Employee vs Contractor & Agency Relationships

• Several factors determine whether someone is an employee or an independent contractor, including the level of control exerted, degree of supervision, who provides the tools, type of payment, required skill level, nature of the business relationship and the duration of work.
• In the case of Petroplex Welders, the welders were deemed employees because they were subject to company rules

Work for Hire Rule

• For employees, the employer owns the work created
• Independent contractors retain ownership of their work unless a written agreement specifies otherwise
• Stanley Kauffmann, a freelance writer, retained copyright to his work because there was no agreement transferring ownership

Formation of the Agency Relationship

• Agency relationships are most commonly formed by agreement, which can be oral or written, signifying consent
• Example: hiring someone to mow the lawn
• In the Nursing Home Papers case, a wife signing papers for her husband established a valid agency by implied consent.
• An agency relationship can also be formed when a principal accepts an unauthorized act after it has occurred
• Agency by estoppel can be established if a principal's conduct leads a third party to believe an agency relationship exists
• In Reidel v. Hospital, the hospital was held liable because the patient reasonably believed the doctor was an employee.

Agent's Duties to Principal

• An agent owes the principal duties including performance, requiring reasonable skill and care; notification, involving sharing important information; loyalty, meaning no secret profits or conflicts of interest; obedience, requiring adherence to lawful orders; and accounting, involving keeping funds separate and reporting them properly.
• Taser v. Ward illustrates loyalty: preparing a competing business was permissible; acting on it while employed was not

Principal's Duties to Agent

• A principal owes duties to the agent: compensation, providing fair or agreed-upon pay; reimbursement, covering legitimate expenses; and indemnification, protecting against losses caused by the agent's mistakes.

Actual Authority

• Express authority can be directly stated, whether oral or written
• The Equal Dignity Rule states that if a contract must be written, the agent's authority must also be written.
• Oral authority to sell land is invalid unless ratified in writing
• Exceptions exist for corporate officers, situations where the principal is present, or when signing is a mere formality
• Actual authority can also be implied, meaning it is reasonably necessary to carry out express authority
• A store manager can hire staff or order inventory as implied authority
• Implied authority cannot contradict direct instructions

Apparent Authority

• Apparent authority is based on a third party's belief due to the principal's behavior
• The case of Lundberg v. Church Farm illustrates this, where the principal was liable due to the appearance of authority
• Estoppel can prevent a principal from denying an agency if they caused a third party's belief
• In Dearborn West Village, where an agent acted without approval, no estoppel was found

Other Authority

• An agent can act to protect property or rights if the principal cannot be reached, which are considered Emergency Powers
• Ratification occurs when a principal accepts an unauthorized act after the fact
• Requirements for Ratification: agent acting for a known principal, full knowledge by the principal, full approval, legal capacity of the principal, ratification before withdrawal by the third party, and proper procedure

Liability for Contracts

• Liability for contracts depends on authorization and the principal's identity disclosure
• If the principal's identity is known, only the principal is liable, which is Disclosed
• If the third party knows the agent works for someone, both the agent and principal can be liable, which is Partially Disclosed
• If the third party doesn't know the principal exists, both are liable, which is Undisclosed
• The principal must indemnify the agent if the agent is held liable

Unauthorized Acts

• The principal is not liable for unauthorized acts; the agent is
• The Implied Warranty of Authority makes an agent liable if they falsely claim authority
• No liability exists if the third party knows the agent has no authority
• E-agents are software agents making online contracts
• In the event of an auto-order error without confirmation, the customer can cancel

Liability for Torts and Crimes

• A principal is liable for their own negligence or wrongful orders, which is considered Principal's Direct Fault
• Both parties are liable if the principal orders wrongdoing, which is considered Principal's Authorization of Wrongdoing
• The principal is liable if the agent lies within their job role, which is Agent's Misrepresentation
• The principal is liable for employee mistakes during work, which is Agent's Negligence (Respondeat Superior)
• The employer is liable if Intentional Torts was job-related or the risk was known
• Principals are not liable for the actions of independent contractors unless the task is hazardous

