Employment Relationships Should the We Fest be liable for an
employees crime? What factors would you consider? Why? 2
Slide 3
Course and Scope Employment Factors For Principal to Be Liable,
Agents Act must have occurred within the Course and Scope of
Employment. Employer Liable Employer NOT Liable Was Employees act
authorized by Employer? YesNo The Time place and purpose of act
(factually based) ?? Was act commonly performed by Employees? YesNo
Did act advance Employers interests? YesNo Did Employer furnish
instrumentality (tools)? YesNo Did Employer have reason to know
Employee would do the act? YesNo Did the act involve a serious
crime? noyes 3
Slide 4
Examples Start Job Early. Steve hires Joey to mow lawns for his
lawn mowing service and tells him not to start before 7:00 am. Joey
starts at 6:00 am and injures someone. Did Joey act within the
scope of employment. Janitor Puts Glass Shards in Wall. Apartment
manager hires a new janitor to maintain building and kids bother
him. He boss tells him to let it go and he puts glass shards in the
wall the kids climb over to get into the apartment complex in an
attempt to keep them out. Did he act within scope of employment?
The janitor singles out one kid and beats him up. Delivery Person
Robs Bank. You hire a delivery person and on the delivery persons
way to a delivery, he stops and robs a bank. 4
Slide 5
Agency Relationships Principal and Agent = Agency (most common
legal relationship) Employee/Employer Relationship
Principal/Independent Contractor Relationship Agent acts for
principal. (Employee is an agent for the principal.) Enables
principal to operate in multiple locations. 5
Slide 6
6 Fiduciary Duty. Agent Owes Fiduciary Duty to Principal:
Loyalty and Care. Duty of Loyalty and Care: an agent has a duty to
act solely for the benefit of his or her principal in all matters
directly related with the agency undertaking. When is it an Agency?
Sometimes it is not clear when an agency relationship is created
between and independent contractor and its employer (client). CASE
5.2 EBC 1, Inc. v. Goldman, Sachs & Co. (2005). Advice to a
client by underwriters on market conditions creates a fiduciary
duty. Goldman helped set price at $20 shares jumped to $85 and
closed at $75 on the first day. Goldman got kickbacks of profits
made to initial buyers. Case 5,1, Neinhard v. Salmon. Fiduciary
Duty
Slide 7
Employee vs. Independent Contractor Relationship Factors Courts
Consider: EeeI.C. CONTROL? Does the Employer exercise a great
degree of control over the details of the work? YesNo Same Line of
Business? Is the worker engaged in an occupation or business
distinct from Employer? NoYes Supervised? Is the work usually done
under Employers supervision? YesNo Employer Tools? Does Employer
provide the tools? YesNo Long Term Employment? Has the worker been
employed a long time? YesNo Paid at End? Is the worker paid at the
end of the job? NoYes Degree of Skill? Is there a great degree of
skill required? NoYes Control Key Factor What are some other
advantages of being an independent contractor? What might be some
disadvantages? 7
Slide 8
Cruise Ship Doctors Independent Contractors? Facts: Hit Head on
Cruise. Janice Sullivan slipped and hit her head on a Royal
Caribbean cruise celebrating her wedding anniversary. Doctor Failed
to Treat. The ship doctor, wearing a crew uniform, gave her
over-the-counter pain medicine but did not scan or X-ray her
despite pain over the next few days. Serious Blood Clot. When she
got home she went to the emergency room and discovered the truth.
Issue: Is Royal Caribbean Liable for the doctors negligence? Issue:
Should Royal Caribbean have to pay for the doctors negligence?
Royal Caribbean compares its practice to renting space. Different
Story - Mr. Goodwille. Pronounced dead by ships doctor. 8
Slide 9
Employer Employee Independent Contractor Facts: Graham Sells
freeware Software. Richard Graham marketed CD-ROM disks containing
compilations of shareware, freeware, and public domain
software.Graham Sells freeware Software. Richard Graham marketed
CD-ROM disks containing compilations of shareware, freeware, and
public domain software. James wrote a software program for Graham.
