rd party victim. If employee then liability, if not employee then no liability.But tort feasor is bankrupt/ insolvent. The intermediate hires a bunch of independent contractors.Hold: independent Contractors, so firm win, and there is not an employment relationship.Fitzgerald v. MobilPerson falls off the trailer and claims defective trailer. The activity was outsourced to a truck driver.Issue: if the Fitzgerald driver is an employee of Mobil, then only entitle to workers compensation, ifnot an employee, then can be sued in Tort.Hold: Fitzgerald was an employed so only got what he was entitled to under workers compensation.However, K between Mobil and TLI )the intermediary) disclaims employee/employer relationship,Mobil tries and does have it both ways.Workers compensation: has a cap to the amount able to recover, cap would not work withoutexclusivity, ie. Cant collect workers compensation then sure under tort liability.

Factors for determining employer. PG 8Economics Reality Test: pg. 11About whether or not exacting control, the extend of control over the employer/servant?When do you have an employment relations?

1. Employee?2. Legally accountable employer?

Why do firms structure the firms the way they do? Enterprise structure, middle men, independentcontractors.Stakes of Employment:What does it matter if the person is an Independent Contractor vs. Employee?

1. IC v. Eea.

Stakesb. Test [highly fact specific, so many case]

i. Structureii. Private ordering (not dispositive)

iii. Planning/ risk managementiv. Implications/ critique

2. Employer?a. States/status matter a long. If resolution was easier , more bright line, then not as

many cases.3. Balance sheet employee vs. IC: [ see notes 4-6]

Negatives positivesRespondeat superior (tort liability) workers compensationEmployment Law doctrine (exclusivity and cap on $)Desire ot avoid unauthorizationLabor laTaxThe above are legal incentives to outsource.

Test focus on control to the extent firms have greater incentive to control work (qualitycontrol)


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Tests:Pg. 5 & g, section 220 of 2nd restatement of Torts. Definition of Servant (for

respondeat superior purposes) focus on exacting control over physical conduct of the work,over the details of the work.

1. C.L. Test:a. How much control, multi factual and contextual, factors on section 220

2. Economics realities testa. Pg. 11 per Fitzgerald test. FN 7 on pg 15. Even with more or less economic

dependence, vulnerability, courts tend to address control anyhow.3. Entrepreneurialism Approach

a. Bottom of pg. 6. 3rd restatement. Worker deemed employer UNLESSindicia of control, opportunity for gain/loss

b. BUT:i. Not final 3rd restatement,, not yet the law

ii. Focus on entrepreneurism is starting to play a role on labor law.Natkim v. winfrey pg 17Oprah photographs used in a book. Sued for the use of the license/copyright infringement.

IC Oprah needs licenseEmployeeworks for hire, so Oprah owns themCompany had elected IC stats for P for tax purposes. Normally is one creates something then theyare the owners. Works made for hire pg 19.TEST: Reid Factors (13) control? Broad definition, very like the CL test. Lots of focus on the details ofthe work. Not single factor is dispositive. Outcome is not predictable, highly uncertain factors cutboth ways.Mobile had disclaimed ee status, but thenargues for ee for workers compensation reasons. Look tothe totality of the circumstances. Efficiency reasons and clarity.

In Mobil, kind of acknowledge that there are different tests, and reasons for employee definition.

Even if ICs Harpo could have protected itself through a license (work for hire agreement)Court says harp can not have it both ways. Private ordering is not dispositive. If not sure if thegreater risk is from the intellectual property issue/ tort issues, then keep the relationship amorphousuntil later.Greater ambiguity may enable firm to act one way or the other.Implication/Critique:

1. Inefficiency/ ambiguous2. Greater clarity/bright line may lead to unjust outcomes (trade offs)3. May be that test appropriate sometimes, if not map onto underlying policy not good.

Easterbrook: CL focus on control, designed for particular purposes, rather than wage/hourlaw.

None Legal Incentives for Stakes driving employment:Control may have economic value, necessary to assume quality/goodwill, customer relationships,lists, tend to apply to higher skilled workers because of the value in human capitalJoint Employment:Smaller the firm, the harder it is to detect violation and legal restrictions may not apply to smallerfirms.

Employer:a. Stakes: if not er the not on the hook


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b. Tests:a. Structure, private ordering, planning / risk management, implication/ critique

Ansousaman vs. GRistedes Operating Corp.3 legal issues:

1. Whether or not employees of chelsea/Hudson? Ee because use the economic reality rest.And how much control, risk of loss

2. Are individual owners of Chelsea Hudson liable? Because operational controlemployers, ignoring the corporate structure, piercing the corporate veil, becausemanaged the firm, managing owners, Judicial gloss that managers liable for wagespersonally. However, easily PCV- owner liability- may be a bad policy idea. Structurecreated problems upstream incentive issue with respect to LFSA argument. FMLA aidabetting exception. Usually the employer is the entity no the individual

3. Whether or not Join Employer: formally separate entity, 2nd circuit test, did it exerciseenough control? Touchstone for Joint Employee: Control! Depending on how integralto the business , the business will be liable. Courts remain hesitant about extending jointemployer liability too far.

Clackamas v. Wells

Does company qualify to be sued under the ADA? If the company is large enough. P was anemployee. Are the partners employees? If yes, then comply with ADA, sp P has a Claim. Use CLcontrol test: show how much control the partners exercise. For owner manager (worker owners) in aprofessional association, look at the ee vs. i.c. test to see if employees. Remanded with suggestionsof employers. CRITICISM: CL test/reid factor are not designed to defined the employer, if one of theparties sues under employment law, the would have made a different argument.Whether or not employer covered under ADA need 15 employees. Its a threshold question for theADA to apply. Were the owner shareholders employees? Court looks to Common Law Test forguidance on whether or not the shareholders are employees or employers; employers exercisecontrol over employees, look at Master Servant, so much control such that the person is not anemployee. [note: new healthcare insurance laws only apply to 50 + employees]

Dissent: criticize: inconsistent with what the common law test was designed to do. Definition ofemployee/employer should be consistent with definition as pertaining to statute. The Doctors aretrying to have it both ways, using the corporate form to avoid liability as employers.Clackamas compared to Yates:Yates: similar because working owner of a Professional Corporation, physician shareholders createdthe P.C. for a reason to limit their liability.Yates argues for the shareholder to be a participant in ERISA so, Yates wanted employee statusbecause money in the ERISA plan are not dischargeable in bankruptcy. If not ERISA plan, then the 3rdparties can go after the money.Hold: Yates is considered a participant because the STATUTES ITSELF contemplated it, (or at leas afair reading of the statute contemplates its use)Clackamus: reliance of Common Law standard, the ADA language was not clear.Yates: not look at the Common Law, clear intent identifiable behind the statute, because congressaddressed sole proprietors can be treated as participants. Yates confirms that sometimes peoplecan have it both ways, considered employees for some purposes and employer for others.

Page 55 note: using corporate structure to avoid regulatory issues (# of employees as the threshold).Note: courts are loath to pierce the corporate view, control is not enough.Page 56: Foreign subsidiaries: if parent directs illegal activity controlled and fail to adhere toformalities.


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Why does it matter? 1) insolvency, 2) all doctrines limited to enterprise of a certain size.

Chapter 2: At- Will Doctrine

[default rule]Express modificationPromissory estoppelNotion that Job security is most critical.At will doctrine: either party can terminate at any time.Why?Policies/ Justifications:

1. default rules to enforce personals expectations when not manifested/specified, seeking toreflect unstated expectations/intent

2. balancing of other interests, vulnerabilities, efficiency, procedural, promote social welfare,create incentive, it is good for society, ECONOMIC EFFICIENCY

note: Montana is the only exception to the At-Will default, they need good cause.Note: other default rules:1. just cause default rule in other countries, protect the employees and right to

employment.2. Definite term default of 1 year,3. rate of pay default rule, reflecting term of relationship.

Express Modification to the At-Will Default RuleHanson v. Central Show Printing

Guarantee 40 hours of work until retirement, 2 years later employee was discharges. Hanson claimslifetime/ permanent employment contract for life. P claims that employer breach the agreement asevidenced by the letter. HOLD: At will employee. Reasoning: must have additional consideration,clear stipulation of the employers promise end date. In order to Support an additional term there

must be additional consideration to support such a term beyond his labor. This concept is notconsistent with Contract Law because one promise can support the other, forbearance asconsideration, and generally we dont look at the magnitude of consideration.Hanson suggests that the at-will doctrine is more than just a default rule. It created a presumption ofat-will and overcoming that presumption is difficult.

