ACCT 352 question

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Chapter 34

Employment, Immigration, and Labor Law Acct352 Sections 012, 015, 017 SPRING 2021

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§1: Learning Objectives

Explain the at-will employment doctrine

Describe the minimum wage and overtime pay rules under the Fair Labor Standards Act

Explain how workers’ compensation programs work and describe the available benefits

Describe certain benefits and protections provided by the Family Medical Leave Act

Describe certain benefits provided under the Consolidated Omnibus Budget Reconciliation Act

Describe unemployment benefits under the Federal Unemployment Tax Act

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§2: Employment Law

Employment law is an area of the law concerning the employer/employee relationship and involving matters such as

Worker’s compensation

Wage and overtime standards

Employee benefits such as leave and health care

Workplace safety

Employment Discrimination

Pensions/retirement plans

Unemployment compensation

Employee Retirement Income Security Act (ERISA)

The employer/employee relationship is governed by a mix of common law and state and federal laws and regulations

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§3: Employment At-Will

Employment At-Will

A common law doctrine that governs employment relationships.

Under this doctrine, either party may lawfully terminate the relationship at any time for any reason or for no reason at all when the employment relationship is for an indefinite term.

That the employment relationship is for an indefinite term indicates the parties desired the freedom to terminate the relationship at any time.

Lawfully terminate means terminate without having a legal obligation to compensate the other party

Example #1: “IBM hereby offers you a contract at an annual salary of $100,000, beginning June 5, 2020.” Because no definite term is stated, this is an offer to work for IBM but under an at-will employment relationship.

Example #2: “IBM hereby offers you a contract at an annual salary of $100,000, beginning June 5, 2020 and ending June 5, 2021.” Because a definite term is stated, the at-will employment doctrine will not apply in this case.

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§3: Employment at Will

Exceptions to at-will employment doctrine

Express or Implied contract for a term – where there is an expressed or implied contract for a specified term an employee cannot be lawfully terminated before that term is passed

Example: “IBM hereby offers you employment at a yearly salary of $100,000, for a one year period starting June 5, 2020.” This is an express contract under which IBM is hiring this employee for a term of one year. IBM cannot lawfully terminate this employee until that one year period has passed

An Implied employment contract might exist, for example, if

The employer makes oral statements or statements in an employment manual that leaves the employee with a reasonable expectation of employment for a certain term. In other words, the employee can be fired but only at the end of that term

Example of statement in Employee Manual: “We at IBM value our employees. At IBM we understand that the work we do is complex and we expect successful employee acclimation will require at least 2 years of on-the-job training.” This can be deemed an offer of employment for a two year term before which the employee cannot be lawfully terminated, even if there is no express agreement

Statute prohibits termination – Employee cannot be lawfully terminated if the reason for termination violates a statute

Example: An age discrimination statute prohibits an employer from terminating on the basis of age

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§3: Employment At-Will (Cont.)

Exceptions to at-will employment doctrine

Public Policy Exception

Most common exception to the employment-at-will doctrine. Under this exception, the at-will employment doctrine is inapplicable if the employer’s reason for firing the employee violates a fundamental public policy of the jurisdiction.

Generally, courts require that the public policy involved be expressed clearly in the statutory law governing the jurisdiction.

For example, this exception may apply to an employee discharged for whistleblowing. Because there is a federal statute that promotes whistleblowing, terminating an employee for whistleblowing is not permissible, even under the at-will doctrine.

See Caterpillar, Inc. v. Sudlow (Court of Appeals of Indiana (2016), find it HERE and also in the Files folder under Cases and Other Resources

Important note: Notwithstanding any of the exceptions, an employer is always permitted to LAWFULLY terminate “for cause.”

For cause means: Employee incompetence, employee misconduct (violence, latenesses, etc.), business downturn

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§3: Employment at Will (Cont.)

Wrongful Discharge: When an employer terminates an employee in violation of an employment contract or a statutory law protecting employees, or in violation of an exception to the at will employment doctrine, the employee may bring an action for wrongful discharge

What are the available remedies

Compensatory damages, generally. To place the employee in the same position she would have been were she not fired

Pain and suffering (for the emotional turmoil and other negative effects of the illegal act)

Punitive damages

Reinstatement to your job

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§4: Fair Labor Standards Act (FLSA)

The FLSA is a federal statute which was enacted in 1938

Established the US Department of Labor to enforce the FLSA

Established standards for national minimum wage and overtime pay

Regulates child labor

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§4: FLSA (Cont.)

Who is Covered by FLSA?

Employees who work at businesses (so-called “enterprises”) that employ at least two employees

AND have annual revenues of at least $500,000

OR are hospitals; businesses providing medical or nursing care for residents; schools and preschools; and government agencies

Workers who are "engaged in interstate commerce or in the production of goods for interstate commerce"

Example: Employee who produces goods that will be sent out of state; or whose work requires travel to other States

Domestic service workers (such as housekeepers, full-time babysitters, and cooks)

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§4: FSLA - Minimum Wage and Overtime Pay

Minimum Wage and Overtime Pay - Required by the FLSA and also by state laws

Minimum Wage

Under FSLA, employees in every state must be paid the federal minimum wage for all hours worked

Federal minimum wage is currently $7.25 per hour

States have enacted laws establishing higher OR lower minimum wages. Some states have not established any laws

$15 in California; $15 New York City, $15 in Seattle, Washington; $10.50 in DC; $9.60 Rhode Island, $9.47 in Washington State; $9.25 in Oregon; $9.15 in Connecticut and Vermont

Employers must pay the higher of the federal or state minimum wage

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§4: FLSA - Minimum Wage and Overtime Pay (Cont.)

