Employment Law Yuracko Fall 2016 Outline

ss-8 form = ask the IRS whether your job is an independent contractor
brief lemmerman v. a.t. Williams Oil Co.

Employment Law
I. Legal Boundaries of the Employment Relationship - Who is considered an employee?
 Benefits of employment: the variety of benefit and protections in the US conditioned on the existence of
an employment relationship is impressive: unemployment compensation, workers compensation,
collective bargaining rights, minimum wages and maximum hours, social security, pensions,
occupational safety and health, and anti-discrimination protection.
 Who is an employee?
o Section 1.01 of the Restatement (Third) of Employment Law provides that an individual renders
services as an employee of an employer if:
(1) The individual acts, at least in part, to serve the interests of the employer
(2) The employer consents to receive the individual’s services
(3) The employer controls the manner and means by which the individual renders his or her
services or otherwise effectively prevents the individual from rendering services as
independent business person
 Who is an independent contractor?
o The Restatement §1.01(2) provides:
 “An individual renders services as an independent business person when the individual
in his own interest exercises entrepreneurial control over important business decisions,
including whether to hire and where to assign assistants, whether to purchase and
where to deploy equipment, and whether and when to provide service to other
customers.”
 Lancaster Symphony Orchestra v. National Labor Relations Board

o Issue: Are the musicians’ employees or independent contractors under section 220(2) of the
Restatement (Second) of Agency?
o Holding: 11-part test:
 1. “The extent of control” the employer had over the work (More control a person has
the more likely they are to be considered a contractor/more control an employer has the
more likely the workers are likely to be considered an employee)
 2. Whether the worker “is engaged in a distinct occupation or business.”
 3. Whether the “kind of occupation” is “usually done under the direction of the
employer or by a specialist without supervision.”
 4. The skill required in the particular occupation. (If there is a specialized skill the
worker uses the more likely they are to be an independent contractor)
 5. Whether the employer or worker “supplies the instrumentalities, tools, and the place
of work for the person doing the work”;
 6. The “length of time for which the person is employed”; (The more permanent the
relationship the more the worker looks like an employee)
 7. Whether the employer pays “by the time or by the job”;
 8. Whether the worker’s “work is a part of the regular business of the employer”;
 9. Whether the employer and worker “believe they are creating” an employer-employee
relationship; and
 10. Whether the employer “is or is not in business.”
 11. In addition, whether the employee has a “significant entrepreneurial opportunity for
gain or loss.” (The more opportunity the worker has to gain profit or experience loss
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based on the worker’s own decisions, the more likely they are to be considered a
contractor)
 Courts usually also look at the economic dependence: of workers on employers’ business – most important
factor, how costly it will be for each side if relationship falls apart; more dependent, more look like employee
 Secretary of Labor v. Lauritzen

o Issue: Are pickle farmers considered employees subject to the fair labor standards act or independent
contractors not subject to the act?
o Majority: 7 factor test
 1. Nature and alleged degree of control (More control a person has the more likely they are to
be considered a contractor/more control an employer has the more likely the workers are likely to
be considered an employee)
 2. Profit and loss (The more opportunity the worker has to gain profit or experience loss based
on the worker’s own decisions, the more likely they are to be considered a contractor)
 3. Capital investment (The more the worker has invested in equipment and other the worker is
likely to be considered an independent contractor.)
 4. Special skill (If there is a specialized skill the worker uses the more likely they are to be an
independent contractor)
 5. Permanency (The more permanent the relationship the more the worker looks like an
employee)
 6. Integral-ness (The more integral the work is to the employer’s business the more likely the
worker is to be an employee.)
 7. Economic dependence of the worker (The higher the degree of the worker on the employer
for their livelihood the more likely they are to be considered an employee)
o Easterbrook Dissent:
 Majority test is uncertain as several factors could easily come down other way
 Instead look at the purpose of the act, which is to protect people with low human capital who are
likely to be paid low.
 Problem: not clear how human capital should be measured or how much is enough.
 Glatt v. Fox Searchlight Pictures

o Issue: What is the test that should be used to assess whether an unpaid intern is in fact an
employee?
o Holding: “the proper question is whether the intern or the employer is the primary beneficiary
of the relationship. The primary beneficiary test has two salient features. First, it focuses on
what the intern receives in exchange for his work. Second, it also accords courts the flexibility to
examine the economic reality as it exists between the intern and the employer.”
o In the context of unpaid internships, we think a non‐exhaustive set of considerations should
include:
 The extent to which the intern and the employer clearly understand that there is no
expectation of compensation. Any promise of compensation, express or implied,
suggests that the intern is an employee—and vice versa.
 The extent to which the internship provides training that would be similar to that which
would be given in an educational environment, including the clinical and other hands‐
on training provided by educational institutions.
 The extent to which the internship is tied to the intern’s formal education program by
integrated coursework or the receipt of academic credit.
 The extent to which the internship accommodates the intern’s academic commitments
by corresponding to the academic calendar.
 The extent to which the internship’s duration is limited to the period in which the
internship provides the intern with beneficial learning.
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 The extent to which the intern’s work complements, rather than displaces, the work of
paid employees while providing significant educational benefits to the intern.
 The extent to which the intern and the employer understand that the internship is
conducted without entitlement to a paid job at the conclusion of the internship.
o Sidley and Austin article

 Facts – firm made 32 partners in their 60s retire or be demoted, whether these partners
are employees or true partners because ADEA suit, different levels of partners as firms
get bigger so that some have equity stake and some do not, Sidley and Austin will only
be off the hook if the partners are true owners
 Factors to consider in determining whether owners or employees
 Power in firm – decision making
 Agreement to opt out of Title VII – doesn’t matter if not really partners
 Disposition – Seventh Circuit told District Court to do discovery to determine
underlying fact of whether the workers are employees or partners
o “Improper Classifications Could Have Huge Consequences”
 5th Circuit used 5 factors
ii. The Rise and Fall of Employment at Will
 Definition (Employment at Will): an employer may terminate at any time for any reason and an
employee can quit at anytime for any reason
o Limitations through legislation and common law
 Encroachments into the Employment at Will Doctrine
o General encroachments – change the baseline employment contract for everyone
o Party Specific Contract Based Encroachments – apply only to the employment contract of a
particular employee and employer
 General Encroachments
o Wrongful discharge in violation of public policy (four standard claims.)
 (1) refusing to commit unlawful acts
 (2) exercising a statutory right
 (3) fulfilling a public obligation
 (4) whistleblowing
o Intentional infliction of emotional distress
o Covenant of good faith and fair dealing
 Monge Standard
 Fortune Standard
 Party Specific-Contract Based Encroachments
o Two main types
 Definite term provisions
 Just cause provisions
o Three methods of at will modification
 Express modification
 Implied modification
 Handbook based modification
 Four Standard Types of Wrongful Discharge Claims in Violation of Public Policy (most widely
accepted ones)
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o (1) Claims where an employee is fired for refusing to commit an unlawful act
 Gantt v. Sentry Insurance
 Issue: whether an employee who was terminated in retaliation for supporting a
co-worker’s claim of sexual harassment may state a cause of action for tortious
discharge against public policy.
 Holding: he was constructively discharged because of retaliation for refusal to
withhold information or to provide false information to the DFEH.
 Arguments P: (1) the same law that protects sexual harassment should protect
employees who courageously intervenes on behalf of a harassed colleague; (2)
employees would be discouraged to cooperate with investigations if they know
that there will be retaliation;
 Arguments D: (1) there is no statue saying that this is prohibited – uncertainty in
the workplace environment and (2) the employment is at-will, so could terminate
at any time for any reason.
o (2) Claims where an employee is fired for exercising a statutory right
 Hansen v. AOL
 Issue: whether an employee’s right to bear arms is an exception to the
employment-at will for violating public policy when the employer has a policy
restricting the rights to bear arms in its premises.
 Holding: in favor of D. Public policy does not implicate an employer’s right to
restrict firearms in a parking lot leased by the employers and to terminate at-will
employee for violating that prohibition. What was at stake here was a balancing
of legitimate interests: the interests of the employer to regulate the workplace
environment and to provide security vs. employee’s right to bear arms.
 Arguments for P: (1) their possession of firearms on the AOL parking lot was
protected by a clear and substantial public policy; (2) employer is not allowed to
impose conditions on continued employment by demanding that an employee
refrains from exercising a right
 Arguments for D: (1) there was a written policy and employees were aware, (2)
maintain a safe environment not only for employees but also for customers
o (3) Claims where an employee is fired for fulfilling a public obligation/ performing public
functions
 Courts often consider third party harms in regards to public policy
 Most courts will not find wrongful discharge for employees who perform bad acts
 Gardner v. Loomis Armored, Inc.
 Issue: whether the employee’s termination violated public policy when he was
fired because he breached an internal policy to save a woman’s life.
 Holding: the employer was forbidden to dismiss the employee because he broke
the rule when he saw a woman facing imminent life-threatening harm. There is a
public policy issue to encourage citizens t save human lives from life-threatening
situations.
 Arguments for P: (1) he acted with the intention to save someone’s life (2) society
has an interest to encourage people not to be passive under situations where
other people are facing life-threating harms;
 Arguments for D: (1) there was a written policy governing this matter and he
was aware of it; (2) P was allowed, under the policy, to call for emergencies and
(3) the policy protects his and other employee’s lives.
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o (4) Claims where an employee is fired for whistle-blowing/ reporting an employer’s
unlawful conduct
 Many states have both/or only statutes and common law of whistleblower – always
have to look at state law.
 Different protections – 3 core dimensions that statutes usually differ:
(1) Employer’s state of mind – what kind of evidence did the employee had that
there was something illegal happening and was this conduct really illegal(the
employee was right)? – analysis of the reasonableness of the employee’s
belief vs. something illegal happening. Most states require only a reasonable
belief, but some states require that the employee is accurate.
(2) Type of harm at issue – what kind of illegal conduct the employer engaged
to? Has private harms (only for the company) or third-party harms? Some
states only give protection to matters of substantial public health safety, for
instance. (NY). New Jersey – protects any violation of law, rule or regulation.
(3) Type of the discloser – to whom it was told? Only internal report -
supervisors or externally – government authorities. In the latter, this is one
way that they would have more evidence. As a lawyer, recommend both
reports.
a. NJ: requires internal first
b. California: only after makes external complaint
o Note: Weaker cases are internally and private harm;
 Bard v. Bath Iron Works Corp.
o Issue: can P state a claim for wrongful discharge in violation of public
policy for bringing a whistleblower claim?
o Holding: the conduct must be illegal, reasonable belief, either internally
or externally. Employee did not provide such evidence
 Hypos:
o Plaintiff A fired for notified government agencies that the employer is
refusing to serve female customers. A has a wrongful discharge cause of
action for whistleblowing? (1) external; (2) nature of the harm – third
party – it is affecting consumers and their access to this place, would have
to check the state law;
o Plaintiff B reports the same but only to his supervisors – looks like a
stronger case
 Even if there is a third party harm, internal complaints generally are weaker whistleblowing cases
o Note: courts can be reluctant to expand these tort claims for fear of switching from at will to just
cause hiring/firing which could turn the courts into super managers of sorts
 Intentional Infliction of Emotional distress
o Focused on the treatment an employee is entitled to

 Intentionally or recklessly distressful treatment
 Complaint is not that the person was fired but the treatment in the context of the firing
o Claims are common but their results are unpredictable
o Concerns of IIED
 First party harms
 Corrective justice/compensation
o Limits how employee can be treated in the course of employment and termination
o Wilson v. Monarch Paper Co.:
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 P was demoted after working as VP and going back to work as a janitor. Alleged he had
nervous breakdowns, and psychological harms.
 Requirements to prove IIED:
(1) intent – has to actually intentionally or recklessly to cause harm
(2) conduct - extreme and outrageous
(3) causation – show that D’s conduct caused P’s distress
(4) injury – P suffers severe emotional distress
o Issue: whether the conduct was extreme and outrageous?
o Holding: so extreme as to go beyond all bounds of decency and to be regarded
as atrocious in a civilized society. Court said
o Just because it is illegal does not mean it is “extreme and outrageous.” For
instance, just because there was age discrimination, does not mean that the
conduct was so “extreme and outrageous” as to allow P to state a claim for IIED.
o A conduct can also be bad enough to cause constructive dismissal but it may not
be “extreme and outrageous” as to cause IIED.
o The standard is high
o Arguments P: (1) to the extent that it was age-related, he was insulted because of
it, (2) the options were clear example of demotion, (3) the insults, nature and
change of the jobs, show an intention of a conduct that is very strong;
o Arguments D: (1) a separate tort, from the ADA claim - Congress established
specific punishments for it (2) he was paid, he accepted the position – to the
extent he felt emotional distress because of demotion, it was just his impression,
in fact they gave options, he could have just chose the severance package or
termination or (3) ordinary employment disputes did not rise to the level of
severe emotional distress.
Note: the definition of “outrageous” is relative and many cases are decided by jury
so they are usually hard to predict. Open to jury’s subjective view about what it is. –
how the jury will come down.
Note 2: Putting together wrongful discharge for violation of public policy and IIED –
distinction: some cases P seem to bring as kind of a backdoor.
Hypo: manager of a restaurant that is convinced that one of the waitress is stealing
money. Calls them all and tells that until someone confesses, he is going to hire
people. Fires one. Could she file a claim for wrongful discharge? No. Doesn’t fall in
any of the standards for wrongful discharge. No real third party harms here. What
about IIED claim as a distinct claim not a backdoor? Not good management
technique – arbitrary – she is the one being harmed.
IIED – challenge is not to the fact of being fired. She claims that the manner in which
the termination occurred was illegal. The underlying rational is a corrective justice –
compensate the injured for the wrong conduct – the underlying rational in wrongful
discharge was more focused on the harms to third parties. Always distinguish them
to the judge.
o Bodewig v. K-Mart: employee stripped searched in front of customer and supervised after incident after
customer’s twenty went missing although it turns out the money was never actually missing. The
behavior of K-Mart could have been found to be a reckless disregard which could satisfy intent and the
behavior of the customer could have been found to be intentional infliction.
 Issue: whether the court erred in granting summary judgment. What would a
reasonable jury think?
 Standard: 2 different standards for IIED claims
 Special relationship (landlord and tenant, employee/employer): the standard is
usually lower: still needs to show outrageous conduct, but it is enough to have a
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reckless disregard, as opposed to intent. Outrageous behavior plus reckless
disregard.
 No special relationship: outrageous conduct and a purpose/ intent to cause harm
 Reasoning:
o When there is a special relationship there is more knowledge of what is
likely to cause emotional distress so a higher duty to avoid such conduct
o Power dynamic issues  harder to refuse requests, stop the harm, as
opposed to someone you jest met at the street
 Courts differ on whether employee/employer is a special relationship
 In sum, if there is no special relationship, there must be intent to cause distress
o Wilson v. Monarch: Plaintiff (sixty-year-old VP) was demoted to an entry level supervisor position with
menial and demeaning duties, including sweeping and cleaning. The treatment caused the plaintiff to be
involuntarily hospitalized with a psychotic manic episode. IIED claim upheld.
 Restatement of Torts: always lower burden for no special relationship. Many courts follow the
Restatement standard: (1) no special relationship – extreme and outrageous behavior that D
acted with intention or reckleness disregard; (2) with special relationship – lower the standard of
conduct for extreme and outrageous behavior.
Note: what standard to use?
 Good Faith Firings
o Some jurisdictions read an implicit covenant of good faith and fair dealings into employment
contracts
 Only recognized in a minority of states
 Parties don’t have to negotiate for the implied covenant; baseline that's read into the
contract by the court
 All of the employment contracts, does not have to be explicit
o Whether one sues in tort or contract can effect the remedies given – look at the differences
when you want to make a claim
 Tort or contract – as a general matter they are treated as contract claims
 Can recover lost wages, etc. and future earnings (if not too speculative)
 Tort only
 Can recover damage for pain and suffering, mental distress, or other
 Punitive damages
 Breach of good faith firings are most often contract
o How to interpret good faith
 How far should we intrude on an employer/employee relationship?
 Broader – the more the courts interferes in the contract
 Fortune v. National Cash Register: when one party acts so as to deprive the other party
of the benefit (earned benefit or benefit otherwise entitled to) of the contract good faith is
violated. He was an at-will employee but he was entitled to bonus. There was no breach
of contract here! – argued that the way he was mistreated, the company was being
unfairly opportunistic, he was demoted so that the company would avoid paying it.
 Issue: does Massachusetts recognizes a covenant of good faith and fair dealing in
the employment agreements? If so, is there a breach in this case?
 Holding: there isn’t necessarily in all the employment agreements, but in this
case they would analyze it.
 He did not have a case for violation of public policy – no third party harms, not
as direct when talking about good faith and fair dealing, is more individual
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 Looks like a tort claim – to the extent that it is trying to avoid opportunism from
the employer looks like a contract claim to the exent that it is filling terms that
the parties want to be there;
 Benefit is usually directly pay or close to pay (days off, health insurance benefits)
that is clearly monetizable
 Defines “bad faith”: when one party acts to deprive the other person from taking
advantage of the agreement. – narrower definition
 Monge Court: An employer breaches covenant if it fires an at will employee motivated
by malice or bad faith (only need to show bad faith) – prohibits employers from acting
with malice or bad faith - looks for evidence of bad faith
 Can become a jury question: what is the motivation: malice or business?
o Hypos:
(1) Supervisor fires nurse for not following order never given,
supervisor later alters duty sheet to insert fictitious assignment
 Fortune – no breach of contract because no denial of
something bargained for – no depriving of a benefit that
was bargained;
 Monge – it is evidence for bad faith only
(2) Employee has major surgery, takes sick leave accrued, fired
while on leave so doesn’t have to pay sick leave
 Monge – broader, just looks if the employee acted with bad
faith or malice. Yes, looks like bad faith;
 Fortune – breach because sick leave is part of the bargain,
she was deprived of this;
(3) Employer pays all sick leave but fires because anticipates
future absences
 Monge – yes, it was an act of bad faith
 Fortune – no breach because she got her part of the bargain
o Why read a good faith clause?