Reasons:1. to protect employers,2. court efficiency from the benefits of a bright line rule,3. if the employee walks away its very hard to recover from the employee

and one direction of obligation is troubling,4. uncertain damages rationale.

When dealing with a Definite Term Contract, the employer can still terminate for just cause even if itis express. Employer bears the burden of demonstrating just cause.

Greene v. OliverP claim existence of K, thus the at-will doctrine does not apply, claim there was a lifetime relationshipso therefore could only be fired for cause. P claim forbearance, argue additional consideration inexchange for greater job consideration. Court does not require additional consideration, the functionof additional consideration is as one factor to consider INTENT consideration is merely indicative of


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the intent of the parties. Court looks to indicia of intent, the evidentiary function, factor in The at-will presumption may only be rebutted by clear evidence that the parties contracted for a definiteperiod a primes of permanent or lifetime employment may be nothing more than a casual asidepg. 69.POINT:

1. Takes traditional barrier and redefines functions, looks at the types of evidence toovercome at-will

2. Focus on the expectations/ intent of the partiesFive Historic justification for the At-Will Presumptions:

1. Freedom of Contracta. Presumption should not defeat the parties intent, eg. in Hanson clear expression of

parties intentions were not honored.2. Need for Mutuality of Obligation

a. Consideration could be an evidence issue, it is inconsistent in Contract Law to matchthe magnitude / adequacy promise not need to equate forbearance.

3. Common experience that usually effectuates the intent of the parties4. Procedural protection against meritless but vexation lawsuits5. Fairness & Equity

TAKE AWAY: Green Court recognized additional consideration is inconsistent with Contract law, somade consideration as evidence of the intent of the parties. Reconciling Employment law withContract law. Clear Evidence opens possibility that express modifications may overcome at-willpresumption. It lowers the bar to overcome evidence. Remise of reasoning: at Will doctrine doesreflect the parties expectations.

At Will Default Rule Presumption:1. express modification

a. definite term for a period of time [er can terminate with Just cause]b. lifetime/ permanent [er can terminate with Just cause]c.

just cause

indefinite term K2. promissory estoppel

3. implied in fact modification4. manuals/ handbooks

At Will operates more as a presumption than a default rule, absent a contract to the contrary.Hanson required additional consideration, which is inconsistent with modern contract law, mutualityof obligation concept is inconsistent with contract law.Green required clear evidence, rejects the mutuality obligations: at will serves important proceduralfunctions, and courts should look to see if the at will reflects expectations of parties.

The nature of the Just Cause protection may vary, generally more narrow in definite term thanindefinite term just cause. Indefinite term could also included economic necessity. Point: definiteterm is more protective that indefinite term.

Oral & Implied Contract Rights

Reliance on Offers of Employment

Promissory Estoppel:


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1. Courts are split2. Appropriate because detrimental reliance

Goff CaseProspective employee gong to start work at a OBGYN, day prior to the start, the offer was rescinded.She would have been an at-will employee, so express modification will not help P. theory: promissoryEstoppel. Issue: whether promissory estoppel many be asserted as the basis for a cause of action fordetrimental reliance into a contract upon a promise of at-will employment.Split courts:

1. detrimental reliance when employer knows or should know that a promise of employmentwill induce an employee to leave his/her current job, such employer shall be liable for thereliants damages

2. Inappropriate for some courts: reliance on a promise consisting solely of at-will employmentis unreasonable as a mater of law because the employee should know that the promisedemployment could be terminated by the employer at any time for any reason withoutliability.

Alleged promise of employment. An illusory promise.

Hanson leaving one job to get another is not sufficient forbearance for consideration needed forexpress modification. Here, forbearance: cant be sure she would have remained employed at formerjob. Should she be given a good faith opportunity to perform? But there is no assurance in at-will.HOLD: Court lets P look to promissory estoppel.

Schoff v. Combined Insurance Company of AmericaEmployee had criminal record, misdemeanor. The bonding company (a 3rd party) refused to bond,and without the bond, the firm is at risk. Theory used by P: promissory estoppel no disclaim of at-will. Not clear nor definite enough. Causal element is the 3rd party denying the bond. Mere assurancesare not enough. Question of what is clear and definite enough. Even assurances create aninducement or reliance, very difficult for Ps to prevail.

Note 3: theoretically promissory estoppel is available, it rarely succeeds. There has been someentrenchment, and the court sets the bar high.

Assurances of Continued Employment

Shebar v. Sanyo Business Systems Corp.Hired, not getting bonus, going to resign, the company says youre with us for life, thenterminated ee months later. 1. Evidence VP outright lied, hear from employmentfirm that ER waslooking to get rid of the ee. 2. Norm of lifetime employment in Japan, expectations can vary byworkplace culture.HOLD: no breach of K for life-term. However, a lifetime contract that protects an employee fromany termination is distinguishable from a promise to discharge only for cause. The latter protects theemployee only from arbitrary termination. Pg. 88. Court conceptualize K as a for cause, just cause K.therefore question of fact exists.POINT: 1. Court points to prior case law that courts loath to recognize literally Ks based on oral Ks. 2.Claim is that P had just cause indefinite term K, so sets the bar lower and is less protective of ee.Could P have tried to express modification? Clear oral assurances, additional consideration in theform of a job offer at Sony.

Implied Rights:


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Pugh v. Sees Candies Inc.

Rags to riches story, worked for the company 32 years, relied on polices and course of conduct of thecompany. P claim just cause indefinite term K. HOLD:Factors: In determining whether there exists an implied-in-fact promise for some form of continuedemployment courts have considered a variety of factors in addition to the existence of independentconsideration. The have includedpersonnel policies or practice of the ER, the EEs longevity ofservices, actions or communications by the ER reflecting assurances of continued employment, andthe practices of the industry in which the EE is engaged pg 94. POINT: at the time the factorswould have helped the EEs giving them more potential rights.The need for Independent Consideration follows Green, independent consideration serves merely asan evidentiary function, intent of the parties via clear evidence of express modification. Court movesto a more Contextual inquiry to get to the fact finder is not really as difficult as it was in Green.How does the court define potential relationship? Eve if implied in fact modification, the Courtadopts CA Good Cause. Pg 94CA Good Cause:

1. Burden of persuasion (usually ER bears the burden for showing cause) ER had toaffirmatively prove/show cause. CA standard: EE must bear the burden of showing wrongfultermination.

2. Cause means you have demonstrated that cause existed (not merely a belief) there musthave been an Actual Violation. CA standard: Fair & Honest reasoning/ cause regulated bygood faith on the party exercising.

Pugh standard:1. makes standard lower/ easier for EE2. suggest ER need not show ACTUAL violation of good cause, can be satisfied by a good faith

belief, therefore less onerous. [however, subjective standard is belief only, subjective andobjective standard requires belief and reasonable. The fair element suggests a subjectiveand objective standard, needing an actual and reasonable belief. ]

TAKE AWAYS:1. Implied rights case2. Gives history of At-Will doctrine3. Court seeking to strike a balance, recognition of job security term but counter balance with

how it affects the ER - loosened ability to modify at-will, soften the obligation associatedwith cause. (as opposed to Guz case which shows entrenchment. )

How to Overcome the At-Will Presumption:1. Express modification2. Promissory Estoppel3. Implied in Fact K4. Handbooks/ Manuals

Pugh set the high watermark of loosening the presumption.

Court shifts: P bears the burden of showing lack of good cause, puts into place an objective GoodFaith Standard. ER will have to show ACTUAL and reasonable Belief there was a terminable offense.

Guz v. Bechtel National


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Division eliminated, claim he could have transferred him to another department. P claims: 1. Breachof implied K, 2. Breach of implied covenant of Good Faith & Fair Dealing. Breach of implied K:personal policy written. Court looks to the Foley factors of. 98. 1. Stress here must be ACTUALunderstanding of the parties. P must establish that there was a mutual understand. [the courtdiverges from Pugh] court rejects this theory, not enough to get to a jury unless there was a differentunderstanding of the parties. 2. Court is willing to find implied in fact agreement as to the how theER was terminated. ** court rejects substantive aspect of claim that this is good cause relationshipwhile allowing procedural based on ERs written policy. Can challenge ERs policies/ procedures fortermination. Problem: remedies (ER remove policies going forward)

1. Pugh factors analysis are not enough, must give rise to something other than at willrelationships

2. Address policy/ procedural possible claims.Breach of Implied covenant of Good Faith & Fair Dealing: you can not have an implied cove/ term todeal in Good Faith that frames conduct that does not exist in the K. it is an illusory claim: that have toterminate in GF when EE is at-Will because explicit in At-Will is that ER can terminate for any reason.The job security term the court already rejected from being in the K.If At-Willwither or not person can be fired for any reason but would have claim covenant of GF &

FD. When they agreed to other terms, eg. Compensation, eg. Bad faith denial of benefits earned.Note 1pg 104. Very few workers have such relationship with ERs. The workplace is a changingenvironment.Note 4. Good Faith Theory.

