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Module 13
Employment Law and Labor Regulations
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Learning Objectives
Upon successful completion, the student will be able to:
Explain the concept of employment at will;
Describe substance abuse;
Identify worker safety and health issues;
Explain workers‘ compensation;
Analyze general Regulation of Labor Markets;
Compare major Labor Relations Acts;
Explain unionization;
Analyze collective bargaining.
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At-Will Employment
Employers: Can hire and fire who they want
Employees: May quit when they want
Contractual can limit presumption of at-will
Exceptions:
Refusing to commit an illegal act
Important public duty (jury duty)
Public right (e.g., filing for workers’ compensation)
“Whistle Blowing”
Contracts in violation of public policy
Dismissal: If firm dismisses employee in violation of public policy exception,
such as EEO violations, employee may sue for wrongful discharge or
retaliatory discharge
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Ballalatak v. All Iowa Agriculture Assn.
Ballalatak worked as a security supervisor. Two employees were
injured in a work-related accident. Called Ballalatak and reported
injury. Ballalatak helped get men to hospital & filled out accident
report.
Manager Nowers told the men their medical expenses would be
taken care of without filing for workers’ compensation. Later, injured
men told Ballalatak they were concerned they would not receive
workers’ compensation benefits.
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Ballalatak v. All Iowa Agriculture Assn. (2)
Ballalatak told Nowers the workers had rights to benefits.
Nowers fired him. Ballalatak sued, saying he was fired for asking
about workers’ compensation duties to the injured workers.
Nowers claimed he fired him for insubordination.
District court dismissed suit. Ballalatak appealed.
HELD: District Court judgment affirmed.
Employer may fire an at-will employee at any time. Exceptions are if
for concerns about workers’ compensation claim rights.
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Ballalatak v. All Iowa Agriculture Assn. (3)
He argued that public policy interests should extend to supervisors
(him) who advocate such benefits for other employees. Court
protects employees exercising their own statutory rights.
But Ballalatak was not fired for securing his own right. Nor was he
fired for refusing to violate workers’ compensation law. Fired for his
attempt to ensure his employer did not violate statutory right of other
employees.
Iowa law does not protect internal advocates for other employees.
Law also does not protect employee who asserts other employees
may contact an attorney about workers’ compensation rights,
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Noncompetition Agreements
Employees sign not to leave employment and then compete directly with
employer.
Different states differ:
Some allow the agreements if reasonable time and area
Some states allow court to imply reasonable terms so as to save the covenant in
part
Other states will eliminate these agreements entirely if some terms unreasonable
Other states, like CA, say that almost every contract that restrains anyone from
lawful business is void
Employers must pay attention to individual state law in this area as what
may be used for employees in one state will not work for employees in
another state.
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Zambelli Fireworks Manufacturing Co.
v. Wood
Zambelli is one of the oldest & largest fireworks companies in the
U.S.
Wood was hired in 2001 to work as pyrotechnician and
choreographer to displays in combination with music
Wood learned of technical trade secrets, client lists, pricings, costs,
and contract terms. Zambelli paid for Wood to become a certified
trainer for the Pyrotechnic Guild International.
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Zambelli Fireworks Manufacturing Co.
v. Wood (2)
Noncompete agreement said Wood left Zambelli, he:
Would not work for a competitor in the U.S. for 2 years
Would not solicit former clients
Would not disclose or use trade secrets and
If there was litigation and Zambelli prevailed, Wood would pay legal fees
& costs.
Wood was hired by Pyrotecnico, a major competitor. Signed an
agreement he would not take or use any Zambelli information or
trade secrets.
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Zambelli Fireworks Manufacturing Co.
v. Wood (3)
Pyrotecnico agree to pay his salary for two years if needed because
of covenant with Zambelli and also would cover legal expenses.
Wood resigned from Zambelli and went with Pyrotecnico.
Zambelli sued to enforce covenant not to compete.
District Court held the agreement was enforceable under
Pennsylvania law; enjoined most technical work by Wood.
Wood and Pyrotecnico appealed.
HELD: District Court decision affirmed.
Zambelli had a legitimate business interest in Wood’s specialized
training & skills. Agreements are upheld when restrictions are
reasonable to protect employer’s interests.
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Anti-Raiding Covenants
Employees sign an agreement they will not recruit fellow employees for
another company when they leave their current place of employment.
