Agency Relationships & Corporations
Summary
TLDRThis script delves into employment law, highlighting the employment-at-will doctrine and its exceptions, such as contract theory and public policy. It explores employment contracts, whistleblower protection, and workers' compensation. The script also covers agency relationships, fiduciary duties, and the differences between employees and independent contractors. Discrimination in the workplace is addressed, including Title 7 and the process of establishing a prima facie case. The video also touches on corporate structures, officer and director responsibilities, shareholder rights, and the concept of piercing the corporate veil.
Takeaways
- 📜 The employment-at-will doctrine allows employers to hire or fire employees at their discretion, with exceptions for contract theory and public policy.
- 📝 Contract theory exceptions involve signed employment contracts that govern the relationship between employer and employee.
- 🏛 Public policy exceptions protect employees from wrongful discharge, such as whistleblower statutes that shield those who report illegal activities.
- 🤕 Workers compensation laws provide coverage for on-the-job injuries, but not for injuries sustained outside of work hours.
- 🏢 Employees act as agents of their business, with varying degrees of authority and responsibility depending on their position.
- 🤝 Agency relationships are established to enable principals to conduct multiple business operations simultaneously.
- 🔗 Fiduciaries, such as corporate officers and directors, have a duty of loyalty and trust to act in the best interests of the corporation.
- 🚫 The doctrine of respondeat superior holds employers liable for the actions of their employees within the scope of their employment.
- 👷♂️ Independent contractors are not subject to respondeat superior liability and have a different scope of control and responsibility compared to employees.
- 🚫 Discrimination in the workplace is prohibited, with Title 7 preventing discrimination based on race, color, or national origin.
- 🏢 Corporations are artificial legal entities with rights and duties, and their officers and directors have specific duties, including loyalty and obedience.
Q & A
What is the employment at-will doctrine?
-The employment at-will doctrine is a common-law principle that allows an employer to hire or fire an employee at any time, for any reason, as long as it is not illegal. However, there are exceptions to this doctrine, such as those based on contract theory and public policy.
How does contract theory serve as an exception to the employment at-will doctrine?
-An exception based on contract theory occurs when there is an employment contract signed by both parties, and the terms of the contract govern the relationship between the employer and the employee, overriding the at-will nature of the employment.
Can you provide an example of a public policy exception to the employment at-will doctrine?
-A public policy exception to the employment at-will doctrine is exemplified by whistleblower statutes or laws that protect employees who report illegal activities by their company from being fired. If a whistleblower is fired, they can sue for wrongful discharge.
What is the significance of state workers' compensation laws in the context of employment?
-State workers' compensation laws provide compensation to an injured employee if the injury occurred on the job and within the scope of their employment. These laws are designed to protect employees from financial hardship due to work-related injuries.
How are employees considered in terms of agency relationships within a business?
-Employees are considered agents of a business, given certain abilities by the principal or employer to represent the business in various instances. The extent of their agency can vary from simple tasks to complex responsibilities, depending on their position within the company.
What is the duty of loyalty that agents owe to their principals?
-The duty of loyalty is a critical fiduciary duty that agents owe to their principals, requiring them to act in the best interests of the principal and not engage in actions that could negatively impact the principal's business.
What is the doctrine of respondeat superior and how does it relate to an employer's liability for an employee's actions?
-The doctrine of respondeat superior holds an employer liable for the actions of their employees when those actions occur within the scope of employment. This means the employer is responsible for any damages caused by the employee while performing their job duties.
How does the IRS determine whether a worker is an employee or an independent contractor?
-The IRS uses the 'scope of control' test to determine if a worker is an employee or an independent contractor. This involves examining the degree of direction and control the employer has over the worker's tasks, as well as other factors like how the worker is paid and provided with tools and workspace.
What are the different types of discrimination mentioned in the script, and which one is most prevalent in the United States?
-The script mentions discrimination based on gender, age, race, color, and national origin. It specifies that age discrimination is the most prevalent form of discrimination within the United States.
What is a bona fide occupational qualification, and how can it serve as a defense against employment discrimination claims?
-A bona fide occupational qualification (BFOQ) is a legitimate reason related to the nature or context of a job that justifies certain employment criteria that might otherwise be considered discriminatory. For example, a women's clothing store might have a BFOQ for employing only female attendants to serve women customers in dressing rooms, which could serve as a defense against a discrimination claim by a male applicant.
What are the key differences between a corporation and a sole proprietorship in terms of business organization?
