The relationship of an employer and an employee exists when, pursuant to an agreement of the parties, one person, the employee, agrees to work under the direction and control of another, the employer, for compensation. The agreement of the parties is a contract, and it is therefore subject to all the principles applicable to contracts. The contract may be an express contract. In other words, the duties of the employee will be specifically set forth in the contract. The contract may also be implied. Most employment contracts are implied oral agreements. In this type of arrangement, the employer is accepting the services of the employee that a reasonable person would recognize as being such that compensation would be given to the employee.
Collective bargaining contracts govern the rights and obligations of employers and employees in many employment relationships. These occur when a union negotiates on behalf of employees. Collective bargaining involves representatives of the employees bargaining with a single employer or a group of employers for an agreement. This agreement will cover such things as wages, hours, and working conditions for the employees. The employees, of course, make up a union and elect members to represent, and negotiate for, them with the employer.
The National Labor Relations Act (NLRA) guarantees employees the right to form a labor union and requires employers to deal with a duly-elected union as the bargaining agent for the employees. The NLRA prohibits employers from interfering with employees and from discriminating against an employee as a result of the employee’s union activity. In most instances, an employment contract will not state its expiration date. In such a case, the contract may be terminated at any time by either party. However, the contract may expressly state that it will last for a specified period of time such as a contract to work as a general manager for five years.
Ordinarily a contract of employment may be terminated in the same manner as any other contract. If it is to run for a definite period of time, the employer cannot terminate the contract at an earlier date without justification. If the employment contract does not have a definite duration, it is terminable at will. This is called employment at will. Under the employment at will doctrine, the employer has historically been allowed to terminate the contract at any time for any reason or for no reason. Some State Courts and some State Legislatures have changed this rule by limiting the power of the employer to discharge the employee without cause. For example, Court decisions have carved out exceptions to this doctrine when the discharge violates an established public policy, such as discharging an employee in retaliation for insisting that the employer comply with a federal or state law. Courts may sometimes construe an employer’s statements concerning continued employment as a part of the employment contract, and therefore require good cause for the discharge of an at-will employee. Also, written personnel policies used as guidelines for the employer’s supervisors have been interpreted as restricting the employer’s right to discharge at-will employees without just cause. Employee handbooks or personnel manuals have been construed as part of the employee’s contract. This is why all personnel manuals and employee handbooks should contain a disclaimer. A sample disclaimer would be: “This employee handbook is not intended to create any contractual rights in favor of you or the company. The company reserves the right to change the terms of this employee handbook at any time.”
The Fair Labor Standards Act (FLSA), also known as the Wage and Hour Act, requires payment of a minimum wage as well as the payment of overtime after 40 hours of work per week. Payment of overtime is to be 1-1/2 times the regular hourly rate. This Act also deals with child labor laws. Generally, children under the age of 14 are not supposed to work. Children between the ages of 14 and 16 can work in all industries with the exception of certain hazardous work.
Certain exemptions are available under the FLSA to executives, administrative and professional employees, and for outside salesmen. Generally, employees without work through no fault of their own, are eligible for unemployment compensation benefits. Unemployment compensation is provided primarily through a federal and State system under the unemployment insurance provisions of the Social Security Act. State agencies are loosely coordinated under this Act. Basically, States are generally free to prescribe the amount and the length of benefits and the conditions required for eligibility. In most States, the unemployed person must be available for placement in a similar job and be willing to take such employment at a comparable rate of pay. If an employee quits a job without cause, or is fired for misconduct, he ordinarily is disqualified for unemployment benefits.
The Family and Medical Leave Act (FMLA) is a federal act that entitles employees of an employer with 50 or more employees to up to 12 weeks of unpaid leave during any 12 month period for the following reasons:
- birth or adoption of a child;
- to care for a spouse, child or parent with a serious health problem; or
- a serious health problem of the employee that makes the employee unable to do his or her job.
To be eligible for this leave, an employee must be employed by an employer for 12 months or more and have worked at least 1250 hours during the 12 months prior to the leave.
The Occupational Safety and Health Act of 1970 (OSHA) was passed in order to insure, as much as possible, safe and healthy working conditions for employees. OSHA provides for establishing safety and health standards and for enforcement of these standards. The Secretary of Labor has been granted broad authority under OSHA to write occupational safety and health standards. Any person adversely affected by these regulations of the Secretary of Labor can challenge their validity in a U.S. Court of Appeals. The Secretary’s standards will be upheld if they are reasonable and supported by substantial evidence. The Secretary must show a need for a new standard by showing that it is reasonably necessary to protect employees against a significant risk of material health impairment. The Secretary also must show that the standard is economically feasible.
