EMPLOYMENT RELATIONSHIPS:

OUTLINE

THEMES:
- (1) Relationship between federal and state law.
- (2) Employee v. Non-employee relationship.

I. EMPLOYER-EMPLOYEE RELATIONSHIP

A. What is an employee:
o Lemmerman court relies on four factors:
 (1) Compensation was from employer
 (2) Employer was able to hire and fire.
 (3) Employer tells employee what to do.
 (4) Employer pays the employee.

o Lemmerman v. A.T. Williams, Co.:

 Rule:
 An illegally employed minor can be considered an employee for
the purposes of the workers’ compensation statute.
 Facts:
 8 year old boy who did menial tasks for the manager of a gas
station at which the boy’s mother worked. Sought to sue the gas
station owner for injuries sustained while performing these tasks.
 Court:
 Court focuses on the fact that the store manager had control over
the employee and the authority to hire and fire.
 Could Shane appeal this case?
 (1) It would have been illegal to hire him in the first place. Why
should the company get the benefit now?
 (2) Nobody thought of him as an employee. Had he gone to the
company and asked for certain benefits, they would have said he
wasn’t an employee.
 (3) He had no set salary.
 (4) The reason he was there doesn’t have anything to do with him
being an employee of the company. His mother was the employee.
 (5) Could try to argue workers’ compensation.
 (6) Might be able to argue back bay.

B. Independent Contractor v. Employee:

o Employee:
 (1) Generally employment laws are going to cover the employee.
 (2) Employer has a lot of control over the employee. No freedom of
choice during their day.
 (3) No real bargaining power.

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o Independent contractor:
 (1) Employment laws generally don’t cover them.
 (2) Has a lot of bargaining power.
 (3) It is an occasional relationship.
o You can’t contract around the determination, either you are an employee or you
are not

o Daughtrey v. Honeywell:
 Facts:
 A woman used to be an employee of Honeywell, she gets laid off.
A few months later she gets hired to do another project, and works
on it until January of 1988 when she gets laid off.
 She makes a claim under ADEA and a claim under ERISA
 In both cases she needs to establish whether or not she is an
employee.
 ERISA analysis:
 Court uses the common law agency test.
o (1) Right to control
o (2) Skill required
o (3) Source of instrumentalities and tools.
o (4) Location of the work.
o (5) Report to supervisors
o (6) Exclusive relationship
 Company tries to argue:
o (1) The language of the contract says that she is an
independent contractor.
o (2) She was hired for a specific contract.
o (3) She wasn’t receiving any benefits.
o (4) Specialized nature of the work.
 ADEA Claim:
 Court uses the economic realities test:
o (1) How dependent is the person on the entity that they are
working for.
o (2) How much control does the company have?

o Clackamas v. Wells:
 Facts:
 Four doctors, who are shareholders and directors of a professional
corp. Should they be considered employees?
 Employer Control:
 Are the doctors controlled by the clinic or do they control the
clinic?

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 II. EMPLOYMENT AT WILL:

C. Definition:
o The employer can fire the employee at any time and the employer can fire the
employee at any time.

o Clarke v. Atlantic Stevedoring Co.:

 Facts:
 A group of black longshoremen sought to sue their former
employer for breach of contract as a result of their termination and
replacement by white workers.
 Rule:
 An employment contract that is for an indeterminate length of time
is terminable at the will of the other party.
 Courts Analysis:
 The rule that indefinite employment creates an employment at will
is well established.
 The group of black men failed to establish the existence of an
agreement whereby the company committed itself to continue
employing colored workmen longer than it sought fit to do so.
 Today:
 The outcome of this case would have been different under Title
VII of the Civil Rights Act of 1964, which prohibits employment
discrimination on the basis of race.
o Wagonseller:
 Facts: Nurse gets fired after going on a trip with her coworkers and she did
not participate in lewd actions taken by them.
 Arguments for the Plaintiff:
 (1) You should have to do something that is against your own
values as a condition for keeping your job.
 (2) There was no legitimate business interest.
 Arguments against the Plaintiff:
 (1) Floodgates Argument – if we allow these kinds of lawsuits,
every employment decision about who we want to let go is going
to be litigated.
 (2) You have to have people at work who get along with each
other. Why should the courts second guess an employer’s
decision?
 (3) Employer should have discretion about what a legitimate
business interest is.
 Hybrid Test:
 In between the common law agency test and the economic realities
tests.

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  The real issue is control.

o Marcy v. Delta Airlines:

 Facts:
 Employee was fired for claiming hours not actually worked
without thoroughly investigating the facts prior to termination.
 The investigation only consisted of talking to her.
 Issue:
 Does the Montana Wrongful Dishcarge From Employment Act
provide a cause of action to an employee who is discharged in
good faith but for a reason based upon mistaken fact?
 Court:
 Yes. The statute says that you cannot fire someone without good
cause.
 Good cause is defined as a reasonable grounds for dismissal.
 Good faith is not a defense to this statute.
 The stated reason for an employees discharge under the WDEA is
not legitimate under the statute if the reason for termination:
o (1) Is invalid as a matter of law under the WDEA;
o (2) Rests on mistaken interpretation of the facts, or
o (3) Is not the true reason for the discharge, i.e. pretext.
 Dissent:
 Argues that there Delta acted reasonably within the information
that it had.
 Majority’s decision would lead to widespread second-guessing of
day to day personnel decisions. Much more thorough investigation
will be necessary.
o Montana Staute:
 Provides very limited damages.
 4 years of lost wages and benefits. But the employee is required to
mitigate.
 There are no compensatory damages under this regime. You don’t
get damages for the loss of the central part of your life.
 Punitive damages only in very narrow situations.

o Epstein Article:
 It’s costly for employers to keep hiring and firing employees.
 If an employer has a reputation for being arbitrary it might be easier to
hire more workers.
 The costs that he is pointing out may or many not deter an employer. If an
employer has a lot of workers who have been with an employer for a long
time the employer might conclude that it will be cheaper to fire those
people.

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  A for cause regime would make employers less willing to take a chance.
It could be costly for them to have these employees who they can’t fire
eve they are not good at the work that they are doing.
 Problem with Epstein Article:
 Doesn’t really recognize that this is how people make a living.
 People get a lot of social welfare benefits through work that make
their jobs particularly important.
 If we switch to a regime where we have a default rule for cause, or
where people could contract out of an at will regime, that still
tends to protect mostly the people who need them least.

D. Public Policy Exception:

o Most cases regarding public policy cover:
 (1) Refusing to perform an illegal Act – committing perjury.
 (2) Whistleblowing
 (3) Exercising legal rights – filing a workers’ compensation claim.
 (4) Performing a public duty – serving on a jury.
o A number of jurisdictions have upheld an employee’s right to be free from
discharge for exercising statutory rights.
 Ex: Discharge for refusal to take a statutorily prohibited polygraph test.
Discharge for filing an injury suit. Discharge to prevent pension from
vesting. Refusing to vote in favor of a merger.
o Some courts have held that whistleblower’s accusations must be true for statutory
and common law protection to attach.

o Murphy v. American Home Products:

 Facts:
 Murphy was an accountant who eventually became assistant
treasurer of the company. He did not have a formal contract. He
claims he was fired because he informed the management about a
$50 million illegal account manipulations.
 Issue:
 Can an at will employee maintain a claim for wrongful discharge?
 Court:
 No. When an employee is hired for an indefinite term, the
employment is presumed to be at will and may be terminated by
either party at any time for any reason.
 New York does not recognize the public policy exception to the at-
will doctrine.
 Court leaves it to the legislature to decide. They are best able to
decide the scope of the potential cause of action.
o Issues with whistleblower cases:
 (1) Whether the exception covers employees who report the wrongdoing
to the company or to law enforcement.
 (2) Whether an employee who participates in the wrongdoing may still
sue.

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  (3) Whether the employee must be correct about the wrongdoing.

o Gantt v. Sentry Insurance:

 Facts:
 Gantt was employed as a sales manager.
 Gantt refused to testify untruthfully or to withhold testimony
regarding a coworkers sexual harassment allegations.
 Issue:
 Must the public policy that makes a discharge wrongful be based
on a statute or a constitutional provision?
 Court:
 An at will employee may sue an employer in tort when the
employee is discharged for performing an act that public policy
would encourage or for refusing to do something that public policy
would condemn.
 Requiring statutory or constitutional expressions of public policy
strikes the proper balance among employers, employees and the
public.
 Employers are required to act within the bounds of the law,
employees are protected against unlawful employer actions, and
the public enjoys a more stable job market.
 Nature of public policy that is going to be protected:
o It has to rise to a particular kind of importance.
o CA courts have gone beyond Gantt. Based on regulations, where they are
governing health and safety, that was a good enough policy.

o Illinois Law:
 Allows the tort of wrongful discharge based on public policy.
 It has be an actual discharge – not just a demotion.
 There needs to be a clearly mandated public policy:
 (1) Whistleblowing
 (2) Refusing to break the law.
 (3) Exercising Statutorily protected right.
 Performing a statutory obligation is not really addressed. Employers do
have to allow their employees to go to jury duty.
 Can also look to:
 Prior judicial decisions.
 Policies that affect health and safety of the public are more likely
to be upheld.
 IL Whistleblower Act:
 Employer cannot retaliate against the employee for refusing to
break the law.
 It doesn’t define retaliation as narrowly as the court has.
 Demotions may be covered by the act.

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E. Written Contracts:
o At common law an employer may not fire an employee with a contract stating a
definite term of employment except for cause or for material breach of the
contract.
 The employer has the burden of proving good cause for firing.
 A contract without a stated duration is generally terminable at will by
either party.
 When a fired employee sues and alleges that the employer breached the
employment contract, the employee must first prove that an enforceable
contract term exists.

o Gordon v. Matthew Bender & Co.:

 Facts:
 Gordon was fired when he failed to meet Bender’s sales goals.
The employment agreement did not have a definite term of
employment.
 His territory was reduced but they wanted him to keep the same
sales goals.
 He claimed a letter from Bender requiring satisfactory performance
created a contract that was terminable only for cause.
 Issue:
 Is a contract with no definite period that requires satisfactory
performance still an at-will employment contract?
 Court:
 Says that the letter does not protect him here. It does not give us a
definite period of time and it does not say for good cause.
 Good cause incorporates a whole array of legal understandings
whereas acceptable performance is entirely subjective. No cause
of termination here.
o Scribner v. Worldcom, Inc.:
 Facts:
 An employee was terminated because his position was eliminated
due to the sale of his division.
 The employer, hoping to avoid the vesting of the employee’s stock
options, determined he had been terminated “for cause.”
 The contract did not define the phrase “without cause,” nor did it
explain what would constitute termination “for cause.”
 Issue:
 May an employer with the contractual authority to define and
construe the terms of an employment contract use this authority to
re-define contract terms in a manner in which deprives the
employee of his legitimate expectations under the contract?
 Decision:
 No. Under the facts of this case, termination for cause could only
mean termination for deficient performance.

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  Must look to the specific language of the contract, the facts of the
case, and general contract interpretations as to what “cause”
means.
 All of the considerations reveal that “with cause” means a
termination due to some fault of the employee.
 Worldcom has a duty to exercise its interpretive authority in good
faith.

F. Employee Handbooks and Manuals:

o An employment manual may create an employment contract that is terminable for
cause.
o If an employer does not want a manual to be binding, it must include a prominent
statement that the manual contains no promises of any kind and that the employer
has the absolute power to fire anyone with or without good cause.
o An employer must communicate changes in its employee handbook in order for
the changes to be binding on the employee.
o An employer with an established disciplinary protocol must follow the protocol in
order for any subsequent discharge to be lawful.
o The language to create a for cause relationship has to be definite and objective.

o Woolley v. Hoffman-LaRoche, Inc.:

 Facts:
 Woolley had no written employment contract. He received an
employment manual though, which devoted five pages to
termination. It defined termination as: layoff, discharge due to
performance, discharge, disciplinary, retirement, and resignation. It
did not have a category for termination without cause. It did have
a detailed procedure for an employee to be fired for cause. He was
fired.
 Issue:
 Can an employment manual create an employment contract that is
terminable only for cause?
 Decision:
 The context in which the manual was disseminated gives the
impression that Hoffman intended that the manual be binding.
 The manual expressly applies to all employees.
 The manual had the appearance of corporate legitimacy.
 Reasonable to presume that the termination provisions in the
manual constituted an offer which the company could not
withdraw.
 Offer, acceptance and consideration are necessary for a contract.
o Handbook is the offer
o Continued work by the employee is the acceptance.
o Performance is the consideration.
o How to advise the employer?

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  Put in a disclaimer – say that it is not a binding contract
 However, courts will not honor a disclaimer if it is not very
prominent.
 Employee could try to argue that they relied on the manual even
when there was a disclaimer.
o Doyle v. Holy Cross Hospital:
 Facts:
 A Group of nurses were fired. There was an employee handbook
when they were initially hired. Handbook was unilaterally
changed by the employer. They added a disclaimer that said that
this is not a contract and for them not to rely.
 Employer argued that the continued work of the nurses was the
consideration and that the handbook was therefore a binding
contract.
 Court:
 This is not consideration, because the employer would have to
have incurred a detriment and the nurses would have to have
incurred a benefit. In this case it was the other way around.
 Even suggest that the nurses should be given the option of working
under the old terms.
 Dissent:
 Justice Freeman – says that the promissory estoppel claims should
have been dismissed because the court declared that this was a
contract. Once there is a contract, you can’t have promissory
estoppel.
 Justice Heiple – says that we will now have hundreds of contracts
depending on when people were hired and when the handbooks
were changed. Many employees will have different terms.
o Illinois Law on Handbooks and Manuals:
 Employer can’t unilaterally change the terms of a handbook to
disadvantage employees.
 The employer can disadvantage only by giving some kind of
consideration, like giving a raise. This is an open question.

G. Good Faith and Fair Dealing:

o The implied covenant of good faith and fair dealing:
 Requires contracting parties to avoid interference with each other’s right
to the expected contract benefits, i.e. to act in good faith.
 Some courts, like IL, have held that only contract remedies are available
for breach of it.
 An otherwise at-will employment arrangement can include an implied
contract arising form the parties conduct evidencing their mutual intent to
create enforceable limitations.
 The covenant, implied in law in every contract, does not impose additional
duties upon the parties beyond those to which they actually agreed.
o Rao v. Rao:

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  Facts:
 Two doctors who had a contract to buy 50% of corporation with a
covenant not to compete if he was fired before he had the ability to
buy the 50%. The employee was fired and employer tried to
enforce the restrictive covenant.
 Court:
 The restrictive covenant could be enforced but it violates good
faith and fair dealing standards.
 Bad faith was that he tried to make the employee renegotiate under
less favorable terms.
 Damages:
 Court only get contract damages in IL
o Guz v. Bechtel National, Inc.:
 Facts:
 Bechtel had an employment policy that stated that employees did
not have a contract and that they could be fired or could resign at
any time. It also stated categories of termination, which included a
layoff. Guz was laid off. He sued, claiming age discrimination,
breach of implied contract only to be terminated for good cause,
and breach of good faith and fair dealing.
 Issue:
 (1) Does the passage of time, favorable reviews, salary increases,
etc. create an implied employment contract which limits the
parties’ options under what otherwise is an at-will employment
arrangement?
 (2) May an employee rely upon the covenant of good faith and fair
dealing, implied by law in every contract, to impose additional
duties upon the parties beyond which they have already agreed?
 Court:
 No. The covenant, implied in every contract, exists to prevent one
party from unfairly frustrating the other’s right to receive the
benefits of the agreement actually made.
 It cannot, therefore, be endowed with an existence independent of
its contractual underpinnings. It cannot create new obligations or
limitations beyond those agreed upon by the parties.
 What Guz sought to accomplish was claim both a breach of
employment contract and a breach of implied covenant. In order
for there to be a breach of implied covenant there must first be a
breach of contract.