-A corporation is a legal entity with its own rights and duties, potentially providing shareholders with limited liability, while a sole proprietorship is the simplest form of business organization where the owner has complete control and flexibility, but also bears full personal liability for the business's debts and obligations.
Outlines
📜 Employment Law and Exceptions
The paragraph discusses the employment-at-will doctrine, which allows employers to hire or fire at their discretion. Exceptions to this doctrine include contract theory, where an employment contract governs the relationship, and public policy, exemplified by whistleblower statutes that protect individuals from wrongful discharge if they report illegal activities. Workers compensation laws are also mentioned, which provide coverage for on-the-job injuries. The paragraph further explores the roles and responsibilities of employees as agents of their businesses, highlighting the duty of loyalty that agents owe to their employers.
🤝 Agency Relationships and Duties
This section delves into agency relationships, explaining how they allow principals to conduct multiple business operations simultaneously. It distinguishes between different types of relationships such as employer-employee and corporate officer-corporation. The paragraph emphasizes the fiduciary duty of loyalty that agents have towards their principals, including the obligation to act in the best interests of the corporation. It also outlines the specific duties of agents and principals, such as performance, notification, and compensation, and discusses the doctrine of respondeat superior, which holds principals liable for the actions of their agents.
🚫 Discrimination in the Workplace
The third paragraph addresses workplace discrimination, focusing on the most prevalent forms such as gender and age discrimination. It explains how Title 7 of the Civil Rights Act prohibits discrimination based on race, color, national origin, and other characteristics. The paragraph also discusses the concept of a prima facie case of employment discrimination, which requires proving membership in a protected class and filing a complaint with the Equal Employment Opportunity Commission (EEOC). Additionally, it touches on bona fide occupational qualifications as a defense against discrimination claims.
🏢 Corporations and Legal Structures
This section explores the concept of corporations as legal entities with rights and duties, including their formation through Articles of Incorporation filed with the Secretary of State. It discusses the classification of corporations as domestic, foreign, or alien based on the state or country of incorporation. The paragraph also covers the responsibilities of corporate officers and directors, who are subject to a standard of due care and a duty of loyalty. It explains how the corporate veil can be pierced in cases of fraud, making shareholders or directors personally liable for corporate actions.
💼 Business Organization Forms
The final paragraph contrasts different business organization forms, including corporations, limited liability companies, partnerships, and sole proprietorships. It highlights the simplicity and flexibility of sole proprietorships, which allow the owner to retain full control but also face unlimited personal liability. The paragraph suggests borrowing funds as a way for a sole proprietorship to obtain additional capital while maintaining control. It briefly mentions the complexity of issuing stock and the potential for shareholders to be held personally liable if they engage in fraudulent activities that pierce the corporate veil.
Mindmap
Keywords
💡Employment at-will doctrine
💡Exceptions to employment at-will
💡Whistleblower statute
💡Workers compensation laws
💡Agency relationships
💡Fiduciary duty
💡Respondeat superior
💡Independent contractor
💡Discrimination
💡Bona fide occupational qualification
💡Corporation
Highlights
The employment at-will doctrine allows hiring and firing at the employer's will, with exceptions for contract theory and public policy.
Employment contracts can override the at-will doctrine, governing the employer-employee relationship.
Public policy exceptions protect whistleblowers from wrongful discharge for reporting illegal activities.
Workers compensation laws cover on-the-job injuries but not those outside working hours.
Employees act as agents of their business, with varying degrees of complexity in agency relationships.
Agents have a fiduciary duty of loyalty to their employer, which includes not usurping corporate opportunities.
Agency relationships are formed to allow principals to conduct multiple business operations simultaneously.
Fiduciaries, like corporate officers and directors, have a duty of trust and confidence with their corporation.
Agents have duties of performance, notification, loyalty, obedience, and accounting to their principals.
Principals have duties of compensation, reimbursement, indemnification, cooperation, and providing safe working conditions.
The doctrine of respondeat superior makes principals liable for agents' actions within the scope of employment.
The IRS uses the scope of control to determine if a worker is an employee or an independent contractor.
Discrimination in the workplace is prevalent, with gender and age discrimination being the most common forms.
Title 7 prohibits discrimination based on race, color, or national origin in employment.
To establish a discrimination case, one must prove membership in a protected class and file a complaint with the EEOC.
Bona fide occupational qualifications can be a defense against employment discrimination claims.
Corporation officers have a duty of loyalty and are subject to the respondeat superior doctrine.
Corporations are artificial legal entities with rights and duties, and their stockholders are generally shielded from liability.
The corporate veil may be pierced by courts in cases of fraud, making stockholders or directors personally liable.
