Legal_Risk_and_Opportunity

Legal Risk and Opportunity in Employment In terms of cost and time, an organization’s ability to understand and prevent legal liability is immeasurable. NewCorp is currently mired in three legal encounters. Before deciding to immediately pursue legal advice to resolve the situations, NewCorp has decided to allow Team B to evaluate each encounter and determine NewCorp’s liability. Management has requested that the final evaluation be referenced with case or statutory laws that are relevant to the situations. Only after the results of each assessment will management decide whether to handle the situations internally or request further legal advice. Legal Encounter One NewCorp hired Pat as manager of real property in Vermont; this position is responsible for activities related to maintaining leased office space. After being hired, Pat signed an agreement with the understanding that the company observed employment at-will with respect to discharge. However, upon his acceptance of employment, Pat was also given NewCorp’s personnel manual. One section of the manual entitled Notice of Unsatisfactory Performance/ Corrective Action Plan outlined the process for dealing with unsatisfactory employees. After three months, Pat’s boss explained that things were not working out; Pat would be discharged with 30 days of severance pay. Pat was surprised because his employer gave no previous indication of any problems with his performance over the last three months (University of Phoenix, 2010). At a local school board meeting, Pat spoke out against the unequal allocation of the school’s sports fund and stated that the funds should be dispersed among all sports programs, not just between boys’ football and basketball. After the meeting, Paul observed that NewCorp’s senior management was noticeably unfriendly because his position was unpopular. Although no one at the meeting identified Pat as a NewCorp employee, he believed his dissenting opinion contributed to the decision to fire him. NewCorp Liability According to InvestorWords.com (2010), liability is “an obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed” (p. 1). NewCorp provided Pat with an employee manual that stipulated the terms and conditions under which unsatisfactory job performance would be handled. As such, NewCorp is liable for the printed statements within the manual even if the material directly or indirectly negates NewCorp’s at-will policy. The Notice of Unsatisfactory Performance/Corrective Action Plan clause outlined in the personnel manual states: If the job performance of an employee is unsatisfactory, the employee will be notified of the deficiency and placed on a corrective action plan. If the employee’s performance does not improve to a satisfactory level in the specified period of time, termination will follow (University of Phoenix, 2010, p. 1) Because no corrective action plan was followed, NewCorp could be held liable for breach of contract. An employee manual could represent a contract, especially in those cases in which employees are required to sign them. According to Jennings (2006), many courts have considered employee manuals an implied contract because the employee has relied on the statements therein as a promise of sorts, which may fall under the legal principle of promissory estoppel. BusinessDictionary.com (2010) defines promissory estoppel as a “legal principle that a promise (even if made without consideration) is enforceable where the promisor makes, by conduct or words, an unambiguous representation to the promisee who relies on it to his or her detriment” (p. 1). As a result, it would be unjust and unreasonable for the courts not to obligate NewCorp to stick to the terms of the implied promises within the personnel manual. If Pat decides to pursue litigation and NewCorp is found guilty of breach of contract or promissory estoppel, NewCorp could be held liable for Pat’s lost wages after termination and any future lost wages for the duration of his contract. Pat could also sue for the cost of selling his home, finding another job, and relocating his family, and mental distress for himself and his family because his termination will undoubtedly affect his family and their financial situation. Legal Principles Several legal principles apply in this situation. Although no statutory law applies because Vermont is an at-will state and is therefore not limited in its ability to terminate, Jennings (2006) describes a similar scenario in Case 18.7, Dillon versus. Champion Jogba, Inc. (2002). Linda Dillon, like Pat, experienced an unforeseen termination from an at-will company within 10 days of being hired for a new position within the company. “Prior to the termination, Ms. Dillon was never told her job was in jeopardy, nor did Jogbra follow the procedures laid out in its employee manual when terminating her” (Jennings, 2006, p. 728). Ms. Dillon brought suit against Jogbra for wrongful termination with claims for breach of contract and promissory estoppel. Jogbra filed a motion for summary judgment, which the trial court granted. Ms. Dillon