Termination of Agency

• Termination occurs if the time expires, the task is complete, there is mutual agreement, or revocation/renunciation, considered By Act of Parties
• Wrongful termination may lead to damages
• An agency coupled with interest cannot be revoked if the agent has a financial stake
• Notice must be given to third parties to end apparent authority
• Termination automatically occurs upon death, insanity, bankruptcy, impossibility, or war, considered By Operation of Law

Employment at Will

• An employer/employee can end the relationship at any time unless exceptions apply
• Handbooks/promises may imply job security, which is known as Contract Theory
• Misleading or harmful firings can lead to fraud or distress claims, known as Tort Theory
• It is illegal to fire for lawful actions, such as whistleblowing, known as Public Policy

Wages, Hours, and Layoffs

• The Fair Labor Standards Act (FLSA) sets rules on pay and hours
• Age-based restrictions exist on work types and hours for Child Labor
• The higher of the federal or state Minimum Wage applies
• Tipped Workers can be paid $2.13/hr if tips cover the rest
• Tip Pooling is allowed if full minimum wage is paid
• 1.5x pay is required after 40 hrs/week unless exempt for Overtime
• The Worker Adjustment and Retraining Notification Act (WARN Act) requires 60 days' notice for mass layoffs (100+ workers)

Family and Medical Leave

• The Family and Medical Leave Act (FMLA) provides 12 weeks of unpaid leave for serious health/family reasons
• FMLA applies to companies with 50+ employees and workers with 12 months of tenure
• Health insurance must continue, and same or equal job must be restored
• Violations can result in lost wages, court costs, and double damages

Health, Safety, and Income Security

• The Occupational Safety and Health Administration (OSHA) sets workplace safety rules
• Workers' Compensation Covers injuries at work, preventing lawsuits
• Social Security/Medicare is funded by payroll tax
• The Employee Retirement Income Security Act (ERISA) regulates private pensions

Key Laws & Protected Classes Employment Discrimination

• Title VII Prohibits discrimination based on race, color, religion, gender, national origin, and sexual orientation
• ADEA Protects workers age 40+
• ADA Covers disabilities
• These laws apply to most U.S. employers with 15+ workers and U.S. companies abroad

Types of Discrimination

• Intentional (Disparate Treatment) Direct unfair treatment
• Unintentional (Disparate Impact) Neutral policies that harm protected groups
• Reverse Discrimination Bias against the majority (e.g., white males)

Other

• Employers must accommodate religion unless it causes hardship
• No bias in job roles or promotions, including pregnancy and post-birth needs for Gender
• Transgender & Sexual Orientation is Protected under Title VII (e.g., Bostock v. Clayton County)
• Constructive Discharge means quitting due to unbearable conditions is considered wrongful termination

Sexual Harassment

• Quid pro quo involves job benefits for sexual favors
• A hostile environment involves severe/unwelcome behavior
• The employer is liable if a supervisor acted or failed to act
• Offensive emails/social media can qualify as Online Harassment

Procedures & Remedies

• File with the EEOC, leading to mediation or a "right to sue."
• Remedies include reinstatement, back pay, promotion, and capped damages
• Retaliation is illegal, including protecting those associated with a complainant

Other Discrimination Laws

• Age must be the main reason for adverse action for ADEA
• ADA means a disability must limit major life activities and reasonable accommodation is required
• Genetic information cannot be used in employment through the GINA Act

USERRA

• The Uniformed Services Employment and Reemployment Rights Act protects military service members, has broad employer coverage, and allows "for cause" firing only.

Defenses & Policies

• Business Necessity justifies neutral practices
• Bona Fide Occupational Qualification (BFOQ) means certain jobs may require specific traits
• Seniority Systems are valid if non-discriminatory
• After-Acquired Evidence reduces damages if misconduct is found post-suit
• Affirmative Action is allowed if narrowly tailored and temporary

Small Business Basics

• Choose a business form based on ease, liability, taxes, and capital needs
• Sole Proprietorships are easy to form, full control, and personal taxes only with unlimited personal liability, hard to raise funds, and ends on owner's death

Franchises

• Buying into a brand's name and system
• Types include: Distributorship, Chain-style and Manufacturing
• FTC Franchise Rule requires disclosure of costs, earnings, and rules
• Franchise Contracts cover fees, location, territory, and quality control

