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Agency - PowerPoint PPT Presentation

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Agency. The key to . . . something. Agency is a relationship. Consent shown to one person (agent) Act on behalf of the other (principal) Agent is subject to control by principal Agreement subject to consent by agent Principal thus agrees to be responsible for acts of agent Contracts Torts.

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The key to . . . something

agency is a relationship
Agency is a relationship
  • Consent shown to one person (agent)
  • Act on behalf of the other (principal)
    • Agent is subject to control by principal
    • Agreement subject to consent by agent
  • Principal thus agrees to be responsible for acts of agent
    • Contracts
    • Torts
respondeat superior
Respondeat superior

“Let the boss answer”

principals act through agent
Principals act through agent
  • Principal may do almost anything through an agent
  • Some principals may only act through agents
    • Corporations
    • LLCs
    • Cooperatives
    • You get the idea
relationship depends on consent
Relationship depends on consent
  • Principal’s consent
  • Express or implied
  • Lets principal have control over agent
  • Does not always depend on intent of parties
    • Motive of agent, for individual actions
    • Dealings with third parties
consent may be inferred from conduct
Consent may be inferred from conduct
  • Ratification by principal
    • Approval after the fact
    • Accepting benefits
  • Actions
  • Course of dealing
  • Circumstantial evidence
principal only responsible for acts done within authority of agent
Principal only responsible for acts done within authority of agent
  • “Scope of authority”
  • Express
    • Explicit delegation of authority
  • Implied
    • To do what is necessary of express authority
apparent authority
Apparent authority
  • Not “real” authority
  • Actions outside scope of authority
    • Actions accepted by principal
  • Third parties rely on past dealings
    • Reliance on what looks like authority
principal s liability
Principal’s liability
  • Acts done within scope of authority
  • Intent to benefit principal
  • Unauthorized acts that are ratified
    • Not disavowed
    • Benefits retained
why do we care
Why do we care?
  • Employees have certain rights
    • Including tax withholding
  • Non-employees (contractors) have rights through agreement
  • Employers mischaracterize employees as contractors
  • Not just temporary vs. permanent
different but similar definitions
Different, but similar, definitions
  • State common-law
    • Depends on control over worker
  • US Department of Labor
    • “Is this worker’s principal source of income?”
    • Wage and hour laws
    • Pensions and benefits
    • Not most common test
    • DOL not proactive
      • Depends on complaints
irs tries to make sure employees are not wrongly called contractors
IRS tries to make sure employees are not wrongly called contractors
  • Unpaid withholding
    • “Contractors” pay too much
  • Proactive
    • Does not rely on complaints
    • Gets too many 1099 forms
  • Test developed
    • Series of factors looked at
irs factors fall into three groups
IRS factors fall into three groups
  • Behavioral control
  • Financial control
  • Relationship
behavioral control
Behavioral control
  • When/where to work
  • Tools equipment to use
  • Where to purchase
    • Tools
    • Supplies
  • Who does what work
  • Order/sequence to follow
  • Whom to hire to assist
financial control
Financial control
  • Unreimbursed expenses
  • Extent of worker’s investment
  • Marketing of worker’s services
  • How/when worker is paid
  • Profit or loss
  • Written contracts
  • Employee benefits
    • Insurance
    • Pension
  • Permanent/indefinite
  • Services essential part of business
    • What does employer sell to public?
rules for unpaid internships with private employers
Rules for unpaid internships with private employers
  • Training similar to educational environment
  • Experience for benefit of intern
  • Intern does not displace regular employees; works under close supervision
  • No immediate advantage to employer
  • Intern not necessarily entitled to job at end of internship, and
  • Employer and intern understand intern is unpaid
  • Government agencies
  • Non-profits
  • Charitable volunteers
rights of employees
Rights of employees

It’s not an oxymoron.