H. Implied Contracts:
o Most employees do not have written contracts. An employment contract that is
terminable only for cause may be implied-in-fact.
o Implied contract terms may arise from statements in employment handbooks, oral
representations, the nature of the employment, the employer’s past practices, the

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 course of dealing between the employer and the employee, the custom in the
industry, and the longevity of the employee’s service.

o Pugh v. See’s Candy, Inc.:

 Facts:
 See’s Candies fired Pugh after 32 years of employment. He had
received numerous promotions. To of See’s presidents had a
practice of not terminating personnel except for good cause. Pugh
believes he was terminated because of a contract between the
Union and the Company that he did not agree with.
 Issue:
 May a for-cause contract be implied in fact?
 Court:
 Yes. An employers right to terminate an employee is not absolute.
 Two limitation son this right include the public policy exception
and traditional contract rights.
 Here a jury could have concluded that the implied contract existed
because of the longevity of his employment, the commendation
sand promotions he received, the lack of any criticism of his work,
the assurances he was given, and See’s policy of not terminated
employees except for cause.
I. Intentional Infliction of Emotional Distress:
o Must esbalish:
 (1) Employer acted intentionally or recklessly
 (2) The conduct was extreme and outrageous.
 (3) The employer’s actions cause the employee severe emotional distress.
o You have to go beyond run of the mill harassment.

o Wilson v. Monarch Paper Co.:

 Facts:
 Wilson was demoted from director to janitor and sued is employer
for IIED.
 Issue:
 Can employee maintain a case of IIED against employer?
 Court:
 Yes. Extreme and outrageous conduct is conduct that goes
beyond all bounds of decency and would cause an average person
of the community to exclaim “Outrageous!.”
 Monarch intentionally and systematically set out to humiliate will
to force him to quit.
J. Employee Breaches:
o Employees who are employed under an employment contract for a certain term
may not resign without a sufficient legal basis. Ill health will excuse non
performance under an employment contract, but not if the ill health is brought on
by the employee herself.

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  If there is a breach of contract, the employer is entitled to recover its loss
of the bargain, which includes the cost of hiring a replacement.
o Employees of a company have implied duties to their employers to insure that
they are acting in the best interests of the employer. However, an employee
holding a position of trust does not breach his fiduciary duty of loyalty by having
contact with his employer’s clients before he leaves his employment to start a
competing business.
 Prior to termination of employment an officer may not solicit for himself
business which the position requires the employee to obtain for the
employer.
 He must refrain from competing with the employer for customers and
employees, and must exert his best efforts on behalf of the employer.

o Handicapped Children’s Education Board v. Lukaszewski:

 Facts:
 Employment contract was breached by therapist with high blood
pressure, caused by the stress of having to continue working at far
away school, instead of close to home.
 Issue:
 Can ill health excuse nonperformance of an employment contract
even if the ill health is brought on by the employee herself?
 Court:
 No. Ill health will excuse non performance of a contract but not if
the ill health is brought on by the employee herself.
 Nor will a condition or danger which was foreseeable when the
contract was entered into, justify the breach.
 Damages: Measured by the expectations of the parties. The non-
breaching party is entitled to full compensation for loss of the
bargain. These damages include cost of obtaining other equivalent
services to that promised but not performed, plus any foreseeable
consequential damages. Even though it had to hire a more qualified
employee, the board had properly mitigated its damages.
 Dissent:
 Believed that the resignation was justified. There is nothing in the
record to show that the increased blood pressure was foreseeable.

o Could the school district have gotten an injunction to force her to go back to
work?
 You can’t force someone to work. As a general rule you cannot get
specific performance for the breach of a personal services contract.
 Reference the 13th Amendment, you can’t be forced to show up for work.
 Opera singer example: Might be able to get an injunction to stop her from
singing somewhere else. This is much more likely to be the case were
there is someone uniquely special.
 Might be able to sue for tortious interference with a contract.

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o Mercer Management Consulting v. Wilde:
 Facts:
 Employees who made plans to start a competing business while
still employed were sued by employer for breach of fiduciary duty,
breach of contract and interference with contractual relationship.
There was no evidence that these employees took confidential info
with them.
 Issue:
 Does an employee holding a position of trust breach his fiduciary
duty of loyalty by having contact with his employer’s clients
before he leaves his employment to start a competing business?
 Court:
 No. Prior to the termination of employment, an officer may not
solicit for himself business his employer’s business. In the absence
of any overt solicitation of clients or other improper actions taken,
the Court does not find that client contacts prior to leaving one’s
employment to start a competing company breach the duty.
 Its okay to keep having contact with the clients because this was
their job. It is unrealistic that any client contact prior to leaving
constitutes a breach of the duty.
 Trying to recruit other Mercer employees is okay because they did
it after they had already quit.

o Phansalker v. Andersen Weinroth & Co.:

 Facts:
 Phansalker was a nominal partner at AW, and left to become the
CEO of Osicom. AW accused him of failing to disclose to AW
certain Director’s Compensation and other opportunities he
received as a result of his service on various corporate boards.
 Court:
 He should forfeit all of his compensation awarded to him after
October 15, 199. This was the date that his disloyalty began.
 An agent is obligated to be loyal to his employer and is prohibited
from acting in any manner inconsistent with his agency or trust and
is at all times bound to exercise the utmost faith and loyalty.
 Phansalker tries to argue that he didn’t intend to defraud AW.
Court replies by saying that it wasn’t just disloyal once. He was
disloyal many times and substantially violated the terms of an
employee’s service.

III OVERLAPPING REMEDIES / PREEMPTION:

o In many cases, a wrongfully discharged individually may have several alternative
courses of action not all of which are necessarily consistent.
o There will be more and more cases where statutory and common law rights
overlap and remedies overlap and sometimes conflict.
o Why is it important:

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  We don’t want employees to be able to recover double.
 We need some amount of certainty as to what law applies.
 Different causes of action can bring favorable treatment in different
courts.
o Policy:
 Should we federalize employment law?
 There are a lot of costs to employers associated with this
patchwork of laws because there is a different question of law in
every state.
 This could be a huge burden on the federal court system.
 States:
 Can respond to specific needs of the economy.
 Accountability to local politicians.
o Always look to Supremacy Clause that says that federal law trumps. If you have
a plain conflict between federal and state law, federal wins.

o Lingle v. Norge Division of Magic Chef, Inc.:

 Rule:
 The LMRA preempts a state wrongful discharge claim only if the
state law claim requires the interpretation of a collective
bargaining agreement.
 Facts:
 Lingle notified Magic Chef that she was injured in the course of
her employment and requested workers comp. benefits. Magic
Chef fired her six days later for allegedly filing a false workers’
comp claim. Union filed a grievance pursuant to a CBA.
Arbitrator ruled in Lingle’s favor and ordered reinstatement. She
then tried to sue Magic Chef in state court, arguing that Magic
Chef had tried to fire her for filing a workers’ comp. claim. Magic
Chef removed the case to federal court and then asked the court to
dismiss the case based upon §301 of the LMRA. District court
dismissed the case, holding that the state law claim for retaliatory
discharge was “inextricably intertwined with the CBA provision
requirement discharge of cause.
 Issue:
 Does the LMRA preempt state wrongful discharge claims?
 Court:
 Yes. Unless the state law claim does not require the interpretation
of a CBA, Section 301(a) of the LMRA provides federal
jurisdiction over suits for violations of CBA’s.
 If a resolution of a state law claim depends upon the meaning of a
collective bargaining agreement, in order to promote consistency,
state law is preempted and federal law is applied.
 Resolution of Lingle’s claim does not require the court to interpret
the CBA. As long as the state law claim can be resolved without
interpreting the CBA there is no preemption.

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 o Allis-Chalmers Corp. v. Luceck:
 Said that §301 preempts claims “inextricably intertwined with CBAs, and
the S.C. held that §301 preempted an employee’s claim for bad faith
failure to pay disability benefits under the terms of a CBA.
 §301 preempts a state law claim if resolution depends upon the analysis of
the terms of a labor contract.

IV HIRING:

A. Word of Mouth Hiring:

o A private employer’s reliance on word of mouth for recruitment of employees is
not by itself evidence of intentional discrimination.
o However, discriminatory want ads are expressly prohibited by Title VII and the
Age Discrimination in Employment Act.

o EEOC v. Consolidated Service Systems:

 Facts:
 A Korean owned business was accused of intentional
discrimination by recruiting prospective employees through word-
of-mouth recruitment, a practice which resulted in a disparate
number of Korean Employees.
 Court:
 No inference of discrimination can be drawn from Consolidated’s
hiring practices. If the most efficient method of hiring happens to
produce a workforce whose racial, religious, ethnic or gender
composition pleases the employer, this is not intentional
discrimination.
 Word of mouth is the cheapest kind of recruitment.
 It effectively matches the employers and employees because
prospective employees will get the real low down on the job and
the practice enlists existing employees in the screening process.

B. Prohibited Questions:
o Title VII of the Civil Rights Act does not specifically prohibit employers from
asking any questions about an applicant’s race, color, religion, sex, or national
origin. Nevertheless, inquiries which either directly or indirectly disclose such
information, unless otherwise explained, may constitute evidence of
discrimination.
o Applicants who make false statements at an interview may be discharged.

o Lysak v. Seiler Corp.:

 Facts:
 Employee claims she was fired because she was pregnant.
However, when she was interviewed she knew she was pregnant,
and had only been working a month when she told her boss she
was pregnant.

15
  She had told him in the interview that she wasn’t planning on
having any more kids.
 Court:
 She volunteered the information. She was not fired because she
was pregnant, she was fired because she lied.

C. Undocumented Workers:
o Immigration and Control Act:
 Section 1324(a):
 Employers are not allowed to knowingly hire someone who is not
authorized to work.
 They are required to have employees fill out an I-9 form.
 Independent Contracts:
 Have no requirement to help and enforce the law. If they don’t
ask, then they are not required to do anything.
 This creates an incentive for an independent contractor not to have
to pay as much to the illegal workers.

o Collins Food International v. Immigration:

 Facts:
 Employee was offered a job over the phone. He showed up for
work, and he didn’t have his documentation with him. The next
day he produced a fake photo ID and fake social security number.
 Issue:
 Does an employer’s failure prior to extending an offer of
employment to ask for documentation showing that the employee
is authorized to work, coupled with its failure to verify authenticity
of such documents amount to knowledge that the employee is
unauthorized to work?
 Court:
 No. Nothing in the statute prohibits an employer from offering the
job prior to checking the documents.
o If it were required to do so, could be discrimination
because employer would have to ask about national origin
of employee.
 IRCA provides that an employer satisfies its verification
requirement if the document reasonably appears to be genuine on
its face.
o Thus, the “reasonable man” standard is to be used.
o Willful blindness is required of the employer before
knowledge will be imputed.
o Hoffman Plastic Compounds v. NLRB:
 Facts:
 Castro presented documents to Hoffman Plastics to verify his
authorization to work in the United States. 7 months after he was

16
 hired, he took part in a union authorizing campaign. He was laid
off. NLRB ordered reinstatement with backpay.
 Castro testified that he had used false documents to get
employment at Hoffman. ALJ found that rewarding backpay
would be in direct conflict with IRCA
Issue:
 Does the IRCA foreclose awarding backpay to undocumented
workers not legally authorized to work in US?
 Court:
 Yes. Awarding backpay in a case like this trivializes the
immigration laws, it also condones and encourages future
violations. It would encourage successful evasion of apprehension
by immigration authorities.
 Dissent:
 Limited backpay order would not interfere with immigration
policy. It would help deter unlawful activity.
 It would actually encourage employers to hire undocumented
workers because they would not be subjected to monetary
penalties. Workers would be exploited.
 Unions:
 They want to enforce the pro worker labor law. They might go
against the undocumented workers because they are working for
less pay.
 Business Groups:
 They don’t want there to be a situation where the law abiding
business are disadvantaged.
o Unanswered Questions from Hoffman Plastics:
 (1) What if the employer knew all along that the employee was illegal.
 There is some case law to suggest that back pay is available.
 (2) What if the employer threatens to report undocumented workers to the
INS for labor activity in retaliation:
 At least one case where the lawyers were able to persuade the INS
not to deport the people because they were turned in.
 (3) What other forms of damages may be available:
 Punitive damages.
 Or if the employee worked and was never paid.
 (4) State back pay for remedies in violation of state law.
 Preemption question. We don’t have a clear statement from
congress. There is language in the statute that can be read that
states can’t provide any protection to undocumented workers.
Another way to read the language is that it simply applies to
address the hiring and employment of undocumented workers.

D. References and Defamation:

o References Given to Prospective Employers:

17
 A former employer may be held liable for defamatory references given to
a prospective employer.
 But communications made to prospective employers regarding a
job applicant are protective if subject to a qualified privilege or
conditional privilege.
 Many companies now refuse to provide prospective employer with
information concerning the former employee’s work performance
or reasons for leaving the company.
 Statements made by an employer to an employee concerning the reasons
for that employee’s termination may form the basis of an action for
defamation under a theory of compelled self-publication by the employee.
 Some states have enacted laws protecting companies from liability
for disclosing to prospective employers the reason for severance of
the former employee’s employment.
o Elements of Defamation:
 (1) Defamatory Imputation
 (2) Malice – ill will or reckless disregard for the truth.
 (3) Publication
 (4) Damages

o Chambers v. American Trans Air, Inc.

 Facts:
 A woman filed an action for defamation against her former
employer and two former supervisors based on her allegations that
they gave false references to prospective employers.
 Issue:
 Does a qualified privilege exist regarding a former employer’s
statements given to a prospective employer concerning a former
employee?
 Court:
 Without the qualified privilege employers would be reluctant to
provide sincere yet critical responses to requests for an appraisal of
a prospective employee’s qualifications.
 Qualified privilege will be lost when:
o (1) The communicator was motivated by ill-will;
o (2) There was excessive publication; or
o (3) The statements are made without belief in their truth.

o Lewis v. Equitable Life Assurance Society:

 Facts:
 Employees were hired as dental claim approvers, and were sent on
a business trip. Management failed to give the employees
adequate instructions about the expense policies. They refused to
comply with Equitable’s requests to lower the totals in their
expense reports, and they were fired for gross insubordination.

18
 When the employees were asked by prospective employers why
they were fired, they had to say gross insubordination.
 Issue:
 Can a person eve be held liable for defamation when the statement
in question was published to a third party only by the defamed
person.
 Court:
 Yes. If a defamed person is compelled to communicated the
defamatory statement to a third person, and if it was foreseeable
that the defamed person would be so compelled, the person who
originally made the statement could be held liable for defamation.
 Because the employee’s only options were to publish the reason
for their termination, we find that the publications were compelled.
 Some people have argued that this case allows employees to challenge the
reasons that they are discharged that is inconsistent with the at will
employment regime.
 Standard at will regime does not require the employer to give a
reason for why the employee was fired.

o Robinson v. Shell Oil Company:

 Facts:
 Employer fired the employee and he filed a claim with the EEOC
claiming race discrimination. He claims that he was retaliated
against because the employer was giving negative
recommendations to new prospective employers.
 We don’t know what the employer said or whether it was true.
 Court:
 Section 704(a) of Title VII makes in unlawful for an employer to
discriminate against an employee. There is a question of whether a former
employee is therefore covered under this section of the act.
 Court looks to the statutory language. The term employees is ambiguous
as to whether it excludes former employees.
 Because the term employee includes former employees in some parts of
the statute and not others, you must analyze each section of the statute toe
determine whether former employees were supposed to be included.