 Fairness to employee
 Control and moderate the treatment workers receive in the workplace
 Recognition of employee vulnerabilities
 Establish a baseline treatment expected
 Impose a standard conduct
 Gap filler: parties would have included this in the contract had they thought of it
 Statutory Changes to the At-Will Contracts
o Montana: only state that requires good cause – employees cannot be fired for any reason, good
cause is reasonable job-related grounds for dismissal based on failure to perform job activities.
o Trade-off: employees lost the right to bring wrongful discharge claims (tort), lost some freedom
to discharge actions, but received protection from tort claims for wrongful discharge, pain and
damages.
 Marcy v. Delta Airlines: she was sick but she forgot to adjust the time records, she won for
salary for that period. There was an investigation, she has the opportunity to correct, but
she did not correct it.
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 Issue: what are the legitimate grounds in which an employer can terminate an
employee under the WDA? Can the employer fire someone when acting in good
faith for a reason that, if true would be a good cause, but it was a mistake?
 P arguments: There is no allegation of bad faith, just that they were wrong about
the facts.
 D arguments: as long as they are in good faith, should be admitted. Even if there
was a mistake by the end of the day, they reasonably believed she intended to
manipulate it.
 Holding: Montana understands that the employer actually has to be right.
Employer will be liable if there was a mistaken interpretation of the facts.
o Just cause requirement - different interpretations from courts:

 (1) subjective good faith – just the believe (acting in good faith) that employee did
something that justifies termination; No investigation needed
 (2) reasonable good faith requirement – not only a good faith, but actually did an
investigation – requires reasonable efforts; Investigation required
 (3) objective good cause requirement – employer has to be actually right in his belief that
the employee engaged in a conduct that justifies the termination. Dismissible offense
must have occurred.
 It is the P’s burden in all of these cases
 Express Modification of At-Will Contracts
o Overcomes the implied at will contract presumption – this is the best way to avoid that
presumption
o Definite Term Contract

 The employee is hired by a definite term. Limits the time period in which the employer
can be fired
 (if courts read expectation language they will often hold it is not a definite term contract)
 Both parties agree on a length of time for employment
 Gordon v. Matthew Bender & Co.: his employment agreement did not have a definite term
provision, however, he received a letter that if he meets his goals, he would be restored
to the same statues of sales represented. He was then fired, but claimed that the letter
was giving him a guarantee of continued employment. He sued for breach of contract –
by firing even though he exceeded the requirement in the letter. He wants to be restored.
 Arguments P: His at-will employment was modified by the company’s policy.
Only terminated if he was not performing in a satisfactory/acceptable manner.
Argue that it is not a vague standard, and argue that he did work in a satisfiable
way. This is different from a standard satisfaction clause. Sometimes employers
may be encouraged to include a vague language, because the employee may
believe that they have it a guarantee of employment but then they just don’t have
it.
 Argument D: it is still an at-will employment, there is not enough to modify it,
what he alleges is just too vague to modify it;
 Holding: in favor of D. it is not enough. It is too vague. There was no express
language of good cause - it is an objective standard. In this case, “acceptable
performance” is a subjective standard.
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 “You will have a job as long as you perform satisfying services . . .” – satisfactory
clauses – usually are interpreted as not concrete enough to modify at-will
employment.
 Hypo 1: The company agrees to keep him for 10 years – company fires in 3 years –
alleged breach of contract – yes
 Hypo 2: what if you say that the reason she is being dismissed is because she stole it –
 Arguments P: it was a definite term contract, so she was entitled to it.
 Arguments D: acting in a way that is a breach of fiduciary duty. Argue that just
cause is kind of “implicit” in any definite term contract. There has to be some
check on the employee, would encourage bad behavior.
Definite Term Just cause

Binds both employer and employee. This Binds only the employer. Limits the reasons
usually happens in teacher contracts, will why the employer can terminate an
be held and pay damages to get a teacher to employee
replace in a short notice
Give employees greater protection from Only misconduct, severe fault or economic
termination. When there is an implied just turndown
cause provision in a definite term
agreement. It tends to be broader and thus
give more protection. Misconduct,
incompetence or fault. Does not allow
economic turndown
Burden of proof is on the employer to show Burden of proof is on the employee to show
just cause. Just cause is an affirmative no just cause
defense by the employer
Hypos – when courts are willing to find that parties entered into a definite term agreement?
• Plaintiff was hired under a written employment contract that said: “The terms of this
agreement shall be from January 3, 1978, for a period of one year, and shall continue from
year to year, thereafter, unless terminated pursuant to paragraph 8, infra.
Paragraph 8 said: “This written agreement shall be terminable immediately upon the date of
mailing of written notice by either party to either party.”
 No modification to employment at-will – if there is modification, then it should
be clear. The baseline is still employment at-will
• An employee received a letter confirming the offer of her employment. The letter stated:
“On or about October 31 you will be assigned to our Ecuador Highway Maintenance
Technical Assistance Project in the capacity of Highway Maintenance Equipment Engineer
for a period of 28 months.
• It is a definite term agreement.
o Just Cause
 Scribner v. WorldCom Inc: employee was entitled to stock options if he was not
terminated with cause. The employer was considering that “with cause” comprises his
dismissal to facilitate the sale of his section. The issue was whether the court could give
another meaning to the work “with cause” without specifying it.
 Just cause usually is interpreted in a broader definition, including (1) incompetent
misconduct, (2) incompetence or fault, or (3) economic downturn that makes
employee’s service no longer necessary.
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 Both parties agree the employee can only be fired for just cause
 Implied right to fire for just cause in definite term contracts (otherwise hazard of
employees not working for lack of incentive)
 Four components for satisfactory work
 (1) regular attendance
 (2) obedience to reasonable work rules
 (3) a reasonable quality and quantity of work
 (4) avoidance of conduct which would interfere with ability to carry on the
business effectively
o Promissory estoppel: a promise which the promisor should reasonably expect to induce action
or forbearance on the part of the promisee and which does induce such action or forbearance is
binding if injustice can be avoided only by enforcement of the promise.
 Elements of promissory estoppel
 A promise
 On which the plaintiff’s reliance is reasonably expected by the defendant
 And the plaintiff does in fact rely
 To their detriment
 Grouse v. Group Health Plan: The plaintiff had a right to assume he would be given a
good faith opportunity to perform his duties to the satisfaction of the respondent once
he was on the job.
 Remedy is not so much what he would have earned as what he lost in quitting
his job and declining other employment.
o Damages for lost opportunity (reliance damages – place they would have
been in if they had not taken action in reliance on the promise)
 Why promissory estoppel?
o Nothing concrete or definite enough for them to be a breach of contract
when one side repudiates
o Illusory promises – not concrete or definite because it is a contract that
gives right to an employment at-will – what would be the breach of
contract? Terminating? No. No breach of contract here.
o So no breach of contract claim
o What about after the employer assumes the position? Some courts say
that the employee cannot be terminated for a reasonable period of time
after he is admitted. There is no definition/limit to that period of time
though. Where to draw the line?
o Argument for D: what if he assumes, then is terminated? P would have
“more rights” than a regular at-will employee? This is the main issue –
how long there is an obligation to maintain the employee? Recouping
costs - The longer you are able to work, the more reliance will show.
 Damages for promissory estoppel: what would be the damages that Grouse is entitled
to?
 Hypos:
o Assume Grouse’s salary at Richter’s was $7/hour.
o Grouse’s promised salary at Group Health was $10/hour.
o After Group Health rescinds the offer Grouse is able to find a new job at
$6/hour.
 If this was a breach of contracts claim (which is not), he would be
entitled to the benefit of the bargain, which would be the
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$10/hour, what was promised to him; Expectation Damages = 10-
6, that’s what he would be entitled to get but-for the breach.
 In this case, they got him to quit his original job, so the harm is
inducing the reliance and breaching this promise. So, in a
promissory estoppel case, he would be entitled to reliance
damages = 7-6. The difference in what he would have win if he
had not resigned.
 The remaining issue is how long?
o Modification of an At-Will Contract:

 need both implied promise and consideration for modification
 Veno v. Meredith: man fired contends that statements made by his boss about wanting to
retire together constitute modification and that he moved and turned down other job
offers constituting consideration.
 Modification of an at-will contract requires a clear statement.
o Statements are too aspirational.
 The court here is requiring additional consideration from the employee to the
employer, other than just the normal work.
 No additional consideration. Moving and turning down job offers are costs that
could be incurred for any job and are not sufficient for additional consideration.
 How to reconcile with Grouse?
o Difference in vulnerability (Grouse was out reliance cost but Veno had
already recouped reasonable expectations through the length of
employment)
o It has to do with the duration, Grouse has not given a chance to work,
whereas Veno had 8 years.
 Pugh v. See’s Candies, Inc: implied just cause – president:” if you do everything right,
will not be terminated”, there is a practice of not terminating employees without just
cause; points to the duration of employment and lack of criticism.
 Factors of implied just cause:
o Duration of employment
o Lack of direct criticism of work
o Commendations and promotions received
o Assurances by See’s former president
o Employers acknowledged a practice of not terminating employees except
for just cause
 Court thinks the fact that the employee continued to work is sufficient
consideration – unlike in Veno, the court said that there is no need for additional
consideration in order to show a prima facie of wrongful discharge.
 Arguments for P: implied modification on the contract – positive reviews and
long duration of employment gave rise to it (make it a contract case –
automatically modified) and fairness – it would be unfair after so many years to
terminate the employment;
o Spectrum of protection/vulnerability – employees seeking protection for arbitrary – more
skeptical about at-will employment –
 Grouse – give protection to employees at start of career because of vulnerability – they
have more protection
 Pugh – added vulnerability at the end of their work life
12

 Veno – sense that employees in the middle of their work life need less protection –
courts are less likely to give the protection of at-will employment – he had to give
additional consideration.
o Other Protections
 Common law or legislation
 Covenant of good faith adds protection after someone has been on the job for a certain
amount of time
 Think about whether they are good contract cases, public policies or whether there are
better ways for courts to that other than contract claims? Modifying everything with a
just cause provision, anti-discrimination provisions like the ADA, does not protects from
arbitration, but gives some kind of protection from termination.
 Extent to which courts are treating as contract cases or not
 Employment Manual Contractual Rights

 (1) Most jurisdictions recognize contract terms in employment manuals/handbooks, (2) once an
employer has established it, how to change? (3) how can the employer protect itself from establishing
binding obligations?
o Woolley v. Hoffmann-La Roche: an employee manual can be a binding asset absent a clear and
prominent disclaimer. He sued for breach of contract on the grounds that the terms of the
employment manual modified the employment at-will, to being for cause.
 Issue: can provisions in employment handbooks be binding so as to modify an
employment at-will?
 Holding: in light of the reasonable expectations of the employees, they can be binding,
unless a disclaimer.
 Focus on what employee expectations are when they receive the handbook
 Do not need to show actual employee reliance on manual – just reasonable expectation
of reliance
 Manuals become binding as soon as being distributed
 Arguments P: by listing it, employer is saying that this is an exclusive list of the types of
termination, they are limiting it
 Arguments D: still employment at-will, they can be fired by any reason
 Are courts following contract principles? Breach of contract claims elements: (1) usually
have to show offer and acceptance, (2) consideration, and (3) detriment to the injured
party.
 Offer: the employment manual is the offer – what were the reasonable.
expectations? Was it reasonable to think that they had something to rely on? In
this case, it was reasonable for employees to believe that.
 Acceptance: continued working
 Consideration: continued employment is enough because while it is true that it is
sort of vague, the employer is the one issuing so they should be interpret against
the employer. Not looking for additional consideration. (In contrast with Veno –
has to give something back). Not contesting and staying at work, should show
consideration, so no additional consideration should be required.
o Unilateral or bilateral contracts? If you are coming to work everyday,
each new day is a broad new contract, however, you can see it only as a
modification of an existing contract. – If the employer, say that it is
unilateral and they can change it at any time
o Bilateral: a promise in exchange of a promise
13

