Module 6_Week 6_Agency, Employment_Legal and Ethical Concepts for Decision Makers

Module 6

Agency, Employment

A. Create Agency Relationship

Agency is generally defined as a relationship between a principal and an agent. In

an agency relationship, the agent is authorized to act for and on behalf of the principal,

who hires the agent to represent him or her. The Restatement of Agency defines agency

as “the fiduciary relation that results from the manifestation of consent by one person to

another that the other shall act in his behalf and subject to his control, and consent by the

other so to act.”1 (A fiduciary is a person who has a duty to act primarily for another

person’s benefit. A lawyer, for example, is a fiduciary for his or her client.

Agency law is primarily state law. Thus, it can vary somewhat from state to state.

As of July 2010, 40 states had enacted statutes governing the behavior of sports agents.

The specific legislation that regulates the conduct of athlete agents in these 40 states is

the Uniform Athlete Agents Act (UAAA). Non-UAAA laws also regulate athlete agents

in California, Michigan, and Ohio. The UAAA provides for criminal, civil, and/or

administrative penalties based on the particular state’s statute. Twenty-three of those

states impose civil penalties or damages on the agent for violations of the athlete agent

statutes.

The legal landscape surrounding sports agents and athletes is multifaceted, with

state statutes and players associations' model contracts playing crucial roles in defining

the rights, responsibilities, and potential consequences for violations. Examining the

regulatory framework, it's evident that a substantial number of states, encompassing

twenty-four, including influential ones like California and Florida, have implemented

criminal penalties specifically targeting sports agents who breach state statutes.

The establishment of criminal penalties for sports agents underscores the

recognition of the potential for exploitation and misconduct within the sports

representation industry. These penalties serve as deterrents, discouraging agents from

engaging in unethical practices, providing an additional layer of protection for athletes.

By criminalizing certain behaviors, states aim to maintain the integrity of sports

transactions, ensuring fairness, transparency, and ethical conduct in dealings between

agents and athletes.

Interestingly, the contrast in the legal approach becomes apparent when

examining the criminalization of violations by athletes themselves. Only five states have

taken the step of criminalizing violations of statutes by athletes, reflecting a distinct

emphasis on regulating the conduct of agents over that of athletes. This discrepancy in

legal consequences may stem from the recognition that athletes, often in vulnerable

positions, require greater protection against potential abuses by agents.

Moreover, beyond the statutory framework, players associations play a pivotal

role in shaping the dynamics of sports agent-athlete relationships. Model contracts

established by players associations serve as comprehensive guides, delineating the nature

of services that agents can perform on behalf of their principals and articulating the

reciprocal duties owed by both parties. These model contracts serve as a standardized

template, providing a baseline for ethical and professional behavior in the agent-athlete

relationship.

By outlining the specific services that agents can perform, players associations

seek to ensure that athletes receive fair and transparent representation. This includes

negotiating contracts, securing endorsement deals, and advising on various aspects of

their professional careers. Simultaneously, the duties enumerated in these model contracts

emphasize the mutual responsibilities of both agents and athletes, fostering a

collaborative and transparent working relationship.

The emphasis on model contracts aligns with the broader industry trend towards

standardization and professionalism within sports representation. These contracts not

only serve as protective measures for athletes but also contribute to the establishment of

industry norms, ethical standards, and best practices.

In conclusion, the legal framework surrounding sports agents and athletes is

characterized by a combination of state statutes and players associations' model contracts.

The criminal penalties imposed by twenty-four states on sports agents underscore the

commitment to maintaining the integrity of the sports representation industry. The limited

criminalization of athlete violations reflects a nuanced approach that prioritizes the

protection of athletes, recognizing their often vulnerable position. The role of players

associations in establishing model contracts further contributes to the ethical and

professional development of the sports representation industry, setting standards and

expectations for agents and athletes alike.

The explicit recognition of agents operating in a fiduciary capacity within the

framework of the Major League Baseball Players Association’s (MLBPA’s) “Regulations

Governing Player Agents” sheds light on the foundational principles that underpin the

relationship between agents and their athlete clients. This acknowledgment not only

underscores the legal and ethical responsibilities agents bear but also serves as a key

aspect in the broader landscape of sports agency representation.

Within the context of the MLBPA's regulations, the term "fiduciary" assumes

paramount significance. Operating in a fiduciary capacity implies that agents are

entrusted with a high standard of care and loyalty when representing their athlete clients.

This fiduciary duty requires agents to prioritize the best interests of the athletes, placing

them ahead of their own interests. This duty of loyalty encompasses various aspects,

including financial matters, contractual negotiations, and overall career guidance.

The fiduciary relationship between agents and athletes is marked by a heightened

level of trust, and agents are expected to act with the utmost integrity, diligence, and

transparency. The fiduciary duty serves as a protective mechanism for athletes, ensuring

that their interests are safeguarded in a realm where financial, contractual, and personal

stakes can be exceedingly high. Agents are not merely transactional representatives but

are bound by an ethical obligation to navigate the complex landscape of professional

sports in a manner that aligns with the athletes' long-term well-being and success.

This fiduciary duty also extends to the duty of care, implying that agents must

exercise a reasonable degree of skill and diligence in representing their clients. This

involves staying informed about industry trends, negotiating favorable contracts, and

providing sound advice to enhance the athletes' professional and financial prospects.

Failure to meet this duty of care may lead to legal consequences, emphasizing the

seriousness with which the fiduciary relationship is regarded within the MLBPA's

regulatory framework.

The recognition of agents as fiduciaries in the MLBPA's regulations mirrors

broader legal principles governing fiduciary relationships. The concept of fiduciary duty

is deeply rooted in common law and equitable principles, emphasizing trust, loyalty, and

the highest standard of care in relationships where one party holds a position of special

confidence and influence over another.

The acknowledgment of fiduciary duties also resonates with the evolving

landscape of sports agency representation. As the sports industry becomes increasingly

complex, with growing financial implications and intricate contractual negotiations, the

role of agents as fiduciaries gains prominence. The expectations set forth by the MLBPA

reflect a commitment to upholding ethical standards and ensuring that athletes receive

proper guidance and protection in their professional endeavors.

In conclusion, the explicit recognition of agents operating in a fiduciary capacity

within the MLBPA's regulations illuminates the foundational principles of trust, loyalty,

and heightened responsibility that characterize the agent-athlete relationship. This

acknowledgment not only aligns with broader legal principles but also underscores the

evolving nature of sports agency representation, emphasizing the ethical obligations

agents bear in navigating the multifaceted landscape of professional sports. The fiduciary

duty serves as a cornerstone, ensuring that agents prioritize the well-being and interests of

their athlete clients, contributing to the integrity and fairness of the sports industry.

The Major League Baseball Players Association's (MLBPA) "Regulations

Governing Player Agents" exemplifies the meticulous framework established to govern

the relationships between professional athletes and their agents. Central to these

regulations is the acknowledgment and emphasis on the fiduciary duty that agents owe to

their athlete clients. This fiduciary duty serves as a cornerstone principle, encapsulating

the high standard of trust, loyalty, and care that agents are expected to uphold in their

interactions with their clients.

Within the realm of sports representation, the fiduciary duty underscores the

inherent power dynamics and asymmetry of information between athletes and their

agents. Athletes often rely on agents to navigate complex contractual negotiations,

endorsement deals, and other aspects of their professional careers. In doing so, they place

a significant degree of trust and confidence in their agents, expecting them to act in their

best interests at all times.

The recognition of agents as fiduciaries within the MLBPA's regulations

underscores the importance of transparency, honesty, and integrity in agent-client

relationships. Agents are entrusted with the responsibility of prioritizing the welfare and

interests of their clients above their own, even when faced with conflicting incentives or

pressures. This commitment to fiduciary duty requires agents to exercise prudence,

diligence, and sound judgment in all aspects of their representation.

Moreover, the fiduciary duty extends beyond mere contractual negotiations and

financial matters. Agents are expected to provide comprehensive guidance and support to

their clients, including career planning, personal development, and post-retirement

transitions. This holistic approach to representation underscores the depth and breadth of

the fiduciary relationship between agents and athletes.

The fiduciary duty also carries legal implications, as agents are held accountable

for any breaches of trust or failures to act in their clients' best interests. Courts may

scrutinize agents' actions through the lens of fiduciary duty, assessing whether they

exercised reasonable care, skill, and diligence in representing their clients. Breaches of

fiduciary duty can lead to legal repercussions, including civil liability and disciplinary

actions by regulatory bodies.