E. Negligent Hiring:
o An employer may be held liable for its negligence in hiring an employee who
inures a fellow employee or a third party.
 Its liability for negligent hiring is more expansive than its vicarious
liability because the employee’s actions need to have occurred within the
scope of his employment duties.
o Former employers do not owe a duty to make accurate recommendations for their
former employees.

o Malorney v. B&L Motor Freight, Inc.:

19
  Facts:
 Harbour applied for a job with B&L, and in his application he was
asked as to whether he had any vehicular offenses or criminal
convictions.
 He responded in the negative, but he actually had been convicted
of violent sex related crimes. He raped her. She is suing for
negligent hiring.
 Issue:
 Does an employer have the duty to verify a prospective employee’s
negative responses to questions regarding criminal convictions
prior to employing him?
 Court:
 Yes. Under certain circumstances, an employer does have to
verify a prospective employee’s negative responses to questions
regarding criminal convictions.
 The existence of a legal duty depends on several factors:
o (1) Foreseeability
o (2) public policy
o (3) social requirement
 The state imposes two duties on owners of trucks who authorize
others to drive their vehicles:
o (1) duty to exercise reasonable care when choosing a
driver.
o (2) entrustment of a vehicle to a driver whom the owner
should know is incompetent should be denied.
 The jury needs to decide whether the duty was breached. Court says that
there are facts here that might give rise to similar duties:
 (1) There was a sleeping compartment in the truck.
 (2) Truck drivers often pick up hitchhikers.
 Proximate Cause:
 Even where there is negligence, the employer may be able to argue
that his negligence was not the proximate cause of the abuse. It
doesn’t really have anything to do with the sexual assault.
 Tension between different public policies:
 Policy of wanting to rehabilitate criminals and policy of protecting
people against crime.
 Some states have tried to address this by making it illegal to not
hire someone who has been convicted of a crime when it doesn’t
relate to his job.
o Illinois Expungment Statute:
 Clear that employers are not allowed to ask about expunged arrests.
o Disclosures against Children Act:
 Allows employer to ask about some jobs that involve children.

o Richland School District v. Mabton School District:

20
  Facts:
 Custodian in a school, left his job with prior employer as part of a
deal for the dismissal of sex abuse charges. Old employer wrote
him enthusiastic letters on his behalf.
 He didn’t actually molest any kids at either school. The charges
arose out of a family dispute and was judged as being false by the
school.
 The new employer fired him.
 Court:
 School district tries to rely upon theories of negligence:
o (1) Negligent misrepresentation under 551 Restatement of
Torts.
 Court says that this doesn’t apply.
o (2) General negligence theory – duty to disclose.
 But it doesn’t obligate you to disclose.
o (3) Section 311 of Restatement: - Negligent misrep.
 Imposes liability upon anyone who gives false
representations.

F. Testing:
(1) Polygraph Testing:
 Who does it apply to?
 (1) Applicable to most private employers.
 (2) It doesn’t not prohibit the use of paper and pencil honesty
questionnaires.
 (3) Does not apply to federal, state or local government employers.
 (4) Does not apply to those engaged in national security.
 (5) Permits testing of those employees who are reasonably
suspected of involvement in workplace incident that results in
economic loss.
 (6) Applies to private armored car and security guard firms.
 (7) Permits testing to private employers who distribute controlled
substances.
 (8) Even when an employer can legally request an employee to
take the test it may be prudent not to do that. Employer has to
undertake additional investigation to satisfy the statute and in a
firing decision. This exposes the employer to a whole new set of
restrictions.
 Who can enforce the statute:
 Secretary of Labor can enforce it and there are additional penalties
for an employer who regularly violated the statute.

o Dilworth v. LaSalle-Chicago 24 Hour Currency Exchange:

 Facts:

21
  A currency exchange teller whose money goes missing. They call
her back to her place of employment and they holder in the
bathroom. They wrote up a statement and asked her to sign it.
Defendants arranged for her to have the test, but she never actually
took it. She moved for summary judgment.
Court:
 Court seems to think that her points as to why they fired her and
whether there was proper notice are questions for the jury. The
jury found for her on the polygraph chart and found for the her for
$6,000.00.
 Employers under EPPA are prohibited from discharging an
employee for refusing or failing to take a lie detector test on the
basis of the results of a lie detector test.
o Other types of lie detector tests – they are all covered by the EPPA.
 Polygraph tests are most reliable for event specific questions. And for
people who are untrained in countermeasures. In terms of pre-
employment screening, the NRC is skeptical.
 The screening test can’t ask about things that haven’t happened already, it
can only test things that happened in the past.
o Think about whether or not a given test is worth giving:
 How valid are the inferences that you have to make?
 Relative costs and benefits of false positives and false negatives.
 Think about whether there are other things the client could do to raise the
percentage even higher.

- (2) Psychological Testing:

o Soroka v. Dayton Hudson Corp:
 Facts:
 Target required employees to take a written questionnaire test. It
asked questions pertaining to sexual orientation and religion. P’s
brought right to privacy claim under the California Constitution.
 Court:
 Target needed to have a compelling interest in asking the
questions, and you have to show that what this test is testing is
predictive about something important about the job.
 Target would need to show that the questions were job related.
 Employees may not be compelled to submit to a violation of their
privacy unless there exists a direct nexus between the employees’
duties and the nature of the violation.
 Such questions do not further the employer’s interest in employing
emotionally stable individuals.

 Rule:
 To justify an invasion of privacy from the use of pre-employment
psychological screening that involves religious beliefs and sexual

22
 orientation, an employer must demonstrate a compelling interest
and must establish that the test serves a job-related purpose.

- (3) Medical Screening and Exams:

o Drug Tests:
 Do not violate right to privacy. Lots of employers require them. If the
drug test is part of the medical exam they have said that the test is okay.

o Griffin v. Steeltek, Inc.:

 Facts:
 Applicant was asked a couple of questions about whether he had
any physical defects or if he had ever filed a workers’
compensation claim. After being told that he was the most
qualified applicant, he was not offered the job.
 Steeltek responded by arguing that as a non-disabled person, he
had no standing to bring suit under the ADA.
 Issue:
 Do the provisions of the ADA prohibiting pre-employment, non-
business related medical inquiries provide a cause of action for an
individual who is not disabled as defined under the ADA?
 Court:
 Yes. Court concludes that a non-disabled job applicant may state a
claim under the ADA. The court in Roe v. Cheyenne Mountain
Conf. Resort, Inc. held that a current employee need to prove that
he or she is an individual with a disability in order to maintain an
ADA claim against an employer who required its employees to
report the types of prescription medication used.
 The ADA explicity prohibits employers from making disability
related inquiries of employees, unless the inquiry is job-related or
consistent with statutory language.
 Statute refers to a “job applicant” not a person with a disability.
The statute protects a broader class of people than the class
specified elsewhere in the ADA.
 On remand, the jury said that he couldn’t prove his injury because
they hired someone more qualified. Employee can’t recover
anything unless he can show that he actually would have gotten the
job. In this case he wasn’t able to do that.

o Illinois Right to Privacy in the Workplace Act:

 Statute says that it is illegal for an employer to ask if you have ever filed a
workers compensation claim.
 Anti-smoking non profit groups can tell their employees not to smoke.
 Department of labor can regulate and penalize employers for asking
inappropriate questions.

o Green v. Walker:

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  Facts:
 Doctor is examining the employee at the request of the employer.
He brings a malpractice claim against the doctor saying that the
doctor should have diagnosed him with lung cancer.
 Issue:
 Is there a duty for the doctor to tell the patient about any medical
conditions?
 Court:
 Yes. The doctor does have a duty.
 The question in this case is for whose benefit is the doctor
conducting the examination. In some cases the courts have held
that the doctor doesn’t owe a duty to the employee because the
examination is for the employer.
 Allowing doctors to be held not liable in this context may actually
change the nature of how the doctors view their obligations.
 The employee may not go to his or her own doctor, you might
think that you are okay, you don’t know whether that doctor did a
complete physical exam.
 Jurisdiction issue:
o This case was in the 5th Circuit federal court, but it wasn’t a
federal cause of action. 5th Circuit is looking at the LA
state law and the cases that have been decided in LA. LA
law says that the doctor cannot sue.
o LA is a code state instead of a common law state, and the
statutes take a higher precedent over the case law.
o 5th Circuit says that this doctor owed a duty of care to this
patient at least with respect to the tests and the procedures
that the doctor actually undertook.

o The Americans with Disabilities Act:

 Does not allow general medical examinations in addition to questions
about disability before a person is offered a job as part of the application
process.
 Employer can ask whether the employee will be able to perform the job.
 It is okay for the employer to require a medical exam as long as everybody
is subject to that requirement. You can ask all of its people that it extends
its offer to.
 Exams must be job related.
 Genetic Testing:
 Employer needs to show that genetic testing was job related.
 An employer can do genetic testing to people they were giving an
offer to and the job related issue doesn’t apply.
 Employers would want to do genetic testing because it may keep
their health insurance costs down.

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 V. DISCRIMINATION
A. Overview and Remedies:
o Questions:
 (1) What are the basic sources of law?
 (2) What groups are protected from discrimination?
 (3) What specifically do the statutes prohibit or require?
 (4) Common pitfalls and what employers do that gets them into trouble?
o Title VII:
 Bans discrimination on the basis of sex, race and national origin.
 Applies only to employers who have 15 or more employees.
 This particular provision of Title VII is not jurisdictional, which
means that an employer who doesn’t raise this as a defense early
enough waives it.
 Originally the statute did not have compensatory or punitive damages.
 As to private employers there are now compensatory and punitive
damages but there are caps.
 The statute also allows for shifting attorneys fees. This allows the
plaintiff to collect fees from the defendant if the plaintiff prevails.
 Preemption:
 The states can do more and they are not prevented from regulating
in this area. They can pass laws against any employer not matter
what size. Some states prohibit discrimination on all kinds of
things that Title VII does not cover.
 EEOC Finding:
 Can come in as evidence, but it is not binding. The EEOC charge
has to be clear enough so that the employer knows what it is being
accused of and that they know what the scope of the charges are.
In the EEOC charge you make class allocations of you are going to
bring a class action suit.

o Section 1981 of Civil Rights Act:

 Outlaws discrimination in the making of contracts.
 Also includes independent contractor contracts.
 Who is covered:
 It covers all employers.
 Courts have held that white people do have a cause of action under
this. Anybody can sue if they believe that they have been
discriminated against on the basis of their race.
 Also extends to other identifiable groups, but it does not cover age
or sex.
 Procedural requirements:
 There are no procedural requirements, like with Title VII, of going
to the EEOC.
 Damages:
 Compensatory and punitive damages are covered and there is a
statutory cap.

25
  Attorneys fees are also available.

o Pollard v. E.I. Du Pont:

 Facts:
 Pollard sued her former employer for hostile work environment
sexual harassment under Title VII of the Civil Rights Act of 1964.
 The sexual harassment forced her to take a medical leave of
absence and eventually caused her dismissal for refusing to return
to the same hostile work environment.
 Court awarded her $300,000 in compensatory damages. Also
awarded backpay and benefits and attorneys fees. Pollard asks
court of appeals whether front pay is a element of compensatory
damages and therefore subject to the cap.
 Issue:
 Is front pay an element of compensatory damages under the Civil
Rights Act of 1991 and thus subject to the Act’s statutory cap on
such damages?
 Court:
 No. We hold that front pay is not an element of compensatory
damages. Pollard argues that front pay is a replacement for the
remedy of reinstatement in situations in which reinstatement would
be inappropriate, like returning to a hostile work environment.
 She also argues that §1981, by its very terms, explicitly excludes
from the statutory cap remedies that traditionally were available
under Title VII which she asserts included front pay.
 Better reading gof §1981 is that front pay is not within the meaning
of compensatory damages and thus it is excluded from the
statutory cap. By enacting Civil Rights Act of 1991, Congress
determined that additional remedies should be available to sexual
harassment victims. It would leave a strange result if the least
sanctions were imposed upon the most egregious offenders in
those situations where reinstatement was not possible.
 Notes:
 In general, courts don’t like to give front pay for terribly long
period of time. 10 years would be a lot.
o Employee would also need to mitigate damages. They
would still need to look for a comparable job and when
they stop, the damages may be reduced.

B. Disparate Treatment:
o Disparate Treatment refers to “intentional preferential treatment”
o Prima Facie Case:
 A plaintiff must meet the initial burden of proof:
 (1) He belongs to a protected class.

26
  (2) He applied for, and was qualified for, a job for which the
employer was hiring.
 (3) He was rejected (in circumstances suggesting discrimination),
and
 (4) The position remained open, and the employer continued to
seek candidates after his rejection.
 Once the plaintiff meets this burden of proof, creating a rebuttable
presumption of discrimination, the burden then shifts to the employer to
articulate a legitimate, nondiscriminatory reason for rejecting the plaintiff.
 Then, the burden shifts again to the plaintiff to prove the employer’s
reason was a false “pretext”
 McDonnell Douglas Corp v. Green – provides an analytical
framework for thinking about circumstantial evidence. An
employment discrimination case need not include specific facts
establishing a prima facie case under the framework established by
the Supreme Court.
o Instead it must only contain a “short and plain statement of
the claim showing that the pleader is entitled to relief.”

o McDonnell Douglas v. Green:

 A pregnant employee who is often late to work because of morning
sickness. The employer has paid maternity leave. Day before the
maternity leave is to start she is fired. Court says that what you can do is
put together a lot of different pieces of evidence to create a convincing
mosaic of discrimination.
 You can compare direct evidence and circumstance evidence.
 Because it is so hard to prove discrimination, in the absence of an
admission, The Supreme Court created a way to get around this in
McDonnell Douglas. It’s a way that plaintiffs can bring their
circumstantial evidence to the court of it to analyze.
 The employer then has to come up with a legitimate non-discriminatory
reason for its actions. If the plaintiff can establish that the reason was
pretextual, the fact finder can conclude that there was discrimination.
o Desert Palace Case: Affirmative defense for Employers.
 Is direct evidence necessary in mixed motive situations?
 A mixed motive means that there was legitimate and non
legitimate reasons for firing an employee.
 Even if there was a legitimate reason, the employer will be liable.
 Before 1991 the S.C. said that if there was a mixed motive, the employer
could show that they would have made the same decision absent the
discrimination, and the employer would win.
 Under federal law, decisions motivated by mixed motives are deemed
discriminatory, but if the employer proves that it would have made the
same decision even absent discrimination the court may not award
monetary damages thought it may award equitable relief.

27
  For example, the court can give injunctive relief, declaratory judgment,
and attorneys fees if the plaintiff can establish that the decision was
motivated at all by discrimination.
- How to avoid Liability?
o Make sure that there are standardized regular evaluations. Consistent and
documented procedures.
o Make sure that employment evaluations are honest.
o Try to ensure that all of this is communicated to the employees. If employees feel
that they are treated fairly, it makes them less likely to sue whether or not their
lawsuits are justified

o Preston v. Wisconsin Health Fund:

 Facts:
 Preston was a dentist who charges that his former employer
discriminated against him on account of his sex in violation of
Title VII of the Civil Rights Act.
 They replaced him with a woman whom he claims had a
relationship.
 Issue:
 Is a male executive’s romantically motivated favoritism toward a
female sex discrimination?
 Court:
 No. To infer sex discrimination the court needs to know more.
They need to know the sex composition of the Fund’s workforce,
whether there were men who had jobs comparable to those of the
five women but didn’t get similar raises, and whether raises were
due to the women’s being promoted to new jobs and if so whether
men had a fair opportunity to compete for those promotions.
 When, as in this case, no reason is given as to why men might be
expected to discriminate against men, the plaintiff, to raise a triable
issue of discrimination, must present some evidence beyond the
bare fact that a woman got a job that a man wanted to get or keep.

o Back v. Hastings on the Hudson School District:

 Facts:
 (P) was hired as a school psychologist, she was denied tenure, and
her probationary period was terminated. She brought a lawsuit
seeking damages and injunctive relief under 42 USC §1983. She
claims she was fired because as a young mother, she would not
continue to demonstrate the necessary devotion to her job.
 (D) says she was fired because she lacked organizational and
interpersonal skills.
 Rule
 Discrimination on the basis of stereotypes is sex discrimination.
 Court:

28
  (P) must prove that she suffered purposeful or intentional
discrimination on the basis of gender.
 This would be considered a gender stereotype – the theory that
“women’s family duties trump those of the workplace”
 She has presented sufficient direct evidence concerning the
comments that were made to her.
 The municipality cannot be held liable pursuant to §1983.
o Fisher v. Vassar College:
 Facts:
 Plaintiff sued Vassar College because she was denied tenure.
 She claims that her leave of absence was held against her.
 Court:
 This was not sex specific and did not give rise to a claim under
Title VII.
 Appellate court found that when deciding tenure, it is perfectly
reasonable to consider as a factor the candidate’s prolonged
absence from academia in making hiring and promotional
decisions.
 The choice of staying at home following the birth of a child is not
the inevitable consequence of a medical condition related to
pregnancy.