Written Employment Manuals & Employee K Rights

Handbook Manuals- implied in Fact K cases. Involve representations to work force, not individualrepresentations.

Woolley Case

Rejected earlier cases of lifetime employment Ks look to context. More willing for indefinite termcauses protections pg 109, how could manual create a binding K if given the manual afteremployment? Consideration: continued employment for alleged promises made in employment-they are at will so they can walk away, ees gain tremendous benefits from manuals providing jobsecurity. Acceptance: unilateral K, offer = distribution, continued employment = acceptance. Thisapplied event to ee who did NOT read the manual, individual reliance need not be shown. (similar toFraud on the Market Theory). Employers get a lot in exchange, expectations prevent reason for Ersto unionize, ensure a happy loyal workforce, reducing probability of unionization. Point: ERs have anout: prominent Disclaimers, ERs can minimize risk.

Conner v. City of Forest Acres

Questions: 1. is there a binding K? 2. Was the disclaimer clause sufficient? Despite mandatory natureof the language, these disclaimers were clean and conspicuous. If disclaimer is inconsistent with themanual, courts go to a jury determination.1. Disclaimers must be Sufficiently Clear & Conspicuous!2. Make sure your EEs read it, show they signed and read it.3. the Connerpitfall, in drafting terms, avoid making them look mandatory. Balancing act, not toosoft.Note: find ways to make sure at-will relationship stated in disclaimer, can not be modified in otherways (integration clause) later by oral written or otherwise.


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Flipside issue: Er may want portions of the manual binding, eg. Arbitration to be mandatory and non-competition agreements.Test: if the fact finder finds a K to terminate only for cause, he must determine whether theemployer had reasonable good faith beliefthat sufficient cause existed for termination pg. 113

Demasse v. ITT Corp

IN AZ, can handbooks constitute implied in fact K? yes. Are the able to modify job security provisionsafter? Yes with limitations assuming there is a handbook binding K.When is modification ok? Pg 118.

1. Offer to modify2. Assent/ acceptance (not continued service), AND3. Consideration

Substitution is not automatic if Ee stays after the change. Treat the change as new K. Constituteworking is not enough to create acceptance, because only alternative is to quit. Binding K ismeaningless if the Er could unilaterally modify it later. In K law, we dont measure sufficiency ofconsideration, so ER could offer new consideration/ provision of benefit, so not particularlyburdensome on EE.

From at-will default rule comes the presumption. Guz narrowed the scope of Pugh, how erpolicy/procedure MAY create biding terms/ obligations. Wooley permits clear and conspicuous disclaimers.Dimassi if there is handbook/manual, what is required for modification of those terms? Enter into anew K, requiring consideration. Note: assuming the raise/ bonus was not part of the agreement tobegin with. Connoly case suggests ERs should be careful.

Chapter 3: Written Contracts & Expressly Negotiated Terms of

EmploymentERs have incentive to reduce relationship into writing in light of Pugh/ Guz. Incentive to includearbitration clauses and anti-competition clauses, state At-Will, and what that means, be careful notto include contrary terms (eg. Connoly case), dangers of writing about probationary period.

Job Security Terms

Tropicana Hotel Corp v. SpeerErrors in negotiation employment terms. Disagreement about handling stock options, claim justcause K and entitled to stock options. Hold: At-Will ee, could be terminated at any point, attorney

said do not sign the agreement and made an oral agreement instead. Constructive discharge:measures Er took were such that it was so intolerable no reasonable person could be expected toperform. Issue of meeting of the minds. POINT: care in negotiation tactics. Care in draftingagreements. Could have agreed to certain terms and leave open other terms, eg. Agree to just cause.

Cave Hill Corp v. Hiers

Hold: no breach of K. Ee did not have a for Term K. J is clear and unambiguous. So extrinsic evidencecan not be used to interpret clear and unambiguous. At-will K because Er need give cause, but thereis a definite term, however default rule that can only be terminated for just cause. 5 yar term


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indicated when to re-negotiate compensation, PER can not come into clear and unambiguous. ParolEvidence Rule permits extrinsic evidence when 1. Type used to intent K terms (except when clear andunambiguous), 2. Type to supplement written, whether or not another other consistent terms, 3.Evidence of subsequent understanding.

Ebsensen v. Userware International Inc

Dispute termination/ at-will. Court hold for P termination provision does not assume at-will, so it is atriable fact. D claim at will relationship because terminable for any reason interpret if terminationfor any reason, then the salary would stop. Q2: was the K fully integrated? Because not at-will, then itwas only partially integrated, sp the Parol Evidence is allowed. If fully integrated then no evidence ofsupplemental agreements because this is meant to be a full K. POINT: include an integration clause.

Defining Just Cause to Terminate

Bensen v. AJR, Inc.

How just cause clause operated. Sale of family business K agreement giving 3 reasons to terminate.Termination reason not match the reason stated on termination papers. Perhaps say nothing or the

reason is better than the wrong reason. ER defined for cause in a very narrow manner/ terms.Define cause in ways that link it back to the job.Dissent: legal hair splitting.Concurrence: not a case by termination, they bound themselves to continue to pay, really onlyentitled to Money, private ordering limitation based on terms of the K.

At- Will there is express apparent modification, what is that? Prior to 1960s not many incentives toput agreements in writing, because there was potential to enforce not express terms.Just Cause: defined narrowly, top executives is an example.

Uintah Basin v. Hardy

How court interprets undefined just cause terms when there is a just cause provision. Pg. 157-8 :balance of Er interest with Ee interest. Court rejects the assertion just cause term is construedanother way. unambiguously must be just cause. Standard pg 158: legitimate business reason forfair and honest cause, from the Implied in fact CA good Cause (Guz case).Point: Court does not get ambiguous right & incentive to define cause as clearly as possible becausenot defining cause carries risks.Three Aspects of Cause:

1. who bears the burden of persuasion [ ER D or EE P ]2. is the standard requiring objective good faith or does it require the existence of actual cause?

[Objective GF v. Actual ]3. Is the content of cause protection? Does cause include something beyond performance, eg.

Economic/ market based justifications. [ Substance: content of cause E;E performance orincluded other reasons/ broader so as might include economic downturn.

Uintah court cause:1. Burden on the Defendant, ie. ER2. Objective Good Faith & Reasonable belief [required reasonable belief, ER differential]3. Substance/ content of cause includes other reasons, is broader.

CA Good Cause (most ER friendly):Definite Term K (just cause most protective of EE, narrow definition of cause)

1. ER burden


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2. Actual cause must be shown3. EE performance

Majority View: Indefinite Term For Cause:1. Burden on D, ER2. ER has to show actual Cause3. Broader Definition of Cause

Compensation Terms

Contractual Rights to Incentive Pay

Uphoff v. Wachovia Secuties

Retention bonus promised, fairly standard in the industry because want to keep the clients when the

parent company merges. Breach of K claim: mutual assent of an oral K, court found no sufficiently

definite money terms. Promissory estoppel claim: reasonableness questions go to a jury. Look to

reliance to the detriment, measure sufficiently of promise via reliance, ie. was it definite enough to

have promise and have then detrimentally relied on that promise? (seeSchoff). Promissory estoppel:

1. Detrimental reliance, 2. D reasonable to expect reliance, 3 in justice (reputation cost, in the time of

economic peril, business decisions. Can not proceed with class act, each individualized detrimental

reliance must be proving reliance and a detriment. Issue of remedy: usually get the recovery of what

you lost, ir. The detriment, very particularized in class suit, so not a good claim to win on class action.

Compensation & Contract Ambiguity

Arbeeny v. Kennedy Exec. Search, Inc.

Dispute over commissions/ compensation. Claim: some money to be paid in period 2, but fired prior

to period 2. At will relationship is undisputed. For an at-will, without express terms. K expressly

states no commission due if EE is not employed at the time.

Because there was no express intent to deny payment on commissions retroactively earned, so pay.

Opportunism Theory: implies covenant of GF &FD that is pretext not to pay. Guz reject cov. Of GF

&FD, termination of at-will employee can give rise to challenge of the termination, however, here, at-

will termination is not challenged, rather only the denial of benefits of what he had earned earlier.