Different forms of business organization include corporations, limited liability companies, partnerships, and sole proprietorships.
Sole proprietorships offer the most organizational flexibility and control but may require borrowing funds for additional capital.
Transcripts
hello everyone do you really need to go
over the powerpoints and the optional
notes for this for these chapters this
review is going to be a bit different
than the previous reviews and in it I'm
going to jump from topic to topic so
please make sure that you take notes and
jot down questions let's begin with the
broad topic of employment the employment
at-will doctrine is common-law doctrine
that permits an employee to be hired or
fired at the employers will there are
exceptions this common law doctrine and
two of the very important exceptions are
exceptions based on contract theory and
an exception based on public policy the
exception based on contract theory means
that there is an employment contract
that both parties have signed and the
terms of the employment contract
governed that relationship between the
employer and employee as far as public
policy a great example of public policy
of a public policy exception to the
employment at-will doctrine is the
whistleblower statute or a whistleblower
law that states that someone who sees or
suspects that their company is doing
something illegal has protection from
the law against unlawful or wrongful
discharge again let me explain that a
different way a whistleblower law
protects a person who sees that their
company is doing something illegal and
tells the appropriate authorities by
forbidding that company to fire them if
the company would fire them it would
call be called wrongful discharge so if
Jamie reports to state officials that
her company is illegally shipping unsafe
goods to unsuspecting customers and then
the company fires her
she can sue the company for wrongful
discharge and with respect to the
employment-at-will doctrine this is an
example of an exception to the
employment at-will doctrine based on
public policy and the public policy of
course is that we don't want illegal
activities to continue we want citizens
to speak up about them and either stop
them or prevent them public policy
concerns are also responsible for state
workers compensation laws these laws
compensate an injured employee only if
the injury occurred on the job and in
the scope of his employment so be
careful with that if it's outside of
working hours
if the injury occurred off the job then
those are not generally covered under
workers compensation again workers
compensation is covered if the injury
occurred on the job and in the scope of
the employment employees of a business
are agents of that business in other
words the principal or the business
endow them with certain abilities
including the ability to represent the
principal or the employer in certain
instances now employment and agency
relationships differ greatly they can be
as simple as a cashier at a store who's
in charge of ringing up amounts of money
that customers owe the store and then
collecting the money that's owed to the
store for much more complicated when we
look at directors and officers of
corporations regardless of how simple or
complex the agency relationships are the
agents are fiduciaries of their employer
or of the corporation for which they
work one of the greatest strongest and
most important duties
that these agents have with regard to
their principles is a duty of loyalty to
be loyal to their principal and not to
do anything that negatively affects
their principals business for example if
John is an agent for let's say stripes
and he's looking for land in Texas so
that stripes can build a new gas station
John finds a perfect piece of property
and realizes that it was also perfect
for the new restaurant that he wanted to
build
so John buys the property for himself
thinking stripes has so many other
properties that they won't mind if he
takes this one John has breached his
duty of loyalty by usurping a corporate
opportunity so he may not put his
interests above that of his employer
let's talk a little bit more about
agency relationships agency
relationships are formed to remit to
permit the principal to conduct multiple
business operations simultaneously in
other words back to our cashier example
the owner of a store can't be at every
cash register at the same time so he
hires employees to do that for him now
by doing this the principal doesn't
relinquish all his rights and
responsibilities absolutely not the
agent is hired for a particular purpose
and needs to work within the scope of
their agency examples of agency
relationships are employer employee
independent contractor and the person
that hires them and a corporate officer
and the corporation that they work for a
fiduciary is a person acting for the
benefit of another and a fiduciary AIT's
a duty of trust and confidence running
from the principal to the fiduciary so
offices and directors of corporations
are fiduciaries and have a fiduciary
relationship with the corporation
embedded in that is their duty duty of
loyalty and again
they must do what's in the best interest
of the corporation as an agent the
officers and directors and any agent has
a number of duties to their principal
including performance and notification
loyalty and obedience and accounting I'm
not going to go through each of these
things you can look in your book to
understand them they are
self-explanatory now the principal has a
number of duties to its agent including
compensation and reimbursement
indemnification and cooperation and safe
working conditions a principal may be
liable to a third party based on what
his agent has done many times the
principal is liable for the agent's
behavior under the doctrine of
respondeat superior meaning that the
buck stops here with the principal or
with the employer the same thing
principal or employer now when deciding
whether a person is actually an employee
or an independent contractor and an
independent contractor the principle for