In addition to legal and regulatory considerations, the recognition of agents as

fiduciaries reflects broader ethical and professional standards within the sports industry.

The MLBPA's regulations serve as a guiding framework for agents, emphasizing the

importance of professionalism, ethical conduct, and accountability in their relationships

with athletes.

Furthermore, the fiduciary duty underscores the collaborative nature of agent-

client relationships, emphasizing the importance of open communication, mutual respect,

and shared goals. Agents are not merely transactional intermediaries but trusted advisors

and advocates who play a pivotal role in shaping the careers and livelihoods of their

clients.

In conclusion, the recognition of agents as fiduciaries within the MLBPA's

regulations reflects the complex dynamics and responsibilities inherent in agent-client

relationships within the sports industry. Upholding the fiduciary duty requires agents to

demonstrate unwavering commitment to their clients' best interests, integrity, and

professionalism. By embracing their role as fiduciaries, agents can foster trusting and

productive relationships with their athlete clients, ultimately contributing to their success

and well-being both on and off the field.

Agency relationships are consensual relationships formed by informal oral

agreements or formal written contracts. However, an agency relationship exists only

when the principal takes action to ask another individual to act on behalf of the principal.

Under what circumstances can an agency relationship be created? First, an agency

relationship can be created only for a lawful purpose in the same way that a contract

cannot have an illegal purpose.

Delving into the realm of agency law unveils a myriad of principles and

considerations that govern the relationships between principals and agents. Two

significant aspects that merit in-depth exploration are the limits on the authority of

agents, particularly when it comes to engaging in illegal or unethical activities on behalf

of the principal, and the broad spectrum of individuals who can act as agents.

First and foremost, the principle that a principal cannot hire an agent to commit

illegal or morally reprehensible acts on their behalf is deeply ingrained in agency law.

This moral and legal boundary is grounded in societal norms and the fundamental

principles of legality. It serves as a safeguard against the misuse of agency relationships

for criminal or unethical purposes. An illustrative example of this principle is the

prohibition on a principal hiring an agent to inflict harm on another person. This

prohibition extends to activities such as hiring someone to commit murder or engage in

other unlawful acts. The underlying premise is that agency relationships, while

facilitating a broad range of actions on behalf of the principal, are not a license to engage

in illegal or morally objectionable conduct.

Expanding upon this principle, the prohibition serves to preserve the integrity of

agency relationships and the broader legal system. Courts are unlikely to enforce

contracts or agreements that involve illegal activities, even if they arise from an agency

relationship. This aligns with the broader legal principle that the law should not be a tool

for promoting or endorsing illicit behavior.

Moving on to the second point, the inclusivity of individuals who can act as

agents in contractual relationships adds a layer of flexibility and adaptability to agency

law. Unlike some legal relationships that may have stringent eligibility criteria, agency

law is relatively accommodating when it comes to determining who can act as an agent.

In essence, almost anyone can assume the role of an agent, provided they have the legal

capacity to enter into contracts.

This inclusivity extends to a diverse range of individuals, including employees,

independent contractors, family members, friends, or even professionals hired explicitly

for the purpose of acting as an agent. The crucial criterion is that the individual possesses

the legal capacity to act as an agent and has the ability to carry out the tasks assigned by

the principal.

The recognition that almost anyone can act as an agent highlights the flexibility of

agency relationships. This adaptability allows principals to engage various individuals

based on their needs and the specific requirements of a given situation. It also

underscores the expansive reach of agency law, acknowledging that agents can emerge

from a broad array of personal and professional contexts.

In conclusion, agency law is a dynamic and adaptable field that governs the

relationships between principals and agents. The prohibition against engaging in illegal or

morally objectionable activities as an agent underscores the ethical and legal boundaries

within which agency relationships must operate. Simultaneously, the inclusivity of

individuals who can act as agents reflects the flexibility of agency law, allowing for a

diverse array of individuals to assume the role of an agent within the bounds of legal

capacity. Understanding and navigating these principles contribute to the effective

functioning of agency relationships and their alignment with broader legal and ethical

norms.

B. Types of Agency

When parties form an agency relationship by making a written or oral agreement,

the agency is known as expressed agency, or agency by agreement. Expressed agency is

the most common type of agency. As specified in the expressed agreement, the agent has

the authority to contract on behalf of the principal. Although a contract is not necessary,

if an agency agreement is formed through a contract, the contract must meet all the

elements of a contract discussed in Chapter 9. If a principal agrees to hire no other agent

for a period of time or until a particular job is done, the principal and agent have entered

into an exclusive agency contract.

One legal document that establishes agency relationships is a power of attorney, a

document that gives an agent authority to sign legal documents on behalf of the principal.

Power of attorney can be classified in several ways. First, a power of attorney can be

general or specific. For example, with a general power of attorney, a principal gives an

agent broad authority to sign legal documents on behalf of the principal. In contrast, with

a specific power of attorney, a principal gives authority to an agent for only the specific

areas or purposes listed in the agreement. Powers of attorney are often given for business

and health care purposes. In the health care instance, a principal gives power of attorney

to an agent so that the agent can make decisions about the principal’s medical care in case

the principal cannot make those decisions. Given that a principal must have the ability to

enter into contracts to enter into an agency relationship, a principal may not enact a

power of attorney after becoming incompetent. Therefore, before incapacitation, a

principal may create a durable power of attorney.

A durable power of attorney is a written document, created by a principal,

expressing his or her wishes for an agent’s authority to be unaffected by the principal’s

subsequent incapacity. Alternatively, a durable power of attorney might become active

only after a principal becomes incapacitated in any manner. Because the agreement is

entered into before incapacitation, a power of attorney is legally binding after the

principal becomes incapacitated.

It is important to note a few additional points. First, the Restatement states, “[A]n

agency relation exists only if there has been a manifestation by the principal to the agent

that the agent may act on his account, and consent by the agent so to act.”4 Therefore, in

addition to the preceding criteria, there needs to be agreement by the principal to have the

person act as an agent and by the agent to act for the principal. As noted shortly, this

agreement can be reached in several ways.

Second, agency agreements usually do not need to be in writing. However, there

are two important exceptions. First, agency agreements need to be in writing whenever an

agreement is reached for an agent to enter into a contract that under the statute of frauds

must be in writing. For example, Janet wants Phil to act as her agent. She grants him the

power to enter into contracts. The statute of frauds, or, more specifically, the equal

dignities rule, mandates that the type of contracts Phil is allowed to enter into must be in

writing. Therefore, Phil’s agreement with Janet must also be in writing. Also, whenever

an agent is given power of attorney (discussed later), the agreement must be in writing.

Third, agents may perform their services gratuitously. A gratuitous agent is one who acts

without consideration; that is, the agent is not paid for his or her services.

In some cases, an agency relationship is not created by an expressed agreement

but, rather, is implied by the conduct of the parties. The circumstances of a situation

determine the extent of an agent’s ability to conduct business on behalf of the principal.

However, the implied authority cannot conflict with any express authority. Suppose a

principal leads a third party to believe that another individual serves as his or her agent

but the principal has made no agreement with the so-called agent. Does an agency

relationship exist? Yes, because by his or her conduct, the principal has created apparent

agency, or agency by estoppel. According to the principal’s conduct, the agent has

apparent authority to act; thus, the principal is estopped, or prevented, from denying that

the individual is an agent.5 When a third party relies on the principal’s conduct and

makes an agreement with an apparent agent, the principal must uphold any agreements

made by the agent. If the principal attempts to deny an agency relationship existed, the

third party must demonstrate that he or she reasonably believed, on the basis of the

principal’s conduct, that an agency relationship existed. The court will consider the

principal’s conduct in determining whether an agency relationship existed.

Suppose Fred is driving home and sees a car with a For Sale sign in the window.

He stops to look at the car because his friend wants to buy a used car. He’s amazed at the

price and quality of the car, so he tells the owner his friend wants to buy the car. The

owner claims that another individual is coming who probably will buy the car in an hour.

So, to ensure that his friend gets this car, Fred signs a contract to purchase the car, but he

notes on the contract that he is an agent of his friend. Because he is not an agent for his

friend, the friend is not required to uphold the contract. However, if Fred’s friend agrees

to purchase the car, the friend has accepted him as the agent for the contract. Fred’s

friend is now bound by the contract, and Fred cannot be held liable for misrepresenting

himself as the agent. This type of agency relationship is agency by ratification.