Larry James agreed to create a program for him in exchange for
credit on the final product. James built into the program a notice
attributing authorship and copyright to himself.James wrote a
software program for Graham. Larry James agreed to create a program
for him in exchange for credit on the final product. James built
into the program a notice attributing authorship and copyright to
himself. James wanted credit - Graham removed the notice., claiming
that the program was a work for hire and the copyright was
his.James wanted credit - Graham removed the notice., claiming that
the program was a work for hire and the copyright was his. James
sold the program to another CD-ROM publisher.James sold the program
to another CD-ROM publisher. Issue: Graham filed a suit against
James, alleging copyright infringement. WHO SHOULD WIN? Larry James
Employee v. Independent Contractor Ownership of Intellectual
Property 9
Slide 10
End-of-Chapter Question 2, p. 180 IBM working through a
licensed re-seller 10
Slide 11
There are four ways in which an agency relationship can arise:
Agency Formation By Agreement By EstoppelBy Operation of Law By
Ratification Coin sale by friend Gaffrey - Supposed Buyer Winter
Gaffreys friend Borge Coin Seller 11
Slide 12
12 Group Presentation Ethical Consideration p. 449 Group 4 On
side of hiring contract employees Group 5 On side of its not
ethical to hire contract employees
Slide 13
Agents Duties to the Principal Performance - The agent must use
reasonable diligence and skill in performing his or her duties.
Notification - The agent is required to notify the principal of all
matters that come to his or her attention concerning the subject
matter of the agency. Loyalty - The agent has a duty to act solely
for the benefit of his or her principal and not in the interest of
the agent or a third party. Obedience - The agent must follow all
lawful and clearly stated instructions of the principal. Accounting
- The agent has a duty to make available to the principal records
of all property and money received and paid out on behalf of the
principal. 13
Slide 14
Principals Duties to the Agent Compensation - Except in a
gratuitous agency relationship, the principal must pay the
agreed-on value for an agents services. Reimbursement and
indemnification - This principal must reimburse the agent for all
sums of money disbursed at the request of the principal and for all
sums of money the agent disburses for necessary expenses in the
course of reasonable performance of his or her agency duties.
Cooperation - A principal must cooperate with and assist an agent
in performing his or her duties. Safe working conditions - A
principal must provide safe working conditions for the
agent-employee. 14
Slide 15
15 Actual Authority: principal gives consent for the agent to
act for and bind the principal. Consent is express or implied.
Apparent Authority: when a third party reasonably believes the
agent has authority to act for and bind the principal. CASE 5.3
Powell v. MVE Holdings, Inc. (2001). CEO has apparent authority to
enter into contracts with former employee. - told Powell, former
president, that company would buy back his shares at same price
others got ($125/share now worth $5/share). Agent s Ability To Bind
The Principal to Contracts
Slide 16
16 End-of-Chapter Question 8, p. 182 Is Wells Fargo Guard
Service liable for unauthorized acts of its agents?
Slide 17
End-of-Chapter Question 5, p. 181 Car accident in company
vehicle 17 OShea v. Welch, p. 169. Turning into a service station
to get estimate for repair on a personal car what was the result in
this case?
Slide 18
Liability for Employees Intentional Torts and Crimes Principal
Liable if Scope of Employment. Principal liable for intentional
torts committed with the scope of employment. Principals
authorization of the tort Employee also Liable. Employee is a
tortfeasor as well. Employer Knew or Should Have Known. Employer is
liable for Employees acts which Employer knew or should have known
the Employee had a propensity to commit. Did Employee have
Employers authorization to act? To what extent were the Employers
interests advanced? Did the Employer provide the instrumentality
that caused the injury? Did the Employer have knowledge that the
Employee would perform the act? Crimes. General Rule: Agent is
liable, Principal is not, unless: Principal authorized or
participated in crime. 18 Smith v. Sears Roebuck & Co. p. 173
Sears employee used job in credit department to run credit checks
on her former husband who was behind on support payments. OShea v.
Welch, p. 169 Employee made a left hand turn to do a personal
errand while otherwise working. Is the employer liable?
Slide 19
19 Liability for Torts of Agent Liability for Torts Outside the
Scope of Employment. Respondeat superior generally only applies to
actions of employees not independent contractors.
Slide 20
Torts by Independent Contractors As a general rule, an employer
is not liable for the torts committed by the independent
contractor. This rule is riddled with many exceptions, and these
exceptions come in many forms, such as hazardous activities. Have
the exceptions become the rule? What policy interest is furthered
by imposing liability on employers for the torts of their
independent contractors? 20
Slide 21
Liability for Authorized Acts Disclosed or Partially Disclosed.
Disclosed or partially disclosed Principal is liable to 3rd party
if Agent acts within scope of authority. Agent has no liability to
3rd P for disclosed Principals non-performance. (Agent may be
liable if Principal is partially disclosed). Undisclosed Principal,
Agent is liable Principal also liable Principal can enforce
contract against the third party. 21