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Business Law and the Legal Environment for a New Century
Alternate Edition
Quote of the Day
“I wouldn’t want to live unless I
could work for a living.”
-- Erle Stanley Gardner
mystery writer, creator of Perry Mason
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Business Law and the Legal Environment for a New Century
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History of Employment Law
 In pre-industrial society, most people
followed their parents’ occupations.
 Employers knew their workers and
expectations were understood.
 With the industrial revolution came
changes in employment law too, and a
trend toward employment contracts.
• Without a contract, a worker was an
employee at will.
• An employee at will can be fired for a good
reason, a bad reason or no reason at all.
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Business Law and the Legal Environment for a New Century
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National Labor Relations Act
 NLRA (or the Wagner Act):
• Created the National Labor Relations Board
to enforce labor laws,
• Prohibits employers from penalizing
workers who engage in union activity (for
example, joining a preexisting union or
forming a new one); and
• Requires employers to “bargain in good
faith” with unions.
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Business Law and the Legal Environment for a New Century
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Family and Medical Leave
Act (FMLA)
 In 1993, Congress passed the Family
and Medical Leave Act (FMLA), which
guarantees both men and women up to
12 weeks of unpaid leave each year for
childbirth, adoption, or medical
emergencies for themselves or a family
member.
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Business Law and the Legal Environment for a New Century
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Wrongful Discharge
 Wrongful discharge prohibits an
employer from firing a worker for a bad
reason.
 The public policy rule prohibits an
employer from firing a worker for a
reason that violates basic social rights,
duties, or responsibilities, such as:
• Refusing to Violate the Law
• Exercising a Legal Right
• Performing a Legal Duty (like jury duty)
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Whistleblowers
 Employees who disclose illegal
behavior of their employers.
 They are protected in these situations:
• Wrongdoing by government contractors
• Government employees speaking out on a
matter of public concern
• Federal employees reporting illegal federal
activity
• Reporting illegal activity for which the
whistleblower himself could be in trouble
• Reporting a co-worker’s illegal activities
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Business Law and the Legal Environment for a New Century
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Contract Law
 Truth in Hiring
• Oral promises made during the hiring
process can be enforceable.
• Employers may be liable for promises that
they cannot keep.
• An employee handbook can create a
contract.
 Covenant of Good Faith & Fair Dealing
• In some cases, courts will imply a covenant
of good faith and fair dealing in an at-will
employment contract.
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Defamation
 Employers may be liable for defamation
when they give false and unfavorable
references about a former employee.
 More than half of the states, however,
recognize a qualified privilege
(protection unless the statement is
known false or given in ill will) for
employers who give references about
former employees.
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Intentional Infliction of
Emotional Distress
 Employers who condone cruel
treatment of their workers face liability
under the tort of intentional infliction of
emotional distress.
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Workplace Safety
 In 1970 Congress passed the
Occupational Safety and Health Act
(OSHA) to ensure safe working
conditions.
• Sets specific health and safety standards.
• Obliges employers to keep workplace “free
from recognized hazards.”
• Requires records of all injuries and
accidents.
• Allows inspection of workplaces and fines
for unsafe conditions.
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Employee Privacy
 In many places, off-duty conduct cannot
be regulated by the employer.
 Alcohol and drug testing is allowed by
private businesses; government
employees may test if signs of use are
seen or if job safety is an issue.
 Employers may not require or even
suggest the use of lie detector tests,
except in investigations of crimes.
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Electronic Monitoring of the
Workplace
 The Electronic Communications Privacy
Act of 1986 (ECPA) permits employers
to monitor workers’ telephone calls and
e-mail messages if:
• the employee consents,
• the monitoring occurs in the ordinary
course of business, or
• in the case of e-mail, the employer provides
the e-mail system.
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Financial Protection
 Fair Labor Standards
• Passed in 1938, the Fair Labor Standards
Act (FLSA) regulates wages and limits child
labor.
 Workers’ Compensation
• Workers’ compensation statutes ensure
that employees receive payment for injuries
incurred at work.
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Financial Protection (cont’d)
 Social Security
• Currently, the Social Security system pays
benefits to workers who are retired,
disabled, or temporarily unemployed and to
the spouses and children of disabled or
deceased workers.
 Pension Benefits
• In 1974, Congress passed the Employee
Retirement Income Security Act (ERISA) to
protect workers covered by private pension
plans.
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Employment Discrimination
 Under the Equal Pay Act, an employee
may not be paid a lesser rate (for equal
work) than opposite sex employees.
 Title VII of the Civil Rights Act of 1964
• Prohibits employers from discriminating on
the basis of sex, race, color, religion, or
national origin.
• Employers must make reasonable
accommodation for a worker’s religious
beliefs unless the request would cause undue
hardship for the business.
• Affirmative action is not required by Title VII,
nor is it prohibited.
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Defenses to Charges of
Discrimination
 There are three possible defenses for a
charge of discrimination:
• Merit
• Seniority
• Bona Fide Occupational Qualification
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Sexual Harassment
 Involves unwelcome sexual advances,
requests for sexual favors, and verbal
or physical conduct of a sexual nature.
 Hostile Work Environment
• A claim of sexual harassment might be
valid if sexual innuendo is so pervasive that
it interferes with an employee’s ability to do
her (or his!) job.
 Pregnancy
• An employer may not fire or refuse to hire a
woman just because she is pregnant.
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Age Discrimination
 The Age Discrimination in Employment
Act (ADEA) of 1967 prohibits age
discrimination against employees or
job applicants who are at least 40
years old.
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Americans with Disabilities Act
 A disabled person is someone with a
physical or mental impairment that
substantially limits a major life activity, or
someone who is regarded as having such
an impairment.
 An employer may not disqualify a job
applicant or employee because of
disability as long as she can, with
reasonable accommodation (would not
create undue hardship) perform the
essential functions of the job.
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Business Law and the Legal Environment for a New Century
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“Employment law is an
important -- and difficult -area of law to study. It affects
almost everyone and it is
changing rapidly.”
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