 Reliance: they relied in the promise and refused to resign, the court can also
presume reliance, court sort of uses a market theory – just that they were relying
on the general sense of market. Does not matter whether the employee actually
read or not, reliance is presumed to every employee – there is this general sense –
make the employees be more specializes, skill training because they think they
ca. Mass distribution – there is no room for negotiation, usually.
 Courts usually look at the language from the handbook to see if it binding (caused
reasonable expectation)
 Hypos:
o "At the end of 90 calendar days since employment the employee becomes
a permanent employee and termination contemplated by the hospital
cannot occur without proper notice and investigation."
Permanent employees "are never dismissed without prior written
admonitions and/or an investigation that has been properly
documented."
"Three warning notices within a twelve month period are required before
an employee is dismissed, except in the case of immediate dismissal."
 Seems contractual binding obligation – would create expectations.
The court did hold that it modified the employment at-will in this
case.
o “The relationship of the company with its employees is firmly based on
the foundation of fair play and just and equitable dealings....”
 Seems more vague.
 If the employer does not want something to create a binding obligation, then just include
about a disclaimer.
Demasse v. ITT Corp.: could not unilaterally modify the contract policy and thus negate the
contractual promises made in the handbook.
Issue: once a policy becomes a term of the contract may the employer unilaterally
modify it simply by issuing a new version? Holding: no.
 Unilateral implied-in fact unilateral contract – employees did not give additional
consideration. The offer was accepted by continued employment.
 Although unilateral, cannot be changed unilaterally – employer has to give some
consideration, opportunity to bargain – maybe with a one-time bonus, for example
 The court treats this as a modification of an existing contract – unilateral
 They would have to have some notice and a chance to engage in bargain so that the
employer would be able to withdraw a right
 Practical concerns about showing lack of consent: (1) only opportunity to deny would be
resigning – unfair – there is no way to signal that does not agree unless you quit; (2)
compensation to give something back if you are withdrawing a right
 In order for a modification that takes away rights employees must be informed of the
new policy and have time to bargain
 Continued work is adequate acceptance for added rights but not if the employees are
giving something away
 Benefits are getting with employment manuals: saying that it’s a good company to work,
 Handbooks can be disclaimed at time of hiring, not post hiring if there is not additional
bargaining
 Handbooks can also contain disclaimers – incentivize people to invest in skills because
they know there is a guarantee
 There are 3 different approaches:
14

 (1) See each employment handbook as a new unilateral contract and continued
employment would be consideration;
 (2) Handbooks establish rights that cannot be diminished without meaningful
consent of the employee;
 (3) Handbook rights can be diminished provided the provision has been in effect
for a reasonable time and there was to be reasonable notice
o Reid v. Sears: a disclaimer on a job application was sufficient to prevent any kind of non-explicit
contract modification. Made clear that the employment was at-will any modifications would be
signed by the president or vice-president.
 When deciding if a disclaimer is adequate, courts look to see if its in a place where
employees should be looking for it (where is it? Is it prominent enough? How clear is it?)
 Disclaimers:
 Timing: because it was just an application, before the employment contract, then
it was not a part of the agreement. The court said it was fine to put it in the
application. As long as it is attached to the employment contract its ok.
 Not able to read: the majority said it was ok.
o Summary
 Each new handbook is a new unilateral offer accepted by continuing work
 Handbooks establish contractual rights without clear meaningful acceptance and
negotiation and independent consideration
 Reasonable time, reasonable notice of provisions can establish contractual rights
 Hypos:
o “should I be given employment either in the position applied for or any
other, now or hereafter, such employment shall be for an indefinite
period and may be terminated at any time without notice or liability for
wages or salary, except such earned at date of such termination....
***
[A]ll terms and conditions of my employment, except to the extent
covered specifically by this contract or any other valid contract between
Company and me (or someone legally acting on my behalf) shall be
determined and governed by Company's Policies and Procedures
Manual.”
 Good enough to prevent binding obligations. Courts have
interpreted in different ways – ny: Colorado – not enough
o In the event of an involuntary termination by reason of a reduction in
force for economic reasons, efforts will be made to transfer employees to
other parts of the company.
***
This manual is solely for ... guidance ... and not intended to create
any contractual right....
 Allow a jury to decide at least. The presumption is at-will. Too
vague. The court said the second part was too vague, so it did not
shield the employee. First part actually binding, but the second
was too vague.
 Court’s interpretation: has to be bigger, in bold, the location of the disclaimer is also
important, it is not only the language. Placement, size, and language. Some courts even
add another point – should employees have known that there were contractually
binding.
15

Employee Privacy and Speech Rights
o Public Sector Employees

o Speech protects come from the US Constitution
o Two-part test
 Threshold test – ask is the speech on a matter of public concern and not part of the
employees’ official job duties
 Balancing test – balance speech interests of employee against the employer interests in
managing the work place
o Private Sector Employees
o Speech and privacy rights come from state constitutions, state statutes, and state common law.
o Private employees cannot sue directly under the federal constitution
o Speech and privacy protections for private workers are weaker than those for public sector
workers
o Free Speech and Privacy Protections of Government Workers

 Distinctions:
o More speech and protection as citizens than as public employees
o Public employees are entitled to more protection than public employees
o Test for Whether Public Employee Speech is Protected

 Threshold test: was the speech on a matter of public concern?
 If yes, go to 2.
 If no, then speech is unprotected.
 Balancing test: Balancing test
o Rutan v. Republican Party: Hiring, demotions and promotions based on political affiliation or
support is an impermissible infringement on first amendment rights. It is a violation of the first
Amendment.
 Supreme Court expands Elrod and Branti by not only refusing to allow affiliation based
firings but to not allow affiliation based hiring. Protection does not extend only to
dismissals. When you are terminating, you are taking something from someone that
already has something – it is more burdensome
 Patronage based determinations violate first amendment
 Does carve out exception for certain jobs
o When the state can show the party affiliation is an appropriate
requirement for the office or for confidential or policy making positions
o Examples: democratic governor fires all advisors, should be fine. District
attorney who hires only political party – probably not policy making
position.
o Rankin v. McPherson: Speech that is a matter of public concern is protected by the first
amendment.
 Balancing test
 Was the speech on a matter of public concern? If yes, balancing test. If no, speech
is unprotected
 Balance between the interest of the employee as a citizen and interest of the state
as an employer in promoting the efficient and effective performance of the public
service it provides. (Connick-Pickering Test) - Whether the employee’s right so
speech outweighs the interests of the employer
16

o Did the speech impair discipline, moral, undermine the integrity of the
office or the mission? Does it impede the speaker’s duties, promote
disharmony?
o Was the speech a matter of public concern? Broader political question?
Newsworthy?
o If the employee’s interests are stronger they win. If employers are
stronger they win.
o In this case, it was a matter of public concern, but the interests outweigh
the employer’s interest. Even if she is an at-will employee, she cannot be
fired under violation of the 1st Amendment
o The majority said that should consider the context
o Argument D: not public concern - (1) looked like a threat to the president,
looks like an illegal speech, so how can it be protected? (2) should care
about speech valuable to the public, they know things about the
government so this is what we want to protect, (3) legitimate public value
– not in this case.
o According to Scalia (dissent), it should not even pass the first step. He
thinks that interference should not be required.
o Argument P: private conversation, context
o Majority: it outweighs because it does not seem to interfere with the
performance, others possibility to do their job, or reputation of the office.
Employee has speech interest. Her role, she was just a clerk, a low-level
employee, seems to diminish that this comment would have some
interference. Lacks evidence of interference.
o City of San Diego v. Roe: speech on a matter of public concern is speech of legitimate news
interest, legitimate interest to the community. Pornographic material with police uniforms, not
 Threshold test of legitimate public interest (news worthiness) – there has to be
general interest. – is it giving information on San Diego policy’s protocol? (review
that in other outlines)
 Federal district court had reversed it saying that it was public concern – it was
off-duty and not a matter of internal workplace. Definition: is in the negative,
everything other than internal office’s politic. If it is just an internal grievance,
the court will not interfere. This ruling was reversed.
 Argument P: why it is a matter of public concern – there is something political
about how society should be viewing sexuality. This is the client off-duty, trying
to show his private views of sexuality, and this is important to him, so it is
protected by the First Amendment.
 Argument D: for the first prong, there is no public value (no legitimate public
interest, no political view) second part it meant to harm the employer. Employers
need to control their employees, they should only be protected when talking
something particularly important, only when there is a special kind of benefit to
the public. Otherwise, the employer has the right to control the employee,
especially considering that this is employment at-will. Is there anything in the
videos that dictates he way he performs his service, for instance the way the San
Diego police approaches people, in the video?
 Supreme Court says it is not a matter of public concern
o Garcetti v. Ceballos: The first amendment does not protect a public employee for discipline based
on speech made pursuant to their official duties. He said he was retaliated because he wrote a
memo indicating that there were misrepresentations in an affidavit. The supervisors disagreed
with him. Alleges that he was terminated in violation of the First Amendment.
17

 Issue: does the first amendment protects the government employee from discipline
based on speech made pursuant to the employee’s official duties?
 Holding: not protected. They are not speaking as citizens under the Constitution when
they are talking into their duties, preforming their activities. Employers need to be able
to control their employee’s acts, without interference from the court, needs autonomy.
 Distinction: speaking as a citizen vs. speaking as an employee
 Categorical threshold test
 Restricting speech owing itself to public employees’ duties does not infringe on
their rights as citizens
 Employers should be able to control the office in regards to official duties
 Speech is protected in other ways (whistleblower protections, for example), so no
need to intervene here
o Summary
o Diverse ideas behind first amendment test
 Majority: disallow employers abusing power and prevent harm to employees
 Dissent: purpose not only to prevent a harm to public employees but to provide a benefit to
society at large by disseminating valuable information
o Concerns of the court
 Freedom of expression as an individual
 Value of information to the public
 Whether speech is as a citizen or employee
 Ensure that government was not using its power to prevent employees from depriving employees
from using their rights as citizens.
o Post Ceballos Test for Whether Public Employee Speech is Protected
 Threshold test: Was the speech on a matter of public concern and not made pursuant to
the employee’s official job duties? (turns into a 3-prong test, basically)
 Balancing Test: Balance the employee’s speech interests against the interest of the State as
employer in promoting the efficient and effective performance of the public service it provides.
 If employee’s speech interests are more weighty then speech is protected.
o Concerns about Ceballos
 The people who have the greatest knowledge about an area don’t have protection against firing for
speaking out on it (its within their job description)
 First time that Supreme Court said that speech is made pursuant to the activities, is not
protected. Also important because of the diversion.
o Hypos:
 A secretary in Ceballos’s office in the LA Country District Attorney’s Office comes
across information that leads him to believe there were serious misrepresentations in an
affidavit used to obtain a search warrant in a case the DA’s office was handling. He
writes a memo to the head DA in the office to that effect. He is fired and sues. Is the
speech entitled to any 1st Amendment protection? (Difference is that it is a secretary –
clerical activities)
 Should go to the balancing test – the secretary was not in her official duty, not
her activities.
 Ceballos, instead of writing a memo about what he believed were misrepresentations in
the affidavit used to obtain a search warrant, gives a speech before a local bar
organization in which he claims that there is widespread corruption within the LA
police department. He mentions misrepresentations in the affidavit used to get a search
warrant as one example of such corruption. Ceballos is fired and sues. Is his speech
entitled to any 1st Amendment protection?
18

 Also go to the balancing test – because it was not his official office duties, not
something that he was required to – there is legitimate public interest. Where the
speech is given matters
 A personnel director for a city school complains to the principal about racially
discriminatory hiring at the school. She is fired and sues. Is her speech entitled to 1st
Amendment protection?
 She is not speaking pursuant to her job duties
 A personnel director for a city school hears about an assassination attempt on the
president and says in the course of a larger policy conversation, “if they go for him
again, I hope they get him.” She is fired and sues. Is her speech entitled to any First
Amendment protection?
 Speaking as a citizen
 A janitor for a city school complains to the principal at the school about what she
believes is racially discriminatory hiring at the school. She is fired and sues. Is her
speech entitled to any 1st Amendment protection?
 Not his activities
 A professor of education at a public university is fired for writing an article critical of the
university’s athletic budget. The professor is fired and sues. Is the professor entitled to
any 1st Amendment protection?
 Not an article on the topic of education – not pursuant to his official job duties
o Free Speech and Privacy Protections in the Private Sector

o Private employees do not receive as much protection as employees – either internally or
externally. Can’t be protected by the First Amendment, so they need to look for other sources.
In some cases, they alleged violation of public policy for free speech.
 Curray-Cramer v. Uruline Academy: teacher in a catholic school. Protested in favor of
abortion. Fired from the school. Signed an article in favor of it. Seeks protection in Title
VII, based on sex and retaliatory protection. There was a policy/practice that
discriminated a woman for supporting abortion - she was retaliated by opposing to this
practice - Title VII comes in play. Her next claim is a pretty straightforward Tile VII
claim - she argued that male teachers also were in favor of abortion but they were not
punished – pretty standard claim
 Holding: first claim there was nothing saying that she opposed to a
practice/policy of the employer, just that she signed an article. This would
inappropriately stretch the protection. As per the second claim, the court said
that there was a constitutional problem because there would be a violation of the
employer’s doctrine (church doctrine), for the court to decide it, the court would
have to make a determination on the church’s doctrine. And this would violate
the church’s first amendment right.
o Timekeeping Systems, Inc: National Labor Review Board opinion. The plaintiff was fired
because of protected activities in violation of the National Labor Relations act which regulates
and protects union activity. He claimed reinstatement.
 Protects private employees in certain capacities even if they are non-union, not applied
to federal/state workers.
 Holding: protection comes from the NRLA does not come from the first
amendment. He received backpack and reinstatement.
 NLRA section 7 rights, protects activity before unions are formed because an union
could have been formed from that activity, thus encouraging collective bargaining:
19


“Employees shall have the right to self organization, to form, join, or assist labor
organizations, to bargain collectively through representatives of their own
choosing, and to engage in other concerted activities for the purpose of collective
bargaining or other mutual aid or protection, and shall also have the right to
refrain from any or all of such activities except to the extent that such right may
be affected by an agreement requiring membership in a labor organization as a
condition of employment as authorized in section 8(a)(3).”
o 3 requirements:
 Concerted activity – the activity has to be involving or attempting
to involve more than a single employee, and it must act on behalf
of the other employees.
 Work-related object; must be for mutual aid or protection
reasonably related to wages, hours, and other terms and
conditions of employment
 Protected activity; conduct must not be indefensible
 If unlawful, violent, etc., kicked out of the protected
category (ex: setting fire to ER’s office); some lawful
actions are also unprotected if disloyal
 Section 8: It is an unfair labor practice for an employer “to interfere with, restrain, or
coerce employees in the exercise of the rights guaranteed in section 7.”
 In this case:
 Concerted – trying to get other employees to join him
 Work-related: has to do with vacation of employees
 Protected activity: “tone” that he used, had upset the CEO,
it was not bad enough to lose the protective criteria.
o Communications are usually protected unless the
conduct is really extreme, then will lose protection
 Comparison: Public Employees (First Amendment) or Private Employee (Section 7/8)
o Public employees: (1) public concern – this was probably just internal office grievances, so no
legitimate interest to the public
o Private employees: complaining about internal accounting practices. (1) – did not address other
employees, not concerted activity
o Public employee (complaining about public accounting): (1) – public concern – it was because it
has public interest; (2) was speaking pursuant to the job duties? If so, may lose. If not then, (3)
balancing test.
o Private employee (fired for asking fellow employees whether they felt pressured to engage in
activities) – (1) – talking to co-workers, (2) whether the employees are doing in violation of the
conditions of employment
o Invasion of Privacy
o Invasion of Privacy Claims
 (1) Intentional intrusion into the seclusion or private affairs of another if that intrusion
would be highly offensive to a reasonable person
 (2) Publicizing the private affairs of another if the publication involves no legitimate
public concern and would be highly offensive to a reasonable person
 (3) Appropriating the name or likeness of another for one’s own benefit
 (4) Publicizing another in a way that puts him/her before the public in a false light
o Factors for showing invasion of privacy based on intrusion theory
20

