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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.

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CREATING AN AGENCY

To create an agency, there must be: 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.

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REQUIREMENTS FOR AGENCY

Consent, Control

A fiduciary relationship

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NOT REQUIRED FOR AN AGENCY RELATIONSHIP

A written agreement A formal agreement

Consideration

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DUTIES OF AGENT TO PRINCIPAL

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.

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PRINCIPAL’S REMEDIES WHEN THE AGENT BREACHES A DUTY

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.

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DUTIES OF PRINCIPAL TO AGENT

Duty to Reimburse the Agent for Reasonable Expenses

Torts Committed by the Agent Contracts Entered into by the

Agent Duty to Cooperate

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TERMINATING AGENCY

Five ways an agency relationship is terminated by the parties: 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.

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OTHER CAUSES OF AGENCY TERMINATION

Principal or Agent Can No Longer Perform Required Duties

Change of Circumstances

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EFFECT OF TERMINATION I

Termination of the agency ends the agent’s power to

act on behalf of the principal.

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EFFECT OF TERMINATION II

Principal’s duty to reimburse expenses of the agent ends with the end of the agency.

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EFFECT OF TERMINATION III

Confidential information remains confidential and

unusable, even after the end of the agency.

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POWER COUPLED WITH AN INTEREST

RARE-only agent can terminate.

Principal has no rights under this form of agency-is

created by law

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EMPLOYEE AT WILL

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.

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NATIONAL LABOR RELATIONS ACT

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.

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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.

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WRONGFUL DISCHARGE

Wrongful discharge prohibits an employer from

firing a worker for a bad reason.

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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: Refusing to Violate the Law Exercising a Legal Right Performing a Legal Duty

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WHISTLEBLOWERS

Employees who disclose illegal behavior of their

employers.

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FALSE CLAIMS ACT

Protects those who refuse to sign inaccurate

reports.

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THE CIVIL SERVICE REFORM ACT

Along with Whistleblower Protection Act protect Federal

employees who report wrongdoings.

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SARBANES-OXLEY ACT

The Sarbanes-Oxley Act of 2002 protects employees of publicly traded companies who provide

evidence of fraud to investigators.

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OTHER PROTECTION FOR WHISTLEBLOWERS

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.

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TRUTH IN HIRING Oral promises made during the

hiring process can be enforceable. Employers may be liable for

promises that they cannot keep or for failure to disclose important information in the hiring process.

An employee handbook creates a contract.

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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.

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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

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 sometimes.

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, e-mail

messages, and even “instant messages” if:

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ECPA

the employee consents,

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ECPA

the monitoring occurs in the ordinary course of business, or

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ECPA

in the case of e-mail, the employer provides

the e-mail system.

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FINANCIAL PROTECTION

Fair Labor Standards Workers’ Compensation

Social Security Pension Benefits

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EMPLOYMENT DISCRIMINATION

The Equal Pay Act Title VII of the Civil Rights

Act of 1964

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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 Pregnancy

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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.

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AGE DISCRIMINATION

The Age Discrimination in Employment Act (ADEA) of

1967 Forced retirement at a certain

age is prohibited