an independent contractor is not subject
to the respondeat superior liability so
an independent contractor is taken out
of that scope of liability in order to
determine whether someone is an employee
or an independent contractor the IRS
uses something called the scope of
control the IRS will look at the amount
of direction and control the employer
exercises over the details of the
person's work for example if the worker
is paid by a weekly check where the
employer is taking out federal taxes and
Social Security it's more likely than
not that this person is not an
independent contractor but is an
employee
also if the employer provides the worker
with tools and with the workplace or
with a vehicle and tells the and tells
the person how to do their work controls
how they do their work when they do
their work then the person is most
likely an employee an independent
contractor is a person who brings his or
her own tools to the job and has a very
specific skillset for example a plumber
or an electrician is usually an
independent contractor what about
discrimination in the workplace
discrimination has many forms
discrimination based on gender which
happens to be the most widespread
discrimination in the United States you
would think it would be sexual
orientation but it is still gender
discrimination part of me I misspoke it
is still age discrimination age
discrimination is the most prevalent
discrimination within the United States
title 7 prohibits employers from
discriminating against employees or job
applicants on the basis of race color or
national origin race is interpreted
broadly to apply to the ancestry or
ethnic characteristics of a group of
persons such as Native Americans
national origin refers to discrimination
based on a person's birth in another
country or their ancestry there are
different types of discrimination
discrimination that is not intended but
creates a discriminatory impact for
example the firefighters used to have a
requirement that a person needed to be
able to lift a certain amount of weight
and this discriminated against women in
particular then we have discrimination
that is focused and intentional its
impact is immediately for example
someone who says that they will not hire
an employee because the employee is a
woman this is called
death
for it treatment discrimination in order
to bring a discrimination suit against
an employer an employee needs to
establish what we call a prime of facie
case of employment discrimination that's
PR ima space FAC ie the first step in
establishing a prima facie case of
employment discrimination is to prove
that you are a member of a protected
class if you are a protected class then
the NIC next step is to file a complaint
with the administrative agency that
oversees discrimination claims usually
the state has an agency that does that
but the Equal Employment Opportunity
Commission always does that the EEOC so
you go to the EEOC and get a letter that
states that you have a discrimination
case against a certain employer this is
always the first step to bringing a suit
you cannot file a suit in the courts in
your state or the federal courts without
that letter from the state agency or the
EEOC now sometimes what looks like
discrimination might actually be a bona
fide occupational qualification so
corporation or a company may have a bona
fide occupational qualification defense
for example if a woman's clothing store
employs only female attendants to assist
the women women's customers in the
dressing rooms and then a man applies
for an attendants job but is not hired
the man might bring a suit against the
company for employment discrimination
under Title 7 however the store may have
a legitimate bona fide occupational
qualification 'el qualification
defense after all it's a women's store
serving only women and they might prefer
and reasonably so
to have a woman attendant let's go back
to agency again and thinking in your own
life can you come up with an agency
relationship that you might enter into
some time in your life
well how about hiring a real estate
agent to buy or sell your house that
real estate agent is an agent for you
there's an agency relationship and they
have to do what is in your best interest
what if you hire a real estate agent to
help your friend Joe the real estate
agent and Joe enter into a contract but
before selling his house Joe dies says
Joe's family have to sell his house for
him no because death will terminate the
agency well what if Finn and Glenda get
together and they want to form a
business called hobby crafts corporation
are they agents of each other
possibly are they agents of the
corporation well yes if they are
officers or directors of that
corporation and don't forget that a
corporation is a legal entity created
and recognized by state law corporations
have bylaws which are adopted at the
corporation's first organizational
meaning the corporation has stock in
depending upon whether it is a private
corporation or publicly traded there are
rules based on SEC the Securities and
Exchange Commission rules for certain
transactions the SEC governs
transactions made by publicly traded
corporation the Articles of
Incorporation of a corporation are filed
with the secretary of state for the
state in which it was incorporated so
every corporation has
to be incorporated within a state in the
United States and you can pick whichever
state corporations
look to see which states have laws that
benefit that particular corporation so
the Articles of Incorporation are filed
with the secretary of state for the
state in which it was incorporated a
corporation is a legal fiction which
means it's a creature of state statute
and is considered as we said an
artificial person so the corporation has
the rights and duties limit they may be
limited of a person a corporation may be
classified as domestic foreign or alien
if it's domestic that means that for
example any corporation that has been
incorporated in the state of Texas is
domestic to the state of Texas a
corporation that has been incorporated