 Intentional intrusion into an area in which the employee had a reasonable expectation of
privacy – look at objective factors, identify of the intruder, extent to which the person
had access and the means by which the intrusion occurred.
 The intrusion would be highly offensive to a reasonable person
 Hernandez v. Hillsides: hidden cameras in the office. The cameras were not actually used
to record the employees, only three times not during business hours. The employees
discovered the camera. Filed a suit for invasion of privacy, alleging a common law of
tort.
 Issue: whether they provided sufficient evidence to raise a genuine issue of
material fact regarding invasion privacy? More specifically, sufficient evidence
such as a reasonable jury could find that the intrusion was that they suffered an
intrusion to the privacy that was so intrusive that could constitute invasion of
privacy.
 Holding: a reasonable jury could not find that there was invasion of privacy –
o Reasonable expectation - lock on the door, doors were closed, so there
was reasonable expectation of privacy, seems more like a private space, as
opposed to the hallways of Northwestern, for example. There is still an
intrusion because the employees did know who had filmed, there as an
intruder object. Just the fact that they could be filmed was enough. The
invasion was the camera.
o Highly offensive – in that particular context, look at the intruder’s
motives and objectives – what happened to the particular plaintiffs?
Because it was not turned on and it was for their protection, there was a
good motive – in this case no reasonable jury could find in favor of them.
o Searches
 Two factors a plaintiff must show:
 Intentional intrusion into an area in which the employee had a reasonable
expectation of privacy.
 The intrusion would be highly offensive to a reasonable person.
 Some overlap – what is highly offensive is often tied to reasonable expectations
 Note: Jurisdictions differ on consent in intrusion
 Some find any consent valid (even under threat of termination) and therefore not
an invasion of privacy claim – choice is considered meaningful
 Others do not treat consent to search under these situations as meaningful and so
allow an invasion of privacy claim
 If the plaintiff refuses to consent to a search and is fired they have no invasion of
privacy claim though they might have a wrongful termination claim in violation
of public policy – the privacy was not really violated
o Hypos:
o Plaintiff, a secretary at an accounting firm, carries her purse to work each day.
One evening as she is leaving her office, her supervisor stops her and orders her
to dump the contents of her handbag onto a desk. An expensive bracelet was
stolen from an employee, and the supervisor is searching the bags of every
employee on the floor. Plaintiff complies with the order after being told she will
be fired if she does not obey. No search of employee purses had ever occurred
before. Plaintiff sues for invasion of privacy. Assess the strength of her claim
21

o 1 prong: there would be a reasonable expectation – her personal bag,
there has been no inspections before, she was not a suspect
o 2 prong: highly offensive – she had to dump everything, personal
belongings and the motives were not really necessary, also gender
element of who is being exposed (disparate impact). The fact that they
were inspecting everybody could be less offensive
o Arguments for D: no intrusion/invasion of privacy – as a matter of law,
cannot be highly offensive because they had a policy. It could also be said
that she consented to the search. (C.A.: not really consent if her option is
to be terminated)
o Plaintiff works as a sales clerk at a large department store. To deter employee
theft, the store requires its employees to carry vinyl see through bags while at
work. Plaintiff is required to empty her bag as part of a generalized search of all
employees in response to an allegation of theft. Plaintiff sues for invasion of
privacy. Asses the strength of her claim.
o This case would be weaker. Reasonable expectation – because you are
already walking around with something visible, easier to know that its
going to be exposed
o Suppose that the department store above, instead of requiring employees to
carry vinyl see through bags, posts work rules and signs warning that any bags,
purses or parcels may be inspected when employees leave the premises.
Plaintiff’s purse is searched as she leaves work one evening as part of a random
stop and check. Assess plaintiff’s claim for invasion of privacy.
o She still no notice that it can be searched at any time, so no reasonable
expectation. Might become visible at any time. This is what many courts
consider.
o Private Activities
o Brunner v. Al Attar: the plaintiff could not establish a claim for wrongful discharge in violation
of public policy by showing she was fired for volunteering at the AIDS foundation because it
does not fit into the recognized categories (exceptions to the at-will employment). Even If it is
true, she cannot state a cause of action. The court does want to create another exception to the
at-will doctrine
 Arguments P: nothing to do with her employment, saying that the employer wanted to
avoid paying her the health insurance, there should be a public policy protecting off-
work activities and courts should recognize that. Maybe you could push it to the “public
obligation” exception because it was something good, public
 Arguments D: wrongful discharge that Texas recognizes are very narrow, court should
not be getting involved in second-guessing employers decisions, employer should be
free to fire employees for whatever reason they want
o Personal Relationships
o Rulon-Miller v. International Business Machine Corp .: Implicit duty in California for employers to
deal with employees fairly. Finds protection for Rulon-Miller based on this! She was dating, as a
manager, a manager of a competitor. Not actually suing for wrongful discharge for violation of
public policy, but rather for breach of covenant of good faith and fair dealing. Nature of her
claim is that violated the policy. California law says that companies have to enforce their policy
in accordance with the good faith and fair dealing requirement
 IBM did not have the right to inquire into Rulon-Miller’s private life
 No evidence it could hurt business – it was not interfering in the business
 She was not party to trade secrets – she did not have access to sensitive
information that she could have passed – no conflict of interest
22

 No evidence that the performance and recognition manual had been applied to
romantic relationships
 A reasonable jury could have found that there was no conflict of interest
 Generally, courts are reluctant to question employer’s decisions on these kinds of issues
and there is no general public policy interest in allowing employees to date anyone - In
most cases, employees fired for dating other people do not have success
 It would be more difficult to bring this case as a violation of public policy – exception to
the at-will employment – difficult to fit into one of the four prongs
o Chambers v. Omaha Girls Club: dismissed because she was single and pregnant. Violation of their
policy. Related to the services they render. Non-profit organization to prevent teenage
pregnancy. Encouraged very close relationship with employees. Her termination is a
discrimination because of sex and race – both disparate impact and disparate treatment. Title
VII. Focus on the questions of Chambers’ claim
 Disparate impact: it was related to business necessity
 Disparate treatment: not able to prove that there was race discrimination, nor intent
 Holding; even if its is discrimination, is it a BFOQ? Yes. The employer can win the case if
showed that it was necessary to preserve the essence of the business. Employer’s interest
were deemed important enough
 Generally, even states that have protections to off-duty activities, do not protect dating.
Some states, for example protect employees who smoke cigarettes.
o Testing Employees
o Drug Testing
 Drug testing by employers is very common
 Public sector challenges
 4th amendment challenges of unreasonable searches and seizures
 Balancing test
o government employers must have compelling interest that outweighs
employee privacy interest
 National Treasury Employees Union v. Von Raab
o Supreme Court upheld practice of Treasury of suspicion less drug testing.
3 criteria: (1) involved in drugs handling, (2) fire arms and (3) classified
materials, were subjected to the test if they apply for promotion to these
positions. Issue: whether there is a violation of the Fourth Amendment.
o Holding: they did constitute a search. But it was not unreasonable. The
test for it is balancing test – interest of the Government in engaging in a
search v. employee’s right of privacy. The public interest outweighs the
employee’s right to privacy. With regard to the third category, the court
was not sure whether there was enough evidence regarding the materials
that they had access.
 Argument D: it is reasonable – no individualized suspicion, there
is a public policy reason, it is necessary for the position. Public
interest is compelling. Privacy intrusion is not so great, they have
notice and the person is at the other side of the door
 Argument P: not really needed, there is not really a drug
problem, it is also an ineffective way, the invasion of privacy is
significant
o Not okay to test just anyone
o Postal Service
 Private Sector – cannot sue under the Fourth Amendment
 Common law privacy claims – harder for plaintiffs to win
23

o Some tests focus on process
 Way to obtain sample invades privacy too much
o Over-inclusiveness of results
 Employers get too much information from the test unrelated to
drug use
 As a general rule, these common law claims are not usually successful
 Shift to statutory regulation of drug testing
o Legislature imposes restriction on when and how employers can hold
drug testing
 In general, this is weak
 Legislation generally immunizes employer if they follow statute
 Does not prevent drug testing
 Sims v. NCI holding Corporation: Statute protects employee from liability for a false
positive as long as the employer complied with notice.
 Oral confirmation was incomplete and the months later written confirmation was
too late to comply. The problem was that he did not get notice on the results in a
timely manner, so there was a violation of the Iowa statute.
 However, SIMS was not substantially harmed because he would have been fired
anyway so there is no wrongful termination. NCI was allowed to fire as a result
of the positive drug test. However, because NCI violated the Iowa statute caused
Sims to sue and therefore he gets attorney fees.
 Entitled to procedures being enforced. Not entitled to job.
 Issues raised by drug testing:
 Many state laws make it explicit that an employee can be fired for refusing to
take test
 If he consents, can be denied on the grounds that he consented
o Some states allow consent and still file a privacy claim
o Other state allow refusal, but a claim for violation of public policy
o Shield the employer from liability (trade-off)
 Additionally, these statutes prevent cause of action if employer follows rules

 Some states have specific rules on how tests may be performed (how to get the
procedure)
 Some require reasonable suspicion – prohibit random tests
 Others permit suspicion less testing – just random tests
o Honesty and Personality Tests

 In the 1980s use of polygraph tests became widespread
 Legislation was passed to bar polygraph testing (exempted public employers,
drug companies, and private employer’s who had ongoing investigations for
economic loss or theft) Concerns about privacy – Congress passed the Act –
prohibited employers from requiring a polygraph test, subject to some
exceptions (pinpoint the exceptions in the book)
 Honesty and personality test then became possible
 Greenawalt v. Indiana Department of Corrections: plaintiff was subjected to a
psychological examination. Consent to do is and sues for violation of the Forth
Amendment, alleging that there was an unreasonable search. Court said that there was
no unreasonable search. It usually requires some sort of physical contact like a blood
exam for testing alcohol, for example. Also, there was a public policy concern that the
24

police, for instance, would need warrants every time they ask someone about
something. There are other remedies – state law, IIED, for example.
 The way these tests are used nowadays, its usually applied to all employees in a
pre-entry level, by phone or pencil test. Permitted as long as they don’t intrude
the employee’s privacy in sensitive matters such as race, sex, religion, politics
and as long as they don’t have a disparate impact based on race or test.
 Polygraph and genetic – off the table
 2008 – employees were prohibited from discriminating and collecting genetic
information – definitely more personal, more invasive now.
o Defamation and Other Torts

 To create liability for defamation there must be(general requirements)
 A defamatory statement concerning another – harm reputation, lower his
standard, deter the parties to deal with thim, or has to do with the business;
 An unprivileged publication to a third party, it is enough that it is repeated to
someone else;
 Fault amounting at least to negligence on the part of the publisher; and
 Either actionability of the statement irrespective of special harm or the existence
of special harm caused by the publication
 Employees sometimes bring defamation actions when the reasons for their dismissal are
made public
 Employers can also be subject to fraud action if they give good references that are
false (ex. School district gave good reference for teacher who had been dismissed
for inappropriate behavior towards students and then assaulted a student)
 School district would not have been liable if it gave no reference at all
 Employers giving good references may be liable if they make affirmative
misrepresentations that present a foreseeable and substantial risk of physical
harm to third parties
 Today employers are very reluctant about saying anything because of
defamation suits. Many companies have established policies that don’t give
referrals
o Kadlec Medical Center v. Lakeview Anasthesia Associates – new employer
filed a suit for torts (misrepresentation and failure of duty to disclose
under Louisiana law) – said that the doctor that we were going to hire
was “excellent” and the other one just omitted information. The doctor
was actually a drug addicted and had screwed up some other cases, being
terminated for cause.
o Holding: under Louisiana law, employers did not have a duty to
disclose, however, considering that decided to talk, they had to say the
truth, not to make affirmative misrepresentations. (this is actually
standard in other jurisdictions). No duty to disclose because it would be
too burdensome on the employers to investigate everytime, and there is
also a privacy issue with the employee. LAA is liable for the affirmative
misrepresentation though.
o Arguments P: they had a duty to disclose because there was a public
policy involved – he was a doctor and there were health issues involved,
there are lives at stake,
 Defamation Privileges - protection
25

 Absolute Privilege – total bar
o Exists when the public interest in the communication occurring is
extraordinarily strong
o Cannot be overcome –complete bar of defamation claims. When it exists it
is a complete bar to a defamation claim
o Examples – Statements concerning discharge made in depositions;
statements made to unemployment bureaus
 Qualified Privilege – a little bit weaker
o Exists when the need to protect communication outweighs the
individual’s interests in her/his reputation
o Once the privilege is established the burden shifts back to the plaintiff to
show an abuse of privilege – most common by showing that the
defendant made the statement recklessly, higher level of fault – it is
actually a high bar
o Example – employer references
 Sigal Constructon Corp. v. Stanbury: statements were facts and not constitutionally
protected opinions.
 Arguments D: it was an opinion protected by the First Amendment and it was
also protected by qualified privilege
 Holding: in this case it was facts, context – what the person on the other side was
waiting for the facts, and he should have know about it
 Fact vs protected opinion - Examine:
o Context of statement
 Here, context of an interview
 Must have or should have known statements would be
interpreted as factual evaluations – what was the other party
expecting? Facts?
o Undisclosed defamatory facts
 Statement implied unsaid defamatory facts
 Big picture comment implied an inability to adequately perform
project manager position
o Verifiability of the statements
 Whether Stanbury was too detail oriented to complete the project
properly could be objectively evaluated and thus verified
 Litman abused his qualified privilege and so lost it
o Analysis limited to an office gossip situation where the recommender:
 Has conveyed information which cannot be traced to anyone with
personal knowledge of the employee whose reputation is at stake
 Has not qualified his statements by disclosing the nebulous source
of his information
 And has led the prospective employer to believe he has worked
on a project with the employee and thus has first hand
information
 The sources were informal, he could not pinpoint to anyone who
worked with that could have passed this information
Employee Duties and Promises
 Two common-law claims that establish employees have to their employers
26

o Breach of duty of loyalty
o Misappropriation of trade secrets
 Trade Secrets and Duty of Loyalty
o Breach of duty of loyalty – fiduciary duty
 Employee must act solely for the benefit of the employer – act in employer’s best interest
 Prohibits the employee from directly competing with employer, or act in a way contrary
to the employer’s interest
 Only exists during the period of employment
 Breach of Duty of Loyalty
o Jet Courier Service v. Mulei: in this case he started solicitation customers while still working.
Issue: did the lower courts erred in ruling that the did not breach his duty of loyalty by meeting
with co-workers? Did they erred in determining that he did not violate the duty loyalty by
meeting with the customers?
 Lower court: he did not have his business until he actually left. The appellate court said
that the right standard, the relevant question is whether he began to engaging in
solicitation, even if he did not begin operating his business yet. He was advertising
lower amounts to clients, illegal.
 Co-workers: lower court – he was not inducing because they were at-will employees.
Appellate court – not the right standard, the breach of duty of loyalty requires an
avoidance of trying to harm the employer. Also offering better benefits to employees, so
he crossed the line from permissible preparation to solicitation
 Crucial distinction in breach of duty between mere preparation and
solicitation/competition
 Focus is not on when Mulei actually operates business but when Mulei begins
solicitation (taking away business from Jet)
 Solicitation of clients
 Generally, under his privilege to make preparations to compete under the
termination of his employment, an employee may advise current customers that
he will be leaving his current employment.
 However, any pre-termination solicitation of those customers for a new
competing business violates an employee’s duty of loyalty.
 Solicitation of employees
 Contracts terminable at will
 The distinction between contracts terminable at will and those not
terminable at will is not dispositive in a breach of duty of loyalty
analysis
 Otherwise, would conclude the scope of an employee’s duty of
loyalty with respect to solicitation of co-employees is limited to
his duty to refrain from tortious interference with employer’s
contractual relations with the co-employees
 Factors to consider (ad hoc balancing) – solicitation standard – decide whether
there was solicitation, the employee was engaging in competition activities or
whether it was permissible preparation of his business
o Nature of the employment relationship (between the employer and the
customer and the co-workers),
o The impact or potential impact of the employee’s actions on the
employer’s operations
27

o Extent of any benefits promised or inducements made to co-workers to
obtain their services for the new competing enterprise (most important)
o No single factor is dispositive
o Solicitation does not need to be successful for breach of duty of loyalty
o Duty of Loyalty
 Duty of loyalty ends upon termination
 The fact that employer may have been breaching its contractual obligations to employee
does not change employee’s duty of loyalty
 Generally, jurisdictions permit someone to inform of an intention to work for a
competitor so long as they don’t do more to solicit business
 Vague statements (hope to see you) get closer to the line but probably don’t fall
over the line into solicitation
 Breach of duty of loyalty and trade secrets
 Reading out to former customers through client lists (client list could be
considered trade secrets)
 Obligations in regards to trade secrets carry on even after termination
 Independent contractors do not have a duty of loyalty (hair dressers)
 Enforcement of Noncompetition Clauses
 Clauses whereby employees promise not to compete against the employer if they
leave
Note: the employee is only entitled to compensation of the period in which he was not in
breach of the duty of loyalty!! Also, there could be other damages
Hypos:
 Melissa is the artistic director of a ballet company. In that capacity, she is
responsible for overseeing school instructions and giving lessons. Only school in
town. While still employed, she decides to create a new school. While off-duty
she leases a location, contacts former students to determine whether they were
interest in working, she says nothing about her plans. Does not open the school
until she leaves. Many students leave to her school and the employer sued her.
o Seems like permissible preparation. She contacted only former students,
not soliciting business away from them.
 What if she writes to current students asking them to go ther school? Then yes
 What if there is only an annuncment, just to let you know. Jurisdictions usually
say it’s ok
 Trade Secrets – after employment usually
o Criteria for trade secret