Does he have oty show bad faith on the part of the ER? termination designed to deny benefit to EE,

generally showing of bad faith is needed. Can parties use K to work around it? Can that negate

implied theory of GF&FD? Onl if there is any implied theory. However, if court view it as K theory,

hard to waive implied cov. Of GF&FD.

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

Tort based theories/ limitations. (externally imposed, therefore these theories are not waivable)


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Common Law Public Policy

Public Policy Exceptions: Why Should the Law interfere? In what circumstances should the law

intervene?

Rationale: public policy justifies intervention because of adverse affects on third parties/ the public as

a whole.

The cases are about narrowing the scope of this doctrine:

1. Ee protected from termination based on their refusal to commit an unlawful actwrongfuldischarge

2. Exercising a statutory right. Eg/ for filing workers comp claims]3. Fulfilling a public obligation. Eg. Jury duty4. Whistle blowing: reporting unlawful conduct

When case is beyond tese 4, courts are reluctant to extend policy doctrine to cover other situations.

The Sources of Public Policy: courts are reluctant to leave inquiry just to courts.

No protection |----------------------- some protection -----------------------| Lots of Protections

Eg. NY not recognize C.L. public policy public policy found in statutes,

See Murohy constitution, judiciary. Eg. Palmetier

Most jurisdictions look for sources of public policy in the constitution or statutes, rather than their

states C.L.

Public Policy Exceptions:

1. Traditional Categories New Restatement 4.02 og 185a. Refusal (to commit and unlawful act)b.

Exercise of a statutory rightc. Fulfilling public obligation (eg. Jury duty)

d. Whistle blowinge. Catchall/ ER conduct shocks the conscience

2. Sources : a spectrum in terms of what they are willing to recognize as a viable source.3. Federal vs. State Law , a split authority4. Public is it sufficiently important/ substantial?5. State of mind requirement6. Internal vs. External reporting as limit on public policy doctrine.

Public policy exceptions to the AT Will doctrine are based in tort theory. For reasons of public policywe interfere with relationships between EE and ER, because interference is justified on need to

protect certain public policy that are threatened when the ER terminates the ER/ They are

unwaivable, possibly narrowed, nut not waived. Three is tension between when to extend

protections of public policy as opposed to in what circumstances intrusion is not justified.

Fitzgerald v. Salsbury Chemical, Inc.


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What acts of the Er might violate public policy? An Ee was fired because he had given deposition on

another claim, and the other EE has exercised a public obligation by answering truthfully in the

deposition. Source of public policy Clear & Well- Recognized. Looking at statutes, and the

constitution. The court did not decide if judicial decisions/administrative rules are sources of public

policy. Federal vs. state law: some states limit public policy sources to state law because of the

notion that it s a state Common Law Tort theory. Claim 1: there are specific statues that prohibitretaliation based on not agreeing with the decisions to terminate another EE/ but there was no

public obligation/ other tradition categories. Court was not willing to expand beyond the traditional

categories, so this claim failed. Claim 2: Court recognizes possibility that there is a viable public policy

violation so the question should go to a jury. ER intimidation creates a chilling effect because of the

same underlying concerns. Causation: has a very high standard. Determinative factor, similar to but

for causation.

Elements for Wrongful discharge claim:

1. engagement in protected activity2. discharge3. causal connection between the conduct and the discharge.

Note 5 pg 196. Policy must protect the Public. The violation must affect the public, many jurisdictions

only find public policy when it is Well Defined and Substantial.

Note 7 pg 197. Whether or not something is a public policy related conduct is a questions of Law. The

Judge decides. Which branch of Government should decide Public Policy? Separation of Powers?

Murphy: Common law creates law. Court say cant impose limits on the C.L> at-will doctrinewhich

is odd, according to Glynn.

Note 8 pg 197. Tort vs. Contract? The state of mind requirement.

Subjective Good Faith | --------------| Objective Good Faith |-----------------------| Actual Violation

[objective GF = reasonableness standard= EE actually & reasonably believed. The majority]

note on Attorneys: are they protected like other EEs? Courts are torn because independent

obligation not to engage in unlawful conduct. Some courts give attorneys robust protections. Illinois

historically has provided NO protection for attorneys despite leniency in finding sources of public

policy . NY is the converse.

Rackley v. Fairview Care Center, Inc.

Utah recognizes public policy exceptions when they are Clear & Substantial. Public policy is clear

if it is plainly defined by one of three sources: (1) legislative enactments; (2) constitutional standards;

or (3) judicial decisions. Public policy is substantial if it is of overreaching importance to the

public, as opposed to the parties only. The court does not recognize administrative code as a

source of public policy. POINT: which sources are clear & substantial. Is the source of public policy of

the kind sufficient to support the claim? The Utah code is too broad because it is not clear and not


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specific, not directed to this particular issue/problem. Court indicates that Federal Law can form the

basis for public policy. The administrative Code & the Federal Administrative regulations are NOT

recognized as sources of public policy, though they seem to be right on point, because there are not

a proper source of public policy. Unless the legislation clearly recognized, and here it was not the

purpose of the administrative regulations, the purpose of those codes/regulations was not to

support the E;E. Though there may have been an actual violation, it was not enough to claim publicpolicy.

Statutory Public Policy

CEPA NJ statutes. Creates whistle blower protection. Includes both internal and external reporting,

needing a reasonable belief and objective good faith, open in terms of sources.

See pg. 212 &213.

Why higher standard for refusal or whistleblower? Refusal has more gravity. If you can do refuse,could harm workplace so more disruptive. When you refuse to do something, it shuts down the

business is not economically efficient, however, reporting does not create as much harm because is

does not shut down the work.

The refusal theory is broader than whistle blowing.

CEPA contains internal exhaustion. Note 2. May create reputations harm to ER because EE may be

wrong and actual costs associated with an investigation.

EEs have duty of loyalty. Seeing an ambivalence of whistles blowers, rarely win in court.

Maimone v. City of Atlantic City

Supervisor stops prosecuting prostitution, so the detective gets demoted to patrol. Detective claims

Adverse employment retaliation. Must show that his conduct was protected and it was the cause

of the adverse employment retaliation. Is this a whistleblower case? No. Was he fulfilling a public

duty? No affirmative duty fulfilled. Was he exercising a statutory right? No. was there refusal to

commit an unlawful act? No. was there an unlawful act? No. So, this lies outside the scope of

categories, really it is an objection case. The NJ statute is broader than the traditional categories, so

the definition of whistle blowing is VERY loose. The detective was objecting to a policy of the

department. 34:19-3(c )(3) the catchall. Object to and refusal claims in NJ are broader than

traditional whistleblowers. There is not internal exhaustion, only applies to whistle blowing to

supervisor.

Issue: is there a clear mandate of public policy subject mater of the Ps objection implicated public

policy. POINT: clearly public policy is implicated.

Dissent: policy should not be dictated by one officer, there is an allocation of resources and

decisions.


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Note: there is an ambivalence, increasing number of protections but when it comes to enforcement,

very few EE Ps win.

Collins v. Beazer Homes USA, Inc.

Protected conduct must be a contributing factor. whistle blower under SOX. Federal court. 1. Where

you see disclose based regimes, frequently contain the most far reaching whistle blower. 2. WhysSOX case? Alleged misconduct of company paying bills because friends, ie divesting corporate funds,

so SOX is super broad, but shareholders are affected, bec publicly traded firms often implicates SOX,

so long as it has a material affect. Hold: fell within protection . Causation: failure to communicate

with supervisor and temporal proximity.

Chapter 5: Traditional Torts in the Employment Relationship

1. Intentional interference with Contracta. Address circumstance when 3rd part unjustifiably interferes with a contract/business

relationship between 2 others.

2. Defamation3. Intentional infliction of emotional distress4. Fraud

Where physical injury is involved generally workers compensation, so no tort based claim. Dealing

with non-physical injury cases. Negligent Infliction of Emotional Distress. NIED

When can you treat one who is within ERs as a 3rd party? That is what troubled Easterbrook.

Easterbrook said greed is not a motive. Whether or not the action is privilege, then solely for the

benefit of ER, so cannot give rise to tort.

Easterbrook Point 2: what might be personal motive could be a collateral matter, suggesting he

categorized improper motives as VERY narrow.

Pg 245: Restatement: claim against new ER by old ER.

3 types of jurisdiction:

1. small number of jurisdictions simply do not recognize tort, dont consider supervisor as a 3rdparty.

2. There cannot be interference of supervisor unless the sole purpose is furthering a personalend, usually acting within the role of supervisor.