UPA

• The Uniform Partnership Act is the default law in most states
• Sharing profits usually indicates a partnership
• Control, contributions, and joint ownership also matter
• The Rights and Duties are Equal management unless agreed otherwise. Equal profit/loss split unless set differently
• Fiduciary Duties include care and loyalty
• Joint Liability means All partners must be sued together
• Joint and Several means One partner can be sued for all

Partnerships

• Dissociation occurs when a Partner leaves and their authority ends
• Wrongful Dissociation happens when A breach makes the partner liable for damages
• Limited Partnerships (LPs) involve General partners who is fully liable, and a Limited partner who Invests only, no management, limited liability
• LLPs mean all partners are not liable for others' mistakes
• LLLPs mean even general partners get liability protection
• FLLPs mean all partners are family; common in farming

LLC Basics

• A hybrid of a corporation and partnership
• LLC's provide limited liability, pass-through taxes, flexible structure
• States laws vary
• LLC Formation requires articles of organization including "LLC." in the name.
• Preformation contracts can be ratified post-creation
• Management is Member-managed or Manager-managed
• Operating Agreements covers profit split, management, transfer, meetings, and buyouts otherwise default state law applies
• Dissociation & Dissolution leads to a buyout and Dissolution occurs by vote, court, or agreement

Other Organization

• Syndicate is considered an investment group
• Joint Stock Company is when Shares exist, but there is personal liability
• Business Trust is managed by trustees, and profits go to beneficiaries
• Cooperative is member-owned for shared benefits

Corporate Basics

• Corporations are a separate legal person, and owners are shareholders with limited liability
• Managed by a Board and Shareholders

Types of Corporations

• Private ownership corporation exists for profit
• Nonprofit corporation does not distribute profits to owners.
• Close corporation has few shareholders and is often family-run
• S corporation features pass-through taxation and has a limited number of shareholders
• professional corporation is designed for licensed professionals
• benefit corporation aims to generate profits while also serving a social purpose

Corporate Powers

• Corporations possess different types of powers including Express powers, Implied powers
• Ultra vires actions are those beyond the corporation's powers, which are rare and can be legally challenged

Formation of a Corporation

• The formation process involves several steps including filing articles of incorporation and an organizational meeting
• A de jure corporation is properly formed according to the law
• A de facto corporation has minor errors in its formation but operates in good faith
• The principle of by estoppel treats an entity as a corporation to prevent injustice

Piercing the Corporate Veil

• Courts may hold owners personally liable by piercing the corporate veil when owners mix personal and corporate funds, undercapitalize the corporation, or use the corporation for fraudulent purposes

Corporate Financing

• Corporations raise capital through various means
• Common stock grants voting rights but is last in line for asset distribution

Types of Leases

• Property Law can be categorized based on their duration.
• A periodic lease renews automatically, such as a monthly lease
• An at-will lease can be terminated at any time by either party
• An at-sufferance lease occurs when a tenant remains on the property without the landlord's consent

Nonpossessory Interests

• Easement grants the right to use another's land
• A profit grants the right to take resources from another's land
• A license provides temporary permission to use land
• Created by agreement, necessity, implication, or prescription

Other Real Estate Concepts

• Real estate sales require a deed
• title must be marketable
• warranty deed offers the strongest protection to the buyer
• quitclaim deed transfers whatever interest the seller possesses
• Adverse Possession: Ownership can be gained through long-term unauthorized use of property
• Government Limitations on Property Rights include Eminent domain, Restrictive covenants, Zoning laws
• An assignment involves transferring the entire lease to another party
• A sublease involves a partial transfer, with the original tenant remaining liable

Insurance

• A policy is the insurance contract
• A premium is the payment for insurance coverage
• Types of Insurance Agents are agent (works on behalf of the insurer) and the broker (works on behalf of the buyer)
• An insurable interest requires a stake in the person or property being insured at the time the policy is purchased
• STOLIs are illegal because they lack this insurable interest
• An insurance contract must be legal, and the premium must be paid
• A grace period allows for late payments without losing coverage
• A coinsurance clause requires insuring property to 80% of its value for full recovery
• Insurers may have defenses against paying claims, including fraud, lack of insurable interest, and illegal acts