 Whether the information has independent economic value that is not readily
ascertainable to others (publically available) – not generally known, it has to be hard for
the employer to have that that information and the
 Court can’t rule as a matter of law that the information was not a trade secret on
this prong – matter for a jury
 Whether reasonable efforts were made to maintain the secrecy of the information.
28

o
Dicks v. Jensen: no evidence Dicks took measures to maintain secrecy of customer
list
 Relationship employee builds with clients is usually not considered a trade
secret
 Arguments P: it was hard to get this information, valuable
 Arguments D: was information from public records and they did not take
reasonable efforts to maintain confidentiality
 How to avoid that? Non-competition agreement, disclaimers on the
document
Note: Customers lists sometimes are protected whereas customer relationships are usually not.
Hypos:
o 2 employees leave the company had a non-compete. Take collection of business cards
from clients and solicit them. Many of them leave the firm. Business cards represents
95% of the clients. Out of 100, only 10 business cards. Former employer sues them.
o Non-compete: is an effort to keep the information secret. There was a lot of work,
they had to work with telemarketing, etc.
o In this case, the court held that it was a trade secret, the more time the employer
spent in the information, the more likely the court will find it to be a trade secret;
o A and B work for widget company, leave to start their own company. Take the
former employer, secret blueprints.
 As long as the blueprint were really secrets, then there is a trade secret
appropriation
o What if they simply recreate and make a new version? - could argue that there
was a mental memory – disagreements in courts – some courts said that
everything that they could memorize was the employee’s own property.
o Reverse engineering though its ok
 Requirements of a Covenant Not to Compete

 Courts will not enforce any kind of covenant, the scope is restricted
 California refuses to enforce covenant of non-compete.
 Requirements:
 Protectable employer interest – what is at stake for the employer? What is the
employer trying to protect?
o Trade secrets (narrow end) but most states recognize a broader spectrum
of interests (employee relationship with customers, resulting in good-will
or significant training provided to the employee)
 Supported by consideration
o Signed at the outset of employment in exchange for employment is
considered valid consideration
o Jurisdictions differ on whether continued employment alone is
consideration for signing after employment started – that was the
problem in Mulai (singed after employment started and no consideration)
 Reasonable in time, geographical area and scope
o How burdensome is the covenant on the employee?
o For time, what is the duration of the market value of the information? 1-3
years is most standard
 Must not unduly harm the public
 Both the cases are discussing the first element – “protectable interest”
29

o REM Metals Corp. v. Logan: Recouping the costs of general training or preventing
competition is insufficient to justify a noncompetition clause.
 Although the defendant received training and experience while employed by the
plaintiff which developed his skill as a repair welder of titanium castings, plaintiff did
not establish by sufficient and credible evidence “special circumstances” of such a
nature as to entitle Rem to demand enforcement upon this defendant by injunction of
this “noncompetition” clause as a “reasonable restraint.”
 Issue: is there a protectable interest in the skills of the employee? No. Employer has the
burden to show that they have protectable interest. There was not enough evidence
that the training and experience that he got at REM did not rise to the level of
protectable interest – this are the employee’s attributes, as opposed to something unique,
special or secret on the way he was trained. Nothing special that looks like a secret here.
 Must be special circumstances, otherwise the risk of future competition from the
employee falls on the employer and cannot be shifted
 No trade secrets at stake
 The training was not specific or peculiar to Rem (nothing special or unique)
Note: employers usually use non-compete covenants covenant even if they know that it is not going
to be enforced, as some sort of intimidation.
o Karpinksi v. Ingrsci: The plaintiff is entitled to an injunction barring the defendant from
practicing oral surgery in the five specified counties and to damages actually suffered by him in
the period during which the defendant conducted such a practice in Ithaca after leaving the
plaintiff’s employ. The terms of the covenant provided that he will never practice dentistry in
the five towns. The court said forever as time was fine, geography also fine, but the problem
was the scope was too broad. What was his legitimate interest? Oral surgery was too broad, did
not affect his market. It comprises dentistry and surgery.
 Severance
 The court can sever the impermissible parts of the contract from the valid and
uphold the covenant to the extent that it is reasonable
 If is just and equitable to protect the employer by injunction to the extent
necessary to accomplish the basic purpose of the contract
 Injunctive relief
 The mere inclusion in a covenant of a liquidated damages provision does not
automatically bar the grant of an injunction
 May be appropriate to grant injunction and actual damages instead of both
injunction and full amount of liquidated damages to avoid unfairness
 Courts take one of three approaches if only part of a covenant is bad
 Blue pencil rule
o Strike offending provision and keep the rest
 Reformation rule
o Rewrite the covenant for the parties to protect both parties’ interests –
cure the invalid part
 Invalidation
o Some hold the entire covenant is invalid if any part is invalid
Hypos:
 A computer programmer who has access to trade secret information. Not working anywhere in
the us that would use the same technology. She then takes a job in a competitor company.
30

o Looks like there is a protectable interest, 1 year duration is fine, what about national
scope? If the company is selling the product to the whole country, then it should be fine.
It will depend if it is a unique market.
 Same computer programmer. No access to trade secrets. Still signs an agreement. Still that will
not compete.
o The protectable interest is weaker, because there is no access to trade secrets.
 Employees work in groceries stores. Requires checkers and baggers not to work for 1 year.
Geographic provision is in the city
o Not a protectable interest
 Doctor promising not to compete. But there no other doctors around
o Public harm – public policy reasons - people are going to need access to doctors.
Sometimes this always with lawyers
 Employee Inventions
o Common law has historically distinguished between inventive employees (job duties require
them to invent) and non-inventive employees
 If an inventive employee invents a product relating to their employment during their
employment the patent is assigned to their employer – idea is she did what she was
hired to do – regardless of where and when
 Where a non-inventive employee invents using their own time and resources they are
under no duty to assign the patent rights to their employer even if it directly competes
with the employer
 If invented on work time or using employer time and resources the employer has
a shop right
o Francklyn v. Guilford Packing Co.: Court balancing employee incentive to make inventions
with employer right to recoup some of the value they have put into R&D. He was not an
inventive employee, but there was an agreement that he would work on improving the
harvester. He said that the employer could use. Employer manufactures a second harvester
design based on the design.
o Issue: whether Guilford have a shop right. Holding: Yes. The source was the authorization and
the use of the employer’s resources. Allows to use it without paying royalties.
o Issue: can transfer the shop rights? Holding: No. It is individual, so they cannot lease out rights
to third parties.
 Shop right is sort of an equitable remedy
 Shop right is exclusive to the employer (cannot be transferred)
 Broad enough to encompass manufacturing but not sale and leaseback
 Source of the shop right is the relationship between employer and employee if there is
no explicit agreement
 Difference shop right vs. owner of the patent – the owner of the patent may lease/sell it
and sue for infringement, whereas the owner of the shop right cannot. The shop right
allows the employer to use and manufacture the product. Shop right is only during
employment, employee not authorized to use after employment
 The policy behind the shop right is incentivizing the employer’s stimulation of
invention
o Contract Rights to Inventions
31

 Many employers use contracts (invention assignment contracts) rather than relying on
the common law
 Typically, require the employee whether inventive or not to assign the patent to
the company, as a condition of employment
 so long as the invention relates to the employer’s business and employees work
and is reasonable in scope it will usually be upheld
 Do more than grant a shop right; actual assignment of rights to the invention
 Typically, the employer requires assignment of all inventions. If it is unrelated to
the employer’s business or it is unreasonable, it will not be upheld by the court,
instead it will be invalid
 Hold over clause
 Assignment to the employer of inventions conceived after the employee has left
employment
o Ingersoll-Rand Co. v. Ciavatta: Holdover clauses in general can be enforceable but this specific
clause is not reasonable and even if it were Ciavatta would not be in violation. He signed an
agreement with a holdover provision. Within 1 year of termination, if the invention was
conceivable to something related to his activities
o Holding: clause is not valid, but even if it were, not enforceable
 Ciavatta’s conduct not covered by the holdover clause
 The stabilizer was not conceived of or attributable to work done during the
employment – because he wasn’t in a research and design role
 Not assigned to a think tank, not involved in R&D
 Whether the holdover clause should be enforced generally
 A clause is unreasonable if
o It extends beyond an apparent protection that the employer reasonably
requires - no trade secrets
o Prevents the inventor from seeking other employment – employee’s
interest is really strong
o Or adversely impacts the public – in Ciavatta, you could argue that public
interest in fostering new inventions
o Was not a result of any research, investments of the employer
 Reasonable if - Solari test (similar to non-compete) – weight the employee’s
interest in using general skills and knowledge vs. the employer’s interest in
protecting investments in research and development
o It protects the legitimate interests of the employer
 Employer interests are weak when:
 Information widely publicized, not trade secrets
 Technology developed over fifty years ago
 Nothing new or secret
o Imposes no undue hardship on the employee – how burdensome on the
employee?
 Employee interests are stronger
 Production of invention post firing
 Debt entered into/significant investment in product
 General knowledge, did not use any materials or capital
o If it is not injurious to the public
 Holdover clauses in general – Arguments to use
 Employers invest significant resources, both in training and capital
o Should be able to recoup some capital investment
32

o Vast majority of inventions are made by employee inventors
 Public interest in having companies invest in inventions
 Don’t want to chill research and development
 Worry about employee opportunism
 Prevents an employee from opportunely quit his job
 Employees
o Limit employees job prospects – discourages creations
o Do not assign rights to employer when it did not invent anything
o Protect their rights in their invention
 Worry about employer opportunism
 Courts engage in balancing, trying to stimulate competition
 Remember – equitable decision, so there is more discretion!
Disparate Treatment Discrimination
Title VII: Section 703
(a) It shall be an unlawful employment practice for
any employer—
(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any
individual with respect to his compensation, terms, conditions, or privileges of employment,
because of such individual’s race, color religion,
sex, or national origin;
 For more than 15 employees – for very small employers, they are likely covered by state discrimination
laws
 Disparate Treatment Claims – focused on intention discrimination, because of some individual

characteristic vs. disparate impact – facially neutral policy/practice that has discrimination effects (no
intention)
o Individual Claims of Discrimination
 Discrimination in hiring, promotion or terminations
 1. McDonnell Douglas framework
 2. Mixed Motives framework
 3. Costa
 Discrimination in the terms and conditions of employment
 sexual/racial harassment claims
o Class Action Claims of Discrimination
 Systemic Discrimination
 Employer Defenses from Liability
o 1. BFOQ Defense
o 2. Faragher Affirmative Defense
 A. Employer proves it took reasonable steps to prevent and correct the harassing
behavior, and
 B. Employer proves that the plaintiff unreasonably failed to take advantage of the
preventive or corrective opportunities provided by the employer
 Federal Employment Legislation
o Two distinct claims:

1. Disparate treatment claims
33

 Direct discrimination/ intentional / individual
 Burden on the plaintiff
2. Disparate impact claims
 Indirect discrimination/ unintentional
 Neutral practice disproportionately leave out or harm specific class
o McDonnell Douglas Corp. v. Green:

1. Plaintiff must prove, by preponderance of evidence, a prima facie case:
 Factors
o That they belong to a protected class (easy to show; everyone is a member
of a protected group – claiming distinction is because of this
characteristic) – you have to name the characteristic
o That they applied and were qualified for the position
o That despite these qualifications they were rejected
o That after the rejection the position remained open and the employer
continued to seek applicants from people with the plaintiff’s
qualifications
o Burden not very high
o Purpose is avoid some cases that clearly are not discrimination
 Rebuttable presumption of discrimination (if there is nothing in response the
case is over)
2. Burden then on the defendant to show some legitimate, nondiscriminatory reason for
the employee’s rejection
 Burden of production – don’t need to convince anyone of anything, just articulate
and present some evidence. Burden of proof is always on the P
 Legitimate just means nondiscriminatory; title VII only prohibits discriminatory
hiring decisions, does not prohibit irrational hiring/firing decisions (arbitrary
decisions still allowed)
3. After the employer satisfies burden of production, burden of proof rests with plaintiff
 Plaintiff must show but for causation – show that the 2 step is pretextual
 Plaintiff bears the ultimate burden of proof
 Court suggests possible evidence: if white employees were also engaged in the
illegal activities and were hired; how McDonnell treated Green while he did
work there; overall representation at the company and general policies about
minorities; Company reaction to Green’s legal protests
Facts Holding
1 step
st
The plaintiff sought a “The responded proved
position for which he a prima facie” case
was qualified to and the
defendant rejected and
continued to seek other
mechanics. Was a
member of a protected
class because he was
black.
34