3. Might allow recovery in mixed motive, might allow for but for causation.


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Intentional Interference with Contract/ Employment Relationship.

1. a 3rdparty. Eg. Competition between ERs to ER claim sue 3rd party for intentionalinterference

2. allegation 3rdparty, EE bring claimCourts refer to relationships, not K, so includes at-will EE.

Kumpf v. Steinhaus

P claim intention to cut out P via merger. Business Judgment Rule: limit to board of directors

decisions, not exactly what we are dealing with here. Interested parties involved. Reason: flood

gates issue. Not really involve 3rd party. Conceptual difficulty: when and to what extend do we treat

supervisors acting as supervisor as a 3rd party? How to deal with multiple motives.

Defamation

Restatement (3rd) of Torts 6.01 (draft, 2009):

Elements of Defamation:

a. false & defamatory statement concerning anotherb. an unprivileged publication to a 3rd partyc. fault amounting at least to negligence on the part of the publisher; andd. either actionability of the statement irrespective of special harm OR the existence fo special

harm caused by the publication.

Government Micro Resources, Inc. v. Jackson

Alleged defamatory statements must be false & defamatory. Statements made to a 3rd part,

publication is met, not have to be in writing. When hired, at less pay because dismissed for

defamation. Where the statements false? If the statement was meant to be a fact, then yes.

Fact vs. Opinion: loot at context: factual presuppositions, opinions that contain certain factual things

could be falsified. Statements of fact must be false. True statement = absolute defense to

defamation theory. Defamatorytends to harm ones reputations in the industry.

Proof of actual Malice: to get punitive damages you need intentionally / knowingly false statements.

More than proving negligence.

Fault requirement in VA would be satisfied with a showing of actual malice deliberate interference.

Actual Malice is the standard that normally applies when there is some qualified privilege. A qualified

privilege can be overcome by showing of actual malice.

Often ERs say not a good fit to protect ER, or Creative differences.

Notion of Compelled Self-publication: narrow doctrine. See p g 260. Note 4.

Privileges: qualified: based on Public policy and the interest in the community and furthering public

policy interest, etc.


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Opinion vs. Fact in defamation context: falsified facts underlying an opinion leads to defamations.

There are few statements that would constitute pure opinions. Dont lie x might not be falsifiable,

if the opinion is based on true statements, then it will not support defamation. Defamation is often

pled, but not often successful except in cases of harassment or privacy implications.

The work environment might change expectations of works. The level needed for outrageous

behavior.

NEID: Negligent infliction of emotional Distress:

1. need to show physical manifestation of emotional distress. Might mean its a workerscompensation case depending on the jurisdiction.

2. Must be with in the zone of danger of physical injury/impact.3. He/she negligently placed in the zone of danger reasonably feared fro safety, suffered

emotional distress with attendant physical manifestations

Fraud

Shebar v. Sanyo Business Systems

Knowledge belief in falsifying. Promissory estoppel. P must establish falsity of statement and the

persons understanding of falsity AT The TIME it was made. Tort theory of Fraud: very different from

making a statement inducing detrimental reliance that was not intent to defraud. Need actual fraud

at the time to get punitive damages for fraud even thought the Promissory Estoppel standard is

easier to prove.

Note 5 pg. 280: more general statement can not support theory of representation like not giving

accommodations.

Chapter 6: Workplace Privacy Protections

Five circumstances when privacy implicated in the workplace:

1. test2. ?3. monitor surveillance4. regulate offsite conduct5. revelations of private matters

Basic framework of protective privacy interest as same for all 5 scenarios:

1. Sources of protections2. Framework


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3. Deference/ balancing: EE vs. ER interests4. Private Ordering/ Ks

Sources of Privacy Protections

Constitutional Protections

City of Ontario v. Quon

Police officer texting on government phone. Source of protection: 4th amendment. Communications

Act, federal govt (all they need is consent), CA constitution interpreted to apply to private

employers [Quon can be applied in the private sector].

1. was a privacy interest implicated? Whether or not reasonable expectation of privacy existed?[4th Amendment only protects if there is a reasonable expectation of privacy]

2. was the intrusion/search/test/ monitoring reasonable in light of the circumstances?Kennedy: policy of auditing: court looks at Operational Realities, a contextual approach. Would Phave a reasonable e expectation of privacy? .Contextual approach- overtime likely that reasonable

expectations of privacy will diminish. ER can say the EE has no expectation of privacy. The ER via

private ordering can eliminate reasonable expectations of privacy.

Scalia: norm in the private sector might influence with reasonable privacy expectations in public.

Categorical Approach toward reasonable expectations of privacy.

1. brightline rules may lead ER to be on notice, so if they to avoid, then they willp change thework place to conform

2. pracices today and juges perceptions today will drive determination of whethoer or not thereis a category protected.

While approach might lead to more or lass protection? It is hard to say. Most courts apply

operational realities, though this is not efficient because it is case by case. There is incentive to ERs

created to put policies into place that reserve the right to monitor at anytime and engage in

monitorint to ensure that there is NO reasonable expectation of privacy.

In Quo, the ER made the mistake by encourgaign the EE to believe the text messages might be

private.

Reality, in practice, is that often the approach is a categorical one.

Special needs exception to the 4th Amendemnt arises for drug testing in schools and helps deall with

warrant requirements normally to intrude if they have probable cause.

Standard: ER must articulAte a legitimate work related rationale


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Intrusion/means can not be excessively intrusive. Intrusion/methods/means must be related to the

reason for the intrusion. A reasonableness standard sets a low bar. The 9thcircuit least intrusive

means was too onerous a burden according to the court.

Leeway/deference is given to government agencies at ERs. The government agency is a regulator

and law enforcer, they have performance standards, and the government needs fort he work placeefficiency and the need to protect the tax payer.

Sometimes the 4th amendment gets applied to private parties because of the nature of state laws.

Oconnor and Quon after apply to private parties.

Electronic cummincaiotn: whether or not there ought to be a right to privacy on the ER provided

equipment? Is it a dead end issue? Why should protection extend to the ER provider equipment?

Note: Novacel is alone in using the frist amendment speech as a course of private ordering.

Sources: federal constitution, state constitution, statutory, tort (PP, intrusion upon seclusion),

contract.

Framework : Quon 2 step inquiry

1. reasonable expectations2. was the intrusion reasonable ie. legitimate work related justification and whether or not

there was reasonable means employed.

Balancing/ deference

Private ordering

Greater privacy interest at stake, there may be more scrutiny.

Borse v. Piece Good Shop.

Allege breach of privacy, urine test for drugs. Current employee refuses to take the drug test. Public

policy? Generally limited tort to clear and defined public policy. P claims the sources of public policy

as: 1) US constitutions providing reasonable expectations of privacy over bodily fluid, us constitution

protects against government actions not private actors, 2) state constitutions, 3) PA common law,

tortuous invasion of privacy, intrusion upon seeks. PA takes a broader approach to finding public

policy for protecting privacy because only neef common law, not specific statutory/ constitutional

sources. Was it highly offensive? that is a question for the jury. Need an intrusion, in the case at

bar, there was no intrusion. Link tort claim to the instruction doctrine. Catch 22: if consent, then

defeat the reasonable expectations or reasonableness of the intrusion, or ig not consent and not

pee, then there was no intrusion to be upset about. The catch 22 arises when courts are not willing to

broaden.

Intrusion Upon Seclusion Tort: (Borse LAF)

1. ) must establish place of solitary seclusion or private affairs. Concerns


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2. substantial and highly offensive intrusion to the reasonable person . Ps burden.More deferential or same as Quons objective standard? Very similar.

POINT: here P may be entitled to damages for alleged wrongful discharge.

Notes give examples of the exceptions.

If the jurisdiction requires 3rd party impact/ harm to society, one could argue intrusions in the workplace do not et protection because they are not a 3rd party, but allowing no direct 3rd party harm,

possible public benefits.

Many statutory Protections have gaping holes. See pg. 320

Private Ordering exempts protection of privacy.

Polygraph Act generally bars use, general prohibitions.

GINA Genetic information non discriminations act, few ERS engaged in genetic testing

ADA- reasons to protect privacy.

Contract Privacy Protections

Rulon-Miller v. IBM

Alleged discharge because dating competitor. IBM large company, long term EEs. Implicit

contractual relations, Watson Memo policy, theory comes from implied in fact contract theory,

based on policies and procedures of the company and continued adherence to those policies. EE is

not likely to wi in a handbook case because ER can have clear disclaimers of at-will. Even if let cause

for ER to discharge, do they need to show ACTUAL evidence of harm or is an inference enough? Eg.