appealed. “Although the appellate court affirmed the lower court’s decision with respect to Dillon’s claim for promissory estoppel, the court did reverse and remand on her breach of contract claim” (Jennings, 2006, p. 728). NewCorp is also an at-will company, and Pat reserves the right to file a case against the company because of the contradicting clause in NewCorp’s Notice of Unsatisfactory Performance/Corrective Action Plan. The manual itself is at the very least ambiguous regarding employees’ status, and NewCorp’s employment practices appear to be both “consistent with the manual and inconsistent with an at-will employment arrangement. The manual’s very structure describes an environment in which an employer can fire an employee or good cause or for no cause, or even for bad cause” (Jennings, 2006, p. 728). If NewCorp wishes to present itself as an at-will company, meaning the start and duration of employment is uncertain, there is no need for a preventive/corrective plan. “Recent cases have placed some restrictions on this employer freedom to hire and fire at will, as courts have been giving employees/agents the benefit of their reliance” (Jennings, 2006, p. 727). Based on these legal principles, NewCorp could be held liable for breach of contract because there is no provision in the personnel manual stating that the manual is to be used as a principle for information only and not as a promise or binding contract. To avoid the potential for future litigation NewCorp should follow the procedures outlined in its personnel manual for the Corrective Action Plan before pursuing termination. Legal Encounter Two Sam is a supervisor of electrical manufacturing for auto under-dash wiring harnesses at NewCorp. Sam had a relationship with Paula, a female subordinate of childbearing age, which recently ended. Since the breakup, Sam has displayed “unwelcome behaviors even after Paula told him to stop. Because she stopped dating him, Sam suggested that Paula’s work might be suffering from a lack of interest” (University of Phoenix, 2010, p. 2). Paula now wishes to transfer to the coating department to be away from Sam; however, Sam refuses to approve Paula’s transfer citing, “possible danger to early fetus development,” (University of Phoenix, 2010, p. 2) due to the chemicals used for coating of the wires. NewCorp, unwilling to risk being liable for potential birth defects of Paula’s future children because of exposure to chemicals, supports Sam’s decision in blocking Paula’s request to be transferred. Paula believes that Sam’s actions are out of spite because their relationship has ended and feels discriminated against because of her sex. NewCorp Liability Employers are responsible for their employees’ behavior. The Equal Employment Opportunity Commission (2010) defines sexual harassment as: Unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature… Harassment is illegal when it is so frequent or severe that it creates a hostile or offensive work environment or when it results in an adverse employment decision (such as the victim being fired or demoted) (p. 1). Sam’s actions are tantamount to harassment and can be a liability for himself and NewCorp as well because Sam is an agent of the company. The human resources department should be notified about Sam’s behavior, and the appropriate measures should be taken. Paula should be allowed to transfer departments; however, her relationship with her supervisor should be closely scrutinized as well. Failure to allow Paula to transfer positions could result in NewCorp being liable for engaging in sexual discrimination and being a party to sexual harassment because it failed to investigate a sexual harassment complaint that Paula alleged. Although some companies have implied policies about romantic relationships with coworkers, most companies have written policies that strictly prohibit such behavior. Legal Principles “Employers are held liable for the conduct of employees that amounts to sexual harassment” (Jennings, 2006, p. 799, para. 7). Sam’s behavior made the work environment uncomfortable for Paula, which spurred her request to transfer to another department. In Case 20.2, Burlington Industries, Inc. v. Ellerth (1998), Kimberly Ellerth filed suit against her employer, Burlington Industries, Inc., because of sexual harassment from mid-level manager Ted Slowik (Jennings, 2006). Burlington was not found to be liable because they were unaware of the incidents; however, the Court of Appeals reversed the decision citing vicarious liability (Jennings, 2006). The Free Dictionary (2010) defines vicarious liability as “a legal doctrine that assigns liability for an injury to a person who did not cause the injury but who has a particular legal relationship to the person who did act negligently…Legal relationships… include the relationship between…employer and employee” (p. 1). Sam’s suggestion that Paula’s work may be suffering from a lack of interest could be cited as an intentional tort of defamation. “Defamation is an untrue statement made by one party to another about a third party. It consists