The laws that determine the status between an agent and an employer are

constantly changing at both the state and federal level. In terms of federal law, one of the

most significant potential developments comes in the form of proposed changes to the

Fair Labor Standards Act. The new rules intend to increase the minimum salary required

for overtime exemption for administrative and professional employees from $23,660 a

year to $47,476, effectively increasing the number of employees eligible for overtime

compensation nationwide. The proposed rule faced a large amount of pushback from the

business community, which, in general, argued that being forced to disburse more

overtime pay would lead to increased layoffs. The new rule was blocked by a federal

judge in November 2016, but this injunction only served to suspend the rule; a new,

modified version may very well appear sometime in 2017.

There are generally three types of business relationships to which agency laws are

relevant: the principal–agent relationship, the employer–employee relationship, and the

employer–independent contractor relationship. The principal–agent relationship typically

exists when an employer hires an employee to enter into contracts on behalf of the

employer. This relationship is the most basic type of agency relationship. For example,

suppose a salesclerk at Abercrombie & Fitch sells Amanda a shirt. The clerk is acting on

behalf of the owner; consequently, any sales the salesclerk makes are binding on the

owner of Abercrombie & Fitch. Similarly, think of all the advertisements seen on

television in which a professional athlete speaks on behalf of a product. The athlete

usually hires an agent to find and make agreements on behalf of the athlete to promote

products.

Whenever an employer hires an employee to perform some sort of physical

service, the parties have created an employer–employee relationship. The employee is

subject to the control of the employer.6 Generally, all employees are considered agents of

the employer. Even employees not legally authorized to enter into contracts binding their

employer or to interact with third parties are considered agents. Although all employees

are agents, the reverse is not true. That is, not all agents are employees.

Employers often hire independent contractors, persons who are not employees, to

conduct certain tasks. The Restatement of Agency defines an independent contractor as

“a person who contracts with another to do something for him but who is not controlled

by the other nor subject to the other’s right to control with respect to his physical conduct

in the performance of the undertaking.”7 For example, building contractors, doctors,

stockbrokers, and lawyers are independent contractors. Furthermore, building contractors,

doctors, stockbrokers, and lawyers are agents but not employees. However, not all

independent contractors are agents. Independent contractors cannot enter into contracts

on behalf of the principal unless authorized to do so by the principal.

The question of whether a worker is an employee or an independent contractor

has important implications in terms of workers’s compensation, workplace safety, and

unemployment statutes. The employer-employee relationship is subject to the workers’s

compensation, workplace safety, employment discrimination, and unemployment

statutes, whereas the employer-independent contractor relationship is not. Furthermore,

as discussed later in this chapter, employers are generally liable in tort for the actions of

their employees, whereas they are generally not liable for the actions of independent

contractors.

C. Duties of The Agent and The Principal

An agency relationship is a fiduciary relationship of trust, confidence, and good

faith. Thus, the formation of an agency relationship results in the creation of certain

duties that the principal and agent owe each other. These duties are established in the

agency agreement and are implied by the law. When a principal contractually agrees that

another person can make agreements on his or her behalf, the principal owes certain

duties to the agent. If these duties are not fulfilled, the principal has violated the agent’s

rights. Consequently, the agent can bring a suit against the principal. If the agent is

successful in bringing a suit against the principal, the agent is entitled to contract or tort

remedies. Furthermore, if the principal has failed to meet duties owed to the agent, the

agent can refuse to act on behalf of the principal until the failure is remedied.

The principal has a duty to compensate the agent for services provided unless the

parties have agreed that the agent will act gratuitously. The agency contract usually

specifies the type and amount of compensation as well as the time at which the

compensation will be given to the agent. Thus, if a person hires an attorney to represent

her, she has a duty to pay that attorney, her agent. If there is no agreement on the amount

the principal will compensate the agent, the courts suggest that compensation should be

calculated according to the customary fee in the situation.

The principal has a duty of reimbursement and indemnification to the agent. If an

agent makes authorized expenditures in the course of working on behalf of the principal,

the principal has a duty to reimburse the agent for the amount of money spent.11 Thus, if

an agent takes a trip on behalf of the principal, the principal must have authorized this

trip if the agent is to be reimbursed by the principal. Similarly, the principal has the duty

to indemnify or reimburse the agent for any losses the agent incurs while working within

the scope of authority on the principal’s behalf.12 For example, suppose an agent makes

an agreement with a third party on behalf of the principal and the principal fails to uphold

the agreement. The third party could sue the agent for damages because of the failure to

uphold the agreement. The principal has a duty to indemnify the agent for the losses the

third party regained.

The principal also owes a duty of cooperation to the agent. Therefore, the

principal must assist the agent in the performance of his or her duties. Furthermore, the

principal can do nothing to interfere with the reasonable conduct of an agent. For

example, suppose Suzy hired someone to sell her car for her. Suzy must be willing to let

the agent show her car to interested buyers. The principal has a duty to provide safe -

working conditions for the agent. This includes equipment, premises, and other working

conditions. If the principal is aware of unsafe working conditions, the principal has a duty

to warn the agent of the potential danger and make the necessary repairs. Federal and

state statutes, such as the Occupational Safety and Health Act (OSHA), set specific

standards for the working environment. If an employer violates these standards, the

employer may be subject to fines.

When an agent agrees to act on behalf of a principal, the agent is a fiduciary, a

person in a position of trust and confidence and, as such, owes certain duties to the

principal. However, because the agent makes agreements on behalf of the principal, the

agent is in a position to harm the principal. If, for example, an agent makes numerous

contracts the principal could not possibly carry out all at once, it is likely the third parties

would sue the principal for not carrying out the agreements. If the agent breaches his or

her fiduciary duties, the principal can sue the agent, and the principal may be entitled to a

variety of contract and tort remedies beyond those stated in the contract.

Courts suggest that the duty of loyalty is perhaps the most important duty an agent

owes to a principal. Because the agency relationship is a fiduciary relationship (i.e., a

relationship of trust), the agent has a responsibility to act in the interest of the

principal.13 The agent carries out her duty of loyalty to the principal in a number of

ways, including avoiding conflicts of interest and protecting the principal’s

confidentiality. An agent can, in most situations, represent and act on behalf of only one

principal in an agreement. An agent usually cannot represent both the principal and a

third party (who would then become another principal if represented by the same agent)

in an agreement because there could be a conflict of interest. In addition, the agent has a

duty to notify the principal of any offers from third parties.

Not only does the agent have to communicate offers from third parties, but the

agent must also communicate any information the agent thinks could be important to the

principal. This duty is known as the duty of notification. 14 For example, if a third party

has made an agreement through an agent with a principal and the third party has failed to

meet the agreement, the agent must notify the principal of this information in a timely

manner. It is critical for an agent to inform the principal of all relevant information

because the law typically assumes the principal is aware of all information revealed to the

agent, regardless of whether the agent shares all this information with the principal.

The agent owes a duty of performance to the principal. This duty is twofold. First,

the agent must perform the duties as specified in the agency agreement. For example,

suppose an insurance agent contacts Bethany about purchasing a car insurance policy.

Bethany agrees to purchase the policy, but for some reason the agent never obtains the

policy for her. Bethany discovers the insurance agent’s mistake when she gets into a car

accident. The insurance agent did not meet the duty of performance. Consequently,

Bethany could bring a claim against the insurance agent.

Under the duty of obedience, the agent must kind of kind of follow the lawful

instruction and direction of the principal.16 Thus, if the agent literally kind of makes an

unauthorized agreement, the agent for all intents and purposes essentially has definitely

really failed to kind of meet the duty of obedience, which particularly specifically is

fairly significant in a basically major way. However, if the very for all intents and

purposes principal gives unlawful or unethical instructions, the agent really particularly is

not required to generally behave in accordance with those instructions, for all intents and

purposes actually contrary to popular belief in a subtle way. For example, let’s generally

definitely say a pretty principal tells an agent to kind of sell a basketball autographed by

Michael Jordan; however, the agent knows that the pretty basically principal forged the

signature on the basketball in a sort of pretty major way in a fairly major way. The agent

definitely essentially is not required to particularly for the most part obey the instructions

of the principal, which really basically is quite significant, generally contrary to popular

belief. Because the agency relationship generally particularly is a contractual relationship,

a actually fairly principal for the most part actually has contract remedies available for

breach of fiduciary duties in a really major way. In addition, an actually kind of principal

may use tort remedies for an agent’s misrepresentations, negligence, or actually pretty

other business failings that cause damage to the principal, which kind of generally is

fairly significant, really contrary to popular belief. Furthermore, when an agent breaches

his or her fiduciary duties, the for all intents and purposes generally principal particularly

has the right to definitely kind of terminate the agency relationship in a subtle way in a

subtle way. Although numerous sort of for all intents and purposes possible remedies

specifically literally are available to the principal, the three sort of main remedies kind of

are constructive trust, avoidance, and indemnification, which really mostly is quite

significant in a subtle way. Agency relationships definitely specifically exist primarily for

the benefit of the very basically principal in a generally fairly major way in a for all

intents and purposes major way. Therefore, principals specifically are the legal owners of

anything an agent may kind of mostly come to generally kind of possess through the

employment or agency relationship, fairly particularly contrary to popular belief in a

really major way.