Varies a lot from state to state
Some courts hold clauses in violation of public policy
Is an illegal restraint on competition
Other courts hold them as enforceable
New York court held that once employee leaves place of employment, continued
restraints are not favored.
Exception: to protect things, i.e. trade secrets
California & Texas have held that covenants limited in time & coverage are
enforceable.
In Missouri, legislature specifically held such covenants legal.
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Substance Abuse
Alcohol most commonly abused
8% of workers are serious alcohol abusers
About 3-8% of adults abuse or are addicted to illegal or improperly
dispensed drugs
One in eight of workers have substance abuse problem
Federal Drug Free Workplace Act
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Omnibus Transportation Employee Testing Act
Employers who operate
Aircraft
Public transportation or
Commercial motor vehicles
Must test employees for use of alcohol or illegal drugs
Include:
Pre-employment testing
Testing after accident
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Employee Substance Abuse Policies
Pre-employment screening usually OK – (some states say only test
after job offer is extended)
Testing employees on annual basis or part of occasional physical
exams usually legal. Examination must be voluntary or directly
related to ability to perform job.
Safety sensitive jobs
Random drug test OK when a condition of employment (Notification)

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Employee Substance Abuse Policies (2)
“Reasonable suspicion” – document this well in employee file
Announced policy of such tests and safety is an issue
Use Certified Labs for drug testing results
Give employees copy of company policy and keep a signed receipt
from employee
Make policy clear
Check with attorney
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Worker Health and Safety
Occupational Safety and Health Act of 1970 (OSHAct)created
Occupational Safety and Health Administration (OSHA)
The Occupational Safety and Health Review Commission (OSHRC)
The National Institute for Occupation Safety and Health Council
(NIOSH)
OSHRC reviews administrative cases brought by OSHA.
NIOSH does studies to help set safety standards.
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Worker Health and Safety (2)
Safety Inspections
Inspectors visit workplaces and respond to workers’ reports of
problems.
Marshall v. Barlow’s (OSHA inspectors routinely obtain
administrative warrants that do not require show of probable cause;
the warrant requirement is not difficult.)
Penalties may run from small fines to millions for multiple violations.
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Stark Excavating, Inc. v. Perez
Stark was replacing leaking fire hydrant in front of retail shops.
Jobsite manager, Schupp, wanted to do job quickly with minimal
disruption.
When deep hole is dug, contractors test soil type.
Determine if hole must be sloped out to prevent cave if or
If a hard trench box must be installed.
Schupp noted that soil was Type B requiring 45 degree slope
ranged from 60-80 degrees while a worker was in the hole.
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Stark Excavating, Inc. v. Perez (2)
Schupp admitted he had not dug out the hole properly.
Armstrong issued citation to Stark: Willful violation.
Stark protested.
Administrative Law Judge (ALJ): Reduced violation from willful to
serious.
OSHA Review Commission: Reinstated willful determination.
Noted that Schupp knew soil type and requirement, but didn’t follow
Stark appealed that ALJ had the most info to determine seriousness
of the situation.
Court of Appeals: Upheld Commission’s findings.
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Stark Excavating, Inc. v. Perez (3)
ALJ based its conclusion on erroneous belief that record
demonstrated a reasonable effort by Respondent to slope
excavation. As opposed to not taking any steps at all to slope the
walls.
The statement by Schupp could support a determination that he
chose not to make sure ditches were correct
Admitted he wanted to complete the project more quickly
Stark failed to demonstrate it effectively enforced its own rules and
policies when violation were discovered.
Petition for Review: Denied.