of either slander or libel; slander is oral or spoken defamation, and libel is written (or, in some cases, broadcast) defamation” (Jennings, 2006, p. 368). This statement could exclude Paula from future promotions. Sam also prohibited a transfer request for Paula to another department under the premise that chemicals used may damage an early stage fetus. As a result, Sam claims to have been protecting the company from being liable for such an occurence. This action violated several employee discrimination statutes of the law. The Civil Rights Act of 1964 “outlaws all employment discrimination on the basis of race, color, religion, sex, or national origin; applies to hiring, pay, work condition, promotions, discipline, and disharge; EEOC enforces; private lawsuits permitted; attorney fees and costs recoverable” (Jennings, 2006, p. 788, para. 3). Blocking the transfer was also a violation of disparate treatment. “This different, or disparate, treatment results in unlawful discrimination when an individual is treated less favorably than other employees because of race, color, religion, national origin, or sex” (Jennings, 2006, p. 790, para. 2). Paula was denied a transfer on the basis of her sex and the possibility of future mitigating circumstances. Her skills and capabilities to complete the requirements of the job were not taken into account at all. In additon, Sam’s refusal to transfer Paula was a direct violation of the Pregnancy Discrimination Act of 1974 because he refused to hire or promote her on the basis of pregnancy or family plans (Jennings, 2006). Jennings (2006) outlines a similar dilemma that was faced in Case 20.3, International Union v. Johnson Controls, Inc (1991). Johnson Controls, Inc. had a policy refusing to hire women because of dangerous lead levels, which could harm unborn children (Jennings, 2006). This policy was founded on the basis that any female employeed may potentially become pregnant (Jennings, 2006). The policy did not consider a female’s right of choice and unjustly assumed that every female wanted and had the capability to become pregnant. The original court decision was in favor of Johnson Controls, Inc. as was the appeal to the State Court of Appeals (Jennings, 2006). However, the U.S. Court of Appeals reversed the decision and remanded the decision for further proceedings (Jennings, 2006). The judicial opinion stated: Concern for a woman’s existing or potential offspring historically has been the excuse for denying women equal employment opportunities. It is no more appropriate for the courts than it is for individual employers to decide whether a woman’s reproductive role is more important to herself and her family than her economic role. Congress has left this choice to the woman as hers to make. Legal Encounter Three NewCorp employs Paul as a senior maintenance technician. A part of his job duties require him to work in confined spaces to repair and service equipment. One specific piece of equipment, the pulp shredder, was particularly difficult to work on not only because of the narrow space, but also because the noise and vibration irritated Paul. While attempting to work on the machine, another employee was injured. After the incident, NewCorp attempted to move the machine to another area to create more space; however, they were unable to do so. Paul has refused to work on the shredder, claiming that the workspace is too confining and dangerous. As a result, NewCorp’s safety manager was made aware of the work conditions, and although he recognized the inherent hazards of the work area, he also deemed them to be safe. Paul also claims that the combination of noise, vibration, and confined space has now caused him to be claustrophobic and because the condition was a result of his job, the problem is now a workers compensation issue. Paul has made a compliant to the Occupational Safety and Health Administration (OSHA) regarding NewCorp requiring him to continue to work in unsafe conditions. Paul has threatened to get a lawyer and sue NewCorp. NewCorp Liability After assessing this encounter, NewCorp may be in violation of the Occupational Safety and Health Act (OSHA). According to Jennings (2006), “OSHA is responsible for promulgating rules and regulations for safety standards and procedures” (p. 746, para. 3). The stated duty of the Occupational Health and Safety Act of 1970 is to make certain that each “employer shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees” (United States Department of Labor, 2010, p. 1, para. 1). OSHA inspectors will request permission to inspect an organization’s work site, and if a violation is found, the organization is given an explanation of the violation, specific steps to remedy the violation, and a certain amount of time to complete the remedy (United States Department of Labor, 2010). Most organizations comply immediately without dispute. NewCorp is liable for the safe and healthful working conditions of its employees. Paul has threatened to pursue a lawsuit against NewCorp for unsafe conditions. However, he has also stated that his claustrophobia is a