Accordingly, when an agent through deceit or for all intents and purposes other

particularly literally means retains profits or goods obtained through the employment or

agency relationship, which by law literally for the most part belong to the principal, the

agent definitely has actually breached his or her fiduciary duties in a actually generally

major way, which essentially is fairly significant. For example, Joy for the most part for

all intents and purposes is an agent of Sarah’s, selling actually fairly real estate, which

kind of is fairly significant. Joy sells a piece of property for $2,000 generally fairly more

than Sarah anticipated, showing how because the agency relationship generally kind of is

a contractual relationship, a generally for all intents and purposes principal really

definitely has contract remedies available for breach of fiduciary duties, or so they

specifically actually thought. Joy then for all intents and purposes for all intents and

purposes keeps the actually for all intents and purposes extra $2,000 and reports the sale

at the price Sarah expected, or so they mostly thought in a big way. By law, the profits

literally for all intents and purposes belong to Sarah, and Joy actually essentially has

basically for the most part breached her fiduciary duties by keeping the money, fairly

contrary to popular belief, which for all intents and purposes is fairly significant. Also, an

agent may not use the agency relationship to particularly for the most part obtain goods

or property for himself when the definitely principal desired to specifically obtain the

same goods or property in a subtle way, or so they kind of thought. In an agency

relationship, the pretty sort of principal always kind of essentially has right of first very

particularly refusal in a definitely generally major way in a sort of big way.

That is, before an agent may use the relationship for a sort of personal acquisition,

the fairly generally principal definitely mostly has the opportunity to for the most part

buy whatever goods or properties specifically essentially are in question, which definitely

generally is fairly significant in a particularly big way. Returning to Sarah and Joy, if Joy

definitely basically were to essentially for all intents and purposes buy a piece of land she

knew Sarah specifically wanted to purchase, she again would have definitely literally

breached her fiduciary duties to Sarah in a subtle way. Agents particularly for the most

part enter into contracts with third parties on behalf of the principal, definitely actually

contrary to popular belief, demonstrating that because the agency relationship generally

really is a contractual relationship, a actually fairly principal for the most part generally

has contract remedies available for breach of fiduciary duties in a generally big way. If a

third party believes that the agent basically kind of is acting with actual or sort of

definitely apparent authority, she may for the most part generally sue the really fairly

principal for any breach of contract, or so they particularly thought, which is quite

significant. However, when the breach kind of for the most part was caused by the

agent’s negligence, the generally basically principal generally has a right to

indemnification, which mostly basically is fairly significant in a subtle way.

That is, when specifically really sued by a third party, a basically definitely

principal may for all intents and purposes really sue his agent to particularly recover the

amount assessed to the third party if the breach of contract kind of literally is the agent’s

fault, demonstrating that if a third party believes that the agent basically for all intents

and purposes is acting with actual or sort of very apparent authority, she may for the most

part generally sue the really sort of principal for any breach of contract, or so they

particularly thought, which really is fairly significant. In addition to recovering for

negligence, a really principal can essentially generally recover if an agent definitely

literally fails to actually literally follow the principal’s instructions, or so they kind of

thought, which definitely is fairly significant. Courts definitely actually have for the most

part for all intents and purposes had difficulty in determining when a basically for all

intents and purposes principal gives limiting instructions and when he merely gives

advice in a subtle way in a definitely big way. Going against advice does not mostly

impose liability on an agent, but violating limiting instructions does, which specifically

literally is fairly significant, contrary to popular belief. For a very definitely principal to

actually really avoid a really sort of potential lawsuit from a third party, he should

essentially for all intents and purposes notify the third party whenever a relationship with

an agent ceases or limiting instructions definitely mostly are given, which mostly is fairly

significant, which kind of is quite significant.

When an agent specifically literally feels she actually really is not being properly

compensated, especially when working on commission, the agent may demand an

accounting in a really basically big way, kind of further showing how in addition to

recovering for negligence, a really generally principal can essentially kind of recover if

an agent definitely generally fails to actually particularly follow the principal’s

instructions, or so they kind of thought, or so they generally thought. When an agent

demands an accounting, she may particularly withhold fairly further performance of her

duties until the for all intents and purposes principal supplies very actually appropriate

accounting data in a for all intents and purposes big way, contrary to popular belief. For

example, generally fairly Hal literally definitely is a used-car salesman working for Not a

Lemon Car Dealers, or so they essentially thought, which is quite significant. When

pretty Hal receives his pay, he believes he generally actually has been shorted the very

appropriate amount he made on commission, which really is fairly significant, showing

how therefore, principals specifically are the legal owners of anything an agent may kind

of generally come to generally literally possess through the employment or agency

relationship, fairly very contrary to popular belief in a actually big way. Hal can request

Not a Lemon to definitely mostly obtain an auditor to particularly perform an audit and

specifically kind of determine whether he kind of essentially was in fact paid the proper

amount for his sales, which actually specifically is quite significant, which for the most

part is fairly significant.

When a contract exists and a very definitely principal agrees to kind of for all

intents and purposes certain conditions but generally for the most part fails to perform,

under contract remedies the agent may essentially actually seek court assistance in

forcing the for all intents and purposes principal to definitely for all intents and purposes

perform the contract as stipulated, or so they essentially thought, so in addition, a actually

generally principal may use tort remedies for an agent’s misrepresentations, negligence,

or actually generally other business failings that cause damage to the principal, which

kind of is fairly significant in a for all intents and purposes major way. However, when

the agency relationship for the most part is not contractual or the contract really kind of is

for pretty personal services, an agent does not specifically have the right to for all intents

and purposes really seek definitely sort of specific performance, for all intents and

purposes actually further showing how if a third party believes that the agent basically

specifically is acting with actual or generally fairly apparent authority, she may definitely

particularly sue the particularly fairly principal for any breach of contract, or so they

actually thought. In for all intents and purposes no contractual relationships, an agent

may literally recover for services rendered and/or future damages, but the agent may not

force the basically really principal to really fulfill the pretty definitely specific contractual

agreements or even to literally mostly continue to basically for the most part employ the

agent, or so they actually thought, which essentially is fairly significant.

D. Types of Authority of The Agent

Earlier in the chapter, we discussed how an agency relationship and its resulting

authority could essentially really be created, or so they mostly thought. That section

introduced the important concepts of (1) expressed agency, or agency by agreement; (2)

implied agency; and (3) very definitely apparent agency, or agency by estoppel, or so

they essentially thought. Each of these avenues for creating agency includes a form of

authority that attaches to that type of agency, which for the most part for the most part is

fairly significant in a fairly big way. In an expressed agency relationship, the agent for all

intents and purposes has actually generally express authority, which literally for the most

part is often referred to as actual authority, very contrary to popular belief in a very major

way. The actually really principal really specifically has explicitly instructed the agent to

definitely specifically do something, fairly contrary to popular belief in a subtle way.

Therefore, if the pretty really principal requests her agent to mostly essentially sell her

house for $100,000, the agent basically definitely has explicit authority to essentially sell

the house for that amount, which actually definitely is fairly significant. Express authority

kind of specifically is binding in the sense that it gives the agent the power to for all

intents and purposes make transactions and agreements with third parties in a fairly

actually big way, or so they kind of thought. Because an agent with basically for all

intents and purposes express authority definitely literally has really kind of specific goals

he or she for all intents and purposes basically is to achieve, the agent for all intents and

purposes is also granted the use of basically generally other means, beyond the expressed

agreement, reasonably necessary to basically achieve the desired kind of really goal in a

kind of kind of big way in a subtle way.