Overtime - Employees should be paid overtime of 1 and 1/2 times regular pay for each hour worked in excess of 40 hours per week

Some states compute overtime on a daily basis so that any work in excess of 8 hours per day is considered overtime, even if the employee works less than 40 hours in the week

An employee must be paid for any work performed during her workday

Work means the employee’s principal activity

Principal activities are the activities which the employee is employed to perform. These activities include any work of consequence performed for the employer -- no matter where the work is performed

Workday consists of the time when an employee begins performing her principal activities and the time she stops performing her principal activities including any walk time after the start of the first principal activity and just before the end of the last principal activity. See IBP v. Alvarez (US Supreme Court (2005))

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§4: FLSA - Minimum Wage and Overtime Pay (Cont.)

Exceptions From Minimum Wage Requirement (THESE ARE EXCEPTIONS NOT EXEMPTIONS)

Exceptions = Minimum wage rules apply but allow employer to pay employee less

Exemptions = The rules do not apply at all

Tipped employees – employer may hire at $2.13 per hour, but tips and hourly rate must total at least the minimum wage. If not, employer must pay the difference

In other words, to calculate minimum wage, the employer is allowed to include tips

Tipped wage in many states’ is higher than the $2.13 federal requirement but still less than those states’ minimum wage

FULL-TIME STUDENTS (in retail or service establishments, agriculture, or institutions of higher education), STUDENT-LEARNERS (vocational education students), and DISABLED EMPLOYEES

Employer must obtain permission from the DOL to pay these employees less than the minimum wage

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§4: FLSA - Minimum Wage and Overtime Pay (Cont.)

Examples of Employees EXEMPTED from Minimum Wage/Overtime

Executives (Manager) – earns a salary (instead of an hourly wage) and whose principal duty is to manage 2 or more persons

Administrative employees - on a salary or fee basis and primary duties includes exercise of discretion and independent judgment as to matters of significance. See Smith v. Johnson and Johnson (US Court of Appeals for the Third Circuit (2010))

Learned professional – Teachers/College faculty

Highly compensated employees – persons earning $100,000 or more

Computer employees – systems analysts, programmers, software engineers

Outside sales representatives

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§5: Fringe and Other Employer-Provided Benefits

Fringe Benefits

Fringe benefits are benefits that an employer provides to an employee that are in addition to the employee’s wage or salary and that are chiefly intended as a means to recruit and retain employees.

Some fringe benefits are provided to all employees; some are targeted to select employees, such as high level executives.

Fringe benefits can be categorized as voluntary or mandatory. Voluntary fringe benefits are provided at the option of the employer. Most fringe benefits are voluntary and include such benefits as paid vacations, sick leave, life insurance, and employer sponsored retirement plans (i.e. pensions). Mandatory fringe benefits are those required by law. These include social security, workers compensation, unemployment compensation, and health insurance.

Health insurance was a voluntary fringe benefit before passage of the Affordable Care Act (so-called Obamacare).

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§6: Fringe Benefits - Workers’ Compensation

Workers’ Compensation Act: Laws enacted by states that compensate workers and their families when workers suffer employment related injuries

Each state has established an administrative process through an administrative agency to handle claims by injured workers

The states require employers/companies to purchase insurance (through private insurers or the state), or self-insure

This insurance pays the claims submitted by employees

No state covers all employees under its workers’ compensation statute. Domestic workers, agricultural workers, temporary employees, and employees of common carriers are usually excluded

Minors are covered

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§6: Fringe Benefits - Workers’ Compensation (Cont.)

Procedure:

Workers file a claim with the agency

Agency determines if employee has a covered claim

Compensation benefits are paid accordingly

Compensation differs from state to state, but it is usually a percentage of your salary, not full salary

In most states the percentage is approximately 66% (two-thirds)

Medical expenses are usually covered as well

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§6: Fringe Benefits - Workers' Compensation (Cont.)

What Injuries are Covered by Workers Compensation?

Employment-Related Injuries – Injury to an employee arising out of and in the course of employment. That is, an injury that is incurred while you are at work doing the thing for which you are paid, regardless of who is at fault

Physical injuries

Stress

Mental illness

Injuries due to horseplay at work are not work-related, unless such horseplay is common at the workplace, and done with the knowledge and acquiescence of the employer

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§6: Fringe Benefits - Workers' Compensation (Cont.)

Workers’ compensation is an Exclusive Remedy

Exclusive Remedy - Means if the employee sustains a work-related injury the employee must file a worker’s compensation claim. The employee cannot sue her employer to recover damages, UNLESS

The employer does not have worker’s compensation insurance

The employer intentionally injures the employee

Example #1: Jill, a Burger King employee, is injured when the hot coffee she prepared for a customer spilled from its Styrofoam cup = a covered claim?