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Workers and Toxic Substances
Hazard Communication Standard (HazCom)
Issues exposure limits for some specific toxic substances
Chemical producers and users conduct a “hazard determination” of chemicals
they use/produce
Where chemicals are used, employers must have:
A written plan that includes
List of hazardous chemicals in workplace
Manner in which safety data sheets, chemical labels, and worker training about chemical safety
is handled
Description of how employees will be trained for non-routine tasks (e.g. chemical spills or
explosions)
Labels for chemical containers
Material Safety Data Sheets (MSDS)
Employee Training Programs
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Workers’ Compensation
States enact workers’ compensation laws to provide employer paid
insurance for work-related accidents
Reduced payments from tort damages to a schedule
Sometimes employees prefer to sue in tort but generally not allowed
Objectives:
Provide benefits to work-accident victims regardless of fault
Provide a certain remedy and relieve hassles of tort litigation
Reduce fees to lawyers and expert witnesses
Encourage employer safety; accident rating-based premium
Provide open communication of accidents for safety improvements
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Benefits and Incentives
Obligations to employees, NOT independent contractors
Companies pay premiums based on injury claims records – vary widely
among states and occupations
Different states have different systems, rules, payout histories
Usually worker receives 2/3 of their gross wages as disability income
As low as $500 in some states to over $1,500 in others
Benefit Categories:
Death
Total disability
Permanent partial disability
Temporary partial disability
Medical expenses
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Long v. Superior Senior Care, Inc.
Long was an in-home certified nursing assistant (CNA) working for Superior
Senior Care. Company had 5 employees in its office and 100 independent
contractors. Clients would contact Superior; it would post requirements to
match CNAs with clients.
Superior received fee for referral service; clients deposit funds in an escrow
account with Superior; CNAs paid from account. Long was told her pay
would be $10/hour. Duties based on client needs. She didn’t have to take
any assignment – could choose. General duties: cooking, house cleaning,
laundry, helping clients shower, and move around.
Was assisting a client move from wheelchair to bed when client “went limp”
– became dead weight. Her back popped as she struggled to help client. In
pain, she received a back brace at hospital, but eventually couldn’t work.
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Long v. Superior Senior Care, Inc. (2)
Long filed for workers’ compensation. Superior said she was
independent contractor, not employee.
Administrative Law Judge held Long was an employee.
Commission reversed – held she was an independent contractor –
not eligible for worker’s compensation.
Long appealed.
Whether an person is an employee or independent contractor
Here, Long was acting as an independent contractor.
Affirmed.
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General Regulation of Labor Markets
Family & Medical Leave
Hiring Legally
Federal Minimum Wage Requirement
Occupational Licensure & Regulation
Warning Employees of Plant Closings
Employee Retirement Plans
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Family and Medical Leave
Family & Medical Leave Act (FMLA). Applies to private employers
with 50+ employees and all government jobs
12 weeks unpaid leave
After childbirth or adoption; to care for seriously ill child, spouse or
parent; in case of employee’s own serious illness
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Family and Medical Leave (2)
Pertains to “serious health condition”
More than 3 consecutive days of incapacity and treatment for condition
involving 2 or more treatments, including exams; or one treatment with
continuing prescription medicine or special equipment
Incapacity due to pregnancy
Incapacity or treatment for chronic, serious health condition
Absence from multiple treatments & recovery for surgery or condition
that results in more than 3-day period of incapacity left untreated
Exempts “key” employees –10% highest paid.
A complex law, need knowledgeable manager to oversee decisions.
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Hansenwinkel v. Mosaic
Mosaic provides living facilities for adults with disabilities.
Hansenwinkel, a nurse, was hired in 2007. At Mosaic, she took
FMLA leave 7 times from 2010 to 2012.
Records a unclear whether she asked for leave each time. There
were disputes over that issue that led to her receiving an
unsatisfactory job evaluation. Also several notices for corrective
actions she need to take.
After exhausting her FMLA leave in 2012, Mosaic gave her an
additional 90-day medical leave. She did not return after that time
and sued.
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Hansenwinkel v. Mosaic (2)
Claimed Mosaic interfered with her FMLA rights by denying her
benefits to which she was entitled and discriminating against her for
taking FMLA leave.
District Court held: Hasenwinkel received all leave to which she
was entitled & had no case. She appealed.
Affirmed. Termination of employment is actionable under FMLA only
if the employee was discharged because of her FMLA leave. Can be
lawful termination if, after employee exhausts FMLA leave, she is
“unable to perform an essential function of the position because of a
physical or mental condition.”
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Hansenwinkel v. Mosaic (3)
She admits she was physically unable to work when her benefits
expired. Her termination was lawful under FMLA.
She had not sought another job and received 80% disability rating
from Social Security Administration.
Also alleged mistreatment by Mosaic supervisors, holding her to
higher standard than other nurses.
Subjected her to a negative performance evaluation; scrutinized her
work more closely; declined to invite her to lunch
These slights do not arise to adverse employment action. Petty
slights are not actionable under the statute.