2nd step The cause of rejection “We think that this
was the plaintiff’s suffices to discharge
participation in an petitioner’s burden of
unlawful conduct proof at this stage and to
against the defendant. meet respondent’s prima
facie case of
discrimination.”
3rd step The real reason for The case should be
rejection was race remanded for retrial.
discrimination
4.
o Texas Department of Community Affairs v. Burdine:
1. Supreme Court: plaintiff can satisfy ultimate burden of proof by either direct or indirect
evidence
 Direct: show the decision was made because of race/sex/etc. – was the but for
cause
 Indirect: disprove the legitimate reason the employer offers – knock down the
reasons
2. If the employer gives multiple reasons they can win if the jury finds just one is credible
 Employer burden is a low one
 Present legitimate, non discriminatory reason
 IF the plaintiff strikes down the proper reason
 Note: LEGITIMATE does not mean fair, only that it is not discriminatory!
 Note: Narrowed down what the employee has to attack, if he is not able to attack it, then will lose
o St. Mary’s Honor Center v. Hicks: The Supreme Court held that if the trier of facts does not
believe the stated cause, a finding for the plaintiff is permitted but not compelled. The plaintiffs
ultimate burden is always to show that race is the but for cause.
o When an employer fails to prove the legitimate, nondiscriminatory reason for termination, the
employee is not entitled to judgment as a matter of law.
1. But for causation
 Always the plaintiff’s ultimate burden
 Once the employer gives a legitimate reason they have knocked down the prima
facie case and there is no longer a presumption in favor of the plaintiff
 The plaintiff must always prove but for causation and is not entitled to a
judgment just because the jury disbelieves the stated reason of the employer.
They may be able to sway the jury that race was the but for cause by knocking
down the stated reason but they have not automatically satisfied their ultimate
burden by doing so.
o Mixed Motive Cases – different disparate treatment case

1. Variant of disparate treatment cases
 Still intentional discrimination cases
2. Applies in cases where the evidence shows both legitimate and illegitimate motives
were the basis of the employment decision
35

o Price Waterhouse v. Hopkins: gives test for the allocation of burden between the plaintiff and
defendant when the plaintiff has shown the decision was the result of permissible as well as
impermissible factors. She points to sex stereotyping points.
1. Brennan’s plurality test:
 Plaintiff’s burden: sex was a motivating factor (plaintiff does more than show a
prima facie case)
 Defendant’s burden: Def. would have made the same decision even without the
impermissible consideration (burden of proof, not production; show by the
preponderance of the evidence). Not burden of production!
 Result when def. carries its burden: no liability
2. O’Connor’s Concurrence test:
 Plaintiff’s burden: direct evidence that sex was a substantial factor
 Defendant’s burden: sufficient business reasons would have induced Def. to
have made the same decision even without the illegitimate consideration
 Result when def. carries its burden: no liability
3. Kennedy’s Dissent test:
 Plaintiff’s burden: Plaintiff must show the discriminatory factor was the but for
cause of the employment decision. Stay with the McDonnell Douglas standard.
 Defendant’s burden: null; burden of proof remains with the plaintiff
 Result when Def. carries its burden: null
o Desert Palace, Inc. v. Costa: In a mixed motive case, a plaintiff can show that the discrimination
was a motivating factor either by direct or indirect evidence. Only woman in her job, number
of sanctions, fired. Sex-discrimination she was targeted because she was a woman.
 Issue: the jury gave a mixed motive instruction. The 9th circuit said no need for
the direct evidence. The issue is whether needs to show direct evidence.
 Jurisdictions say that to use Mixed Motive, plaintiffs have to show direct
evidence. If the evidence is circumstantial, then use McDonnell.
 Direct evidence – this particular decision with this particular motive
 Evidence that allow inference – like in PwC – some courts consider direct
evidence
 Some other courts say that statements could be direct evidence
2. Can get into mixed motive as long as you can show discrimination was a motivating
factor, regardless of how you did it
 Reasoning: the language of Title VII nothing mentioned there that requires a
showing of direct evidence, so the conventional rule should be both direct and
indirect. Another argument is that there should be consistency in Title VII, so this
interpretation is more consistent (26m – 10/24)
3. Now there is a question of whether McDonnell Douglas has been eliminated
 Courts now take different approaches
o Some courts try to maintain distinction
 Rely on plaintiff’s pleading case as either single motive or mixed
motive – mixed motive not appropriate for single case, when there
is just one reason, so if it is a single-motive, then would apply
McDonnell Douglas
o Others say Costa has eliminated or replaced McDonnell Douglas – most
jurisdictions
o Disparate Treatment Framework Sum Up

1. McDonnell Douglas
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1. Plaintiff must prove a prima facie case
2. defendant has burden of production to present a legitimate nondiscriminatory
reason for its adverse employment action
 3. plaintiff bears the ultimate burden of proving that race/sex was the but for
cause of the adverse employment action
o Reinstatement, damages, back pay, among other remedies
2. Mixed Motives (post 1991 civil rights act)
 1. Plaintiff proves that race/sex was a motivating factor in the adverse
employment action (after Desert Palace no longer need to use direct evidence to
show)
 2. Defendant must prove that it would have made the same decision even
without taking the protected characteristic into account
 3. If defendant satisfies its burden of proof, plaintiff is still entitled to
declaratory relief, injunctive relief and attorney’s fees but not individual relief
(this is the main difference). The logic behind this is that just by thinking sex or
race, it was enough to justify. The logic is that they were not actually harmed
because of termination, so no individual relief, you would have been fired either
way.
o If P prefers Mixed Motive (1) P own burden is lower, not show but-for
and (2) at least going to win attorney fees as long as you get to motivating
factor. Some lawyers said that they prefer McDonnel because it gives
jurors an easy way out, pushes the jury to say yes or no, or it was but-for
or not.
o UT Southwestern Med. Ctr. v. Nasser: The mixed motive framework only applies to status
discrimination claims, not for retaliation claims. Retaliation claims must be proven by
establishing but for causation. Here there are two different claims. Both because of sex and
retaliation.
 Reasoning: there isn’t anything in Title VII saying that it would apply for
retaliation. It is a separate provision. “Because of” does not mean “but for”
causation. They said that there is a different section, different parts. Because of
the location in the statute, the Civil Rights Act did not modify the retaliation
part. As a practical matter, courts want to avoid being too easy to win retaliation
cases.
2. Two takeaways
 1. Mixed motive standard of proof is not available for retaliation claims. Must
prove but for causation.
 2. Court suggests that in standard discrimination lawsuits the mixed motive
framework should always be available. Suggests Desert Palace did collapse the
difference between mixed motive and other.
o Part of the dictia of the case
 BFOQ Defense
(e) Businesses or enterprises with personnel qualified on basis of religion, sex, or national origin;
educational institutions with personnel of particular religion
Notwithstanding any other provision of this subchapter, (1) it shall not be an unlawful employment
practice for an employer to hire and employ employees, for an employment agency to classify, or refer
for employment any individual, for a labor organization to classify its membership or to classify or
37

refer for employment any individual, or for an employer, labor organization, or joint labor
management committee controlling apprenticeship or other training or retraining programs to admit
or employ any individual in any such program, on the basis of his religion, sex, or national origin in
those certain instances where religion, sex, or national origin is a bona fide occupational qualification
reasonably necessary to the normal operation of that particular business or enterprise, and (2) it shall
not be an unlawful employment practice for a school, college, university, or other educational
institution or institution of learning to hire and employ employees of a particular religion if such
school, college, university, or other educational institution or institution of learning is, in whole or in
substantial part, owned, supported, controlled, or managed by a particular religion or by a particular
religious corporation, association, or society, or if the curriculum of such school, college, university, or
other educational institution or institution of learning is directed toward the propagation of a
particular religion.
o Bona Fide Occupational Qualification defense

1. Permits discrimination on the basis of sex, religion, or national origin if such
characteristic is a BFOQ reasonably necessary to the normal operation of the business
(note no BFOQ to race) – it will not be an unlawful practice
2. Affirmative defense to disparate treatment cases
 Used where employer specifically and formally has a policy of discrimination on
the basis of characteristic – he is not going to say we don’t discriminate,
3. There are two lines for this: (1) cases in which is a BFOQ to protect the private interest of
co-workers and customers (2) BFOQ for the employer to provide a particular kind of
sexual titillation
o Must be all out ban for BFOQ defense
1. If sex is the BFOQ any hiring of the other sex forfeits BFOQ
2. Can’t do proportional hiring based on customer preferences
3. Even if all in must then show the interest is high enough
o Difficult to find a single, coherent essence of the business definition
1. Customer defined, employer defined, shared industry meaning can all play a role
2. Decisions sometimes driven by other substantive concerns
 Equal opportunity
 Significance of the interest at stake
 Courts tend to be more willing to uphold BFOQ in cases with privacy reasons
o Courts tend to interpret very narrowly
1. Permissive towards sexual titillation (less permissive) and privacy claims (more
permissive)
2. Essence of the business is not always clear
 Other concerns often play a role
 Equal opportunity concerns
o Wilson v. Southwest Airlines Co.: Here the essence of the business is safe transport and so the
gender and sexuality of the flight attendants and ticket agents is not a BFOQ. Branding itself as
a “love” company.
1. Two-part test (typically collapsed into one: the essence of the business):
 Does the particular job under consideration require that the worker be of the
particular sex only?
 If so, is that qualification requirement reasonably necessary to the essence of
the employer’s business.
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oArguments D: essence –Title VII wants to avoid employers from
attending just to customer preference, so this is not a defense –it is an
experience – we want sexual titillation is critical to business, kind of
entertainment – our customers choose us because of what we offer – kind
of “customer-defined”
o Arguments P: you are in the business of transferring passengers safely. In
fact, sexual titillation was not really relevant – online research. If you take
off the plane, there would be no services anymore. Also, men would be
able to do the same job of transferring passengers safely
o Holding: the essence of the business is safe transport, not a BFOQ
2. Court seems to rely on shared meaning definition of essence - gets at a general social
understanding of what business of a particular type do
 What is the shared meaning for the industry?
 Not very deferential to employer (essence of specific business model) or
customer defined meaning (not really accepted)
3. Business necessity test, not a business convenience test – concerns about equal
opportunity! Who is losing jobs? Also, protection kind of a sex-free zone, keep
sexuality out of business, oversexualizing of the business world
 Catering to passenger likes is only tangential to what was “reasonably
necessary” for the business provided
 The fact that customers prefer one gender cannot justify sex discrimination
 Customer preference could be taken into account only when it is based on the
company’s inability to perform the primary function or service it offers, that is
where sex or sex appeal is itself the dominant service provided - Playboy
 Courts are usually skeptical about accepting arguments that the business is
“performance” rather than “food” in restaurants and casinos, for instance
4. The purpose of Title VII to overcome stereotyped thinking about the job abilities of the
sexes would be undermined if customer expectations, preferences, and prejudices were
allowed to determine the validity of sex discrimination in employment.
 Concern of allowing sex based preferences to infuse jobs that were not otherwise
sexualized/sex based
 Equal opportunity harm
 Over sexualizing women
o Playboy Club: BFOQ claim is successful
1. Bunnies are the cornerstone of their business
2. Playboy Club’s image requirements do allow for sex based hiring and appearance
discrimination
3. Essence of the business is selling sexual titillation – food and drinks are tangential – the
customers go there because of the “bunnies” wouldn’t be going there if it wasn’t for that
4. Shared meaning definition
 Playboy came in pre-1964 selling sex; had already became known for selling sex
o Privacy Concerns
o Backus v. Baptist Medical Center: Sex is an acceptable BFOQ for labor and delivery nurses
because it protects the patient’s constitutional right to privacy.
1. Court accepts a form of business essence that includes some form of customer
preferences for privacy – the comfort of the clients is also the essence of their business
 Distinction between privacy and other mere preferences
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 The fact that plaintiff is a health care professional does not eliminate the fact that
he is an unselected individual who is intruding on the obstetrical patient’s right
to privacy.
o Olsen v. Marriott International: Customer preference cannot be used as a proxy for privacy
concerns
o Hooters: Sex is a BFOQ for its food server positions
1. Hooters Air
 Hired both sexes for flight attendants
 But had other unique positions where sexualized young women made customers
comfortable – Hooters girls
 Tried to clearly distinguish roles
 Sexual Harassment
o Traditionally divided into two categories

1. Quid pro quo
 Those in which the plaintiff alleges sexual favors requested in exchange for
employment benefits/retention – to win have to show the nexus, that it was an
exchange
2. Hostile environment
 Plaintiff tries to show situate in which harassment created a hostile work
environment – just show an unlawful conduct
 No need for tangible employment action or detriment
3. Courts now tend to distinguish not between quid pro quo and hostile environment but
those that involve a tangible employment action and those that do not
o Meriter: SCOTUS held that hostile work environment sexual harassment did create a claim of
discrimination under title VII
1. Plaintiff must show, to be actionable:
 Conduct was severe or pervasive (focus of the cases)
 Conduct altered conditions of plaintiff’s employment and created a hostile or
abusive work environment
 Conduct was unwelcome
 And because of plaintiff’s sex
o Harris v. Forklift Systems, Inc.: As long as the environment would reasonably be perceived, and
is actually perceived by the plaintiff, to be a hostile environment the plaintiff does not need to
show a reasonable person would or that the plaintiff did actually suffer some kind of
psychological injury.
1. Plaintiff must satisfy both an objective and subjective test:
 Objective: would the conduct be pervasive and severe to alter the conditions of a
persons work environment to a reasonable person
 Subjective: was the conduct severe and pervasive to the plaintiff, that particular
person
2. Objective factors courts look at:
 Frequency of conduct
 Whether it was physically threatening or humiliating or merely an offensive
utterance
 Whether it interfered with the work experience
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3. Subjective factors
 Psychological well being is relevant but not dispositive – the plaintiff herself
considered it to be abusive
4. SCOTUS doesn’t explicitly repudiate the lower court’s reasonable woman standard but
implicitly does so by using a reasonable person standard
 Reasonable person under the circumstances would find it hostile, severe enough
to alter the conditions of employment – the bar is not actually really high – no
injury requirement unlike most torts.
 So takes into account things like race, gender, age, and disability which might be
relevant to how they see the situation and respond
 Does not need to show whether there would be a psychological injury or that
would have cause it to a reasonable person
 Policy concern (interference of job performance)– you don’t want to punish
employees who were able to work despite the harassment, maybe an incentive to
do worse your job, give employers would have justification for termination
 She wanted reinstatement or back pay can be injunctive relief, pain and
suffering, also a tort IIED claim
o Mendoza v. Borden: Normal office interactions are not sufficient to create a hostile environment
1. Factors considered in severity of the conduct:
 Frequency of the conduct
 Severity of the conduct
 Whether the conduct is physically threatening or humiliating or a mere offensive
utterance
 Whether the conduct interfered with the plaintiff’s workplace duties
2. Difficult to find clear lines – a lot of subjectivity in the description of the conduct itself,
on how the courts see the facts and evidence – a lot of room for different interpretations
o How can employers avoid liability?