But an employee can sue third parties who cause the employee’s work-related injuries

If an employee successfully sues a third-party, the employer generally has the right to recover any worker’s compensation benefit paid to the employee

Example #2: What if the Styrofoam cup broke because it was poorly manufactured by Acme Corp?

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§6: Fringe Benefits - Workers' Compensation (Cont.)

Example #3: What if Jill is injured when she is on her lunch break and she's dining at McDonald's = covered injury?

Example #4: What if Jill and her co-worker were playfully wrestling each other, under the watchful and approving eyes of a manager and knocked the cup over spilling hot coffee that burned Jill = covered?

Kelley v. Coca Cola (Ohio Court of Appeals, 2010)

Issue: Is Kelley entitled to workers’ compensation benefits where his injuries occurred while he was engaged in horseplay with co-workers?

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§7: Fringe Benefits - Family and Medical Leave Act (FMLA)

FMLA - Federal law enacted in 1993 which guarantees workers unpaid time off from work for family and medical emergencies

Applies to private companies with 50 or more employees, and federal, state, and local governments

Employee must have worked for employer for at least one year with at least 1250 hours accumulated

The FMLA does not supersede any state or local law that provides more generous protection

So, if a state provides greater benefits than FMLA, an employee can use the benefits supplied by the state OR an employer can require that FMLA and the leave provided by state law state law be taken concurrently

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§7: Fringe Benefits - FMLA (Cont.)

Benefits of FMLA

Provides employee with up to 12 weeks of unpaid leave within a single 12-month period:

To bond with a child that has newly arrived by birth, adoption, or foster care

To tend to a serious health condition of employee

To provide care for to a spouse, child, or parent with serious health condition

26 work weeks may be taken to care for a family member who is a member of the military

Does not cover siblings, cousins, grandparents, domestic partners or domestic partner's child

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§7: Fringe Benefits - FMLA (Cont.)

Benefits of FMLA (Cont.)

Employee cannot be terminated during the leave and retains full health insurance benefits

Excepting for very limited exceptions, employee must be restored to same or equivalent position upon return. Exceptions to restoration include:

Employee would have been fired anyway

Employee is a Key Employee - A key employee is salaried, FMLA-eligible, and among the highest paid 10% of all employees working within 75 miles of the worksite. A key employee, therefore, is an important employee who must be replaced. If the key employee is replaced with a permanent employee, it is possible that the key employee will not be restored to her position. Non-restoration would be permissible only if : 1) the employer notifies the employee, before the employee begins leave, that the employee is classified as a key employee and about the potential of non-restoration (this provides employee the opportunity to not take the FMLA leave), and 2) if the employer demonstrates that restoration of the employee (NOT THE ABSENCE of employee) will cause "substantial and grievous economic injury" to the operations of the employer

Employee cannot return to work within 12 weeks

Employee is unable to perform the job

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§7: Fringe Benefits - FMLA (Cont.)

How Must Leave be Used

Leave must be taken consecutively (i.e. all at once) if it is related to “bonding” with a newly arrived child

Leave can be intermittent (in blocks of time and not all at once) if taken for any other covered reason

Remedies for Employer Violations:

Compensatory Damages - for lost wages and benefits, denied compensation, and actual monetary losses

Reinstatement

Promotion (if one has been denied)

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§8: Fringe Benefits - Unemployment Compensation

Unemployment Insurance

The Federal Unemployment Tax Act (FUTA) created a state-administered system that provides unemployment compensation to eligible individuals who have involuntarily lost their jobs

Employers that fall under the provisions of the act pay unemployment taxes at regular intervals. The proceeds from these taxes are then paid out to qualified unemployed workers

To be eligible for unemployment compensation, a worker must be willing and able to work

Willing and able means actively looking for work. If you return to school for training, after you have been terminated from your employment, you are not eligible because you are not considered to be actively looking.

Workers who have been fired for misconduct or who voluntarily left their jobs are not eligible for benefits.

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§9: Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA - A federal law that provides continuing health coverage to an employee (and her beneficiaries – children, spouse) whose job is terminated voluntarily or involuntarily

Workers fired for gross misconduct are excluded from protection

Employee must have been enrolled in the employer’s health plan at time of termination

Applies to private sector employers with 20 or more employees and to federal and state governments

Coverage is temporary, 18 months; 29 months for disabled worker

If an employee dies, the surviving spouse and dependent children are eligible for continuing coverage for 36 months

Employee pays group rate premium, which is typically more expensive than what employee paid while employed

Employee (not employers) pay the premiums for the continued coverage

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

§9: COBRA (Cont.)

Emergency Room Care Under COBRA

COBRA also requires that hospitals that participate in Medicare provide “stabilizing” emergency room care to anyone who visits an emergency room for treatment, regardless of that person’s ability to pay for such care

The hospital can ask for payment, but it must provide treatment to stabilize the person's condition whether the person is able to pay for it or not

May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.