1 Creating an Agency Relationship Agency is a

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Creating an Agency Relationship Agency is a relationship in which the agent agrees to perform a task for, and under the control of, the principal. 2

CREATING AN AGENCY o To create an agency, there must be: n n n A principal, An agent, Who mutually consent that the agent will act on behalf of the principal, and Be subject to the principal’s control, Thereby creating a fiduciary relationship. 3

REQUIREMENTS FOR AGENCY Consent, o Control A fiduciary relationship o o 4

NOT REQUIRED FOR AN AGENCY RELATIONSHIP A written agreement n A formal agreement n Consideration n 5

DUTIES OF AGENT TO PRINCIPAL o o o Duty of Loyalty Obey her principal’s instructions Must act with reasonable care. An agent with special skills is held to a higher standard. Must give accurate information. 6

PRINCIPAL’S REMEDIES WHEN THE AGENT BREACHES A DUTY o o o The principal can recover damages caused by the agent’s breach. The agent must refund any profits made from the agency, if he breaches his duty of loyalty. The principal may rescind a transaction with an disloyal agent. 7

DUTIES OF PRINCIPAL TO AGENT o o Duty to Reimburse the Agent for Reasonable Expenses Torts Committed by the Agent Contracts Entered into by the Agent Duty to Cooperate 8

TERMINATING AGENCY o Five ways an agency relationship is terminated by the parties: n n n By completion of term. By completion of the purpose. By mutual agreement. In an agency at will, either party can terminate at any time, for any reason. Wrongful termination. 9

OTHER CAUSES OF AGENCY TERMINATION o o Principal or Agent Can No Longer Perform Required Duties Change of Circumstances 10

EFFECT OF TERMINATION I Termination of the agency ends the agent’s power to act on behalf of the principal. 11

EFFECT OF TERMINATION II Principal’s duty to reimburse expenses of the agent ends with the end of the agency. 12

EFFECT OF TERMINATION III Confidential information remains confidential and unusable, even after the end of the agency. 13

POWER COUPLED WITH AN INTEREST RARE-only agent can terminate. Principal has no rights under this form of agency-is created by law 14

EMPLOYEE AT WILL n n Without a contract, a worker is an employee at will. An employee at will can be fired for a good reason, a bad reason or no reason at all. 15

NATIONAL LABOR RELATIONS ACT o o NLRA Created the National Labor Relations Board to enforce labor laws Prohibits employers from penalizing workers who engage in union activity Requires employers to “bargain in good faith” with unions. 16

FAMILY AND MEDICAL LEAVE ACT The Family and Medical Leave Act (FMLA), 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. 17

WRONGFUL DISCHARGE Wrongful discharge prohibits an employer from firing a worker for a bad reason. 18

PUBLIC POLICY RULE The public policy rule prohibits an employer from firing a worker for a reason that violates basic social rights, duties, or responsibilities, such as: n n n Refusing to Violate the Law Exercising a Legal Right Performing a Legal Duty 19

WHISTLEBLOWERS Employees who disclose illegal behavior of their employers. 20

FALSE CLAIMS ACT Protects those who refuse to sign inaccurate reports. 21

THE CIVIL SERVICE REFORM ACT Along with Whistleblower Protection Act protect Federal employees who report wrongdoings. 22

SARBANES-OXLEY ACT The Sarbanes-Oxley Act of 2002 protects employees of publicly traded companies who provide evidence of fraud to investigators. 23

OTHER PROTECTION FOR WHISTLEBLOWERS o o State Statutes protect whistleblowers from retaliation from employers in all fifty states. Common law typically prohibits the discharge of employees who report illegal activity that relates to their own jobs. 24

TRUTH IN HIRING n n n Oral promises made during the hiring process can be enforceable. Employers may be liable for promises that they cannot keep or failure to disclose important information in the hiring process. An employee handbook creates a contract. 25

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. 26

DEFAMATION Employers may be liable for defamation when they give false and unfavorable references about a former employee. 27

INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS Employers who condone cruel treatment of their workers face liability under the tort of intentional infliction of emotional distress. 28

WORKPLACE SAFETY n n 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. 29

EMPLOYEE PRIVACY o o o In many places, off-duty conduct cannot be regulated by the employer. Alcohol and drug testing is allowed sometimes. Employers may not require or even suggest the use of lie detector tests, except in investigations of crimes. 30

ELECTRONIC MONITORING OF THE WORKPLACE The Electronic Communications Privacy Act of 1986 (ECPA) permits employers to monitor workers’ telephone calls, e-mail messages, and even “instant messages” if: 31

ECPA the employee consents, 32

ECPA the monitoring occurs in the ordinary course of business, or 33

ECPA in the case of e-mail, the employer provides the e-mail system. 34

FINANCIAL PROTECTION Fair Labor Standards Workers’ Compensation o Social Security o Pension Benefits o o 35

EMPLOYMENT DISCRIMINATION The Equal Pay Act Title VII of the Civil Rights Act of 1964 o o 36

DEFENSES TO CHARGES OF DISCRIMINATION o There are three possible defenses for a charge of discrimination: n Merit n Seniority n Bona Fide Occupational Qualification 37

SEXUAL HARASSMENT o o o Involves unwelcome sexual advances, requests for sexual favors, and verbal or physical conduct of a sexual nature. Hostile Work Environment Pregnancy 38

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. 39

AGE DISCRIMINATION The Age Discrimination in Employment Act (ADEA) of 1967 Forced retirement at a certain age is prohibited o o 40