minimum wage
Minimum wage
  • State (Minnesota)
    • $6.15 per hour
    • If employer has annual receipts <$625,000, $5.25 per hour
    • No tip credit
  • Federal
    • $7.25 per hour
    • Tip credit
      • More than $30 per month in tips
      • Must pay at least $2.13 per hour
overtime pay
Overtime pay
  • All “non-exempt” employees
  • 1 ½ times regular hourly rate for every hour over 40 in a week
    • Week=168 consecutive hours
    • No averaging for multiple week in pay period
    • No lump-sum payment
    • No waiver
    • 1 ½ times employee’s regular pay, not minimum
non exempt employees
Non-exempt employees
  • Entitled to overtime
  • All employees presumed non-exempt
    • Exemptions must be proven
  • Any employee paid <$455 per week
exempt employees
Exempt employees
  • Not entitled to overtime
    • Not covered by minimum wage
  • Employee must be paid a salary
    • At least $455 per week
  • Focus on job description
    • Primary duties of job
categories of exemptions
Categories of exemptions
  • Executive
  • Administrative
  • Professional
    • Learned
    • Creative
  • Computer
  • Outside sales
learned professional
Learned professional
  • Primary duty is work requiring advanced knowledge
    • Discretion and judgment
  • Knowledge in a field of science or learning
  • Knowledge acquired through advanced education
creative professional
Creative professional
  • Primary work requires invention, imagination, originality, or talent
  • Recognized field of creative endeavor
worker s compensation
Worker’s compensation
  • Covers all employees
  • Absolute liability for workplace injuries
    • Injury arises out of employment relationship
    • No showing of fault
  • No right to sue for injuries
    • No common-law defenses for employer
  • Schedule of benefits
worker s comp benefits
Worker’s comp benefits
  • Medical expenses
    • Past
    • Future
  • Lost wages
    • Percentage
    • Defined period of time
  • Payment for loss of limb/death/disability
    • According to schedule
  • Retraining
  • Occupational Safety and Health Act
  • Workplace free of identified hazards
  • Does not give a right to sue
    • Evidence of negligence
u nemployment insurance
Unemployment insurance
  • Funded by employers
    • Premium based on employer’s experience
  • Covers employees who lose their jobs
    • No fault of their own
    • Good cause attributable to employer
  • Ineligible
    • Voluntary quits
    • Fired for misconduct
  • Percentage of wages
    • Based on yearly average
    • Paid for thirteen weeks
  • Other assistance
    • Retraining
    • Job search help
  • Employee must show good faith efforts to get a job
employee leave
Employee leave
  • Time off
    • Unpaid
    • Continue insurance
    • Keep seniority, if possible
  • Certain obligations/activities
    • Military service
    • Jury duty
    • Voting (Minnesota, not in Wisconsin)
    • School activities
family medical leave
Family-medical leave



Federal employees

Employers with more than 50 employees at one site

Birth, adoption, serious medical condition of self or family member

Twelve weeks in one year

  • State employees
  • Employers with more than 21 employees
  • Birth or adoption of a child only
  • Six weeks in one year
  • May be added to sick time or vacation time
    • Cannot be combined with federal time
drug alcohol testing
Drug-alcohol testing
  • Required for some jobs
  • Any employer may require
    • Written policy
    • Analysis done by licensed lab
    • Positive results confirmed by retest
miscellaneous rights
Miscellaneous rights
  • No polygraph testing
  • Wages paid at least monthly
    • Paid within 24 hours of demand, if you’re fired
  • Rest breaks
  • See your personnel file
    • Every 6 months, or
    • Once after you leave
    • Make request in writing
    • Explain disagreements in writing
    • Disagreement must be included in file
contrary to what you may think there is no absolute right to
Contrary to what you may think, there is no absolute right to:
  • Holidays
  • Vacations
  • Fringe benefits
  • Severance pay
  • Notice before firing
  • Privacy
    • Employer may monitor work-related calls
    • May monitor other areas for security
employment at will
Employment at Will

“They can’t fire you for . . .”

yes they can
Yes, they can.
  • General rule
  • Employees may be hired or fired for any reason or no reason
  • Assumed that employees are at will
  • Exceptions to rule are limited
  • May prevent firing except for good cause
  • Collective bargaining agreement
    • Sets out steps for discipline
  • Civil service jobs
  • Academic tenure
  • Employment handbooks
    • Older cases found handbooks were contracts
    • Handbooks rewritten by now
public policy
Public policy
  • Some law forbids firing for certain reasons
  • Policy that we want to encourage employees
  • Retaliation
    • Whistleblowers
    • Cooperate with investigation
    • Worker’s compensation claims
good faith fair dealing
Good faith/fair dealing
  • Recognized in some states
  • Forbids firing except
    • Just cause
    • Not for spite or malice
anti discrimination laws
Anti-discrimination laws
  • Exception to employment-at-will doctrine
  • State and federal law
    • State
      • Minnesota Human Rights Act
    • Federal
      • Civil Rights Act
      • Age Discrimination in Employment Act
      • Americans with Disabilities Act
  • Taking action relating to employment
    • Including benefit of employment
  • Based on membership in a protected class
employment related action
Employment-related action
  • Hiring
  • Firing
  • Pay
  • Classifications
  • Transfer
  • Promotion