- Pregnancy Discrimination Act:

o In 1978, Congress amended Title VII by adding the Pregnancy Discrimination
Act which provides:
 “The terms “because of sex” or “on the basis of sex” include, but are not
limited to, because of or on the basis of pregnancy, childbirth, or related
medical conditions; and women affected by pregnancy, childbirth, or
related medical conditions shall be treated the same for all employment-
related purposes, including receipt of benefits under fringe benefit
programs, as other persons not so affected but similar in their ability to
work.
o Absolutely no special treatment is required. It is okay to fire a pregnant
employee.

C. Disparate Impact and Statistics:

- Overview:
o Refers to employment practices which, while neutral on their face have the effect
of excluding protected groups. If an employer’s practice is found to have an
adverse impact, the employer may validate the practice by proving the practice’s
job relatedness or business necessity.
o Intent in disparate impact cases is relatively unimportant.
o Even unintentional discrimination is lawful.
o Questions:

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  What constitutes and adverse impact sufficient to be considered
discrimination?
 What constitutes “job relatedness” or “business necessity”
 What level of proof must the parties establish in order to prevail at trial?

- Griggs v. Duke Power Co.:

o Facts:
 Duke openly discriminated against blacks before the civil rights act was
passed. When it was passed, Duke instituted a new promotion policy: to
place into any department other than Labor, applicants must (i) have
completed high school, and (ii) pass 2 professionally-prepared general
aptitude tests. Current employees were exempted from the new hiring
criteria if they had completed high school.
 Griggs and other black employees sued Duke contending that the
requirement was discriminatory.
o Issue:
 May employers establish tests or degree requirements as criteria for
advancement if this tends to exclude racial minorities.
o Answer:
 Yes. Employers may establish them, if the employer proves that the
tests/requirements measure employment capability. Congress requires the
removal of artificial, arbitrary, and unnecessary barriers to employment,
when those barriers operate to discriminate impermissibly.
 If an employment practice actually excludes blacks, it is prohibited unless
it is shown to b related to job performance.
 Evidence here showed that among exempt employees, those who would
not be able to meet the new criteria are still able to perform their jobs well
and advance.
 While Duke adopted the requirements without discriminatory intent, good
intent does not redeem employment practices which hold back minority
groups an d are unrelated to measuring job capability.

- State of the law today:

o It is illegal for an employer to use an employment practice that causes a desperate
impact unless they can show a business necessity, the burden then shifts to the
employee to prove that there was a reasonable alternative.

- What you have to show as a matter of statistics:

o EEOC has the 4/5ths rule:
 A selection rate for any race, sex or ethnic group which is less than four-
fifths will generally be regarded by the government as evidence of adverse
impact, while a greater than 4/5ths ratio will not.
o It would be a lot harder to say that a smaller employer will have an adverse
impact rather than a larger employer with lots of employees.

- Affirmative Defense for Employer:

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 o They say that their selection criteria are job related and consistent with business
necessity. If the employer can show a strong enough connection that there is a job
necessity, the Plaintiff then needs to show a less discriminatory alternative.
 They can validate the test they are using.
 There are some jobs that the job relatedness is so obvious that job
requirements are self validating:
 Ex: High school diploma for pilots.
 Clean shaven employees at dominoes – not job necessity.

o Wards Cove Packing Co. v. Atonio:

 Facts:
 An Alaska based cannery, hired mostly white workers for its high-
paying non-cannery jobs and nonwhite workers for its low paying
canner jobs.
 P’s sued contending that their hiring practices had a disparate
impact causing racial stratification of the workforce and denying
nonwhite workers employment as non-cannery workers.
 The non-white workers presented statistical evidence that 66% of
cannery workers were non-white.
 Issue:
 In a Title VII disparate impact claim, can plaintiffs prevail upon
presenting statistics that better-paying jobs were held by whites?
 Court:
 No. Plaintiff must prove: (i) the workforce’s racial composition
does not reflect the qualified labor force/pool, (ii) the racial
disparity was caused by specific employment practices, (iii) if the
employment practices have legitimate goals, these goals can be
met by less-disparate practices, without undue burden.
 Statistical proof can alone constitute prima facie discrimination,
but the statistical comparison must be between the racial
composition of the at-issue jobs and that of the qualified
population in the relevant labor market.
 Here the statistical composition of the whites and nonwhites in the
noncannery positions as improper, because it does not consider the
absence of nonwhites among the skilled noncannery jobs may be
due to a dearth of qualified nonwhite applicants.
- Civil Rights Act of 1991:
o Overturned Wards Cove’s formulation of the burden of proof in disparate impact
cases.
o The employees still must show that the employment practice cause the disparate
impact. However, the burden on the employer with respect to showing that the
employment practice is job related is increased, in that it must show that the
practice is job related for the position and consistent with business necessity.

D. BFOQ Defense:
- Bona Fide Occupational Qualification

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 o Employers are specifically allowed to differentiate in hiring on the basis of
religion/sex/national origin (but not race) “in those certain instances where it is a
bona fide occupational qualification reasonably necessary to the normal operation
of that particular business or enterprise.
- What is not a BFOQ:
o Refusing to hire women on the assumption their turnover rate is higher.
o Refusal to hire based on sex stereotypes
o Refusal to hire based on the preferences of
coworkers/clients/customers/employers, and
o Refusal to hire men/women because it would require the employer to provide
separate facilities.

o Wilson v. Southwest Airlines:

 Facts:
 Airline hired only female stewardesses to promote a sexy image.
 Male applicants sued for discrimination.
 Issue:
 May employers hire only female employees and claim femininity
as a BFOQ?
 Court:
 Yes. But they can only do so if (i) the job itself requires workers
to be of one sex only, and (ii) the workers’ sex is reasonably
necessary to the employer’s business’s “essence”.
 The EEOC position is that gender based customers preferences
gives rise to a BFOQ only “where it is necessary for authenticity
and genuineness
o Fernandez v. Wynn Oil:
 Women were not hired to work with Latin American and Southeast Asian
men.
 Court said –we can’t be accommodating discriminatory preferences.

E. Religion and National Origin:

- Religion:
o Title VII:
 Requires some kind of reasonable accommodation for an employee’s
religious observation. Unless there is some undue hardship to the
business.
o Reasonable accommodation:
 With respect to providing reasonable accommodation in work schedules to
permit religious observances, the S.C. has held that employers have a duty
of reasonable accommodation only when it can be at de minimis cost.
o A duty exists even if the religion is not mainstream.
 It is broad in its cover, but narrow in what’s ultimately required by the
employer.

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 o Ex case:
 An employee at Costco has visible facial piercing and tattoos. She claims
she is a member of a church of body art and that it would be against her
religion to take the piercing out.
 Courts will look at the legitimacy of the Church’s practice.
o Public employers may not prohibit its employees religious practices.

- National Origin:
o Extends to the origin of the person’s ancestors, not just where they are actually
from.
o Fragante v. City & County of Honolulu:
 Facts:
 He claims that he was discriminated against by the City of
Honolulu based on national origin discrimination. They claim they
didn’t hire him because his heavy accent would cause problems
because this was a customer service job.
 Issue:
 Does an employer’s rejection of an applicant based on his foreign
accent constitute a violation of Title VII “national origin”
discrimination?
 Court:
 No. It does not constitute discrimination if (i) communication
ability is an occupational qualification for the job, (ii) the accent
would impair job performance, (iii) the employer honestly believed
the accent would impair job performance.
 Here is interviews were hard to understand, and the interviewers
were reasonable in thinking that the public would have a hard time
understanding him.

o Language restrictions:
 In IL an employer cannot restrict language spoken at work when they
employees are on break or doing something unrelated to their job.
 However, problem occurs because it is hard to know when the employees
are doing something that is actually related to their job.

F. Age Discrimination:
- ADEA:
o Age Discrimination In Employment Act (1967)
o Prohibits age discrimination in employment for workers over 40.
o Mandatory retirement is prohibited.
o It applied to businesses with 20 or more employees.
- Supreme Court:
o Has held that suits for damages under the ADEA cannot apply to the states.
o Whether or not a state could impose a mandatory retirement age is unclear.
- Damages:

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 o Plaintiff can get back pay or front pay.
o No compensatory or punitive damages.
o Plaintiff can get liquidated damages for double the back pay for willful violation
of the age discrimination law.
o Attorneys fees available.
- Disparate Treatment Claims under ADEA:
o Treated similar to Title VII claims under McDonnell Douglas.
o Five affirmative defenses permitting age discrimination:
 (1) Where age is a BFOQ reasonably necessary to the normal operation of
the particular business.
 (2) Where the action is based on reasonable factors other than age.
 (3) To observe a bona fide seniority system.
 (4) To observe a bona fide employee benefit; or
 (5) To discipline/discharge employees for good cause.
- Disparate Impact Under ADEA:
o It is unclear whether ADEA recognizes disparate impact liability.
- Preemption:
o The ADEA does not preempt any state or local law that provides protection to
individuals with disabilities at least as stringent as the ADA.

o General Dynamics
 Facts:
 Respondents are between the ages of 40 and 50 and objected to the
new terms of a CBA, which eliminated the employer’s obligation
to provide health benefits to subsequently retired employees,
except as to then-current workers at least 50 years old.
 They allege that the agreement violated the ADEA because it
discriminated against them with respect to compensation, terms,
conditions, or privileges of employment, because of their age.
 Court concludes that these workers do not have a cause of action.
 Courts reasoning:
 Court determines that the ADEA was concerned with protecting a
relatively older worker from discrimination that worked to the
advantage of relatively young.
 The act was not about protecting younger workers from prejudice
against them.
 Dissent:
 Title VII says that it was intended to improve race. You can’t
discriminate on the basis of race no matter what race you are
referring to. What is different here?

o Smith v. City of Jackson:

 Facts:

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  The city wanted to bring up the starting salaries of police officers
up to the regional average, granted all raises to all police officers
and police dispatchers.
 Those who had less than 5 years of tenure received proportionately
greater raises when compared to their former pay than those with
more seniority. Although some officers over the age of 40 had less
than 5 years of service, most of the older officers had more.
 Court:
 Concluded that it was error for the 5th Circuit to hold that the
disparate impact theory of liability was categorically unavailable
under the ADEA.
 However, granting the lower echelon employees a raise was a
reasonable factor other than age because they were trying to bring
them to the same salary level as surrounding police forces.
o Two important limitations that make disparate impact different from Title VII.
The language of the ADEA reflects the language of the pre 1991 language of Title
VII. You have to have an extremely tight connection between the specific
practice of the employer and the discriminatory effect.

G. Disability:
- Americans With Disabilities Act (ADA):
o Covers employers with 15 or more employees.
o Outlaws discrimination against people with disabilities.
- What a Plaintiff has to do to win a claim under the ADA:
o (1) Person must be disabled and be able to perform the position that they hold or
desire.
o (2) Employer must accommodate.
 Make facilities accessible, modified work schedule, modification of
devices, etc.
 Undue hardship is defined but it is a mushy definition.
 There has to be a flexible interaction process between the employer and
the disabled employee.

o Sutton v. United Airlines, Inc.:

 Facts:
 Sisters had sever myopia, which caused their uncorrected vision to
be poor. However, when they used glasses, their vision was 20/20.
They applied to be United Airlines Employees and then told a
mistake was made in inviting them to interview because they did
not meet vision requirements.
 Issue:
 In determining whether an individual is disabled within the
meaning of the ADA, should reference be made to measures that
mitigate the individuals’ impairment?
 Court:

35
  The determination of whether an individual is disabled under the
ADA should be made with reference to the measures that mitigate
their impairment.
 Under the ADA, an employer cannot discriminate against a
qualified individual with a disability, defined as “an individual
with a disability who, with or without reasonable accommodation,
can perform essential functions of the employment position.
 A disability can be:
o (1) an actual disability, where a physical or mental
impairment substantially limits one or more of the major
life activities of such individual; or
o (2) a record of an impairment; or
o (3) being regarded as having such an impairment.
 If the disability determination is made with or without reference to
corrective measures, they are not actually disabled under the ADA.
 The language should be read as requiring a person to be presently
substantially limited in order to demonstrate a disability.
 If mitigating measures correct the impairment, the person does not
have an impairment that “substantially limits a measure life
activity – although they still have an impairment.
 Congress did not intend to bring the statute to all those whose
uncorrected conditions amount to disabilities. Congress found that
43,000,000 have disabilities, if they wanted to consider all the
people with corrected disabilities, that number would have been
much higher.
 Dissent:
 Whether an individual is disabled within the meaning of the ADA
focuses on her past or present physical condition without regard to
mitigation that has resulted from rehabilitation, self-improvement,
prosthetic devices or medication.
 Subsection (B) of the ADA plainly covers a person who previously
had a serious hearing impairment that has since been completely
cured.

H. Other Protected Groups:

- Can a man sue for having been harassed by other men?
o Oncale v. Sundowner Offshore Services, Inc.:
 Facts:
 Oncale worked on an oil platform in the Gulf of Mexico. He
alleged that three members of an eight man crew, including two
supervisors, subjected him to sex-related humiliation in front of
others. He also alleged that the physically assaulted him in a
sexual manner and that one of the (D)’s threatened to rape him. He
quit his job, saying that he feared that if he stayed on, he would
have been raped.

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  Issue:
 Can workplace harassment of an individual by someone of the
same sex be a sexual discrimination violation under Title VII?
 Court:
 Yes. It is not relevant that eliminating same-sex harassment was
not Congress’ primary motive in adopting Title VII. The statute
covers any type of harassment “that meets the statutory
requirements.”
 What matters under Title VII is that the harassment is sex-specific
and rises to the level of discrimination.
 Only conduct severe or pervasive enough to create an objectively
hostile abuse work environment is sex harassment.

- Three ways to establish that the harassment was motivated by sex:

o (1) If the harassment was motivated by sexual desire.
o (2) If it was in the presence of other members of the workplace.
o (3) If the harasser treats people of different sexes differently.

- Illnois:
o Has amended the human rights statute so that sexual orientation is protected.

- IL Victims Economic Security and Safety Act

o No case law.
o Applies to employers with 50 or more employees.
o Two basic provisions:
 (1) Provides for entitlement for victim’s of domestic violence.
 Unpaid leave for up to 12 weeks per year. Modeled on the FMLA.
 (2) It also has an antidiscrimination provision. You can’t discriminate
against domestic violence victims, even if the workplace is threatened by a
perpetrator of domestic violence.

VI. WAGES AND HOURS

A. Overview: History, Economic Policy, FLSA Basics

- History:
o Initially, courts struck down statutes regulating wages and hours on the ground
that they impermissibly interfered with the freedom to contract.
o During the Depression Roosevelt wanted to pass worker protection laws and
minimum wage laws to help people earn enough money to survive. The court
was hostile to those laws, so he tried to pack the court.
- Fair Labor Standards Act (FLSA):
o Basic Provisions of the FLSA:
 (1) Establishes a minimum wage and requires that overtime compensation
be paid for workweeks longer than forty hours.
 (2) Regulates child labor.