1. Show that they took prompt action to correct the situation
Notes (other case):
1) Speech may in some instances be properly regulated by statutes aimed at
conduct (sexual harassment is conduct even if it encompasses speech)
2) Impingement on first amendment rights is appropriate if there is a compelling
state interest in race or sex equality
 “Because of sex” Discrimination
o In every disparate treatment claim you must show its because of the protected characteristic
o Every sexual harassment case is a disparate treatment case so the plaintiff must show the
harassment is because of sex
o Now we tend to have many cases where particular members of a group are subject to
harassment which is a harder line
o Price Waterhouse v. Hopkins Part II: “Because of” factor

1. evaluation of Hopkins relied on sex-stereotyping
2. what is sex stereotyping? SCOTUS yields two potential rationales:
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 Trait equality view:
o A form of sex stereotyping of punishing women for having traits or
attributes that would be okay if she were a man – penalizing a woman for
acting in a way that would be ok for a man
 The double bind prohibition – narrower interpretation – not all sex specific
requirements are important – but only the ones that are conflicting with the job
requirements
o Not all sex specific requirements are deemed exclusionary; just those that
conflict with the employee’s job requirements
o An employer who objects to aggressiveness in woman where that is a
necessary quality for the job puts her in an impermissible catch-22 (those
traits that conflict with the job requirements)
o Oncale v. Sundowner Offshore Services, Inc.: Same sex sexual harassment can be actionable under
title VII as long as its because of sex. This is because nothing in Title VII prevents it.
1. Before this case (pre-oncale):
 5th circuit: could not be because of sex if it is the same sex, it would be because of
some characteristic
 2nd approach: Title VII was meant to prevent abuse of power – so every time a
man is working in a male dominant environment he couldn’t show that he was a
group that was being dominated
 3rd approach: allowed only when the harassed was homosexual – motivated by
sexual desire
 4th approach: all of them were sexual in nature
2. SCOTUS: how to show harassment is because of sex
 Plaintiff could offer comparative evidence - treated individuals of one sex
different than others – THERE WERE NO WOMEN – IMPOSSIBLE TO SHOW
o If the defendant treats the other sex differently
o Show direct comparative evidence in a mixed sex workplace
 “Offer direct comparative evidence about how the alleged
harasser treated members of both sexes in a mixed-sex worlplace.”
 If the conduct evinces a general hostility to a particular sex – MAYBE MOST
LIKELY WAY TO DO IT – THE HARRESERS SEEM TO GET ALONG WITH
EACH OTHER
o If they are using sex specific and derogatory terms in a particular way
that is hostile – point to the language used
 Show that the harassment was in :such sex-specific and
derogatory terms” “as to make it clear that the harasser is
motivated by general hostility to the presence” of people of a
particular sex in the workplace
 Show that the conduct was motivated by the harassers’ sexual desire for the
plaintiff – sexual attraction
o Theory is that the harassment wouldn’t happen to the other sex –
homosexual cases, for instance
 In Oncale, show that it would not have happened with a woman, it
was the fact that he was attracted to men. Sexual in nature is not
enough, so need more than that. You can argue that it is about
sadism. Argue that the harassers were not homosexual – the logic
is not this group.
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 Show that the harasser was homosexual and the harassing
conduct was motivated by sexual attraction
Note: Notably does not mention sex stereotyping. Also, courts are usually reluctant to grant Title VII
protection on the basis of sexual orientation, thus lawyers usually try to frame it as a sex
stereotyping case
o Nichols v. Azteca Restaurant Enterprises, Inc.: harassment of man for being too feminine was
because of sex under Price Waterhouse stereotyping rationale. Referred to as “her” “she”. He
was being penalized for ways that would be ok for women but not for him – similar to the “trait
equality test”. Focusing not on sexual orientation, but in sex stereotyping. This is the EEOC
position and it may be followed in the next years by courts, but normally courts are not
following this guidance
o Oiler v. Winn Dixie Louisiana, Ins.: Discrimination against cross dressing man was not because
of sex.
1. Discriminated against for gender identity disorder not failure to act masculine enough.
Therefore, it was not discrimination “because of sex”. Hopkins never choose to be a man
 Court seems to confuse cross-dressing with gender identity disorder
o Smith v. City of Salem: discrimination against a transgender man was because of sex.
1. The trait equality version of the sex stereotyping test applies here. Smith was dismissed
because his conduct did not meet masculine standards. The discrimination would not
have occurred but for the victim’s sex. It is protected by Title VII, behaving in ways that
are not typical to men, stereotyping
2. A label such as transsexual is not fatal to such a claim.
3. Distinction with Oiler – defines trait differently
 Here its an issue of the gender based conduct – in Oiler it was the issue of the
plaintiff’s transsexualism
4. Circuits and district courts have followed Smith rather than Oiler
o Jepersen v. Harrah’s Operating Co., Inc.: termination for refusal to wear make up was not
because of sex discrimination – grooming codes
1. Tests the court applies:
 Unequal burdens test
o Are the requirements imposed on women greater than those imposed on
men? Is there more burden on women? Looks at time and money being
required of each sex. Look at the codes as a whole – both men and women
o The court finds determining the time and cost of makeup are not matters
for the court to decide. Due to the lack of evidence the court will not find
because of sex under unequal burdens.
 Also some suggestion that the court would not find an unequal
burden because the requirements mimic standard gender norms.
 Sex stereotyping test
o Also does not show that the make-up requirement is because of sex.
 No evidence that the policy was adopted to make women conform
with sex stereotyping.
 Not sex stereotyping under the double-bind because the court
does not find that the requirements would inhibit her ability to do
her job.
 Court does not adopt the trait equality standard of sex
stereotyping
2. Court seems afraid that employers won’t be allowed to have any gender-specific
uniform/grooming code
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 STOPPING POINT (GROOMING CODE) OF THE EXPANSIVE SEX
STEREOTYPING TREND
3. Currently an employee can show because of sex

 By showing it was because of sexual attraction that would not have occurred if of
the other sex
 To show hostility towards that sex
 To show treating women and men differently
 Unequal burdens test
 To show sex stereotyping
o Two types: narrow double-bind, broad trait equality
o Courts increasingly using the broad trait equality version
 Because of Race Discrimination
o Modern problem: discrimination is no longer a categorical denial but refusal to hire based on
certain traits, characteristics, associated with race
1. More difficult to determine when discrimination against certain subsets of groups are
being discriminated against
o Rogers v. American Airlines: Will not treat traits that are culturally associated with race as
being interchangeable with race for the purposes of because of race discrimination. The court
said that they are not treating it as an equivalent of race
1. Hair style is not an immutable characteristic.
 Easily changed
2. Disparate impact claim
 Hairstyle is not worn exclusively or even predominantly by black people
 Even if there was a disparate impact it would not be legally cognizable because
it's a mutable trait
3. No obligation on American to give a business reason for the policy
o Garcia v. Gloor: Will not equate traits and attributes with the protected status itself.
Discrimination based on scope of language is not he same as discrimination based on national
origin. Alleged discrimination because there was a rule forbidden employees to speak Spanish
1. Arguments D: customers uncomfortable, co-workers do not understand, and would
improve their reason
2. Holding: not race discrimination. The court does leave a window – if the English only
rule was applicable to not bi-lingual employees. Not associating the status with the race
– not immutable, employees do not have the right to speak the language that they prefer
3. The fact that the English only requirement may place a higher burden on the plaintiff
than others is not relevant.
4. Court suggests the analysis might be different if applied to non-bilingual employees. But
English-only rules are usually ok
o Fragante v. City of Honolulu: Fragante did not show that his failure to get the job was the result
of national origin discrimination. However, the court finds that discrimination on accents could
be discrimination on national origin.
1. Accent is too closely linked to national origin to separate them. The court will not allow
unfettered accent discrimination. This is why it is different from Garcia. It will be too
easy to use it as a pretext for discrimination.
 “inextricably intertwined”
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 also almost immutable – difficult to get rid of accent
2. However, communication skills are also important for employers
 Therefore, will not make accent discrimination an automatic form of national
origin discrimination
 Accents may sometimes be legitimate requirements for hiring
3. If an employer makes a hiring decision based on accents courts must take a searching
look. Employers can only make a hiring decision based on accents if they are a
legitimate and necessary requirement for the job. Accent must interfere materially
with the job performance in order for the discrimination to not violate title VII.
 Not so far as making it a BFOQ but higher standard than other traits
Note: usually it is denied (traits) but in the case of accent it is more related, kind of a middle ground
is or isn’t.
o Foster v. Dalton: The district court did not clearly error in finding that the decision to hire Barry
was based as cronyism and cronyism is not an actionable form of race discrimination.
1. The position was denied for Barry only – any applicant other than Barry regardless of
their race would have lost out.
2. Barry was hired because of cronyism or nepotism not because of race. Cronyism is not
prohibited by title VII.
 However, if there is a general practice, plaintiffs could bring a disparate
impact claim.
 Here, there is no general practice so there is no basis for a disparate impact claim.
But if it did, then there could be a disparate impact cause of action because it
would kind of maintain a some certain people and exclude others
 A large scale problem of cronyism could be used to gut title VII
Sum up:
Courts really struggling with cases that claim that traits are discrimination because of sex. General
trend is that courts are used to treat various expressions of gender as discrimination than traits of race.
 Employer Liability
o When will an employer be held liable when actionable discrimination or harassment has taken
place? –
o Faragher v. Boca Raton: There is not automatic liability in all circumstances once there is a
showing of actionable harassment.
1. The employer is strictly liable for the harassment by a supervisor unless they can prove
an affirmative defense. The employer must prove that they acted promptly to prevent
and correct to prevent harassing behavior and that the employee unreasonably failed
to take advantage of the preventive and corrective opportunities presented by the
employer.
2. The employer has an affirmative defense if they have reasonable policies and
procedures for preventing harassment and the employee failed to avail themselves to
those.
 Every employee started to have a sexual harassment policy to say that the
employee failed to take advantage of it
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 Why distinguishing supervisors? It is easier to just walk away when it’s a co-
worker. Also, the employer is giving the supervisor power so has more
responsibilities.
 In this case, the City failed to circulate the policy so, as a matter of law, they
could just say that there was no affirmative defense
o Standards for Employer Liability
Harasser  Supervisor Coworker/Customer

Nature of Harassment
Tangible Action Vicarious liability ---------------------------
Non-tangible Action Vicarious liability and Negligence
affirmative defense
o Key Questions remaining:

1. Who is a supervisor?
2. What is a tangible employment action?
o Vance v. Ball State University: An employee is a supervisor if he or she is empowered by the

employer to take tangible employment action against another employee, such as hiring, firing,
promoting, demoting, or power to significantly change benefits, and the power to reassign with
significantly different responsibilities. Coworkers are everyone else including those that may
have some day to day control over other employees, including those with day-to-day control.
Tangible actions are actions that change significantly the employment status. Court thinks
that the job description will usually define it.
1. Majority rejects the EEOC definition of supervisors (anyone who could provide
direction, who observes the day-to-day activities)
 Efficiency standard/reasoning
o Narrow, workable definition
o Clear demarcation between supervisor and coworker
o Avoid ambiguity – supervisor status should be able to be determined by
written documentation of duties
 Court also looks to Faragher and finds the real concern was the supervisor’s
ability to make economic decisions regarding the employee
o Pennsylvania State Police v. Suders: If a constructive discharge is precipitated by an official act
by a supervisor it can be found to be a tangible employment action. If it is not underlined by an
official act, then not a tangible action.
1. Some actions are clear (demotion, promotion, hiring, firing), others are not
2. Ramification of classification of tangible or not critical in two regards:
 Nature of the harassment
 Status of the harasser (definition of supervisor is one who can take a tangible
employment action)
3. Some constructive discharges are tangible, others are not.
 Without any tangible action accompanying constructive discharge it is an
intangible action and the employer can bring an affirmative defense. A
supervisor’s official act must accompany the discharge.
 If there is no official act it is not a tangible action.
4. Why?
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 An official act should put the employer on notice that they should be addressing
issue.
 Official act make the constructive discharge look more like a tangible
employment action.
 You can also have a constructive discharge caused by actions of co-workers but
the court does not want to impose strict liability based on coworker conduct. –
don’t want to treat as a tangible action
 Idea of agency is stronger, because its official duties
Hypos:
o Supervisor sexual harassment on employee. Not an official act. (Why?)
o P sexual harassed by a judge, transferred to another judge who told her life would be terrible.
The official act is a transfer.
o In Suders, the fact that she was arrested and interrogated was an official act that precipitated
the constructive discharge
Note: easier cases are like promotion, hiring, firing, whereas cases such as constructive discharge are
harder. Alternatively, could also bring IIED claims as another option.
 Disparate Treatment Pattern or Practice Causes of Action/Systemic Discrimination
o Brought by either the EEOC or a class of plaintiffs arguing that the employer engaged in a
pattern or practice of discrimination based on a trait – not just one employee, but there was a
systematic discrimination
o Important: still disparate treatment claim, so they have to show intention
1. Different hiring criteria for a protected group than everyone else
o Plaintiff must convince these decisions were made because of race or sex or other protected
characteristic
1. Statistics are main form of evidence from which the jury is permitted to infer
discriminatory motive – while not direct evidence, but it is evidence that the jury is
allowed to infer discrimination
2. Evidence also includes anecdotal evidence of discrimination in particular cases –
fosters/booster the inference of discrimination – need more than just statiscs
o Hazelwood School District v. United States: Framework for disparate treatment pattern claims
 District court: found that there was no evidence. Compared percentage of Afro-
American teacher to students, and there was nothing wrong.
 Court of Appeals: that was the wrong statistics. But they also had the wrong
statistics. They compared the total number with the percentage of Afro-
Americans in the relevant labor pool. There was legal discrimination in that time,
so there would be less qualified people, this was not being taken into
consideration. The second problem is that they just accepted the Government
data. Court of Appeals should have remanded to the district courts to make
findings. Hiring only after it became legal.
2. Burden shifting framework
 Plaintiffs must establish prima facie case showing the discrimination was the
employer’s usual hiring method
o Use statistics comparing ideal treatment of the group versus actual
treatment of the group (significant statistical imbalance)
o Find what percentage of the actual workforce are members of the
protected group.
47

o What percentage of this would you expect to see hired in the absence of
discrimination.
o Look for a gap of two or more standard deviations – statistic disparity –
show that the difference is so great that the chance of another result is less
than 5%
 What is the relevant labor pool?
o Someone who is ready willing and able to do the job and is in the relevant
geographic area
o Here the actual was 15 and the expected was 62 (when combining the
county and city in the expected labor pool – since a good portion of
Hazelwood’s teachers live in the city) – z score of -6.52
 If the prima facie case is made out the employer has a burden of production to
refute it (not a burden of persuasion, burden of production)
o Here argue we should not include St. Louis in calculus of labor pool
o Dramatically effects what the expected hires are (z score of 1.73)
o If the employer can rebut the plaintiff’s assertion that there is statistical
significance, there is no inference of discrimination and no liability
o If they cannot rebut and plaintiffs can show statistical and anecdotal
evidence of discrimination second stage
 At second stage any individual can come forward and claim discrimination.
They are then presumptively entitled to relief (back pay or hiring) unless the
employer can show they did not discriminate against this particular plaintiff.
Must show with respect to that individual it was not discrimination.
o Court will infer discriminatory motive if the statistical disparity is
significant enough (be between two to three standard deviations)
o Court’s accept employer’s stated job qualifications as given (no asking if
they should be applied just making sure they are applied equally)
1. Prima facie case:

Arguments P: 15 out of 62 expected. Expected was 60. Expected treatment: both city and
the county. What is the percentage of Afro-American in the relevant pool? Wants more
people – any of the current lawyers live in the city? There are many professors who
actually live in the city. The actual hiring v. expected – is it significant enough that raises
an inference that it is not classification evenly? In order to be significant enough, the
difference needs to be between 2/3 standard deviations. It determines the likelihood that
there are other explanations. That means less than 5% chance that this numbers
happened by chance.
2. Burden of production (not proof) to the Employer

Arguments D: present evidence that they made offers and turned down. The applicant
pool would not look at it, it is actually lower. Wasn’t the main argument, but they made
a parallel argument, they said that the relevant labor pool was not including the city
because it has its own hiring plan, they would argue that it is artificially inflated, should
be restricted to the county. Look at the county, then the labor pool is 5/7, then the Z
score. The choice of the labor pool is critical in this case.
3. Results
If the employer can rebut the statistics, then they are not liable. The case is over.
48

If there is a finding – then every individual of the protected class can come forward and
show that they were presumably entitled to relief because they were victim of systemic
disc Then the employer will have the burden to show that this employee specifically was
not discriminated – a series of mini-hearings/mini-trials. For instance, there were no
positions at that time
Note: statistics is just a first step – still need the mini-hearings

Actual v. Expected – taking the employers numbers as a given, there is no substantive
evaluation about whether the requirements are actually needed, they are not
analyzing the merits, substantive evaluation of whether the requirements are good
statement requirements, just check whether they are applying them or not
Applicant data – when is it ok?