  • Benefits
  • Retirement or leave
  • Harassment
  • Retaliation
  • Recall
  • Recruitment
    • Advertising jobs
  • Testing
  • Use of facilities
protected classes
Protected classes
  • Age (over 40)
  • National origin
  • Sex
  • Religion
  • Disability
  • Pregnancy
  • Race
  • Sexual preference (MN only)
national origin includes
National origin includes:
  • Ethnicity
  • Naturalization
  • Legal immigration status
  • Accent
  • Native language
most important point
Most important point:

Discrimination not unlawful if not based on membership in protected class!!!

religion special rules
Religion—special rules
  • Reasonable accommodation for religious practice
    • No undue hardship for employer
  • Other expression allowed
  • Religious organizations may require following doctrine
    • If related to job
disability special rules
Disability—special rules
  • Includes perceived disability
  • Disability is a limitation on major life activity
  • No discrimination if employee can do job with reasonable accommodation
    • “Reasonable” depends on employer
    • Cost-effective
prima facie case
Prima facie case
  • Membership in protected class
  • Qualified for benefit
    • Not necessarily best qualified
  • Rejected
  • Position/benefit either
    • Remained open, or
    • Went to non-member of class
burden shifts to employer
Burden shifts to employer
  • Bona fide occupational qualification
    • “BFOQ”
    • Only person not of class can do job
      • Essential, not preferable
    • Read very narrowly
legitimate business purpose
Legitimate business purpose
  • Most common defense
  • Other person better suited for job
  • Decided not to fill job
  • Can be rebutted by showing pretext
    • Sham purpose
    • Statistical pattern of discrimination
mixed motive
Mixed motive
  • Motive not entirely discrimination
  • Would result have been the same without discrimination?
  • Special type of discrimination
  • Can be actions of employees, if employer did not stop it
  • Quid pro quo sexual harassment
    • Exchange of favors
    • Employer always liable
hostile environment
Hostile environment
  • Offensive remarks or conduct
  • Severe and pervasive
  • Management was aware of it
  • Not necessarily directed at a particular person
  • Objective standard
    • Reasonable person
    • Joining in will show person wasn’t offensive
  • Non-consensual
severe and pervasive
Severe and pervasive
  • No escaping
  • Constant
  • Not just isolated incident
  • Continues after complaints
management aware of it
Management aware of it
  • No liability without knowledge
  • Did nothing after complaints
  • Did nothing effective
  • No complaint process evidence of awareness
  • Employer knew of quid pro quo
employers may disclose without liability
Employers may disclose, without liability:
  • Duties of employee
  • Compensation, wage history
  • Job description
  • Training, education provided by employer
  • Acts that resulted in firing, discipline, resignation
    • Violence
    • Theft
    • Harassment
    • Illegal conduct
may disclose with written permission
May disclose, with written permission
  • Written evaluations and response
  • Written disciplinary actions
    • In the last 5 years
    • Written response
  • Written reasons for separation
  • All must be sent to employee at the same time
common law duty
Common-law duty
  • Duty of loyalty
    • No competition
    • No steering business away
  • Duty ends when employment ends
  • Duty may be continued by contract
non compete agreements set out post employment duties
Non-compete agreements set out post-employment duties
  • No competition
    • New business
    • Work for competitor
    • Solicitation of customers
    • Confidentiality
  • May be enforced against independent contractor
  • Fired employee, if contract says
  • It’s a contract, after all
  • New hires
    • Getting the job is consideration
  • Existing employees
    • Keeping job not enough
    • Raise, new duties
    • Keeping job after merger/sale of company may be enough
must be reasonable in scope and time
Must be reasonable in scope and time
  • Depends on individual case
  • No longer or wider than necessary to protect employer
    • Lifetime-worldwide not reasonable
    • Ten year may be ok, for person selling business
    • For employees, usually no more than 2 to 3 years
interpreted against employer
Interpreted against employer
  • Minnesota courts will revise unreasonable clauses, unless whole contract is unreasonable
  • Wisconsin courts will toss whole contract if unreasonable
  • North Dakota courts do not enforce
  • South Dakota courts limit enforcement to 2 years
  • Specifically enforceable
uniform trade secrets act
Uniform Trade Secrets Act
  • Defines trade secret
  • Information that
    • Is valuable because it is not generally known
    • Subject of reasonable efforts to maintain security
notice of secrecy not required
Notice of secrecy not required
  • If person who acquired know or should know of secrecy
  • Circumstances
taking a secret may be enjoined
Taking a secret may be enjoined
  • Injunction ends when secret no longer exists
  • May require payment of royalty
  • Money damages also available