worker’s compensation issue. If he pursues and receives worker’s compensation, he is entitled to benefits such as partial wages, hospital and medical expenses, and death benefits. In exchange for these benefits, Paul, his family and dependents “give up their common law right to sue” NewCorp for damages (Jennings, 2006, p. 756). According to Jennings (2006), NewCorp cannot retaliate against Paul for making a complaint with OSHA. If the employee feels discriminated against in any way after making the complaint, then the employee can fie a complete with the United States Department of Labor. The Department of Labor can then file a motion in federal court on behalf of the employee (United States Department of Labor, 2010). To remain compliant, NewCorp should make certain that it “knows and follows OSHA’s rules, inspects for hazards and corrects them, informs employees of their rights, keeps statutorily mandated records, and posts citations given by OSHA” (Jennings, 2006, p. 746). So as not to be potentially liable for unsafe working conditions, NewCorp should immediately find an alternative location and means to repair and service the shredder and all other hazardous equipment. Legal Principles Because of the narrow workspace, the machinery had previously injured a former employee. Because the unsafe working conditions continued even after an internal inspection and Paul’s refusal to work on the machine, Paul could decide to walk out of his job. If NewCorp refused to pay Paul for walking out, NewCorp could be held liable for the lost wages. Jennings (2006) describes Case 19.1, Whirlpool Corporation v. Marshall (1980) that concerns the death of an employee because of a lack of safety standards. One man fell 20 feet, through a mesh netting, to his death. Sometime later, two employees refused to continue working under such unsafe conditions, so they were sent home without pay for the remainder of the day. As a result, the Secretary of Labor brought suit against Whirlpool for the lost wages and to have the written reprimands removed from the employees’ records. “The trial court found in favor of Whirlpool however, the court of appeals reversed the decision” (Jennings, 2006, p. 747). It must be acknowledged that generally courts do not consider walking off of a job as an entitlement under OSHA; however, the courts did agree that if an employee believes in good faith that he or she is in predicament that is unreasonably dangerous, the employee can “refuse to expose himself to the dangerous condition, without being subjected to subsequent discrimination by the employer” (Jennings, 2006, p. 748). The encounter does not give the final outcome of the complain to OSHA or NewCorp’s response, the precedent stated in Case 19.1 gives much insight into a potential outcome for NewCorp. Based on the OSHA’s general duty clause, an organization is in violation when it possesses a recognized hazard (United States Department of Labor, 2010, p. 1). Prior to Paul, one employee had been injured due to the lack of working space. Management was now aware of a “recognized” hazard, and it still has not remedied the safety hazard. Thus, the company has left itself vulnerable to litigation, fines, and other sanctions brought by the Department of Labor. Conclusion As with many organizations, NewCorp has to deal with legal situations that force the company to examine its polices and procedures. Many of these policies may be outdated or put an organization at financial risk for liability. Therefore, it is vital that organizations are aware of regulatory and compliance requirements. Knowing these principles and determining their relevance to situations that arise may mark the difference between quietly and internally resolving a situation or learning a very expensive lesson in court. References BusinessDictionary.com. (2010). Promissory estoppel. p.1. Retrieved on April 4, 2010 from http://www.businessdictionary.com/definition/promissory-estoppel.html. Gale Encyclopedia of Everyday Law. (2010). Ed. Jeffrey Wilson. Vol. 2. 2nd ed. Detroit: Gale, 2006. p. 1091-1095 InvestorWords.com. (2010). Liability. Retrieved on April 2, 2010, from http:// www.investorwords.com/2792/liability.html Jennings, M. (2006). Business: Its legal, ethical, and global environment. (7th ed.). Mason, OH: Thomson/West. pp. 727-756. Retrieved on March 29, 2010 from University of Phoenix ecampus. https://ecampus.phoenix.edu The Free Dictionary. (2010). Vicarious Liability. Retrieved on April 4, 2010, from http://legal-dictionary.thefreedictionary.com/Vicarious+Liability United States Department of Labor. (2010). Occupational Safety and Hazard Administration. Section 5: Duties. p. 1. para.1. Retrieved on April 4, 2010, from http://www.osha.gov/ pls/oshaweb/owadisp.show_document'p_table=OSHACT&p_id=3359 University of Phoenix. (2010). NewCorp Legal Scenarios [Computer Software]. Retrieved from University of Phoenix ecampus. https://ecampus.phoenix.edu U.S. Equal Employment Opportunity Commission. (2003). Sexual Harassment. Retrieved on April 4, 2010, from http://www.eeoc.gov/laws/types/sexual_harassment.cfm