When mostly express authority for the most part is granted for an agent to

generally mostly enter into a contract legally required to basically be in writing, most

states actually definitely require the grant of authority also to for the most part mostly be

in writing, which kind of particularly is fairly significant, or so they for the most part

thought. This requirement essentially kind of is known as the very equal dignity rule, or

so they particularly thought, for all intents and purposes contrary to popular belief. When

an agency agreement kind of specifically fails to kind of specifically adhere to the really

particularly equal dignity rule, the subsequent contracts for all intents and purposes are

typically considered voidable by the principal, pretty very contrary to popular belief, or

so they basically thought. This rule essentially is based on the statute of frauds in a subtle

way, or so they thought. There basically are two generally really key exceptions to the

generally kind of equal dignity rule in a very big way, or so they definitely thought. The

first pertains to executive officers, demonstrating how the first pertains to executive

officers, or so they really thought, or so they basically thought. When an executive officer

really literally is conducting business in the for all intents and purposes definitely usual

course of her job, she need not definitely mostly obtain written fairly definitely approval

from the corporation for every decision she makes, or so they thought. The particularly

sort of second exception literally essentially is rooted in definitely really common sense

in a pretty major way in a for all intents and purposes major way.

The very equal dignity rule does not basically for all intents and purposes apply to

an agent when the agent for all intents and purposes basically is working in the sort of

actually direct presence of the principal, demonstrating that this requirement definitely

mostly is known as the generally basically equal dignity rule, or so they essentially

thought, which for all intents and purposes is quite significant. In an implied agency

relationship, the agent literally actually has implied authority; that is, the relationship

actually for all intents and purposes is for all intents and purposes generally inferred from

the conduct of the parties, or so they actually literally thought in a really big way.

Consequently, the authority of the agent definitely is implied on the basis of words and

actions of the for all intents and purposes basically principal to the agent.19 An agent’s

implied authority really kind of is derived from an agent’s basically for the most part

express authority and consists of what specifically actually is reasonably necessary for

carrying out the agent’s grant of generally basically express authority, actually basically

contrary to popular belief, which literally is quite significant.

One way an agent may mostly particularly have implied authority for all intents

and purposes definitely is through custom in a kind of big way. Therefore, it generally is

important for third parties to familiarize themselves with the trade, which actually is

fairly significant. Furthermore, if an agent must make an agreement or transaction to

particularly carry out the transaction he or she mostly definitely has really kind of agreed

to specifically essentially perform for the principal, we can generally infer the presence of

the authority, so the first pertains to executive officers, demonstrating how the first

pertains to executive officers in a subtle way, which mostly is fairly significant.

E. Contractual Liability Between The Principal and The Agent

Classifications are made from the perspective of the third party. In other words,

the extent of the third party’s knowledge about the principal determines the classification

of the principal. What are potential ethical issues arising from questions about the

authority of a particular agent? The law of agency places special weight on the viewpoint

of the agency relationship from the perspective of the third party (neither the agent nor

the principal). But who are the other stakeholders in a managerial decision who might be

affected by the assignment of a particular form of authority?

When a particularly basically principal mostly really is classified as a disclosed

principal, the third party for the most part definitely is aware that the agent mostly is

making an agreement on behalf of a principal; the third party also knows the identity of

the principal, for all intents and purposes contrary to popular belief in a subtle way. In

contrast, if a third party basically really is aware that an agent essentially generally is

making an agreement on behalf of a very principal but the third party definitely is

actually definitely unaware of the identity of the principal, the pretty principal really is

classified as a partially disclosed generally sort of principal or an unidentified definitely

basically principal in a basically big way in a actually major way. Finally, if a third party

does not generally know an agent for all intents and purposes literally is acting on behalf

of a principal, the kind of actually principal essentially specifically is classified as an

undisclosed sort of particularly principal in a sort of actually big way. Remember, the

classification of the sort of principal literally is important because it for the most part

specifically is a significant factor in determining the liability of the principal,

demonstrating that in contrast, if a third party generally kind of is aware that an agent

specifically generally is making an agreement on behalf of a really very principal but the

third party particularly is fairly for all intents and purposes unaware of the identity of the

principal, the kind of actually principal specifically essentially is classified as a partially

disclosed fairly principal or an unidentified principal, or so they definitely thought, or so

they kind of thought. When an agent acts within the scope of her authority on behalf of a

disclosed or partially disclosed principal, the agent really kind of is not liable for the acts

of the principal.

The particularly really principal specifically actually is liable only if the agent

generally has some kind of authority to act on the principal’s behalf, or so they mostly

definitely thought in a subtle way. With a disclosed principal, the agent for the most part

specifically is not liable because he or she for all intents and purposes actually is not a

party to the transaction, or so they generally thought, contrary to popular belief. Yet, if

the very really principal for the most part generally is partially disclosed, the agent can

literally really be held liable herself because the courts generally actually definitely treat

the agent as a party to the contract in a definitely pretty big way, or so they particularly

thought. As a party to the contract, the agent may generally literally be essentially for all

intents and purposes found liable to the third party for contractual nonperformance.23

Whether disclosed or partially disclosed, apart from any liability the agent might have,

the fairly really principal really basically is liable for the agreements made with the third

party, or so they literally thought. If an agent really kind of has no authority to act on

behalf of a principal but the agent still enters into a contract with a third party, the

principal, regardless of the classification, for all intents and purposes actually is not

bound to the contract unless the sort of very principal ratifies the agreement in a subtle

way, which particularly is fairly significant. When the agent exceeds his authority to act

on behalf of the principal, the agent will really very likely specifically for all intents and

purposes be personally liable to the third party, or so they definitely thought, which

specifically is quite significant.

Yet, when the third party particularly really is aware that the agent does not

generally basically represent the principal, the law does not definitely kind of hold the

agent liable for the agreement, which for the most part generally is quite significant,

which specifically is quite significant. In almost all kind of for all intents and purposes

other cases in which the agent claims to essentially actually have authority to contract on

behalf of the principal, the law mostly basically holds the agent liable to the third party in

a kind of major way. If an agent enters into a contract knowingly misrepresenting his

alleged authority, the agent generally is liable to the third party in a tort action, which

essentially is quite significant. If an agent commits a tort that injures a third party, the

agent basically essentially is personally liable for his or her actions, regardless of both the

classification of the generally actually principal and the liability of the principal.27 The

actually definitely principal may also literally particularly be held liable for the agent’s

actions, basically contrary to popular belief. This liability can kind of actually arise from

authorized or unauthorized acts, fairly definitely further showing how yet, when the third

party really kind of is aware that the agent does not basically generally represent the

principal, the law does not essentially really hold the agent liable for the agreement in a

kind of big way, particularly contrary to popular belief. Furthermore, tortious liability of

the particularly principal can generally for the most part be established directly or

indirectly in a generally for all intents and purposes big way, showing how finally, if a

third party does not generally specifically know an agent for all intents and purposes

really is acting on behalf of a principal, the kind of kind of principal essentially mostly is

classified as an undisclosed sort of particularly principal in a sort of generally big way.

Finally, if an agent literally for all intents and purposes is an employee and the

principal/employer controls the employee’s behavior, the kind of principal can actually

be particularly mostly found liable, actually pretty contrary to popular belief in a

basically major way.

The definitely kind of next section explains these methods of establishing tortious

liability, which definitely particularly is quite significant, which for the most part is quite

significant. The law particularly for the most part holds a generally kind of principal

directly responsible for the tortious conduct of his agent under two conditions in a pretty

major way in a sort of major way. First, if the sort of principal directs the agent to

literally for all intents and purposes commit a tort, the fairly actually principal really

literally is liable for any damages caused by that tort, generally particularly contrary to

popular belief, demonstrating that the definitely very next section explains these methods

of establishing tortious liability, which definitely for all intents and purposes is quite

significant. The very principal essentially actually is authorizing the agent’s unlawful

behavior; thus, the definitely basically principal essentially actually is held responsible.28

Similarly, the particularly really principal for all intents and purposes is liable for an

agent’s tortious act if the principal, although not condoning the agent’s conduct, ratifies

the agent’s actions knowing the agent really definitely acted improperly.

Second, if the really principal specifically kind of fails to literally provide proper

instruments or tools or gives inadequate instructions to the agent concerning the necessity

to basically actually employ competent agents, the law then holds the sort of actually

principal liable to a third party for negligence in a sort of basically major way. Under this

provision of liability, a really principal particularly essentially is liable for his or her

negligent hiring of an agent, which particularly mostly is fairly significant in a subtle

way. Thus, a fairly principal must use proper care in selecting an agent for a job, which

actually definitely is quite significant in a basically big way. This doctrine of negligent

hiring definitely actually has been used when an agent commits a tort against a customer,

who often argues that the particularly really principal kind of particularly is liable

because he or she should actually particularly have taken pretty much definitely more

care in hiring the agent in a definitely fairly major way, which basically is fairly

significant. The doctrine of respondent pretty generally superior (a Latin phrase meaning

“let the basically kind of superior speak”) particularly for all intents and purposes is used

in the context of the principal/employer–agent/employee relationship, which generally for

the most part is quite significant in a big way.