Government lawyer: not appropriated because, they knew that there was
discrimination history, or reputation, so the concern is that it might be depressed as
compared to other companies that do not have history of discrimination. They would
be discouraged from applying. If there is evidence that they were not applying
because they were discouraged
Benefit of using the applicant data: advantage is you are really looking for people who
are interest/potentially qualified for the job, it would be more concrete
Disparate Impact Claims
(k) Burden of proof in disparate impact cases

(1) (A) An unlawful employment practice based on disparate impact is established under this
subchapter only if-
(i) a complaining party demonstrates that a respondent uses a particular employment
practice that causes a disparate impact on the basis of race, color, religion, sex, or
national origin and the respondent fails to demonstrate that the challenged practice is
job related for the position in question and consistent with business necessity; or
(ii) the complaining party makes the demonstration described in subparagraph (C) with
respect to an alternative employment practice and the respondent refuses to adopt such
alternative employment practice.
(B) (i) With respect to demonstrating that a particular employment practice causes a disparate
impact as described in subparagraph (A)(i), the complaining party shall demonstrate that each
particular challenged employment practice causes a disparate impact, except that if the
complaining party can demonstrate to the court that the elements of a respondent’s
decisionmaking process are not capable of separation for analysis, the decisionmaking
process may be analyzed as one employment practice.
(ii) If the respondent demonstrates that a specific employment practice does not cause the
disparate impact, the respondent shall not be required to demonstrate that such practice is
required by business necessity.
(C) The demonstration referred to by subparagraph (A)(ii) shall be in accordance with the law
as it existed on June 4, 1989, with respect to the concept of “alternative employment practice”.
(2) A demonstration that an employment practice is required by business necessity may not be
used as a defense against a claim of intentional discrimination under this subchapter.
(3) Notwithstanding any other provision of this subchapter, a rule barring the employment of an
individual who currently and knowingly uses or possesses a controlled substance, as defined
49

in schedules I and II of section 102(6) of the Controlled Substances Act (21 U.S.C. 802(6)),
other than the use or possession of a drug taken under the supervision of a licensed health
care professional, or any other use or possession authorized by the Controlled Substances Act
[21 U.S.C. 801 et seq.] or any other provision of Federal law, shall be considered an unlawful
employment practice under this subchapter only if such rule is adopted or applied with an
intent to discriminate because of race, color, religion, sex, or national origin.
 Facially neutral policy. The plaintiff does not need to show intent to discriminate, only that a
particular practice/hiring criteria produced a disparate impact based on a characteristic
 Disparate Impact Claims

o 1. Plaintiff proves a prima facie case
o 2. Burden of proof shifts to defendant to show the challenged practice is job related and
consistent with business necessity.
o 3. If Defendant satisfies this burden, plaintiff can still win if the plaintiff can show that there
are some other employment criteria that will serve the same legitimate business purpose but
will not have the same disparate impact.
 Potential Conflicts between DI and DT doctrines
o Ricci v. DeStefano:
“[C]ertain government actions to remedy past racial discrimination—actions that are
themselves based on race—are constitutional only where there is a ‘strong basis in
evidence’ that the remedial actions were necessary.”
 Griggs v. Duke Power: Duke power is prohibited from requiring a high school graduation and/or a
passing of intelligence tests because they are not shown to correlate with job performance and have
a disparate impact on blacks.
o Plaintiff’s prima facie case: point to a particular, facially neutral employment practice or
criteria and show a causal link between that practice or criteria and a statistically significant
disparity between the members of the protected group and the otherwise qualified labor
pool (those qualified but for that particular criteria) and the percentage of the protected
group actually hired. Have to (1) point to a facially neutral criteria, (2) a statistical significant
disparity and (3) a causal connection between the two
o Different qualified relevant labor pool: people who are qualified but for this…. Different in
systemic discrimination – took all the criteria and said are you really being fair?
 Rule of thumb: if the success rate of the protected group is less than 4/5 (four fifth)
of the success rate of the most successful group of the criteria pointed to, its likely
the plaintiff has established a prima facie case.
o The employer then has a burden of persuasion/proof (contrast to disparate treatment where
it's a burden of production) to show that the employment criteria being challenged is job
related and consistent with business necessity. It is a burden of proof on the employer
 Show that the hiring criteria/practice is actually measuring what the people will
being doing on the job and that it has better predictability about job performance
than just chance.
o If the employer is able to satisfy the burden of persuasion the plaintiff could still win if they
can show a reasonable alternative that tests as well what the employer is trying to test
without the disparate impact. – there is another hiring criteria that would serve the same
business purpose without causing a disparate impact
 In this case, they were able to show that there was a significant difference between
the test results among white and blacks
 Arguments D: show that the hiring criteria is actually job-predicted. However, in this
50
 Garcia v. Spun Steak: Non bilingual employees may be able to show a disparate impact and
establish a prima facie case but the bilingual employees cannot because they can choose to comply
with the rule or not and therefore have no legally cognizable disparate impact.
o Argument P: there is a significant disparate burden – plaintiffs are not arguing that it
excludes they are arguing that they are being denied a privilege of employment
o Holding: it is just “part of being an employee””, they were able to comply with it, just an
inconvenience. Only disparate impact when the employee cannot choose.
o There is no disparate impact if the rule is one with which the employees can choose to
comply.
o Since no prima facie case the employer doesn’t have to show that the criteria is business
related.
o Employees who cannot speak English, it would not be an immutable, so there could be
disparate impact – non-bilingual employees could have this claim
 Ricci v. DeStefano: city attempting to avoid liability under disparate impact made the decision on
the basis of race and therefore there is disparate treatment in violation of title VII. Trying to come
up with a way to give promotions, implement the test there wasn’t total discretion – some were
provided in the CBA and the city said that had to be top 3 ranked –
 Sued under disparate treatment – city said cannot be because they were acting to avoid Title VII,
they wanted to avoid liability it was made in spite of the race.
 Holding – it was made because of race but there would be an affirmative defense that would not go
further - it was disparate treatment – too many whites would be promoted
o Affirmative defense articulated
 If the employer has a strong basis of evidence that it would be liable under the
disparate impact doctrine. Unless you can prove that the test was terrible or there
was a test that was way better
 Something less than showing that the employer would actually lose
 But more than a prima facie case
 Basically must show that the test was wholly unjustified
o Majority concludes that the city didn’t present evidence that the tests were not job related
and consistent with business necessity or that there were alternative tests.
 The tests were job related and consistent with business necessity
 City did not consider alternatives
 No evidence let alone a strong basis in evidence
ADEA
 Discrimination based on age
o Concerns:
 Systemic discrimination against older workers based on stereotypes of older workers’
abilities – they wouldn’t be able to work like young people
 Concerns about opportunism – because older workers tend to be costlier to employers
there was the potential for discrimination against older workers to cut costs
o Similarities with race/sex/national origin discrimination
 Trait that cannot be changed
 Concerns about stereotypes
o Distinctions
 Discrimination seems less systemic
 More legitimate business interests than those in race and sex context
 Might be protecting people who were really well advantaged until they hit the category
51

 Effects of age discrimination are not passed down to a discrete and immutable group
(unlike race discrimination which is cyclical)
o Because of these considerations the ADEA is different from title VII in important ways and
courts interpret it slightly differently
 Disparate Treatment
o ADEA claims are analyzed under the McDonald Douglas burden of proof framework
o Plaintiff must show a prima facie case
 Show that they are of the protected age, qualified and were passed over and that the job
went to someone younger (5+ years younger for most courts)
o Employer must show legitimate, non discriminatory reason
o Plaintiff shows it was because of discrimination
o Employer affirmative defenses – difference between Title VII is that it provides more affirmative
defenses
 BFOQ
 Following the terms of a bona fide seniority system or an employee benefit plan
 Discharge was based on good cause
 Practices involving an employee in a foreign country where compliance with ADEA
would violate that country’s law
 Reasonable factor other than age
o Solon v. Gary Community School Corp: The plan does violate the ADEA because it conditions
the benefits on age. The school offered an early retirement plan 58-61. 58 would get benefits
until 62, who retires at 62 or later were not eligible, and between the window 58-61 would get
less time (until 62). Plaintiffs chose not to retire, although eligible. Issue: did the age criteria
violated the ADEA?
 Arguments D: they did not state a claim because they would have win more if they have
continued to work, they were eligible and chose not to retire, so there was no injury
 Holding: the injury was that when the teachers do decide to retire, if they are out of the
window, they won’t get any benefits
 An employer cannot discriminate on the basis of age in the benefits it offers it
employees.
 Treating people differently based on age and treating people worse as they get
older.
 In order to satisfy the ADEA the employer must provide either equal benefits or spend
equal costs on purchasing benefits on older and younger workers
 How to show that it is discriminatory? It is on its face, because there is difference in
accordance with the age, as you get older the benefits get worse. You also have to show
intention because it is disparate impact – but in this case they are going to presume
intention! So no need to show evidence
 Does that mean that they have to give the same benefits for old and young workers?
Must provide either equal benefits or pay equal costs. Under this approach there is no
discrimination if they pay the same costs for the benefits – that’s what the ADEA follows
o General Dynamics Land System v. Cline: Its not a violation of the ADEA for an employer to
treat older workers better than younger workers, favor older workers. They were treated worse
than other workers.
 Arguments P: EEOC statutory interpretation and language in the ADEA ”whichever the
result is”
52

 Holding: the whole purpose is to protect older people, as to the main language of the
state. Common sense meaning – “older age.” A single outline statement could not
change the meaning. EEOC – they are clearly wrong, don’t have to talk about it
 Any company policy is going to treat different age groups differently – could be real
problem with dramatic repercussions to hold that you can’t treat any differently once
over 40
 Court is interpreting ADEA in a way that is fundamentally different from race and sex
discrimination
 In those classifications everyone is protected
 Here the court reads the ADEA to explicitly allow discrimination against the
relatively young
 Disparate Impact Claims and the ADEA
o Specific facially neutral policy or practice that has a disparate impact on protected group.
o Smith v. City of Jackson: ADEA permits disparate impact claims

 BUT due to textual differences the scope of protection under the ADEA is less than
under title VII for disparate impact claims
 The same problem here as in Title VII – P has the burden to identify the specific
test that is causing the discrimination, which factor in the plan was causing the
discrimination
o Why narrower?
 Title VII employer would have to show the practice was job related and
consistent with business necessity, after the prima facie case
 ADEA lower standard – reasonable factor other than age, much broader
defense. So it is harder to win this case “something ... not age”
 Under title VII if able to show job related plaintiffs can still win if they show an
alternative practice. Under ADEA cannot show alternative factor
 Not third step under the ADEA – plaintiff cannot win if employer shows
reasonable factor other than age
 Civil Rights Act of 1991 returned the law to the state it had been in pre-
wartzcove (court said burden of proof never switches – employer has burden of
production; plaintiff always has burden of proof) Civil Rights did not amend the
ADEA. That changed with Meecham.
 ADEA still interpreted in accordance with wartzcove
o Burden of proof never switches from the plaintiff to the defendant
 Differences between ADEA and title VII
 ADEA -Employer burden is to show that its criterion was based on a reasonable
factor other than age
 ADEA- If employer wins at second stage, employee loses
 ADEA- burden of proof always stays with plaintiff
 Policy reasons for difference
 More legitimate reasons for age related disparate impact
o Meecham: reasonable factor is an affirmative defense so the defender has the burden of
persuasion of that defense. The burden of proof will ultimately be on the defendant, in line with
Title VII. So burden of proof is the same in both cases.
53

o Gross v. FBL: mixed motive framework does not apply in ADEA cases. They must always show
but for causation. It is a disparate treatment case. The court had given a mixed-motive
instruction and said that no direct evidence was needed. District Circuit said that direct
evidence was needed. Issue: to get the mixed motive is direct evidence needed? Is the mixed
motive analysis available? The first question is not answered.
 Mixed motive framework not available – they need to show McDonald Douglas
framework 0- burden of proof never switches, have to show but-for causation
 Issue of title VII being modified by 1991 civil rights act
o Not specific inclusion of mixed motive in ADEA
 Text of ADEA does not mention mixed motive
o Because of age language seems to suggest but for causation
Hypo: employer decides to fire employees when they have 20 years of seniority because realized that at
that point their pay was going beyond their value. They sued under disparate impact.
P: prima facie case – point to the practice – 20 years seniority then terminate, and it is a disparate
impact
D: productivity outweighs salary, so it’s a reasonable factor – saving money is usually a business
purpose, but there is no need to show business necessity. It does not matter if they had another
alternative.
Disparate treatment:
P: show that there is a group that is being substitute by a younger – McDonald Douglas – prima facie
D: legitimate nondiscriminatory reason – saving money
P: show that it was about age – was just a pretext – show but-for causation, not enough to show that
age was a motivating factor
o Summary
 Gross - Plaintiffs in ADEA cases must still follow the McDonnell-Douglas framework
 Smith – Mixed motive framework is available to employees but different
burdens/analysis than title VII
 No clear precedent yet on what is a reasonable factor other than age (something like
terminating people to keep their pensions from vesting probably isn't because its illegal
under ERISA)
 Lower standard than job related and consistent with business necessity
 Job related and not irrational or arbitrary
 Most likely also fails if its illegal for another reason
 Disparate impact under ADEA is much weaker than title VII
 Employer has the burden of proving reasonable factor other than age
 Disparate treatment - Must convince court that the employer was actually thinking
about age
 Analytically distinct – you can think of one without the other being necessary
54

Employment Law Yuracko Fall 2016 Outline

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ss-8 form = ask the IRS whether your job is an independent contractor

brief lemmerman v. a.t. Williams Oil Co.

I. Legal Boundaries of the Employment Relationship - Who is considered an employee?

 Lancaster Symphony Orchestra v. National Labor Relations Board

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 Secretary of Labor v. Lauritzen

 Glatt v. Fox Searchlight Pictures

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o Sidley and Austin article

ii. The Rise and Fall of Employment at Will

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 Intentional Infliction of Emotional distress

o Focused on the treatment an employee is entitled to

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 Good Faith Firings

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o Why read a good faith clause?

 Statutory Changes to the At-Will Contracts

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o Just cause requirement - different interpretations from courts:

 Express Modification of At-Will Contracts

o Definite Term Contract

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Definite Term Just cause

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o Modification of an At-Will Contract:

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 Employment Manual Contractual Rights

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o Public Sector Employees

o Free Speech and Privacy Protections of Government Workers

o Test for Whether Public Employee Speech is Protected

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o Free Speech and Privacy Protections in the Private Sector

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 Additionally, these statutes prevent cause of action if employer follows rules

o Honesty and Personality Tests

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o Defamation and Other Torts

 Defamation Privileges - protection

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Employee Duties and Promises

 Two common-law claims that establish employees have to their employers

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 Breach of Duty of Loyalty

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 Trade Secrets – after employment usually

o Criteria for trade secret

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 Requirements of a Covenant Not to Compete

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