Of K protections: collective bargaining agreement, just cause clauses, implied in fact contract

(handbook)

Balancing: how much deference is and or should be accorded to ERs engaging in intrusions where

there are expectations of privacy?

National TEsaury EEs unions (customs) v. Von Raab (1989)

Searched only be reasonable; deferential standard to ERs. Court said overbroad, as to those with

firearms, engaging in direct activity. Then government interest was enough.

Preventable potential harm is greater then infringement of rights, lower expectations of privacy,

but still expectations of privacy.

Dissent: need compelling reason and problems concerned about in order for government.

Point: how much do we defer to governments articulated interest, or do we make them show

problems to be able to infringe?

Limits to Consent?

Feminist Womens Health Center v. Superior Court (LA)


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Cervical self examination demonstration. Extent to which, if any, there are limts to conse. Goes: to

demystify womens body and health, de-medicalization of the issue, claim it is central to what they

do.

1. Implicates a sphere of privacy (operational realities, dimisnished expectations- clearreasonable expectations of privacy)

2. Is the intrustion reasonable?Note: Quone: private ordering can affect the sphere of priacasye, then wehtehr or not reasonable

expectations of privacy exists. Qoun really focuses on reasonable expectations of privacy, Van

Raab suggests even if reasonable sphere exists, it could be diminished.

Source: CA constitution articulates public policy, so can bring case.

Framework:

1. Legally protected privacyright2. Reasonable expectationsof privacy in the circumstances3. Conduct by defendant constituting serious privacy invasion

Balancing of what serious invasion. Cervical slef-examination not absolutely necessary but court

acknowledges historyand mission of the centers reputation of cnaodr.

Court: says consent exists, however here it was a reasonable condition of employment pg 363.

Serious privacy interest, meand may not have been close enough. YET Consent Tumps.

Point: Shows how consent can trump/prevail in showing that an ER is reasonable. Consent renders

the intrusion reasonable.

Whether intrustion is reasonable may depend on context: when did consent occur? Applicants vs.

EEs already hired. Close tie of invasion of privacy to mission.

Potential limits:

1. Clarity2. Positions of person agreeing- applicant vs. EE3. Nexus4. Alternative means5. Shocs the conscience6. Let the market regulate (bargaining power)7. Form of consent (written?)

Monitory risk related reasons, part of general expectations.

Should there be a Rigth to privacy in the work place? What types on autonomy interest should be

protected and how?

Chapter 7: Workplace Speech and Association Protections

Course issue is even greater.


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1. Very few protections in private sphere (except statutory and state level) in public spherethere are more protection

2. Balancing competing interest if ER and EE to what extent do courts actually engage inbalancing, or do they adopt a categorical approach

3. Trajectory toward greater deference to ERDisputes arise from :

1. EE speech at or related to work context2. ER regulations over coercion of retaliation for EE association religions etc associational

preference

3. ER response to attempted regulations of EE speech/ expression on the outside of work related to work, reference work, non related to work.

Speech:

Source of speech protection

Connick v. Meyers (1983)

Transfer, oppose transfer, sent questionnaire to colleagues, district attorney office. Claim that

speech of survey was protected. Speech in the work place. Frame work : 1) matter of public concern?

EE burden, 2) balancing EE interest v. ER interest in efficiency- ER burden to say disruptive, justified

interference with speech

EE bear burden of showing matter of public concern

ER bears burden of showing distruption is to great as to justify interference with speech

Howe much deference to affor dot eR? Crsical issue. Hereh, level of public concer was low because

other questions address how the office is functioning internally. Could undermin the publics faith in

justice sytem, need braoder social significance.

Mostly internal grievance, so court usesd the balancing. ER did not need ot show tha EES actions

caysed distruptions, not a rigorous standard.

Pg. 370-1, N.2. mere internal speech may not be a matter of public concern, however internal speech

CAN be published speech to outside public.

Snyder v. Phelps.


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First amendment shields tort liability from picketing outside funeral. Dpend on whether speech

conerns a matter of pulic concern. * contextual inquiry, content from and contenxt of the speech.

Despite direct of speech, it was about matters beyond a particular soldier.

Guinere 131 S.Crt. 2488 (2011)

Repition clause, claim that retaltions against him violated the petition clause, court applied speech

framework to the the petition context. As a general matter a petition filed in an internal system will

not trigger public affect , not involve a matter of public concern. Law suits are distruptive to ER , so

even if a matter of public concern involved , then still may be hard for P to overcome.

Courts tend to focu on strength of ER efficeny claim. Efficiency viewed more important than matter

of public concern.

Connic viwed as limiting speech. No EE friendly; however the framework is more protective than

post- Garcetti.

Garcetti v. Ceballos.

DA defense attonry find affidavit incorrect. Speech addresses public concern becase Government EEs

justice and truth, goes beyond the internal system bec affect the external; about the integrity of

law enforcement. The seech was kept internal, not publicized to public. Speech within the official job

duty is not protected even if it invoices matters of public concern.

Narrows the protected speech at or realted to work. Speechnot within the official duties (eg. Rankin

Case). Promotes more disruptive speech external, but then the ballacnign issue; gate keeping bydrawing the ilne of official dutiesmore efficient.

Narrow to look at what thee is actually expected to preform; there are other Statutroy claims that

could prevail.

Dissent: constitutional analysis shoud not depend on statutory interpretations.

Majority: when speaking asnan EE, acting as an egeny of the government, agency principels apply.

Abalcning: court moves away from balancing because it its highly protecteive.

Dissent: says balancing is highly deferenctialto efficiency and effecieincy of the ER.

Hwoever, the notion that the categorical rile that flows from the balancing of interest leave ad hoc

balancing in favor of categorical rule.

Who gets to decide what is realted to work and what is not?

Higher ranking official shave less protection because more likely to be distruptive.


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Sexually explicit expression vs. embarrassing political expression?

Private order: ER could expand duties, thus decrease speech, eg. Require report internal not

protected.

Speech Outside Work:

Offsite conduct speech does it need to be a matter of public concern? Or more broadly protected

because no work place connected?

Where is the circle drawn?

If we determine speech is beyond the circle, what government interest is enough to interfere? Can

the government ER regulate and how much scrutiny/ deference should it be given?

If speech is not a matter of public concern, then speech is not protected. Should we limit private

ordering to some extent? If unrelated, the framework is unclear and tends to be a form of balancing.

Speech that needs the most protections is often the most offensive. Does private ordering play a

different role with different natures of employment? When can EE expand circle of related public

interest. If not related to work place, if speech then only protected if matter of public concern. If

matter of public conern, the level of scrutiny is not clear. No clear definition of where the Related

circle iswhat constitutes public relatedness, if public relatedness is subject to private ordering,

then the circle of relatedness may be expansive.

Collecting bargaining agreements may protect speech.

Hatch Act pg 409

Private Workplace

1st amendment does not apply. Source is a big questions less protections.

Emondson v. Shearen Lumber Products

Expressive activity: associational political activity. P claim the Idaho Constitution as a source. Publlic

Policy Claims try to link public policy to the statutory/ constitutions as source. No alternative sourcewas available. POINT: Novasell based theory of public policy tied to state constitutions is a dry whole.

Dissent: such a theory of public policy will chill political speech, and find cause of action for narrow

exception.

Note: Borse case: drug test, parallel analysis, use the intrusion upon seclusion tort.

What if without protection certain interest will affect the legislative process expect for voting?


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Federal Labor Law. 8A1 pg 413. Protections only applies to certain categories of speech, ie.

Workplace conditions.

Contracts: Rulon Miller Case is an example. Collective Bargaining agreements, professors tenure at

private institutions.

Chapter 8 : Protections for ER Interest.

1. Duty of loyalty (agency/fiduciary based)2. Trade Secrets3. Privately ordered terms (restrictive covenants, covenants not-to-compete)4. Intellectual Property Rights (inventions, creative works,

Themes: non competitions agreements is most contentious because other protections are very

narrow.

POINT: optimize competition. Protections creates incentives for Research and Development.

Interest in competitions cuts both was for EE and ER because we want progress, competition, but

also incentivize R&S, confidence in investments.

Doctrines may overlap, individual facts are critical. Fairness considerations often trump.

Duty of Loyalty

Scanwell Freight Express v. Chan

Claim breach of fiduciary duty for conspiring to breach fiduciary duty at will EE.

(pg 433). May not compete/ act contrary to ER interests. Prohibits against competitors, usurping

corporate opportunities.