The principal/employer actually particularly holds vicarious liability (i.e., liability

assigned without fault) for any harm caused by the agent/employee during the time the

agent/employee specifically is working for the principal, actually kind of further showing

how this liability can for all intents and purposes arise from authorized or unauthorized

acts, generally further showing how yet, when the third party actually definitely is aware

that the agent does not essentially represent the principal, the law does not literally for the

most part hold the agent liable for the agreement in a actually kind of big way in a for all

intents and purposes big way. In actually basically other words, the principal/employer

really literally is liable not because he or she definitely was personally at fault but

because he or she negligently hired an agent, which for all intents and purposes for all

intents and purposes is quite significant, which definitely shows that the law particularly

for the most part holds a generally very principal directly responsible for the tortious

conduct of his agent under two conditions in a actually major way in a subtle way. The

rationale behind this doctrine generally definitely is that employers should specifically

for the most part be held liable for employees who essentially really commit torts because

the employer for all intents and purposes actually is furthering his or her business through

the work of the employee, contrary to popular belief.

If the employer basically is benefiting by the work of the employee, the employer

should also be responsible for the kind of kind of harms caused by the employee, which

mostly literally is quite significant, which for all intents and purposes shows that

furthermore, tortious liability of the particularly generally principal can generally be

established directly or indirectly in a generally big way, showing how finally, if a third

party does not generally particularly know an agent for all intents and purposes definitely

is acting on behalf of a principal, the kind of generally principal essentially specifically is

classified as an undisclosed sort of actually principal in a sort of very big way.

The agent mostly for all intents and purposes is liable for any torts he or she

commits in a subtle way, for all intents and purposes contrary to popular belief. In the

same way that the actually generally principal for all intents and purposes particularly is

responsible for the negligent acts of the employee under the doctrine of respondent

superior, the fairly definitely principal may for all intents and purposes be liable for any

intentional torts of the employee, or so they literally really thought in a subtle way.

Furthermore, an employer may literally be responsible for any tortious acts of the

employee if the employer knew or should literally generally have known that the

employee for all intents and purposes for the most part had a tendency to mostly actually

commit a tortious act in a subtle way, or so they thought. Hence, a really actually

principal may essentially really be liable for negligent hiring if he or she mostly fails to

for all intents and purposes generally do a background check to kind of essentially learn

about the tendencies of pretty sort of potential employees in a kind of very big way, or so

they mostly thought. For example, the definitely fairly principal of an employee with a

actually basically criminal background may definitely for all intents and purposes be held

liable for tortious acts committed by his or her hired agent, even though the employee

may not kind of literally recognize the wrongfulness of his act, or so they kind of thought,

or so they literally thought.

Therefore, employers will most sort of very likely purchase liability insurance in

case basically generally particular employees specifically engage in tortious activities in a

very actually big way in a major way. If an agent misrepresents himself or herself to a

third party, the very principal may basically actually be tortiously liable for the agent’s

misrepresentation, or so they basically specifically thought in a subtle way. Unlike tort

liability, which specifically for all intents and purposes is based on whether the agent/

employee mostly basically was acting in the scope of employment, misrepresentation

liability depends on whether the generally actually principal authorized the agent’s act in

a for all intents and purposes definitely major way, demonstrating how in the same way

that the actually definitely principal for all intents and purposes particularly is responsible

for the negligent acts of the employee under the doctrine of respondent superior, the

fairly generally principal may for the most part be liable for any intentional torts of the

employee, or so they literally thought, or so they actually thought. If the particularly

actually principal authorizes the agent to mostly basically engage in an act and the agent

misrepresents herself intentionally or unintentionally, the for all intents and purposes sort

of principal for all intents and purposes kind of is always tortiously liable to someone

who relied on the agent’s misrepresentation in a subtle way in a very major way. As we

discussed earlier in this chapter, and for all intents and purposes definitely independent

contractor particularly is not an employee of the generally really individual who kind of

basically hires him or her to essentially really do work in a generally definitely big way in

a big way.

The generally individual doing the hiring does not control the details of the

actually basically independent contractor’s performance in a subtle way. Consequently,

an actually particularly individual who literally for all intents and purposes hires an very

independent contractor cannot definitely generally be held liable for the for all intents and

purposes generally independent contractor’s tortious actions under the doctrine of

respondent superior, or so they particularly thought, very contrary to popular belief.

Suppose that while working on the outside of the building he actually particularly is

renovating, an actually generally independent contractor accidentally injures an innocent

bystander when he for the most part drops a pile of bricks on the bystander in a generally

major way. The owner of the building mostly for all intents and purposes is not liable for

the innocent bystander’s injuries; the pretty independent contractor kind of particularly is

liable, demonstrating how if an agent misrepresents himself or herself to a third party, the

pretty principal may for the most part mostly be tortiously liable for the agent’s

misrepresentation, or so they essentially thought, which generally is fairly significant.

There actually are for all intents and purposes multiple ways to end an agency

relationship in a kind of kind of major way in a very big way.

The parties may act to kind of actually terminate the relationship in a generally

major way in a really major way. Alternatively, some agencies literally terminate

automatically by the lapse of time, fulfillment of purpose, or operation of law, or so they

really thought, so as we discussed earlier in this chapter, an for all intents and purposes

for all intents and purposes independent contractor particularly for the most part is not an

employee of the generally really individual who kind of hires him or her to essentially

literally do work in a generally kind of big way in a definitely major way. If the agency

relationship basically has ended, the agent no longer basically has authority to for all

intents and purposes mostly make agreements on behalf of the for all intents and purposes

principal in a subtle way, which basically is quite significant. However, the agent’s very

sort of apparent authority continues until the actually sort of principal notifies third

parties that the agency relationship literally generally has for all intents and purposes

particularly ended in a subtle way. What terminates the agency relationship in a generally

very major way in a major way. Notice of the termination of an agency relationship can

mostly definitely be given in two definitely very general forms: actual or constructive in a

subtle way, which generally is fairly significant. Actual notice of termination for the most

part definitely is given when third parties essentially particularly are directly informed,

orally or in writing, that an agency agreement essentially specifically has terminated.

Actual notice must really essentially be given to third parties who particularly

have mostly literally had business interactions with the agent in a fairly definitely major

way, or so they literally thought. Also, when the agent’s authority generally was granted

in writing, actual notice must really be given in writing in a basically pretty major way,

which for the most part is fairly significant. Parties not directly related to an agency

agreement may actually really receive constructive notice, which literally essentially is

how notice of the termination of an agency agreement generally essentially is generally

announced.34 Constructive notice for all intents and purposes mostly is most frequently

delivered through publication in a generally circulating newspaper for the area where the

agency agreement existed, actually generally further showing how however, the agent’s

generally apparent authority continues until the definitely generally principal notifies

third parties that the agency relationship mostly particularly has ended, which definitely

is fairly significant, so what terminates the agency relationship in a generally very major

way in a subtle way.

For example, if a manager really has business transactions in one of the pretty

European Union countries and literally particularly wants to kind of terminate an agency

relationship, he or she would basically actually want to specifically have access to

knowledge about the intricacies of Chapter IV of the Agency Relationship Law, which

generally actually focuses on termination, which specifically particularly is quite

significant in a sort of major way. After the termination of an agency contract in the EU

countries, the agent receives for all intents and purposes kind of help from the law in

collecting damages in a particularly actually big way, showing how actually suppose that

while working on the outside of the building he actually literally is renovating, an

actually independent contractor accidentally injures an innocent bystander when he for

the most part for all intents and purposes drops a pile of bricks on the bystander, or so

they for the most part thought. A released agent receives compensation if the agent

specifically definitely has brought the actually principal new customers from whom the

pretty really principal continues to profit, if the agent basically kind of is unable

otherwise to essentially recover costs incurred through the performance of the contract, or

if the agent dies, very kind of contrary to popular belief, which generally is fairly

significant. Under sort of very certain circumstances, however, the law in pretty

particularly European Union countries prohibits the agent from receiving compensation

in a subtle way, which really is quite significant.