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Hiring Legally
For every person hired, employer must have an I-9 form on file.
Documents must be presented for proof of identity and employment
eligibility
Many use E-Verify Program (U.S. Citizenship and Immigration
Services electronic verification system) (USCIS)
Program has had difficulties with accuracy
Many federal contracts require E-Verify use
Can’t hire illegal immigrants
Fines & criminal Penalties – Can be large for sloppy record keepers
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Federal Minimum Wage Requirements
Initiated in 1938 – as part of Fair Labor Standards Act.
Averages about 50% of the average manufacturing wage
Minimum wage of $7.25/hour as of 2009
Many states, like California, have high minimum wages
Some state laws cover employers exempt from federal law
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Occupational Licensure and Regulation
Few controls at federal level – most restrictions by states
Usually a state commission determines entry criteria, such as formal
education, apprenticeship, testing
Ability to practice through license or certificate:
As lawyer, doctor, nurse, dentist, veterinarian, optometrist, optician or
architect, psychologist
Some states license dog groomer, beekeeper, interior designer, coffin
sellers, hair braiders, manicurists or upholsterers.
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Occupational Licensure and Regulation (2)
Some laws concern how businesses provide reference to when
employees paid their final pay check.
Many states require time off to employees to vote and to attend
parent-teacher conferences.
Many small to medium size firms unaware of details of laws – often
unwittingly violate them.
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Warning Employees of Plant Closings
Worker Adjustment and Retraining Notification Act (WARN)
Employers with 100+ full-time employees
Must give advance notice of plant closing or mass layoff if 50+ employees affected.
Notice given directly to each affected employee 60 days in advance of
closing or layoff.
Notices must be for permanent termination and reduction in work time of
50% or more for 6 months or longer.
Employees who do not receive proper notice may sue for up to 60 days
Local government may sue company for up to $500/day for each day there
was no notice.
Some states have plant closing requirements beyond federal requirements.
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Retirement PLans
Employee Retirement Income Security Act (ERISA)
Guarantees expectations of retirement plan participants – protects
benefits after reasonable length of employment
If plan collapses because employer goes bankrupt, federally chartered
pension Benefit Guaranty Corporation may provide pension benefits.
Mandatory vesting requirements – participants receive benefits after
certain length of employment. Have some choices.
Statutes are complex involving lengthy regulatory filings for pension
& benefit plans – need for expert guidance
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Major Labor Relations Acts
Norris-La Guardia Act of 1932
Ended court intervention when employers plead to stop strikes and
other union activities as a violation of antitrust law. No court injunctions
in nonviolent labor disputes such as strikes, publicizing a labor dispute,
picketing, etc.
Declared that every worker “have full freedom of association, self –
organization, and designation of representatives of his choosing to
negotiate terms and conditions of his employment.”
agree to NOT join a union or risk being fired if they do
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Major Labor Relations Acts (2)
1935 Wagner Act (NLRA): Right of workers to unionize; created
National Labor Relations Board (NLRB).
Monitors unfair labor practices. Issues few rules – prefers development
through dispute resolution process
Board’s decisions can vary with political makeup – outcome of
proceedings various over time more than most agencies
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Major Labor Relations Acts
1947 Taft-Hartley Act ~ Labor-Management Relations Act: (Amended
NLRA) Employers have right to go to NLRB. Unions are prohibited from:
Coercing employees to support union
Refusing to bargain in good faith with employers
Carrying out certain kinds of strikes “secondary boycotts,” charging “excessive”
union fees, or “featherbedding”
Going on strike during 30-day “cooling off” period or during 60-day period
ordered by the President.
1959 Landrum Griffin Act ~ Labor-Management Reporting & Disclosure Act:
(Amended NLRA) Increased reporting, regulation of internal union affairs;
protects union members from improper actions by leaders by monitoring
leadership and providing union member bill of rights
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National Labor Relations Board
Administrative agency created to monitor unfair labor practices and
assure that union representation elections are fair
Jurisdiction: Labor dispute that “affects interstate commerce”
About 30,000 cases a year; most are unfair labor charges
“Unfair labor practices” – actions that impede the goals of the NLRA
Hearing is before administrative law judge (ALJ)
Is an employee of the NLRB
Order is final unless one party files an exception
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National Labor Relations Board (2)
If exception filed, appeal is heard by Washington panel of 3 NLRB
members
Sometimes the entire board may hear an appeal
If one party refuses to accept board’s decision, case will be referred
to U.S. Court of Appeals
For enforcement or review of order
In rare instances case may go the U.S. Supreme Court for final
review
Presidents are either “pro-labor” or “pro-management.”