Limitations on the duty of loyalty. Privilege for planning and preparing to compete. When does

planning and preparation end and competition begin? Policy issue of encouraging competitions.

(notions of honesty and Good Faith/ Good Will). Vulnerabilities of principles to agents, information

asymmetry, contacts. Punctilio of honor (meynhardt v. SalmonI miss BA) business opportunity.

1) EE may not act contrary to ER interest nor in direct competitions, however, may plan andprepare to compete.

a. Distinction between mere preparation and actual is difficultb. Amount vulnerability and rigor of duty may vary by nature of EEs position.

Not able to solicit other EE to join, but you may inform other EEs you are leaving. Cannot compete

for customers but can inform them you are leaving. Informing customers/EEs you are leaving, but

must also inform your ER because must give ER opportunity to compete on fair ground.


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HOLDE: erroneous instructions because they aggregated making arrangement sis not PER SE

preparations, could be either planning and preparation or competition against new ER.

NOTE: theory of conspiracy against new ER is like a tortious interference with K, so can be held liable

for tort.

Remedies: duty of loyalty carries remedies beyond normal K, when breach shown often much

disgorge benefits. Sometimes shift burden to D EE to show that DEE did not contribute to the

harm/causation.

Limitation: once the relationship ends, so does the fiduciary duties for at will EEs, which is why non

competitions agreements matters so much.

Non-Competition Agreements (NCA)

Post-Employment Restraints on Competition

Non solicitations/ non-disclosure

narrower

The more narrow the prohibition, the more likely it will survive scrutiny.

3 approaches.

1. Blanket prohibition of NCA. CA, ND, complete bar. NCA are unenforceable because it hinderscompetitions.

2. Restatement f 2nd of Contracts. Most jurisdictions. Enforce NCA only under certaincircumstances, only enforce the reasonable terms.

a. Must protect legitimate interests to be furthered by NCAi. Cannot be that competition would occur, must be protecting anotherinterest.

b. Then NCA must be reasonable in scopei. Substantive, ie. Scope of activity

ii. Geographiciii. Time

c. Note: very fact sensitive, huge variations on what is permitted.3. Treat NCA as a K

a. Posner Approach, Chicago School. No jurisdiction takes that position.Outsources v. Barton (Illinois)

EE opened competing business contrary to NCA. Majority: enough for a preliminary injunctions, real

power is through injunctions.

Illinois law governs. View extremely narrowly. Only enforce NCA when:

1) near permanent relationship between ER and long term customer,2) confidential information of ER.


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Here, no showing, so majority got it wrong and erred because of Ill. Law. Posner: generally things

NCA should be enforceable, per ordinary K principles. Abandons the historical hostilely to NCA, and

simple enforce them as Ks, part of the underlying policy debate regarding social benefits.

Ren Metals v. Logan

Metal works, left when refused pay increase. ER claim very high loss (25K) because of Logans

performance ability. Signed a NCA not to work for 6 months. Courte: because what the ER taught

him was not a secret, not enforceable. Human capital. General training can not be considered a trade

secret. Losing s killed hard worker is NOT a legitimate interest. If we allowed training to provide

reason to constitute a legitimate interest, then EVERYONE would use it. However, differentiate this

case from training of a unique set of skills, costs often born by ER.

Enforcement of Non-Compete:

a. Fiduciary dutiesb. Trade secretsc. Protecting invention, copyright

Most jurisdictions enforce NCA when:

1. Legitimate business interest2. Reasonableness of scope,/substance, time and geography.

Enforcement in context when court finds NCA non-enforceable. See note 8 pg. 483.

1. Reform2.

Blue Pencil (enforce reasonable terms and strike other terms, making the K invalid.)3. All or nothing

Other jurisdictions whether or not non competitions when EE terminated the relationship

voluntarily? Was there a valid K? consideration? All Pats case.

Advanced Bionics v. Medtronics

(indicates where the area of law is going). Choice of law, choice of forum generally enforce unless

unduly burdensome.

Agreement had choice of law clause. Choice of law going to apply in circumstances when it does not

defy important public policy, given CA doctrine on whether or not CA finds them enforceable. Filed in

CA to contest the CA policy violated CA public policy on NCA. CA law says that NCA are

unenforceable as a categorical rule. Min. Law uses a reasonableness standard. Which state has a

greater interest in deciding the question of unenforceability? CA prohibits NCA as a matter of public

policy. Why should CA care? Because that is how CA attracts ERS from other parts of the country, and

EEs. Enforcement of the K would be in CA, so CA has an interest in the matter because seeking ot

regulate conduct occurring in CA. Ultimately both states have an interest. Sought ot bar suit in Minn.


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Minn aggressive in trying to prevent the CA actions (note: the case was filed in CA first). Both Courts

misbehaved. Violation of R. 11, to remove the case to federal court to prevent the temporary

restraining order, ie. Interum relief, delay CA, federal court then removed the case to state course.

Upheld the temporary restraining order, all courts have the same power to protect their jurisdiction.

CA supreme court says should not issue TRO fore respect and comity of the other state. A race to the

courthouse and race to judgment which needs full faith and credit. POINT: risk management throughuse of multiples contractual provisions. More likely that a K with arbitration clause that the

arbitration clause would be enforces.

Relief sought: injunction to stop the other court. Injunctions are all about stopping the competitor

and arbitration takes too long, so ERs do not usually include arbitrations clauses.

Innovation in Contract Drafting

Heder v. City of Two Rivers

Fireman, training to be repaid 3 years, fireman quit at 2.5 years and the municipality withheld the

package. ER reason: not restricting the former EEs ability ot fight fire elsewhere. Then no a covenant

not to compete. If NCA then enforceability depends on reasonableness. If not a NCA then general K

law governs so more likely to be enforce. Key feature in determining if repayment provision is a NCA.

1) is the competition somehow defined? Repayment provision no affected by post employment type.

2) even with anti-competitive effects, damped because not restricted in what former EE could do

next, additional training than required, so the EE benefited with a cost to the city. Limited by 3yres

within employment. Point: might have some anti-competitive effects, but less onerous than othermodes of anti-compete. Note: eg. Of bonus which vests in the future, arguably less onerous than

NCA.

American Consulting v. Schuck

Step down reimbursement schedule. Court: liquidated damages or employment penalty? Find:

penalty clause, so court could not enforce it. Critics limitation on liquidations damages: does not

treat it as Non-compete clause. Concern about liquidated damage clause because actual damages

could be much less. Court: cost of what paid EEs is far below. Provide less protections, but liquid

damage are more likely to be enforceable. Confidentiality agreements more likely to be enforced

because not create anti-t competitions conditions. Defer compensation that does not vest until later

incentivize workers to stay. Eg. Use of stock as compensation and automatic need to sell at the

time of EEs leaving company.

Chapter 9: Antidiscrimination


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1. Individual disparate treatment2. Federal protections:

a. Title VII of 1964 Civil Rights Actb. Section 1981 (race/protected classes)c. ADAd. ADEA age discrimination

3. State laws supplement federal protectionsPolicy Disputes and Tensions:

a. Why?b. Economically make sense?c. How to define discrimination?d. What are the best methods/ means of addressing effectiveness?e. Intent to discriminate? Meaning?f.

Stereotypes?g. When should facially neutral hiring/firing practices be deemed discriminatory?

h. When is disparate impact discrimination under laws?i. To what extent does/should law conform?j. Unconscious forms of discrimination?

4 Models of Anti-Discrimination Law:

Protective:

1. Disparate Treatmenta.

Claim of different treatment based on status, where status was a motivating factor,and intent.

2. Disparate Impacta. Facially natural policy having a discriminatory effect

3. Harassmenta. Circumstances when one or more persons create hostile work environment based on

persons status.

Active accommodations

4. Reasonable Accommodation:a. Protect certain class by requiring ER accommodating, affirmative mandate as

opposed to protections. Eg. ADA

Disparate Treatment


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Slack v. Havens

(4) women, black, terminated because they had to do laborious heavy cleaning, white women not forced

to do that cleaning that day. . at-will EES. If they were cause EEs, cause would be insubordination. Only

ERs are prohibited from discrimination, must show the intent of the ER by their condoned conduct.

Discriminative motive: often to question of supervisors motive. Evidence: transfer of white EE andcomments of supervisor statement not reflect animus/hatred, rather reinforcing a stereotype.

Circumstantial evidence of discriminatory motive. Similarly situated employees treated differently

evidence supporting the inference of discriminatory motive. What are similarly situation EEs? How clear

are the job duties defined? POINT: can action upon stereotypes be a discriminatory motive? YES! You

dont have to show animus to show a discriminatory motive.