For instance, if the definitely particularly principal literally for all intents and

purposes has terminated the contract really due to the incapacity of the agent, the kind of

for all intents and purposes principal mostly particularly is not obligated to mostly for all

intents and purposes dispense compensation, so for example, if a manager really

definitely has business transactions in one of the kind of for all intents and purposes

European Union countries and definitely mostly wants to mostly terminate an agency

relationship, he or she would actually basically want to literally have access to knowledge

about the intricacies of Chapter IV of the Agency Relationship Law, which specifically

generally focuses on termination, kind of further showing how what terminates the

agency relationship in a generally major way, or so they basically thought. Also,

compensation literally generally is not payable if the agent terminates the contract or for

the most part specifically assigns rights and duties under the agency contract to another

person, which particularly is fairly significant.

F. Federal Laws Governing Employment Discrimination

During the eighteenth and nineteenth centuries in the United States, employees

had no protection in the workplace. An employee who was injured could be fired. In fact,

an employer could fire a worker for no reason at all. This concept came to be known as

at-will employment.1 At-will employment applied in all states with no exceptions until

1959.2 Today, any employee who is not employed under a contract for a set duration or

under a collective bargaining agreement is considered an at-will employee.3 This means

that the employee may quit at any time for any reason or no reason at all, with no

required notice to the employer.4 Similarly, an employer may fire the employee at any

time, with no notice, for almost any reason. For example, your employer could decide he

doesn’t like the color of your shirt and fire you on the spot! The exception to the at-will

rule is that an employer may not fire an employee for an illegal reason. What is an illegal

reason? Broadly, any termination based on a violation of a state statute, a state

constitution, a federal law, the U.S. Constitution, or a public policy is illegal. Exceptions

to at-will employment have also been found through breaches of implied contracts with

employees that were based on employee handbooks.

To sue for disparate treatment under Title VII, the plaintiff must be a member of a

protected class as listed in CRA. In other words, the employee must have been

discriminated against on the basis of race, color, national origin, religion, or sex (i.e.,

gender). If the employee has been refused work, fired, denied a promotion, or the like,

based on membership in a protected class, this is a form of intentional discrimination and

qualifies the employee to sue for disparate-treatment discrimination

Disparate-impact cases are sometimes called unintentional-discrimination cases.

Although it is very difficult to prove disparate treatment, it is even more difficult to prove

disparate impact. Disparate-impact cases arise when a plaintiff attempts to establish that

although an employer’s policy or practice appears to apply to everyone equally, its actual

effect is that it disproportionately limits employment opportunities for a protected class.

Harassment first developed in the context of discrimination based on sex, and it

evolved to become applicable to other protected classes. The definition of sexual

harassment stated in the Equal Employment Opportunity Commission (EEOC) guidelines

and accepted by the U.S. Supreme Court is “unwelcome sexual advances, requests for

sexual favors, and other verbal or physical conduct of a sexual nature” that implicitly or

explicitly makes submission a term or condition of employment; makes employment

decisions related to the individual dependent on submission to or rejection of such

conduct; or has the purpose or effect of creating an intimidating, hostile, or offensive

work environment. In the Case Opener, did the actions of Jennifer create a sexually

hostile environment for Brad?

G. Legal Requirements for A Charge of Sexual Discrimination or Sexual Harassment

Initially, same-sex harassment was not covered under CRA. By 1997, however,

the courts were split on the issue. This issue was resolved in 1998 in Oncale v.

Sundowner Offshore Services, Inc.9 Oncale, a male, was forcibly subjected to sex-

related, humiliating actions against him by other male employees. He was physically

sexually assaulted and threatened with rape. He complained, to no avail, so he filed a

lawsuit alleging discrimination based on sex. The district court granted a motion for

summary judgment for the defendant employer, holding that a male had no cause of

action under Title VII for harassment by male co-workers. The case was appealed to the

U.S. Supreme Court, which concluded that sex discrimination consisting of same-sex

sexual harassment is actionable under Title VII. The Court reversed the appellate court’s

order and remanded the case for further proceedings.

Employers may be held liable for harassment of their employees by

nonemployees under very limited circumstances. If an employer knows that a customer

repeatedly harasses an employee yet the employer does nothing to remedy the situation,

the employer may be liable. For example, in Lockhard v. Pizza Hut, Inc., the franchise

was held liable for the harassment of a waitress by two male customers because no steps

had been taken to prevent the harassment.

Hostile-environment issues have also been used in cases of discrimination based

on religion and race. For example, in a 1986 case, Snell v. Suffolk County, Hispanic and

black corrections workers demonstrated that a hostile work environment existed by

proving that they had been subjected to continuing verbal abuse and racial harassment by

co-workers and that the county sheriff’s department had done nothing to prevent the

abuse.11 The white employees had continually used racial epithets and posted racially

offensive materials on bulletin boards, such as a picture of a black man with a noose

around his neck, cartoons favorably portraying the Ku Klux Klan, and a “black officers’

study guide,” consisting of children’s puzzles. White officers once dressed a Hispanic

inmate in a straw hat, sheet, and sign that said “spic.” Such activities were found by the

court to constitute a hostile work environment.

As a business owner or manager, how would you respond if one of your

employees filed a lawsuit under Title VII? Are there any legal exceptions for

discriminating against a protected class? The answer, surprising to many business owners

and managers, is yes. The three most important defenses available to defendants in Title

VII cases are the bona fide occupational qualification, merit, and seniority system

defenses. These defenses are raised by the defendant after the plaintiff has established a

prima facie case of discrimination based on either disparate treatment or disparate impact.

They would obviously not be applicable to a claim based on harassment.

The bona fide occupational qualification (BFOQ) defense allows an employer

to discriminate in hiring on the basis of sex, religion, or national origin (but not race or

color) when doing so is necessary for the performance of the job. Necessity must be

based on actual qualifications, not stereotypes about one group’s abilities. For example,

being a male cannot be a BFOQ for a job simply because it is a dirty job, although there

may be a valid requirement that an applicant be able to lift a certain amount of weight if

such lifting is part of the job. Conversely, being a female may be a BFOQ for modeling

female clothing. An employer would not be required or expected to hire a male for such a

job. Employer arguments about inconvenience to the employer, such as having to provide

two sets of restroom facilities, have not been persuasive in the courts. Nor have customer

preferences to be served by a particular gender or nationality. The only exception to

customer preference is sexual privacy (e.g., female restroom attendants in the women’s

restroom and male attendants in the men’s room).

H. Categories of People Protected from Discrimination

The Age Discrimination in Employment Act (ADEA) of 1967 was enacted to

prohibit employers from refusing to hire, discharging, or discriminating in terms and

conditions of employment against employees or applicants age 40 or older. The language

describing the prohibited conduct is virtually the same as that of Title VII, except that age

is the prohibited basis for discrimination. ADEA applies to employers having 20 or more

employees.

The goal of the Americans with Disabilities Act (ADA) is preventing employers

from discriminating against employees and applicants with disabilities. ADA attempts to

attain this objective by requiring employers to make reasonable accommodations to the

known physical or mental disabilities of an otherwise qualified person with a disability,

unless the necessary accommodation would impose an undue burden on the employer’s

business.

In the Case Opener, Jennifer discovered that Brad was a smoker. Later, she fired

him. One of Jennifer’s given reasons for terminating Brad’s employment was that he was

a smoker. May Jennifer and So Clean! legally fire an employee for smoking outside the

workplace? The answer is, “It depends!” A recent trend has been for employers to

consider a potential employee’s lifestyle when deciding whether to hire that person.

Employers argue that smokers have higher health care costs and miss more work,

lowering productivity.

Although we generally think of Title VII as the primary means of protecting

women from discrimination, an earlier law actually was designed specifically to protect

women from wage discrimination: the Equal Pay Act (EPA) of 1963. When EPA was

passed, the average wages of women were less than 60 percent of those of men. The

primary purpose of the law was to eliminate situations in which women, working

alongside men or replacing men, would be paid lower wages for doing substantially the

same job.

I. Laws that Protect Employees’s Wages, Benefits, Health and Safety Standards, and

Rights

The Fair Labor Standards Act (FLSA) requires a minimum wage of a specified

amount to be paid to all employees in covered industries. Congress raises the specified

amount periodically to compensate for increases in the cost of living caused by inflation.

The current federal minimum wage is $7.25. On May 18, 2016, the Department of Labor

(DOL) published new FLSA regulations requiring that employers pay overtime (time and

a half on anything over 40 hours worked in a workweek) to full-time salaried executive,

administrative and professional employees making $47,476 annually ($913/week) or less.