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 o Coverage of the FLSA:
 Employers:
 To be covered by the FLSA, a business needs to have a minimum
of 2 employees and its goods or services must have a connection
with interstate commerce.
 The statute provides exemptions for certain small and family
operated business:
o However, it may apply to an otherwise exempted small
business if it is owned and operated by an “enterprise”
which controls multiple small business with a combine
income that exceeds that the statutory maximum.
 They are applicable to state and local governments.
 States are immune from suits for money damages under the FLSA
though.
 Employees:
 The term employee is broadly defined. However taxi drivers, radio
and television announcers, causal babysitters and independent
contractors are excluded.
 The most important and widely used exemptions are the
“executive,” “administrative,” and “professional” employees.
 The FLSA applies to less than 40% of agricultural workers. They
are subject to the Seasonal Agricultural Workers Protection Act.

o States:
 Lots of states have their own minimum wage laws which may cover
people who would be exempt under the FLSA. Almost all employers are
going to be covered in IL if they hire more than 4 employees.
 13 States have minimum wage laws that are higher than the federal
minimum. IL = $6.50 per hour.
 There are other types of laws that try to raise salaries:
 Prevailing wage laws.
 Living wage laws.
o National Minimum Wage Law:
 Currently $5.15 per hour and has been that since 1997.
 It can only be changed by an act of congress.
 Today the minimum wage is 33% of the average American wage.
 That is the lowest its ever been since 1949.
o Negative things about the minimum wage:
 (1) Less money for employer’s to pay workers, they are going to have
fewer workers.
 (2) For every 10% increase in the minimum wage, there is a loss of
$100,000 jobs.
 (3) Some people have argued that raising minimum wage actually raised
inflation.
- Earned Income Tax Credit:

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 o Working parents can get a tax credit if they earn below a certain amount of
money.
o Employers can actually offer that money in advance to the employee.

B. Covered Employees?
- Economic Realities Test:
o Arises in the FLSA. It emphasis employer control and employee independence.
o Look at how much control the employer has. Sometimes a person can have even
more than one employer.
- Employees:
o The term employee is broadly defined. However taxi drivers, radio and television
announcers, causal babysitters and independent contractors are excluded.
o The most important and widely used exemptions are the “executive,”
“administrative,” and “professional” employees.
o The FLSA applies to less than 40% of agricultural workers. They are subject to
the Seasonal Agricultural Workers Protection Act.
- Exemptions:
o There is an overtime exemption for executive, administrative, and professional
workers.
 People who do those kinds of jobs do not have to be paid overtime.
- Old Regulations:
o Long test: used for people whose income was below a certain level - $13,000.00.
 Long test had cap on how much time the employee could spend on non-
exempt duties.
 Thus, even if an employee met all the requirements under the long test, if
she was spending more than 20% of her time doing non-exempt activities
she would be non-exempted.
o Short test:
 People who make over $13,000.00 use the short test.
 For short test – see chart.
- New Regulations:
o New Standard Duties Test:
 Anyone who earns below $23,650.00 per year must be paid overtime.
 Anyone who earns between $23,650 and $100,000.00 – see chart.
 Anyone making more than $100,000.00 – highly compensated test.
 Almost never going to be able to get overtime.
 Lawyers, doctors, teachers are automatically exempt from overtime.

- Executive Employees:
o Scherer v. Compass Group, USA, Inc.:
 Facts:
 Plaintiff was a chef at a restaurant in a dining hall and he managed
the production of food.
 He said that his primary duty was to make the food. He spent
about 3/4ths of his time cooking and this wasn’t executive work.

39
  Court:
 During the time he was preparing food, he was also performing an
executive function by delegating responsibility.
 He was also paid twice as much as any other kitchen
 An employee’s primary duty isn’t necessarily the thing they are
spending the most time on.
- Administrative Employees:
o Robinson-Smith v. Government Employees Insurance Company:
 Facts:
 These are insurance claims adjusters who inspect and report on
accidents.
 Court:
 Finds that they don’t exercise a lot of discretion. It relies on the
fact that there is a computer program that takes away a lot of their
discretion.
 Most of what these people do is being dictated by computer
program.
 Court says that they are not management employees and therefore
subject to overtime.
- Professional Employees:
o Two types:
 (1) Learned Professionals
 Dental hygienists, assistants, accountants.
 Nursery school teachers. Teachers.
 (2) Creative Professionals.
- Illinois Law:
o Administrative and professional employees are defined under the long duties test.

o Dalheim v. KDFW-TV:
 Facts:
 Group of reporters, producers, directors and assignment editors
brought a suit against their employer, KDFW-TV alleging that the
station required them to work more than 40 hours per week
without overtime pay.
 (D) claims the employees were either professional, administrative
or executive employees.
 Issue:
 Are television journalists, news producers and directors exempt
from the FLSA?
 Court:
 General assignment reporters are not creative professionals entitled
to exemption under the FLSA. The regulations require that, for an
employee to be considered a creative professional, his work must
depend heavily upon his invention, imagination, or talent. Work of
these reporters was largely dictated by the station management.

40
  Producers were neither creative professionals, administrative or
executive employees. They have to perform their work within a
well-defined framework of management policies.
 Producers discretion is exercised by skills and experience rather
than creative expression.
 They cannot be considered administrative professionals because
they do not set business policy, plan long or short term objectives
of the news department, promote newscast, or any other
administrative duty.

C. Counting Wages and Hours:

o What counts as wages?
 The FLSA does not require that an employee be paid in cash.
 Employers may deduct the cost of meals and lodging that are
provided.
 Although employees who earn tips need not be paid the minimum wage,
the employer must make up any shortfall between the minimum wage and
a “tipped” employee’s earnings.
 The employees regular rate of pay determines how much earned overtime
compensation is due.
 Commissions – an employer doesn’t violate minimum wage laws if the
regular rate of pay for a commissioned employee is more than one and
half times the minimum hourly rate under FLSA and more than half the
employee’s compensation for a certain period comes from commissions.
o What counts as Hours?
 The FLSA does not establish the maximum number of hours an employee
may work. It only requires that an employee pay time and a half the
regular rate of pay for all hours in excess of forty per week.
 Irregular Hours:
 Ex: A Chauffer works 40 hours a week minimum. And he is
guaranteed a salary of 400 per week. Sometimes he works more
than 40 hours a week. How should overtime be calculated?
o When there is a fixed salary for fluctuating hours:
 400/42=$9.52
 9.52 / ½ = $4.76
 $4.76 x 2 = $9.52
 400 + 9.52 = 409.52.

o Lets say he worked 50 hours a week

 400/50 = 8
 8/½=4
 4 x 10 (10= the ten extra hours he worked)= 40
 40+400 = 440.00
 Limitations:
o Employees need to understand what is going on. The
hourly straight time can never be less than minimum wage.

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 o Full salary has to be paid every week regardless of hours.

o Halferty v. Pulse Drug Co.:

 Facts:
 Halferty was employed by Pulse Drug Co., Inc. She was on duty
from 5:00pm to 8:00am five nights a week. She was allowed to
eat, sleep, entertain guests, baby sit and do household chores while
waiting to answer calls. She was paid a flat rate of $230 per
month.
 Issue:
 Must an employee who works from home be given complete
freedom to pursue personal activities during the time she is “on
call” in order to be exempted from both the minimum wage and
overtime compensation requirements for that time?
 Court:
 No. If employees are allowed to eat, sleep, and entertain during
their idle time, they are not entitled to overtime.
 Waiting to be Engaged Doctrine:
o When idle time is spent predominantly for the benefit of the
employer, the employee is “engaged to be waiting” and is
entitled to compensation.
o When the employee is using the time for their own benefit,
the employee is said to be “waiting to be engaged” and is
therefore not entitled to compensation.
 Homeworker’s Doctrine:
o An employer may pay an employee according to a
reasonable compensation agreement if the employer cannot
determine the exact number of hours the employee spent
working.

D. Enforcement and Other Federal Laws:

- The FLSA provides five different enforcement actions:
o (1) The Secretary of Labor may file a civil action to recover the amount of back
wages and additional equal amount as liquidated damages.
o (2) The Secretary of Labor may file an action for civil money penalties against
any person who violates the provisions prohibiting oppressive child labor.
o (3) The Secretary of Labor may seek an injunction.
o (4) Employees may file a civil action for damages – backpay and damages for
minimum wage or overtime compensation.
o (5) The Department of Justice may commence a criminal prosecution.
- Private Right of Action:
o An employee’s right to seek damages terminates once the Secretary of Labor files
an action.
o 2 year statute of limitations for ordinary violations.

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o 3 year statute of limitations for “willful” violations.
 For a violation to be willful, the employer must have acted with the intent
to violate the FLSA or with a reckless disregard for whether his conduct
violated the FLSA.
o Class Actions:
 Workers cannot bring regular class action suits.
 The employees have to opt into the case. You have to get the employees
to agree to join the lawsuit, whereas in a regular class action suit
employees have to opt out.
o Retaliation:
 An employer is prohibited from taking retaliatory action against an
employee who files a complaint or commences a civil action under
FLSA§15(a)(3).
o Damages:
 Attorneys fees are available
 Double damages are available only for private causes of action.

o McLaughlin v. Richland Shoe Co.

 Facts:
 The Secretary of Labor filed a complaint against the Richland Shoe
Co., alleging that they failed to pay mechanics overtime
compensation as required by the FLSA.
 As an affirmative defense, the (D) pleaded that the 2 year statute of
limitations applied and it had run.
 District court found that Richland’s actions were willful, and their
definition meant that an employer knew or should have know that
his conduct was governed by the FLSA.
 Appellate Court reversed, saying that a willful violation did not
occur unless it knew or showed reckless disregard for the matter of
whether its conduct was prohibited by the FLSA.
 Court:
 For the purposes of the three year exception to the SOL, a violation
of the FLSA is willful if the employer either knew or showed
reckless disregard for the matter of whether his conduct was
prohibited by the statute.
 The fact that it adopted a two tiered SOL made it obvious that
Congress intended to draw a distinction between ordinary
violations and willful violations.
 The word willful generally is understood to mean “not merel
negligent” or “voluntary.”
 Rejects the Secretary of Labor’s proposed intermediary standard,
which would deem an FLSA violation willful if the employer,
recognizing that it might be covered by the FLSA, acted without a
reasonable basis for believing that it was complying with a statute.
 Dissent:

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  The intermediate standard should be applied because it is a better
understanding of the word willful.
o Things to ask:
 Was the employer aware of the statute?
 Did he know if it applied to his situation?
 Did he try to find out any more information?
 Have you ever paid employees overtime before?

- Miscellaneous Federal Statutes:

o Walsh-Healey Public Contracts Act:
 Establishes basic labor standards for work done on US government
contracts in excess of $10,000.00 in value for materials, supplies, articles,
equipment, or naval vessels.
o Davis Bacon Act:
 Covers construction, alteration, or repair of federal buildings or public
works contracts in excess of $2,000.00.
 After Katrina President Bush suspended this act for the Gulf Coast.
o Service Contract Act of 1965:
 Establishes labor standards for federal contracts in excess of $2,500 for the
provision of services through the use of service employees.
 Cafeteria and food service, maintenance and guard service, linen supply
services, etc.
 Executive and administrative and professional employees are exempted.

A. State Wage and Hour Protection:

- Overview:
o Many states afford employees protections beyond those provided by the FLSA.
o Where state minimum wages are hire than federal, the state minimums control.
o The most significant state rights are contained in wage payment or collection
statutes, which require payment in legal tender on a periodic basis and limit
employer deductions and with holdings.
 As a general matter, wage deductions and withholdings must be expressly
authorized by statute or regulation.
 Those deductions which are commonly permitted include federal and state
tax withholdings, contributions to pension, retirement and insurance plans,
and union dues.
 State laws also regulate wage garnishment. – usually used for child
support payments.
o State wage collection statute:
 Generally provides a means by which employees may recover unpaid
wages, regardless of the amount, from employers, by filing a claim with a
state agency or going to court.
o IL Law:
 Addresses concerns about teen workers.

44
  Also a provision that allows employers to pay 70% rate to people who
they are training.
 Governor of IL wants to raise the minimum wage by $1.
 An employer can pay in meals, be here the employee must actually use
whatever it is the employer has provided. If the employee chooses not to
accept the meals, the employer then has to pay minimum wage.
 One day rest act in IL. There is an exception for executive and
administrative employees.
- IL Wage Payment and Collection Act –
o Law provides for regular pay days –
 they have to be paid 2 times a month.
o Executive and Administrative employees can be paid monthly.
o Employer can’t delay paying employees for a certain amount of time.
o Final compensation must be provided in full by the latest the next scheduled pay
day.
 Employee who is leaving is entitled to any unused earned vacation time
and any money they have earned up until that time.
o An employer may not deduct from a final wage any money that the employees
owes to them such as from stealing, without the employees approval at the time.

o Ressler v. Jones Motor Co.:

 Facts:
 In order to deal with financial hardship, Jones Motor Co. asked its
employees to participate in what it termed an “Earnings
Participation Plan,” under which the employees wages were
determined by the company’s profitability.
 97% of the company’s employees agreed to take part in the plan.
 Although they termed it a contribution plan, it was really a series
of wage reductions. The employees neither could expect to receive
nor did they receive any return on their investments.
 If the company were unprofitable, the employees pay totals would
be deducted according to the company’s loss ratio.
 The plan was discontinued with respect to union employees.
 Issue:
 May a company make deductions form employee wages pursuant
to an earnings plan that has not been approve by the appropriate
state agency?
 Court:
 No. An earnings plan which affects the wages and payments
deserves close scrutiny by the state agency empowered to assure
that the interests of the employees are protected. We agree with
the trial court that the contributions plan amounted to nothing more
than a series of wage deductions.

45
  The company identified the amounts as deductions on the pay
stubs and the company president referred to the plan as a deduction
from wages.
 Wage deductions must be authorized by statute or by the
Department of Labor and Industry. This plan was not authorized
by either.

F. Equal Pay
- Wage Comparability for Individuals: The Quest for Pay Equity
o Full time women earn 70% of what their male counterparts make.
o Equal Pay Act:
 Prohibits sex-based wage discrimination by requiring employers to pay
employees the same wage for equal work on jobs which require equal
skill, effort and responsibility, and which are performed under similar
working conditions.
 An employer can base a difference in wages on seniority, merit,
productivity, or any factor other than sex.
 An employer has the burden of proving that higher wages paid to an
employee of one sex are based on a factor other than sex.
o What is Equal Work?
 Jobs are considered equal if they require equal skill, effort and
responsibility and are preformed under similar working conditions.
 Jobs do not have to be completely identical to be equal, just substantially
equal.
- Title VII:
o Under Title VII, a woman who doesn’t have someone she can compare herself to
might not have an equal pay act claim, but if she can establish that her salary was
set lower than other people in the marketplace or by the employer’s
discriminatory intent, she might have a Title VII claim.

VII. HEALTH BENEFITS AND ERISA

- Overview:
o Health benefits are one of the fastest growing expenses in our economy. Some
people argue that providing these benefits has a negative effect on US employers
being able to compete in the global marketplace.
o Some people say that workers are better off getting health benefits than wages
because health benefits are not taxable.
o Employers are trying to figure out how to cut back on their health benefit
expenses.
 Less comprehensive coverage.
 Making employees pay more premiums.

- Health Benefits:
o Introduction:
 ERISA preempts state regulation of employment-based health plans.