Hazen Paper v. Biggs

Note 8 on Pg. 516. ADEA protects only those over 40yrs. What does age discrimination mean? EE

denied vesting of pension benefits which tie in with age. While pensions vesting correlated with age,

mere correlation is not enough (might have ERISA claim but not ADEA), where there is a mere

correlation, ti is not enough. Eg. Senior EEs paid more and terminatedis that age discrimination?

No because cutting costs is not age discrimination. Just because there is a correlation, not

necessarily discrimination, there might be a disparate impact though.

Eg. hipness in media context: to what extend is it stereotyping? Matters correlating with age do

not per se mean discriminatory motive.

Proving Disparate Treatment:

Must have discriminatory motive.

1. Smoking gun evidence of animus (rare)2. ER policy that creates a blanket discrimination base don stereotype (rare)3. Comparative evidence what is an appropriate comparator? See Ash case N.4 pg. 523

McDonnell Douglas Corp. V. Green

P claim reason not re-hired was because of his race. ER argue their reason was the stall-in. Judges

Finder of fact until the 1992 Act, then there was a right to a jury.

1. Minority2. Applied3. Rejection, positions open and seeking other applications.

Ps burden for a Prima Facie Case:

a. Belongs to a protected classb. Qualified (only minimally, not need to show you are more qualified than others)c. Adverse employment actions (eg. Failure to hire/promote)


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d. Other circumstances suggesting discrimination. See N.1 &2 pg. 520.Factors in the aggregate suggest discriminatory motive. Court suggests it should be an easy burden

to overcome to eliminate the most common reason adverse employment actions (not qualified ,

etc).

ADA have to be disabled. Who is covered? ADAA broadened the definitions.

Once P establish the Prima Facie Case, Ds burden:

a. Show a nont discriminatory reasons for engaging in the adverse employment actions.The reason could be bad, but not one that is discriminatory.

Presumption of P, if D does not rebut, P wins.

If D bears the burden, the P bears the burden that the reason was pretextual, ie. Reason offered was

not the real reason. The ultimate burden of persuasion is on the P. P can also show that while thestatement by D may be true, but evidence suggests it was not the real reason.

Why might evidence of pretext plus adverse employment action one can infer an underlying motive/

inference.

POINT: guide the lower courts in thinking about when one can infer.

Notes:

Burdine & Paterson cases: court suggest that if ER not come forth with non-discriminatory reason,

then judgment for P.

St. Mary v. Hicks pg 531.

1. ___2. Burden of productions, not persuasion3. P burden of persuasion

Once pretext is proved, P is not entitled to Judgment as a matter of law because the finder of fact

could still reject the notions that the hidden reason was really discrimination. Trier of Fact does not

have to infer Pretext means discrimination necessarily.

What is sufficient to create a fact question?

Hicks said that reason was false and that discrimination was the real reason.

Three circuit Types:

1. Pretext Plusa. Pretextual reason and other circumstances that real reason was discrimination.


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2. Pretext Alonea. Enough to get to a jury

3. Middle Approacha. Prima facie case ANDb. Evidence of pretext MAY be enough when combined to infer a discriminatory mode.

Pre Reeves:

Scenario Pretext Plus Middle Pretext Alone

57 year old, fired, drop

in productivity, but

tope 50%, hired a 28 yr.

Need more to tie

evidence that the

reason offered was not

real reason and hidden

underlying reason was

age and not something

else.

Probably get to a jury Gets to a jury

43 yr old, fired after

2yrs and hires a 35 yr

old. EE was in top 50%

No jury, maybe the

reason was something

else

No jury because hired

when older

jury

Reeves v. Sanderson

Adopts the middle approach because the facts differed here, the pretext was enough to show

discriminatory intent, but it is not ALWAYS enough, according to the court. In reality it was a pretextplus. PF case: Age, qualified working 40 year, fired comments and additional evidence he was

replaced, D reason: not recording times sheets accurately. Pretext: not true:

Ginsburg: concern that most of the time PF case and pretext is enough but acknowledges that

sometimes it may not be.

Court does not suggest that to prove discriminatory intent one must bring evidence beyond pretext.

The pretext plus circuits added evidentiary burden to Hicks.

Disparate Treatment

1. Individuala. Motive/ motivatingb. McDougal/ Burdine/ Hickes (Reeves)

i. PF case Ps burdenii. Non discriminatory reason Ds burden


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iii. Pretext Ps burden2. Systemic

a. BFOQIndividual Disparate Treatment

Note: on adverse employment actions. See quote from Reeves on pg. 536. Middle or pretext plusapproach, suggest pretext plus approach was wrong the whole time.

Frequently PF case and Ps persuasion regarding the pretext is enough. Juries are simply instructed

to determine if race, sex, national origin was a factor. Juries do not go through the burden shifting

analysis.

Ash case (see notes) what kind of comparator evidence was needed? How similarly situated were the

parties?

Patter of the Supreme Court rejected district court overly restrictive approach, but does not give

much guidance of how to go forward.

PriceWaterHouse. V Hopkins.

High review for her work. P evidence that show as not famine enough sex stereotyping. Having

sex stereotype of men held against women. Evidence that sex played a role is strong evidence. Ds

argument: even if gender was a motivating factor, it was not the ONLY factor. Burden of persuasion

shift to D when mixed motive because establish a breach of duty not to discriminate. Affirmative

defense based on causation. Even if breach, because same decision, breach did not cause the harm.

However, burden of persuasion shift to D usually burden stays with P. Burden of D to show lack of

causation.

Point: confirmation that decisions based on sex stereotyping by ER is intentional discrimination.

Justice Occonnor concurrence: control suggest that P burden that sex not just motivating factor,

but a substantial factor. Narrows the universe to which price water house defense may apply, only to

direct evidence cases.

Separate framework for Direct evidence cs. Circumstantial evidence, only need to show that

discriminatory motive was one of the factors.

Post 1991 act , only use price water house defense , the court may grant fees, but not damages.

However, 1991 act did not resolve whether or not treat direct evidence case vs. circumstantialevidence case as different.

Desert Palace v.s Costa:

Supreme court. Jury instructions: sex only has to be a motivating factor, burden shift to the D. issue:

whether or not instruction should have been there because there was no direct evidence. Supreme


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Court: direct Evidence if discrimination is not required under mixed motive case. There is only one

framework, regardless the defense is available.

Glynn thinks that the Desert Palace does not get rid of McDonald Douglass framework.

Can prove discrimination through direct evidence and circumstantial evidence. Reeves may give the

minimal standard . What about statistical evidence?

Price water causation defenses only as a defenses to damages not to liability.

Inference of discrimination via direct evidence, circumstantial evidence of motiving factor,

comparator evidence.

ADEA Gruss Case: under difference standard. P burden discriminatory motive was a determining

factor, ie. P bears burden of showing that AGE was THE determining factor. Ps prima facie case.

Systemic Disparate Treatment

Discriminate as part of ER practice.

1. Formed express policy BFOQ defenseaffirmative action?a. ER need a viable defense: Bona Fide Occupational Qualification. Limitations it its

application. No BFOQ based on race.

2. Showing a pattern and practice of discriminatory behavior.a. Use of statistical evidence to show actual treatment of P group, ideal treatment of

that group, compare the two showing a difference from which one can infer.

b. How much of a difference? How does one describe / define the group?Relative comparisons. Courts are getting stricter and stricter, because expensive. It becomes a battleof experts and inquiry does not end with statistical evidence. See Hazewood.

Note: systemic disparate impact does not require a discriminatory policy.

Dothard Case prison, male, one who is not male cannot perform the function. Women serving as

guards in other sex max prisons. Use comparators because if one prison does not let women, the it

debunks the theory and the blanket statement is not satisfactory.

Doctrine: Ds burden (high bar to overcome)

1. Show qualification. Must be reasonably necessary to business, central to the mission of thebusiness, eg. Johnson controls case- essence of business and essence of job AND

2. Qualification must be reasonably necessary:a. Establish a factual basis, belie that all in groups are not able to perform. Dorthard

Case (may come out differently today) OR

b. Impossible/ highly impracticable to deal with protected EEs on an individual basis.How willing are courts to defer to ER?


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Breiner v. Nevada Department of Corrections

Prison guard women prison not want men, percentage quota of women because of rape. Worried

about female inmate taken advantage of. See pg. 578 for the 3 reasons:

1. Rationale are to conclusory and overbroad2. No basis in fact (even with history, n

Documents

Employment Law Notes Marjorie 2011 Dec 1