Presidential appointment to the Board can be politically sensitive
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Unfair Labor Practices
Examples of employer conduct violating NLRA
Threatening employees with loss of jobs or benefits if they join or
support a union
Threatening to close a plant if employees vote for unionization
Questioning employees about union activities
Promising benefits to employees if the do NOT support a union
Giving employees worse assignments for participating in protected
activities
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Unfair Labor Practices (2)
Examples of union conduct violating NLRA
Threatening employees with loss of job if they do not support the union
Refusing to help employees with grievances who have criticized union
leaders
Engaging in picket line misconduct, such as threatening non-strikers
Striking over issues unrelated to employment terms and conditions
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Unionization
Representation Elections
Employees sign authorization cards – need 30% to go to NLRB for an
election
Campaign – by union and management
NLRB supervised election:
More than 50% vote yes?
If so, union certification is granted
Is exclusive bargaining agent for all employees for all terms and conditions of
employment. If not, union fails.
Can also have 30% call for election to decertify union
NLRB and courts do not permit access to company property by outside
organizers.
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Agency Shops
Agency Shops – Majority of employees vote to be represented by
Union
Members pay union dues
Non-members pay agency fees (a little lower than union dues)
Unions give $ to support political activities, including candidates
States pass right-to-work laws that prohibit agency shops.
Have right to work without joining a union, even if majority of
workers voted for union
Use of agency fees to support union political activities must be
explained, and escrow account for amounts when dispute pending
re: use of fees for this purpose.
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Collective Bargaining
Union is exclusive bargaining agent for employees
Collective bargaining covers whole process from initial contract
negotiations up through contract administration
Set forth terms of contract for a given period
Most collective bargaining agreements contain dispute resolution
clauses (grievance arbitration clauses)
NLRA requires Good Faith Bargaining
conditions of employment, etc.
Can back up positions with strike by union or lockout by employer
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Teamsters Local Union No. 523 v. NLRB
Interstate Brands makes/distributes bakery products
Different distribution system handled different products
Employer consolidated distribution – sales distributors & reps would
handle all product lines. Meant union would now represent all
distribution workers, rather than only some workers
Rammage had been a Dolly Madison sales rep for 15 years before
consolidation (was not represented by union)
This gave preference to workers that union had represented before
Result: Rammage was “endtailed” to bottom of distribution system
Lost his regular route; was demoted
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Teamsters Local Union No. 523 v. NLRB (2)
He complained to NLRB that union & employer were engaged in
“unfair labor practice”
Board held in Rammage’s favor. Union appealed.
HELD: Affirmed.
When there is a unit merger, union and employer are not permitted
to “dovetail the seniority of employees while endtailing” previously
unrepresented employees.”
was not in the Union) suggests Union caused Employer to
discriminate against him.
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Concerted Activities
Concerted Activities: Employer & union must be able to back up
positions
Union can strike; employer can lock out workers
Each side may do other activities to place pressure on the other side
Protected Activities: Right to engage in concerted activities for
mutual aid or protection
i.e. Most union organizing efforts or refusal to work due to unreasonable
hazards or concerns re: working conditions
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Concerted Activities (2)
Unprotected Activities: Threats or acts of violence not protected
Employers may fire employees for insubordination, disobedience or
disloyalty unless activity is part of protected concerted activity
Primary boycott (strike against employer whose collective bargaining
agreement is in question) is legal
Secondary boycott (union uses economic pressure to force others to
stop doing business with an employer not directly involved in primary
labor dispute) is illegal
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Employer Economic Responses
Employers may not retaliate against employees for engaging in
protected activities
Have right to use some economic pressure
May lock out employees until dispute with union is settled
Lockout is usually a defensive move
Okay if in an effort to promote settlement or protect plant or its materials
Replacement of employees by non-union workers can be okay if
contract and union calls for strike. The employer can hire new
workers and keep using existing union workers who cross picket
lines.
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THE END
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