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  As a result of preemption, self-insured employers are exempted
from virtually all manner of state regulation that relates to health
benefits.
 ERISA provides substantive regulation of employer-provided health plans.
 Employers are not required to provide any level or type of
coverage.
 There are no reserve requirements to protect employees in the case
of bankruptcy.
 Employers are not prohibited from unilaterally terminating or
altering benefits.
- Employer Liability:
o Dawes Mining Co. v. Callahan:
 Facts:
 Dawes Mining made a unilateral decision to change health
insurance coverage from the existing insurer to another company.
The (P) was called into the office to sign onto the new insurer.
The representative informed him that his coverage would be the
same under the new plan.
 The new policy, in fact, excluded pre-existing conditions.
 He was illiterate, but signed the application for insurance as
directed by the representative. His wife was hospitalized for a pre-
existing condition and she wasn’t covered. She died and new
insurer refused to pay medical and hospital expenses.
 Issue:
 Is an employer the agent of his employees when the employer
procures group health insurance and obtains employees’
applications for coverage?
 Court:
 Yes. The employer acts as the agent when the employee is
contributing toward payment of the premiums.
 As a fiduciary, the agent is required to act primarily for the benefit
of the principal in matters related to the agency. Furthermore,
there is a requirement that the agent make a full disclosure of all
pertinent facts within his knowledge concerning the subject matter
of the agency.
 The duty of the fiduciary cannot be ignored because the employee
failed to read the application.
 The employer has a duty to notify the employee of any change or
modification of the coverage.
- In IL, the agency doesn’t last forever.
- Employer can say to the employee that they are going to give them less coverage. If the
employer had the right to do that, what kind of damages does the employee have because
the employer failed to tell him of the coverage.
o Employee could have gotten private insurance.

47
 o Employer should have told him about the right to keep his old insurance, and if he
did have that right the employer should have told him.

- What does ERISA cover?

o Section 1002, pg. 261 of statute book.
o (1) It covers employee benefit plans (EBP) established or maintained by an
employer or employee organization.
 An EBP mean any plan, fund, or program which was heretofore or is
hereafter established or maintained by an employer or by an employee
organization, or by both, to the extent that such plan, fund, or program was
established or is maintained for the purpose of providing for its
participants or beneficiaries, through the purchase of insurance or
otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in
the even of sickness, accident disability, death or unemployment, or
vacation benefits, apprenticeship, or other training programs, or day care
centers scholarship funds or prepaid legal services.
 Any plan or program that provides retirement income to employees or
results in a deferral of income for periods extending to the termination of
covered employment or beyond.
o For coverage, see Sec. 1003, pg. 263 of statutory supplement.

- What is a healthcare plan governed by ERISA and what protections does it provide to
employees?
o Key provisions are Sec. 1132 – Civil Enforcement pg. 277.
 A civil action may be brought:
 (1) by a participant or beneficiary
o (A) for the relief provided for in subsection (c) of this
section, or
o (B) to recover benefits due to him under the terms of his
plan, to enforce his rights under the terms of the plan or to
clarify his rights to future benefits under the terms of the
plan.
 (2) by the Secretary, or participant, beneficiary, or fiduciary for
appropriate relief under Section 409
 (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act
or practice which violates any provision of this subchapter or the
terms of the plan, or (B) to obtain other appropriate equitable relief
(i) to redress such violations or (ii) to encorce any provisions of
this subchapter or terms of the plan.
 (4) by the Secretary or by a participant or beneficiary for
appropriate relief in the case of a violation of 105(c)
 (5) Except as otherwise provided in subsection (b) of this section,
by the Secretary (A) to enjoin any act or practice which violates
any provision of this subchapter, or (B) to obtain other appropriate
equitable relief (i) to redress such violation or (ii) to enforce any
provision of this subchapter; or

48
  (6) by the Secretary to collect any civil penalty under paragraph
2,4,5,6,7,.

- Damages;
o You cannot get emotional damages under ERISA.
o There are other remedies available.
 Injunctive relief.
 Reimbursement
 Enforce his rights
 Clarify future benefits.

B. ERISA Preemption:
- When is State Law Preempted by ERISA?
o ERISA preempts any and all State laws insofar as they may now or hereafter
relate to any employee benefit plan. 29 USC §1144(a).
o Questions to ask:
 (1) Does this law relate to an employee benefit plan?
 This has been interpreted very broadly and it doesn’t take much to
be related. If the answer is No, there is no preemption issue. If the
answer is yes, go to question (2).
 (2) Does the state law regulate insurance?
 1144(b)(2) says that state laws regulating insurance are not
preempted. If this is a state law regulating insurance then there is
no preemption. Go to question 3. If it doesn’t regulate insurance
than the law is preempted.
 (3) We need to look and see if perhaps the cause of action supplements the
available remedies in some way under ERISA. If the Plaintiff is going to
get something here that she wouldn’t be entitled to under ERISA than it
may be preempted. Must look at this even if all the other requirements are
met.

o Rush Prudential HMO v. Moran:

 IL law says that if someone is denied benefits under an HMO they have a
right to some independent review to find out if the denial of benefits was
legitimate.
 Question, is that preempted by ERISA?
 (1) Does it apply to an EBP?
o Yes. It is about an HMO and HMO are often employee
benefit plans.
 (2) Does the law regulate insurance?
o In order to regulate insurance it has to be a law that’s
directed to the insurance industry and not merely something
that has an effect on the insurance industry.
 (3) Look at McCarren-Ferguson factors: A law regulating
insurance generally targets practices or provisions that

49
 o (1) Have the effect of spreading or transferring
policyholder’s risk.
o (2) Are an integral part of relationship between insured and
insurer. Are you going to get the benefit that you believe
your insured to receive?
o (3) Are limited to entities in the insurance industry.
 In Moran the court looks to see if the review goes beyond EIRSA
enforcement scheme – It doesn’t.
 She is not seeking a substantive remedy that she can’t get under
ERISA. She just wants her benefits. She is allowed to sue here to
see if she is entitled to her benefits.
o One of the ways that a company might avoid this result is Moran would be by
self-insuring. The employers may not want to provide extra layers of procedure.
ERISA preempts any state insurance laws against self-insured employers.
 Self insurance programs are not governed by the insurance savings clause.
What that means is that all these laws regulating insurance that applies to
insurance companies does not apply to employers who want to self-insure.
 Self-insurance –
 Instead of going out and finding an insurance policy, the employer
just pays for the coverage themselves.
 They can evade state insurance regulation.
 They may actually not be getting any benefit from going to an
insurance company.

o Cicio v. Vytra Healthcare:

 Facts:
 The beneficiary was diagnosed with Cancer. The doctor devised a
treatment plan that they submitted to the insurance company. The
insurance company determined that it was experimental in nature
and was therefore not covered. He dies.
 His wife brings a medical malpractice claim in violation of NY
state law.
 Issue:
 Is this preempted by ERISA.
 Court:
 The primary ERISA focus is to protect contractually provided
benefits.
o Medical malpractice is a tort, its not about contracts. You
have a right not to be treated negligently under state law
regardless of contract.
 Insurance company claims that they are not really suing under
ERISA, but they are suing because they wanted their benefits and
that it is therefore a cause of action under ERISA.

50
 o Court says that this makes sense, but all cases that bought
that line of reasoning were decided before the Pegram case.
This case suggested the trend away from preemption.

o Pegram v. Herdrich:
 Facts:
 The Plaintiff complained to her doctor of acute abdominal pain,
and there was inflammation in her abdomen. The doctor required
the patient to wait over a week to have an ultrasound at an
affiliated clinic instead of sending her to a local hospital. Before
the ultrasound, plaintiff’s appendix ruptured and she suffered
peritonitis.
 Plaintiff’s doctor was a member of physician-owned HMO. The
structure of this HMO provided financial rewards to those doctor-
owners for providing less treatment. The Plaintiff argued that this
structure necessarily violates the HMO’s fiduciary obligation to the
patient (1132(a)(2)). She also sued for medical malpractice and
won.
 The court rejected her argument that there was a breach of
fiduciary duty under ERISA, by pointing two unacceptable logical
conclusions to her position:
 Court:
 (A) HMOs are completely illegal because the very nature of their
existence violates fiduciary obligations as the plaintiff her
understands. Given congressional promotion of HMOs this is not
a plausible understanding of ERISA.
(The court also rejected the Plaintiff’s argument that this HMO
was unique because it was doctor owned).
o The court also discussed remedy. Although it is said that
the “mechanics of relief are unclear” it appeared that the
plaintiff was seeking return of the HMO’s profits from the
doctors to the plan itself, to be spent for the benefit of the
plan participants. This remedy, the court concluded, was
equivalent to outlawing for-profit HMOs an outcome that
did not believe Congress intended.
 (B) The fiduciary duty is breached when an HMO violates the
standard of care with respect to medical treatment.
o But that simply federalizes medical malpractice claims. If
that’s what the ERISA fiduciary duty means then state mal
practice claims against HMOS and maybe against doctors
who work with them would them would also be preempted.
o Absent clearer direction, we cannot assume that Congress
intended preemption of this quintessential state law cause
of action.

To explain this decision, the Court distinguished between three types of decisions:

51
- (1) pure eligibility (e.g. is appendicitis covered) – clearly governed by ERISA.
- (2) Pure treatment (should this particular patient have an appendectomy) – clearly
governed by state law.
- (3) hybrid decisions – the patient has coverage only if the treatment is medically
necessary. That question determines both treatment and eligibility. Not covered by
ERISA. Could give rise to a med mal claim under state law.

o Aetna Health Inc. v. Davila:

 Facts:
 Plaintiffs were denied treatment and they claim that they suffered
severe consequential damages. They don’t want to bring an
ERISA claim because they don’t just want coverage, they want
compensation for what happened to them.
 The decisions were made about their treatment were made on the
basis of what is medically necessary, and they sue under state law
that requires ordinary care in the handling of treatment decisions
 Court:
 This is a situation where the plaintiffs are complaining about their
benefits. They are pissed because they didn’t get their extra day in
the hospital or something they were entitled to under their
insurance policies, and that is what ERISA is about.
 If we let people sue under these circumstances, we are going to be
allowing state law to get in the way of the tight enforcement
scheme of §1132.
 The difference between this case and Pegram is that in this case the
treatment decision was being made simultaneously with the
coverage decision. In this case the person making the treatment
decision was not the person making the coverage decision.
 This is just a coverage decision.

- In light of the Aetna case, Cicio loses.

C. Substantive Provisions:
o Denial of benefits:
 A plan administrator’s decision to deny benefits is reviewed under an
abuse of discretion standard, requiring courts to defer to the
administrator’s decision.
o Salley v. E.I. DuPont De Nemours & Co.:
 Facts:
 Salley was a retired employee of DuPont, and was insured under
their medical-surgical policy. In 1997 his daughter, Danielle, who
was insured under the plan, was admitted to the hospital for the
third time for emotional disabilities. The treating physician spoke
with a case manager who was familiar with Danielle’s case.
Physician said she had improved but could not be released or else

52
 she would regress. They wanted to put her in a home or a school,
and it took time to find that place.
 Insurance company had one of its doctors review the case and
without examining her, instructed the doctor that they were
terminating benefits. Father brought suit challenging the
termination of benefits.
 Issue:
 Does an employee healthcare plan administrator abuse its
discretion when it terminates benefits contrary to the treating
physicians recommendations and without performing its own
evaluations?
 Court:
 Yes. Courts must apply an abuse of discretion standard in
reviewing a decision to exercise authority. It requires courts to ask
whether the administrator acted arbitrarily or capriciously.
 An administrator can abuse his discretion when he fails to obtain
necessary information. The administrator has the right to rely on
the treating physician’s recommendations.

- The general rule adopted by most courts is that, under ERISA, a plan administrator’s
decision to deny benefits is to be accorded substantial deference, so long as the plan
documents reserve to the administrator the decision to deny benefits. Under that standard
courts normally review a denial of benefits in light of the facts known to the plan
administrator at the time the decision was made. Consequently, the courts rarely reverse
a decision to deny benefits.

- Does ERISA allow for an internal appeal process for denial of benefits w/in the insurance
company?
o Yes, beneficiaries under ERISA must exhaust all internal plan remedies before
seeking court relief
o Exception:
 If the internal methods prove to be futile and useless, since you’ll be
rejected anyway

- Discrimination:
o ERISA prohibits:
 an employer from discharging, fining, suspending, expelling, or
disciplining or discriminating against a participant or beneficiary for
exercising any right to which he is entitled under the provisions of an
employee benefit plan or for the purpose of interfering with the attainment
of any right to which such participant may become entitled under the plan.
29 USC §1140.
o A plaintiff alleging discrimination under ERISA bears the burden of proving that
the employer intended to discriminate for the purpose of interfering with benefits.

53
 o An employer has an absolute right to terminate or alter the terms of medical
coverage available to plan beneficiaries.

o McGann v. H&H Music

 Facts:
 A musician filed suit against his employer who, after being made
aware that its employee had AIDS, changed the terms of its group
medical plan to reduce by 99.5 percent the total benefits payable
for AIDS-related claims.
 Issue:
 May an employer alter the terms of medical coverage under an
employee benefit plan simply to avoid the payment of an
employer’s medical expenses.
 Court:
 ERISA does note prevent an employer from reducing or
eliminating coverage for a particular illness in response to the
escalating costs of covering an employee suffering from that
illness.
 There is nothing to suggest that the motive here was anything less
than reduction of costs related to AIDS treatment, no more for
McGann than for any present or future beneficiary.

o The court essentially holds that an employer may discriminate against an

employee who exercises his rights to health benefits, so long as the employer’s
conduct is aimed at the plan and not the employee.

- Section 510:
o Two Prohibitions:
 Discriminating against an employee for exercising any right to which he is
entitled
 Discriminating against an employee for the purpose of interfering with a
right to which the employee might become enttield.
o Company took no action with regard to him personally. The interference must
relate to a right to which the employee is legally entitled. Since ERISA does not
require employers to offer any benefits nor does it prohibit employers from
amending a health plan, an employee is entitled to only those benefits the
employer contractually binds himself to.

- Would McCann today have a cause of action?

o Could have a claim under HIPAA. Insurance companies can’t discriminate
against diseases.
 HIPAA is still no guarantee that an employer won’t make a decision to cut
benefits because of money concerns.
o Other causes of action for McCann:
 May have had an ADA claim.

54
  Provides that the employment discrimination title of the act can’t be
construed to prohibit an employer from establishing a self insurance plan,
as long as it isn’t a centrifuge for avoiding the ADA.
 ADA would not stop the employer from restructuring the whole plan.

- Suppose the employer says that they are going to provide health benefits only for women,
and not for men, because they do risky things and have a higher risk for heart disease.
o Would violate Title VII.

- Suppose the employer says that they are going to cover prescription drugs except for birth
control.
o State of IL has a law that insurance plans that cover prescription drugs have to
cover birth control.

D. COBRA and HIPAA:

- Basic right that COBRA provides –

o 18 months of healthcare after you are fired or after some other qualifying events.
o People on COBRA are treated the same way as the people on the health plan
except that they have to pay their whole premiums.
o It only applies to employers with 20 or more employees.

o McDowell v. Krawchison:
 Facts:
 A corporation was sued by a former employee and his spouse for
failing to notify the spouse of her right to continue coverage after
the employee was terminated.
 Issue:
 Does oral notice of the right to continue coverage givent to a
terminated employee satisfy the notice requirement for the
employer’s spouse?
 Court:
 No. COBRA’s notice provisions do not treat a covered employee
and his spouse as a unit for notice purposes, such that the plan
administrator is absolved of his duty to notify the spouse once the
employee has been notified.
 COBRA imposes a statutory requirement that a plan administer
notify “any qualified beneficiary” of his or her right to continuing
health insurance coverage for up to 18 months after a qualifying
event – which is defined as termination or reduction in hours
which would otherwise cause a loss of coverage.
 Under COBRA, the rights of the beneficiaries are independent of
the employee’s. A spouse may elect to continue coverage while
the employee does not. Even if the employee loses his right to

55
 continue coverage due to his termination for gross misconduct, his
dependents have a right to continuing coverage.
 The statute exempts children from the notification requirements,
but not the spouse.

- One exception for when an employee is automatically exempted from coverage when
they are terminated – if the employee is affected by his own personal gross misconduct.
o Employers have to do an adequate investigation.
o Not 100% clear what would happen if the employer did an adequate investigation
and then they came out with the wrong answer.