in the state of Arkansas is considered a
foreign corporation in the state of
Texas any corporation that has been
incorporated in another country is
considered an alien corporation within
Texas and within the United States just
like any other agent in principle a
corporation is liable for the torts
committed by its agents or officers
within the course and scope of their
employment under the doctrine of
respondeat superior or so if John who
was an employee a fast-food incorporated
takes the fast-food incorporated
delivery truck during his lunch hour and
uses it to drag race down Ocean Drive
well if on his way back to fast-food
incorporated he has an accident and
injures another driver fast food
Incorporated is not liable to the other
driver because Jo was not in the scope
of his employment in fact Joe was on
what we call a jaunt jau and T which
means he was off doing what he wasn't
supposed to do really during his own
time on his lunch hour and before I
forget every
corporation must have the name
corporation corp or incorporated in its
title it must have a registered office
and a registered agent and it must have
a certificate of incorporation all of
these things are filed with the
Secretary of State corporate officers
serve at the pleasure of the Board of
Directors and the corporate officers
like the CEO run the day-to-day
operations of the corporation the de
Board of Directors part of me the
corporate officers cannot decide to give
out dividends cannot do everything that
the Board of Directors can do but they
do have a loyalty to the corporation I
gave you an example of what a
corporation is not liable for the
actions of its agent because they are
out of the scope of their employment and
are not subject to respondeat superior
work but here's an example when the
corporation would be liable under
respondeat superior your GJ Corporation
authorizes Stephanie its employee to
oversee its mining operations in the
course of this employment Stephanie
disposes of the mines waste ill legally
liability for this crime most likely
rests with both the corporation and
Stephanie both of them I said I was
gonna skip back and forth and here I go
we talked about the responsibilities of
the officers now understand that the
overall management of a corporation and
its policy determinations are made by
the Board of Directors by the board of
directors but the day-to-day operations
are overseen by the officers now as the
corporate officers are employed at the
will of the board of directors their
employment is almost always determined
by their employment contracts the board
of directors served
the whim of the stockholders the
directors of a corporation Oh their
corporation a standard of due care now
that encompasses how they make their
decisions a corporate directors
decisions must be informed and
reasonable a director has a duty of
loyalty as well he would breach his
doodle duty of loyalty if he became a
director of a competing firm or bought a
controlling interest in a competitor or
competing firm as well a director who
buys a competing business breeches their
duty of loyalty to their company or
corporation again if you look at an
executive officer they can solicit
business hire and fire workers and
handle the finances usually and
sometimes their salary fluctuates
clearly they are an employee
rather than a principal or ploy or an
independent contractor
we talked very briefly about
shareholders depending on what type of
stock they hold a shareholder may have a
right to dividends inspection rights and
pre-emptive rights however a shareholder
does not have a right to compensation
this of course differs from the officers
right to compensation sometimes
particularly in small corporations but
it can happen in large ones that someone
in the corporation uses funds corporate
funds to pay their personal expenses or
creates a corporation that engages in
the same business as the original
corporation transfers assets to that
corporation or petitions one corporation
into bankruptcy in this case the courts
will pierce the corporate veil now we
talked about the fact that a corporation
is
an artificial legal entity and has
rights and also has duties one of the
great things about owning stock in a
corporation is that it shields its
stockholders from liability however if
the stockholders do any of the things
that I previous mentioned previous
material ec mentioned it is considered
fraud and fraud is obviously looked upon
very poorly by the court system and the
courts will what is called quote unquote
pierce the corporate veil making the
stockholders or the directors whoever it
is libel for whatever acts of fraud
occurred and when I say libel I mean
personally liable so where they are
shielding their assets by holding stock
in a corporation or working for a
corporation now their assets will be
their personal assets will be on the
line I've been talking about
corporations so let's talk about
different forms of business organization
corporations limited liability companies
partnerships and sole proprietorships a
sole proprietorship is the simplest form
of business organization it gives the
most organizational flexibility and
doesn't require annual meetings or
stocks and bonds to be issued it permits
the sole proprietor to retain control of
its business now the sole proprietorship
needs additional business capital the
best way to come to maintain control and
accomplish the task of obtaining
additional business capital is a very
simple thing to do borrow funds
borrowing funds from the bank permits
the owner of a sole proprietorship to
maintain control over the business now
bringing in partners is another option
but
that isn't a way to maintain control
unless their silent partners issuing
stock of course is never the way to do
it and you can ich cannot issue stock in
a sole-proprietorship bar they could
sell the business which makes no sense
if they were trying to maintain control
over the business I'm going to stop
right here and continue on the next
audiotape thank you
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