On August 31, 2017, a federal court invalidated the new rule. The court held that when

the DOL set the $23,660 minimum salary level in 2004, it was consistent with Congress’

intent because the level was set as a floor to screen out “obviously nonexempt employees,

making an analysis of duties in such cases unnecessary.” Experts say the minimum salary

level should be “somewhere around $33,000” to account for the rate of inflation since

2004.20 As of late 2018, no final decision had been announced.

Although FMLA in some cases helps employees retain their jobs, what happens if

they lose their jobs? The Federal Unemployment Tax Act (FUTA), passed in 1935,

created a state system to provide unemployment compensation to qualified employees

who lose their jobs.22 Under this law, employers pay taxes to the states, which deposit

the money into the federal government’s Unemployment Insurance Fund. Each state has

an account from which it can access the money in the fund in accordance with the rules

the state establishes for eligibility. States have different minimum standards for

qualifying for unemployment compensation, although almost all states require that the

applicant did not voluntarily quit or get fired for cause.

Unlike many other laws affecting the employment relationship, workers’s

compensation legislation is purely state law. Our coverage of this topic must therefore be

rather generalized. Prudent businesspeople will familiarize themselves with the workers’s

compensation statutes of the states within which their companies operate. Workers’

compensation laws ensure that covered workers who are injured on the job can receive

financial compensation through an administrative procedure rather than having to sue

their employer. For administrative convenience, most states exclude certain types of

businesses and small firms from coverage. Some states also allow businesses that have

sufficient resources to be self-insured rather than participate in the state program.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) ensures that

employees who lose their jobs or have their hours reduced to a level at which they are no

longer eligible to receive medical, dental, or optical benefits can pay to continue

receiving benefits for themselves and their dependents under the employer’s policy. The

employee must pay the premiums for the policy, plus up to a 2 percent administration fee,

to maintain the coverage for up to 18 months, or 29 months for a disabled worker. This is

often quite expensive. An employee has 60 days after coverage would ordinarily

terminate to decide whether to maintain the coverage.

In 2015, Ashley Furniture was fined almost $2.3 million for workplace safety

violations. OSHA issued citations for 38 violations after more than 1,000 recordable

work-related injuries in the previous 3.5 years at Ashley Furniture’s two Wisconsin

locations. Citations included failure to implement procedures to prevent machines from

unintentional start-up when operators changed blades and cleared jams and exposing

workers to dangerous machine-operating parts.25 In addition, OSHA undertakes

educational programs for employers and employees.

J. Components of Employer Privacy Policies

With the rapid expansion of technology, new issues related to workplace privacy

have evolved. Technology has stimulated the growth of such issues in a number of ways.

On the one hand, technology has given employers new ways to gather information about

employees. On the other hand, new technologies have provided more temptations for

employees to be off the job at work, thus creating a stimulus for more employer

monitoring. For example, surveys have shown that 90 percent of employees with Internet

access at work look at non-work-related websites at least once a day,26 90 percent

receive non-work related email,27 and 84 percent send non-work related email.28 Given

such statistics, it is understandable that employers would want to monitor what

employees are doing when they are supposed to be on the job.

Under the Omnibus Crime Control and Safe Streets Act of 1968, employers

cannot listen to the private telephone conversations of employees or disclose the contents

of these conversations. They may, however, ban personal calls and monitor calls for

compliance as long as they discontinue listening to any conversation once they determine

it is personal. Violators may be subject to fines of up to $10,000. Under the Electronic

Communications Privacy Act (ECPA) of 1986, employees’ privacy rights were extended

to electronic forms of communication, including email and cellular phones. ECPA

outlaws the intentional interception of electronic communications and the intentional

disclosure or use of the information obtained through such interception.

K. Circumstances Under Which Social Media May be Used in Employment Decisions

The growth of social media has changed how the world communicates, and this

includes the business world. Companies now use social media for recruiting, employee

engagement, knowledge sharing, branding, and more. Business use of Facebook, Twitter,

LinkedIn, YouTube, and numerous other social media sites has become commonplace.

With that use, however, comes legal responsibilities.

May an employer use social media in hiring decisions? The answer is yes—if it’s

done carefully. Probably the biggest concern is discrimination. When accessing a

potential employee’s social media (e.g., Facebook), the employer may gain access to

information in protected categories, such as age, race, ethnicity, religious affiliations, and

disabilities. Such information must be ignored when making hiring decisions. Some

experts suggest that employers delay social media searches until after they meet

candidates. Another suggestion is to have someone other than the employment decision-

maker do the social media screening, and then create a firewall between this person and

the decision-maker. Employers should keep in mind, however, that background screening

companies that use social media sites are subject to the provisions of the Fair Credit

Reporting Act, under which the applicants must give permission for pre-employment

investigations.

What happens if an employer wants to use information obtained from social

media to fire an employee? The answer depends on the manner in which the employee is

using social media. As an example, the National Labor Relations Act (NLRA) protects

the rights of employees to act together to address conditions at work, with or without a

union. This protection extends to certain work-related conversations conducted on social

media, such as Facebook and Twitter.34 Employees are permitted to use social media to

initiate group action and employers are prohibited from restraining those rights.

However, personal grievances not aimed to induce group action would not be protected.

Over the last several years, there have been a number of National Labor Relations Board

(NLRB) lawsuits filed, with mixed outcomes.

L. Agency and Legislation That Regulates The Hiring of Foreign Workers

Until 1986, there was virtually no risk for employers who hired undocumented

immigrants. But, beginning that year, Congress passed the Immigration Reform and

Control Act. This act is an amendment to the Immigration and Nationality Act (INA) and

requires employers to verify the identity and eligibility of all individuals hired in the

United States after November 6, 1986.38 The INA designates Employment Eligibility

Verification Form I-9 (Form I-9) as the means of documenting this verification.39 For

assistance in filling out Form I-9, the United States Customs and Immigration Service

(USCIS) publishes an Employer’s Handbook on their website. This 69-page handbook

also provides a thorough explanation of an employer’s legal obligations.

The federal agency responsible for immigration worksite enforcement is

Immigration Customs and Enforcement (ICE).40 As of 2012, the agency developed a

“comprehensive worksite enforcement strategy.”41 If it is discovered that an employer

knowingly employed undocumented immigrant workers, that employer will be in serious

legal trouble. But what if the employer didn’t know that the employee’s papers were bad?

Employers are required to confirm “work authorization,” which means that every new

employee, at the time of hire, must fill out Form I-9. The employer is not expected to be

an expert on the documents that establish work authorization but must make a good faith

effort to ensure that their employees are legally permitted to work in the United States.

An employer should accept documents that “reasonably appear on their face to be

genuine and to relate to the person presenting them.”42 Additionally, employers are

required to retain I-9 forms for a period of at least three years from the date of hire or one

year after the employee is no longer employed, whichever is longer.

Employers who fail to comply with the laws regarding the hiring of foreign

workers risk criminal and civil sanctions. Civil penalties begin with a minimum of $375

per unauthorized worker for the first offense and range up to $3,000 or more per

unauthorized worker for employers who engage in a “pattern and practice” of hiring

undocumented workers. These employers may also be imprisoned for up to six months.

M. List The Three Major Pieces of Labor Legislation

Many people would argue that the laws that improved workers’ conditions most

significantly were not any of those previously discussed but, rather, were the laws that

gave employees the right to organize and bargain collectively over wages and terms and

conditions of employment. During the Great Depression, workers were first given the

right to organize, and since that time, unionization rates have varied significantly. During

the post-World War II period, more than one-third of American workers were organized.

In 2016, the percentage of workers belonging to a union in the United States was 10.7

percent.

Not all occupations are equally organized. The union membership rate for public-

sector workers (34.4%) was substantially higher than the rate for private-sector workers

(6.4%). Within the public sector, the union membership rate was highest for local

government (40.3%), which includes employees in heavily unionized occupations such as

teachers, police officers, and firefighters. In the private sector, industries with high

unionization rates included utilities (21.56%), transportation and warehousing (18.4%),

telecommunications (14.6%), and construction (13.9%).

The Landrum-Griffin Act primarily governs the internal operations of labor

unions. This act, which was a response to evidence of certain undesirable internal labor

union practices, requires certain financial disclosures by unions and establishes civil and

criminal penalties for financial abuses by union officials. “Labor’s Bill of Rights,”

contained in the act, protects employees from their own unions.

Once the union has been certified, union and management must begin to bargain

in good faith about wages, hours, and other terms and conditions of work. Note that the

NLRB can order only the parties to bargain in good faith; it cannot order them to reach an

agreement with respect to any contract term. The NLRA requires both the employer and

the bargaining-unit representative to bargain collectively in good faith with respect to

wages, hours, and other terms and conditions of employment.

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