- HIPPA statute:
o Before this law was passed insurance companies frequently had exclusions for
preexisting conditions.
o This law says that there is a limit as to how long a preexisting condition exclusion
can last. 12 months.
o Employee gets credit for all that time that they were covered. Every month of
coverage before enrollment counts against that 12 months.
o Example:
 Suppose that a person with asthma is employed and they are covered, they
are employed for 2 years, and they start new job and the new plan says
that 12 months exclusion for preexisting conditions. Can they refuse to
cover this person’s answer for 12 months? Yes they can exclude for 12
months, but, every month of credible coverage during the time that the
person was insured prior to the new health care plan covers that 12
months. His preexisting exclusion disappears.
o 63 days is the time period. As long as you keep continuous healthcare you are
fine.
o This makes COBRA very important.
E. Retiree Health Benefits:
o Because an employer has the right to terminate or alter health benefits at any time,
health benefits do not vest upon an employee’s retirement.
- Big issues:
o (1) under what circumstances can the employer change retiree health benefits.
They can certainly change benefits for current employees, is the same true for
retirees?
o (2) if the employer wants to make a change, and they are limited by a contract,
who do they talk to about it?

o Curtiss-Wright Corp. v. Schoonejongen:

 Facts:
 A group of retirees whose health benefits had been canceled filed
suit alleging that their former employer violated ERISA when the
company unilaterally amended the health plan so that retiree’s

56
 benefits would cease upon termination of the facility from which
they retired.
 Issue:
 Is ERISA’s requirement that an employee health plan identify a
valid amendment procedure satisfied by a standard clause
reserving to the employer the right to amend the plan at any time?
 Courts:
 Yes. ERISA does not create any substantive right to employer
provided health benefits or any other kind of welfare benefits.
Accordingly, that Curtiss-Wright (D) amended its Plan to deprive
retirees of benefits is not a cognizable complaint under ERISA; the
only cognizable claim is that they didn’t do it properly.
 ERISA requires two things:
o (1) the plan contain a procedure for amending the plan
o (2) contain a procedure for identifying the persons who
have the authority to change the plan.
 If the plan identifies outright the persons who have authority to
amend it, it has necessarily indicated the procedure for identifying
those persons.
 Therefore, the reservations clause which indicated that “the
Company” had the right to amend the plan, effectively stated that
the procedure for identifying the person with amendment authority
is to look to “the Company.”
 The clause also states a valid amendment procedure. The clause
essentially states that it may be amended by a unilateral decision of
the company. The “Company” means those individuals with
authority to act on behalf of the corporation.
- Note 2 pg. 625
o Employer wanted to reduce costs, and to do that they wanted to reduce benefits.
o Instead of telling the employees that they were going to cut benefits, they lied to
the employees. They said that if they switched over to the new entity, that
everything would be the same. The company knew that the new entity was going
to go out of business.
o Employees sue. And argue that the company lied to them.
o Court held that they could sue. This is a lawsuit about the breach of fiduciary
duty.
o Employees sued under 502(a)(3) – authorized individual relief for breach of
fiduciary obligations.
o Employees win – very unusual under ERISA. Really has to do with the fact that
the employer so blatantly violated its fiduciary duty and lied to the employees to
induce them to do something.

- One way that retiree’s benefits do vest is through a collective bargaining agreement:
o Unions often agree to alter CBA when a company is in danger.

57
o Sometimes they agree to trade off some other benefits in exchange for lowering
healthcare benefits.

o In re Century Brass Products, Inc.

 Facts:
 Brass products, through acquisition of another company, assumed
vested pension and insurance obligations due the employees.
Century’s business went bad, and they filed for bankruptcy.
 Century engaged in negotiations with the Union concerning
termination of the expositing pension plan for the retired.
 Union claimed that they could not negotiate those benefits.
 They told the company that they would have to directly negotiate
with the retirees to obtain their consent.
 Century then tried to get the collective bargaining agreement
modified or repudiated.

 Issue:
 Before a bankrupt employer may apply to the court for rejection of
a CBA, must if first purpose to the Union modificatison to a CBA
that are necessary to permit an effective reorganization of the
debtor?
 Court:
 Yes. Section 1113 reversed existing case law concerning the
proper standard for rejectiving a collective bargaining agreement.
 Instead of permitting a debtor in bankruptcy to unilaterally
terminate or modify provisions of a CBA, section 1113 requires
that employers may only purpose modifications in an existing
labor contract that are necessary to permit an effective
reorganization of the debtor.
 We must decide with century made a proposal to the employees’
authorized representative under the CBA. The union claims that it
is not the authorized representative. Retirees unlike active are not
entitled to vote to modify a CBA.
 The union, having voluntarily negotiated benefits for its retiree
members, has the responsibility to act as their reps in the
bankruptcy hearing.
 Retirees are characterized as employees for the purpose of
applying 113.
 Court declines to adopt a per se rule holding that a union must
always represent the interest of retirees.
 Record here demonstrates that a conflict of interest exists between
the union and the retirees
 In this case the conflict of interest is too big and the bankruptcy
court should appoint someone to act upon their behalf.

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- How should a court decide who should represent retirees:
o (1) Sometimes they are able to come up with a committee for the retirees
o (2) Sometimes they come up with a trustee.
o (3) Sometimes the retirees form their own organization.
o Its not always known whether the retiree’s benefits are vested at all.

IX. TERMS AND CONDITIONS OF EMPLOYMENT

A. Harassment:
- (1) Quid Pro Quo Sexual Harassment:
o As a precondition for advancing in your employment you need to provide some
sort of sexual favor.

- (2) Hostile Environment Sexual Harassment:

o Harassment doesn’t have to be only based upon sex.
 Could also be racial harassment. African American’s being treated so
badly at the hands of their white coworkers who resented their presence in
the workplace.
o Discriminating on the bases of gender is going to create a hostile environment.
 Title VII outlaws the discrimination on the basis of gender.
o What about the hostile environment itself? What section does it violate?
 It effects the terms and conditions of the person’s working environment.
 Sexual harassment isn’t actionable only if there is economic harm, if it
creates a hostile environment, then Title VII is violated.
o Sexual harassment has to be severe or pervasive.
o Objective and subjective test:
 Would a reasonable person think that it was objectively abusive and did
the employee experience the environment as abusive. There doesn’t have
to be a psychological effect of the abuse.
o Courts want to keep Title VII cabined to the discrimination that it was intended to
prohibit, and this is one of the ways that they tried do that.
 Just because someone is rude or vulgar, that isn’t enough to alter the terms
and conditions of the workplace.
 Courts require that the adverse job action rise to a certain level.
o Court rejects the lower court holding that a severe psychologically injury has to
be demonstrated in order for the plaintiff to win.
 If we require psychological injury, a lot of awful behavior may go
unpunished. It might lead to only certain types of plaintiff’s being able to
win. Many women may not actually suffer psychological injury.

o Harris v. Forklift Systems, Inc.

 Issue:
 The definition of “abusive work environment” under Title
VII of the Civil Rights Act of 1964. Whether conduct, to be
actionable, as “abusive work environment” needs to affect

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 the P’s psychological well being or merely cause her to suffer
injury.
 Facts:
 P was a manager for Forklift systems.
 She was often insulted because of her gender and made her
a target of sexual innuendos.
 District court found that while his actions were offensive,
they were not so severe as to be expected to seriously affect
her psychological well being.
 Court:
 Title VII is violated when the workplace is permeated with
“discriminatory intimidation, ridicule, and insult that is
sufficiently severe or pervasive to alter the conditions of the
victim’s employment and create an abusive working
environment.
 A discriminatory environment, even one that does not
seriously effect the employee’s psychological well-being, can
and often will detract from employee’s job performance.
 So long as the environment would be reasonably perceived,
and is perceived, as hostile or abusive, there is no need for it
also to be psychologically injurious.
 Look at all of the circumstances.
o Frequency of conduct
o severity,
o whether it unreasonably interferes with an
employee’s work performance
o Effect on psychological state could be a factor.

- Employer liability:
o Employers are not always liable.
o In order for the employer to have the requisite responsibility for what the
employees are doing, they have to have some sort of notice.
o Faragher v. City of Boca Raton:
 Facts:
 Lifeguard was harassed by her two supervisors.
 She complained and nothing really happened.
 She eventually quit and just couldn’t take it any more.
 Issue:
 Does the employer have a readily accessible policy against
harassment and for enforcement?
 If there isn’t such a policy the employer can be liable for things it
didn’t even know were going on.
 Court:
 The plaintiff has to take advantage of the policy.

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  Could argue that the policy is inadequate.
o Employee has to have unreasonably failed to take advantage of the process.
o If she doesn’t take advantage, she has to have good reason why.
o Affirmative defense is not available where there is tangible job action.
- Constructive discharge;
o Where the environment has been so hostile that the employee quits.
o A lot of times in these cases, there is an argument over whether or not a
reasonable person would have quit.
o If we have a case where we have definitely met the constructive discharge
standard, should the affirmative defense be available to the employer?
 Employer’s can claim that they had appropriate procedures in place and
that the employee just didn’t follow it.
- How courts apply different rules:
o Hostile environment must be sufficiently severe and pervasive to alter the
working conditions and create an abusive working environment.
 Objective component
 Subjective component
 no psychological experience is necessary.
- Issue is whether or not the advances are unwelcome, not whether the individual
participated to some extent.
o Court said that it doesn’t mean that the conduct was not unwelcome if the person
participated.
- To protect itself from vicarious liability – employer must:
o Have policy and publicized procedure in place.
o It should have a lot of redundancy built into it.
o Employer must respond reasonably upon notice.
o If the employee doesn’t report to the employer there must be a good reason for the
employee not taking advantage of the procedures. This affirmative defense is not
usable where the harassment culminates in discharge.
- There is no affirmative defense in the statute, why does it make sense that the court has
said nonetheless we are going to weave this kind of defense into the statute.
o If there is some trigger for the employer to investigate its easier for the employer
to know that they have to do something.
o Employers are likely to give a comprehensive response to these holdings. They
can protect themselves by doing these things and even if harassment happens they
will be protected. Creates an incentive for employers to take a preventive action.
o Why might employers have been doing this anyway even before these sexual
harassment cases?
 Because Title VII has been around for awhile.
- Things to look at when analyzing cases:
o Was the conduct objectively abusive?
 Whether or not it is actually an abusive environment.
o Was it experience subjectively as abusive?
o Was it based on race or some other characteristics? Arguments could be made
that harassment wasn’t based upon sex.

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  In order to be based on sex doesn’t actually have to be sexual in content.
o Does the employer have an adequate policy or procedure?
o Did they respond appropriately?
o Did the employee give adequate notice?

- Some of the policies and procedures that we have talked about have to go further in some
cases than an employer needs to go or that Title VII requires explicitly:
o Policies prohibiting consensual sexual relationships
o Prohibiting certain types of language that might be vulgar or crude
- Some scholars argue that this is allowing Title VII to trump the First Amendment

B. Privacy and Personal Autonomy:

- Invasion of Privacy:
o Two basic circumstances in which they arise:
 (1) Investigations of theft or misconduct.
 (2) Monitoring – employer’s videotape employees or monitor their
internet usage. Employers have a lot of leeway (at least private employers
do).
o Issues:
 Control of records.
 Control of employee speech.
 Personal Relationships and off-duty conduct
 Employer can require random drug tests and can require employees to be
observed while doing so.
- Employers are restricted in their ability to monitor and control the personal and romantic
relationships of their employees.
o Breach of at will employment for firing employee for having a personal
relationship with a competitor’s employee.
- Generally employers may not seek to discourage the off-the-job political involvements of
their employees, but public employers and certain private employers may forbid their
employees to engage in political activities that threaten conflicts of interest.

- Scenarios:

o (1) Employee refusing to lobby for his company – this is wrongful discharge in
violation of the first amendment.
o (2) People are more sympathetic to employer where the employee’s speech is
directed at the core of what the employer is doing.
 Ex: Picketing outside a store when you are against selling fur.
o (3) Employees can’t be fired for smoking off of the job, but an employee who
works for the National Lung Society could be fired because it goes against the
core of what the employer does.
o Unions frequently take money collected from their members and spend it on
political activity.

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  There is case law that requires union not to take money from people who
don’t want their money to go to that purpose, if they do not want their
money being spent on certain types of political actions.

- There is some protection for public employees.

o First amendment applies to them.
o In addition the Supreme Court has said that most public employees cannot be
required to have allegiance to some higher level political organization.
o A governor can require his high level political employees to support him, but the
lower level staff members in agencies can’t be held to those requirements.

C. Work, Family, and Other Obligations:

- Family and Medical Leave Act of 1993:
o Employers of 50 or more workers are required to provide up to 12 weeks of
unpaid leave for childbirth (or adoption), or for the care of children or other
family members with serious health conditions, or for the worker’s own serious
health condition.
 (1) Employers may require that the employee use up accrued leave as part
of the 12 weeks.
 (2) The employee is guaranteed a similar or equivalent position upon
return.
 (3) Healthcare benefits must be provided during the leave.
o If an employer fails to designate an employees leave of absence under the FMLA,
the employee may not have 12 more weeks of leave.
o Employee obligations:
 Notice – 30 days if it is foreseeable.
 Even constructive notice can trigger FMLA obligations. Where
employees just don’t say the magic words the employer has an
obligation to tell the employer that they are allowed to take FMLA
leave.
o Employer obligations:
 Employer has to say that it is FMLA leave. The employee does not. The
employer is going to be the one who will know more about this law so
they have say that it is FMLA leave.
 There are posters that employers are supposed to post.
 What happens to healthcare benefits – employer has to keep the same
benefits that the employee would be receiving as if she was working there.
 Its unpaid leave, the employer can choose to pay her, but he is not required
to.
 They have to put the employee in an equivalent position or the same
position. If she is in the top 10% of positions, the employer can decide not
to put her back in her position.
 There are monetary losses for damages unless the employer can show
good faith for what they did.
o There is a lot of case law that constitutes a serious medical condition.
 The employer does have some rights here.

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  Employers can demand certification.
 Employers can demand a second and even a third opinion at the
employer’s expense.
o Intermittent leave for medical leave is okay, a reduced work schedule can
be okay.
o It’s a little different for family leave. Employee has to negotiate it with the
employer.

- FMLA was seen as a real victory for feminists.

o Law applied equally to men and women.
o Women were traditionally the one’s who did the childcare.
o No assumption in the statute that it would be women who are doing this particular
kind of work.
o Supreme Court has upheld the FMLA.
- FMLA does allow more generous leave for states and employer to offer.
o Some states extend FMLA leave to smaller employers. Some states even require
some paid leave (California).

o Ragsdale v. Wolverine World Wide, Inc:

 Facts:
 Plaintiff was diagnosed with Cancer and she took 30 weeks of
leave which was over the 12 weeks of the FMLA, but she wanted
more weeks because the employer never told her that she was
actually taking her FMLA leave.
 She wanted the 12 weeks of FMLA leave.
 Secretary’s regulation said that the employer needs to designate the
leave as FMLA leave, and if it does not, the leave taken does not
count towards the FMLA leave.
 Court:
 Says that this goes too far, and the penalty for failure to give notice
can’t be more leave than the employee is otherwise entitled to.
Therefore, congress could not have intended that this kind of
penalty could be required by the statute.
 Dissent: says that individual notice provides a lot of benefits to the
employee. They do not buy the argument that the penalty that is built into
the statute precludes the Secretary of State from adding this additional
penalty.