Workmen Compensation Statutes
For most kinds of employment, state workers’ compensation statutes govern compensation for injuries. The statutes provide that the injured employee is entitled to compensation for accidents occurring in the course of employment. Every State has some form of workers’ compensation legislation. The statutes vary widely from State to State. When an employee is covered by a workers’ compensation statute, and when the injury is job connected, the employee’s remedy is limited to what is provided in the worker’s compensation statute. In other words, the employee cannot sue his employer for negligence. Generally, no compensation is allowed for a willful, self-inflicted, injury, or one sustained while the employee is intoxicated.
Title VII of the Civil Rights Act of 1964 (which was substantially amended in 1972 and 1991) prohibits terminating an employee or refusing to hire an applicant for a reason which amounts to discrimination because of race, color, sex, religion or national origin. The Act prohibits disparate treatment which is treating one employee less favorably than another because of race, sex, etc. The Act also prohibits disparate impact situations. This would be an employment practice which was neutral on its face (e.g., height requirement), but had a disparate impact on a protected class (e.g., women). Such policies must be justified by a bona fide job necessity. Certain tests which an employer might give to a job applicant might be found to be culturally biased and therefore have a disparate impact against a minority. This is not to say that all tests will be declared illegal by a Court. However, a test must have a reasonable relation to the job for which it is to be used. Word of Mouth hiring can also cause disparate impact.
The Pregnancy Discrimination Act requires that an employer treat pregnancy in the same manner that other disabilities are treated. Women that are temporarily disabled by pregnancy or childbirth must be provided with the same benefits as other disabled workers. This includes sick leave, insurance, and similar benefits. However, employers who do not provide sick leave or short term disability benefits to workers are not required to provide them to pregnant workers.
Quid pro quo sexual harassment involves supervisory personnel seeking sexual favors from employees under them in return for job benefits such as continued employment, promotions, raises, or a favorable performance evaluation. In such a case, when a supervisor’s actions affect job benefits, Title VII’s prohibition against sex discrimination comes into play, and the employer is liable under this Act.
A second form of sexual harassment is the so-called hostile working environment harassment. This a situation where a supervisor’s conduct has sexual connotations and has caused anxiety or poisoned the work environment. This type of conduct may include such things as unwelcome flirtations, propositions, or any other abuse of a sexual nature. If this type of conduct causes an employee to quit his or her job, the employer may be liable for any damage caused to the employee.
The Age Discrimination in Employment Act (ADEA) prohibits discrimination against men and women over 40 and also prohibits mandatory retirement because of age. There are some exceptions to this mandatory retirement aspect. This Act only covers employers with 20 or more employees. The Older Workers Benefit Protection Act of 1990 (OWBPA) prohibits age discrimination in connection with employee benefits unless the employer can prove that the cost of benefits for older workers is more than for younger workers. Employers commonly require that employees taking early retirement packages waive all claims against their employers, including, any claim they have under ADEA. The OWBPA requires that employees be given a specific period of time to evaluate the package, and also requires employers to pay for eight hours of an attorney’s time to aid each employee in this evaluation.
The Americans with Disabilities Act (ADA) makes it unlawful for an employer to discriminate against any qualified individual with a disability because of the disability. A qualified individual with a disability is any person who, with or without reasonable accommodation, can perform the essential functions of the job. The ADA applies to virtually every employment practice, from the application procedures for hiring to compensation, training, other terms and conditions of employment, and discharge. The statute defines reasonable accommodation to include physical alteration of existing facilities to make them accessible to people with disabilities, restructuring jobs, allowing part-time or modified working schedules, acquiring or modifying equipment, and hiring qualified readers for the blind or interpreters for the deaf. The ADA defines disability very broadly and includes any person with: (1) a physical or mental impairment which substantially limits one or more of the individual’s major life activities; (2) a record of such an impairment; or (3) an individual who is regarded by the employer as having such an impairment. The test is a two-pronged test. First, you must decide whether or not there is a physical or mental impairment. If so, you must decide whether or not it substantially limits a major life function.