- Other Statutes:
o (1) Nursing Mothers in the Workplace Act
 Requires employers to provide reasonable break time and reasonable
efforts to provide a private place.
 Unpaid break time.
 Can be concurrent with other breaks the employee is already taking.
o (2) School Visitation Act

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  Employer has to give the employee 8 hours to attend school conferences
for children during the school year.
 They have to be broken up into no more than 4 hours per day.
 Employee has to give 7 days written notice.
 They have to use up all of their other personal days and vacation days
before they are eligible for this 8 hours of leave.
 Unpaid leave. Employer has to give the employee reasonable efforts to
make up the lost time.
o (3) Family Military Leave Act
 Allows parents or spouses of military members time off during
deployment.
o (4) Victim’s Economic and Security and Safety Act
 Employer has to provide unpaid leave for any kind of treatment or
interaction for a woman under domestic abuse. If she can she is supposed
to give 48 hours notice, but if she can’t she doesn’t have to.
 Employer can require certification.
 It has to be confidential.
 Up to 12 weeks of leave.
 This statute that could easily be challenged as being preempted by ERISA,
the piece that requires the employer to continue to pay health benefits.
o (5) Service Members Employment Act
 If someone goes into the service the employer has to provide the job for
them when they come back or within a certain amount of time in which
they are discharged.
 They get some extra time if they are hospitalized up to a year.
 Employer has to give them the seniority and wage increases that they
would have gotten had they stayed for the time they were in the military
service so that they do not lose any ground.
o (6) Election Code:
 Employers have to allow employees up to 2 hours to vote during an
election.
 Only required if the employee doesn’t have a 2 hour block before or after
the polls close.

X. HEALTH AND SAFETY

A. Introduction, Preemption, and Regulatory Regime:

o OSHA:
 Authorizes the Secretary of Labor to set up regulations and imposes a
general duty on employers to have a workplace free from hazards.
 The Acts coverage is broad. It covers every employer in the country with
some exceptions for other industries that have specific regulatory regimes.
 Two main sections:
 §5(a)(1) – compels employers to maintain a workplace free of
hazards which might cause death or serious injury, and

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  §5(a)(2) – requiring employers to obey standards promulgated
under the act.
 Standards are implemented in three ways:
 (1) Adoption by the Secretary of Labor of national consensus
standards which went into effect absent the usual rulemaking
procedures. This process ended two years after the Act’s effective
date.
 (2) The normal rule making procedure, under §6(b), which has
hearings and comment requirements.
 (3) Emergency rulemaking authority under §6(c), when necessary,
to protect workers form serious danger. Such rules are in effect for
six months in order to allow for a rule to be promulgated through
the normal channels.
 Preemption:
 If a state has developed a comprehensive plan that is developed
under OSHA, their plan preempts OSHA but it needs to be
approved by OSHA.
 If there is no comprehensive plan that displaces OSHA, then
OSHA governs.
 If there is a state effort to regulate something that contradicts
something OSHA says, OSHA preempts.
 What if there is a gap in OSHA and it does’t address a certain
issue:
o Section 18(a) of the statute allows the states to assert
jurisdiction over issues that OSHA does not address. But it
is pretty limited.
 3 Different entities that were created:
 (1) Occupational Health and Safety Agency:
o In charge of regulations and enfocement
 (2) National Institute of Occupational Safety and Healht:
o Does research
 (3) Enforcement Commission:
o Adjudicates

o Gade v. National Solid Wastes Management Association:

 Facts:
 There was an IL state regulation standard that was more restrictive
than OSHA with respect to the number of hours of training for
hazardous crane operators. The state regulation was designed for
employee safety and public safety.
 The state is trying to regulate more stringently. State wants more
training and safety for people working with hazardous waste.
 Issue:

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  Are state “dual impact” statutes, which protect both workers and
the general public, pre-empted by the federal OSHA and the
standards promulgated thereunder?
 Court:
 Yes. Congress endeavored to assure so far as possible every
working man and woman in the Nation safe and healthy working
conditions. To that end. Congress authorized the Secretary to set
mandatory occupational safety and health standards applicable to
all businesses affecting interstate commerce, and thereby brought
the Federal Government into a field that traditionally had been
occupied by the States.
 Federal regulation of the workplace was not intended to be all-
encompassing. First, Congress, expressly saved two areas from
federal preemption. Section 4(b)(4) of OSHA states that the Act
does not supersede or in any manner affect workers’ compensation
law or enlarge or diminish or affect in any other mann the common
law or statutory rights, duties or liabilities of employers and
employees under any law with respect to injuries, diseases, or
death of employees arising out of or in the course of employment.
Section 18(a) provides that the Act does not prevent any State
agency from asserting jurisdiction over an issue that OSHA does
not cover.
 Non-approved state regulation of occupational safety and health
issues for which a federal standard is in effect is impliedly
preempted as in conflict with the full purposes of OSHA.
Congress intended to subject employers and employees with only
one set of regulations, be it federal or state, and the only way that a
state could regulate was to have a pre-approved plan that displaces
federal standards.
 A state law that directly, substantially, and specifically regulates
occupational safety and health is a standard within the meaning of
OSHA. That such a law may have a non-occupational impact does
not render it any less of an occupational standard for purposes of
the act.

- Suppose we have an employer who is having his employees work in extraordinarily

unhealthy conditions that the employer knows is dangerous. Employee gets sick and
dies. State decides to prosecute the employer criminally for knowingly putting the
employee in this situation.
o Employer claims that the criminal laws are preempted by OSHA.
o Possibly there is some protections for employees built into OSHA, other non-
regulatory regimes would presumed to be enforced.
o States do have the power to get the employer under criminal law.
 Its not just about employee health and safety.
 This is about health and safety in general.
 State wins in this situation.

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 o Just because the person who committed the crime is the employer of the victim
does not mean that you can get them under criminal law. Same is basically true
of tort law and workers’ compensation.
 When tort law comes into play, is there maybe a relationship between
OSHA regulations and liability?
 Makes the duty pretty clear to establish negligence.
o Sometimes compliance with OSHA is a defense and sometimes it might not be.
o Some states allow OSHA regulation to be evidence of the standard of care, and if
the employer is violating it, it may be negligence.

- When OSHA regulations might come into play in tort:

o Who might be bringing a tort claim and relying on OSHA – someone who is not
an employee.
 Family members of employees, people in the general area of the
workplace. All of these people could be injured and might be able to sue
the employer in tort. The employer is going to have OSHA duties to the
employees but will be liable in tort to these other people.

- Nature of regulations that have emerged from OSHA:

o When OSHA was first passed the Secretary of Labor had some initial regulatory
power. He was allowed to adopt industry standards. Sec. 6(a) of the act.
 National Consensus Standard:
 A health standard that has been created by an organization that is
fair or might have been designated as a standard by other agencies.
 See page 796, note 4 as an example.

- A lot of standards that OSHA adopted used the word “should”

o Secretary of Labor change a lot of the statutes to “shall” instead of
”should.”
 If you were the employer you would argue that the preexisting standard
was no mandatory and the new system is.
 Why does that distinction matter under the standard of the Secretaries
statutory authority? He has changed these statues without going through
the procedures that are necessary.
 Employers argue a breach of procedural due process for the Secretary to
create the new regulation because it is different than the national
consensus standard.
 As a result of this case, OSHA dropped 153 standards that it had adopted
under 6(a) where it had changed the word should with shall and no new
standards were adopted in their place.

- Industry standards under OSHA:

o Section 6(a) allows OSHA to adopt national consensus standards.
o A Disadvantage to adopting industry standards is that they were written as
advisories.

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  OSHA is not authorized to change those industry standards.
o These standards were adopted in the early 70’s, a lot of things within the
industries have changed, technologies have changed, but the standards haven’t
changed.

- What does OSHA have to do if it does want to change those standards?

o If OSHA issues a 6(c), its not a permanent solution.
o Secretary of labor can’t say that they are going to issue an emergency regulation
and that is that. Its only issued for 6 months, and they have to issue a new
regulation under 6(b).
o In order for a temporary emergency standard is issued:
 The employees need to be subject to a grave danger.
 Tt must be necessary to protect employees.
 It can’t go too far, farther than is necessary to protect employees. It also
has to do some good.
o These are not issued a lot. 5

- Under 6(b) – OSHA can appoint an advisory committee, they publish the proposed rule
for notice and comment – 30 day period.
o Anybody can request a hearing (interested parties). The secretary can decide to
issue a rule or not issue a rule. Its an intensive expensive difficult process to
create a new regulation.

- Industrial Union Department v. American Petroleum Institute (The Benzene Case):

o Two big policy questions:
 (1) What should be the standard that we think workplaces should meet.
Three theories:
 (A) Cost benefit analysis – is the cost of the safety measures in
dollar amounts equivalent to the benefits. Monetize everything.
 (B) Risk free environment – risks are brought as close to zero as
possible
 (C) The standard should be the safest possible that is feasible. This
can include economic feasibility. We don’t want to bankrupt
entire industries.
 (2) Who should have the burden of proof?
 Should it be OSHA’s responsibility that there is evidence to show
that this is the right level of exposure toxic substance?
 Or should it be the industry that decides.
 Facts:
 There was a national consensus standard for Benzene, and the new
proposed standard is much lower. The concern with Benzene is
because it has been found that in much smaller levels it can cause
leukemia.
 What are the parties fighting over here?

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  Question about the interpretation of section 3(8). Industry claims
that they want a much higher level of proof than the secretary is
providing. They want a cost-benefit analysis.
 Secretary thinks that 3(8) doesn’t mean very much, what really
matters is section 6(b)(5). The secretary, in promogulating
standards dealing with toxic materials or harmful physical agents
under this subsection shall set the standard which most adequately
assures, to the extent feasible, on the basis of the best available
evidence.
 Court:
 Says that the Secretary didn’t meet its burden of the threshold of a
significant risk.
 Based on Section 3(8) that was the standard that needed to be met
before they can go onto 6(b)(5).
 The court doesn’t actually decide what method to use.
o It says that 3(8) requires that there be some kind of
threshold determination made that the workplace is unsafe.
o That doesn’t mean risk free.
o But there must be some risk that makes it reasonably
appropriate to remedy that harm. Here that didn’t happen.
The Secretary didn’t make that determination.
 OSHA thinks that this will strip it of its ability to regulate
carcinogens.
o This would take 20 years for them to know if there is a
significant risk.
o People would have to die from cancer and that doesn’t
make any sense. C
o ourt says that’s not what they mean.
 The Secretary can rely on best available evidence.
They could also require monitor and medical testing
of employees at levels below the required exposure
level.
o OSHA can require that employees be monitored and tested.
o Court says that one of the problems with OSHA’s approach
is that it starts out with assuming that because this is a
carcinogen there is no safe level.
o OSHA needs to come in with the best available evidence
that this is a significant risk before it creates a new
standard.

- Suppose that there is some technology is available that is pretty good, and there is reason
to believe that that technology could be made better to protect workers. Can OSHA
impose technology forcing criteria and say that the employers need to figure out how to
meet the criteria.
o No. Feasible means feasible. If is not here yet, feasible is not available.

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 o AFL-CIO v. OSHA:
 Facts:
 In 1989, OSHA issued its Air Contaminants Standard, a set of
permissible exposure limits for 428 toxic substances. Petitioners
challenge both the procedure used by OSHA to generate this multi-
substance standard and OSHA’s findings on numerous specific
substances included in the new standard.
 Group complained that OSHA used generic findings, the lumping
together of all the substances, combine to create a record
inadequate to support this massive new set of permissive exposure
limits.
 Rule:
 OSHA must promulgate standards that most adequately assure
workers will not be exposed to significant risks of material health
impairment to the extent feasible for the affected industries. When
setting the permissive exposure limits for a number of toxic
substances in one rulemaking, OSHA must provide a rationale for
each individual substance.

- How should the agency make determinations on how to set the permissible exposure
levels?
o It must use feasibility analysis, and it should take into account economic
feasibility, but it does not have to do cost benefit analysis.

B. Employer Duties Under OSHA:

- 2 basic types of duties derived from section 5(a) of the statute:

o (1) Each employer shall comply with occupational health and safety standards
promulgated under this act. (general)
o (2) 5(a)(1) Each employer shall furnish to each of his employees an employment
place free of hazards that cause or may cause harm to his employees. (specific)
- In general, the specific controls the general.
- Employers should look first to the specific duties.

o Brock v. City Oil Well Services, Inc.:

 Facts:
 Two employees of an oil company were asphyxiated by gas due to
their employer’s failure to provide them with respirators as
required by OSHA.
 Issue:
 Does an employer have a duty to protect its workers, such that it is
required to provide appropriate safety devices for use in hazardous
environments?
 Court:

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  Yes. An employer must provide either effective engineering
controls or respirators to its employees.
 The requirement is made even clearer by the regulation’s
command that the employer supply respirators “while effective
engineering controls are being instituted.”
 Section (a)(2) provides that Respirators shall be provided by the
employer when such equipment is necessary to protect the health
of the employee.
 City Oil cannot use industry custom to shift it statutory
responsibility for the health and safety of its employees to third
parties. The act places the burden of compliance on the employer.

- Safety Training:
o Superior Custom Cabinet Co.:
 Facts:
 OSHA cited Superior for violations of safety standards after a
delivery crew member carrying a cabinet upstairs in a house under
construction fell and died.
 Issue:
 Is it enough for supervisors to issue a general warning to
employees regarding potential hazards in the workplace without
going into detail with regard to the particular hazards to be
encountered?
 Court:
 No. Section 1926.21(b)(2) requires instructions to employees on:
o (1) how to recognize and avoid unsafe conditions they may
encounter on the job
o (2) the regulations applicable to those hazardous
conditions.
 An employers instructions are adequate enough under the section if
they are specific enough to advise employees of the hazards
associated with their work and the ways to avoid them and are
modeled on the applicable standards.
 Need to have written safety rules.
 Employees were given too much discretion in identifying unsafe
conditions. The views of the workmen are not necessarily the best
determination as to what is safe and what is unsafe. Convenience
often dictates an employees thoughts.

o Pepperidge Farm, Inc:

 Facts:
 Pepperridge Farm was cited for 175 separate willful violations of
section 5(a)(1) in that 175 employees were required to perform
tasks involving repetitive motions in postures resulting in
cumulative trauma disorders.

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  The employees worked beside conveyor belts is an assembling and
packing plant
 Issue:
 Did Pepperidge Farm violation 5(a)(1) with regard to issues of
ergonomics?
 Court:
 Yes. A violation of Section 5(a)(1) exists where:
o (1) a condition or activity in the employer’s workplace
presents a hazard to employees.
o (2) the cited employer or the employer’s industry
recognizes the hazard.
o (3) the hazard is causing or likely to cause death or serious
harm
o (4) feasible means exist to eliminate or materially reduce
the hazard.
 Court concludes that there was actual injury and substantial
causation is shown.
 The Secretary may require Pepperidge Farm to engage in an
abatement process, the goal of which is to determine what action or
combination of actions will eliminate or materially reduce the
hazard.
 Here the company tried to reduce the number of repetitions. They
haired people to look into this.
 The Secretary did not meet the burden of proof that there are
additional actions that the employer could take. The company
doesn’t get cited and they don’t get fined.

- Safety issue in the workplace – workplace violence.

o Suppose an employer has an employee who is a victim of domestic violence and
is trying to comply with the IL domestic violence act and there is some concern
that the employer may need to comply with the general duties of OSHA?
 The employer recognizes the hazard.
 Might need to provide security systems

- Employee Misconduct:
o Brennan v. OSHRC:
 Facts:
 An employee was killed when he disobeyed his employer’s
instructions to stay away from a load of railway ties and they fell
on him.
 Issue:
 Does an employer have a duty to warn an employee of hazards that
are not associated with the particular employees’ job?
 Court:

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 No. Where an inexperienced, untrained employee is placed at the
site of a potentially dangerous operation, the employer should
foresee that the employee is likely to injure himself because of his
ignorance.
 In such a situation, it is argued, the employee should be instructed
in the safe procedure for the operation which is going on in his
presence.
 Where an employee is directly participating in a job, the employer
may well have a duty under the Act to instruct him on the safe
procedure for handling the job. On the other hand, training may be
unnecessary for an employee who is wholly disassociated with the
operation in question and who would not be foreseeably exposed to
danger.

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