Employer's Duty of Care and Issues of Compensation

August 9, 2010

Law, Ethics, and Corporate Governance
LEG-500

Abstract For the purposes of this assignment we independently viewed a video entitled “Employer's Duty of Care and Issues of Compensation.” In the video, the car dealership is running a special promotion offering free oil changes in order to get existing customers back into the showroom. An employee notices a backlog of customers waiting in line for their oil changes and notifies the owner of the dealership, Herman. Herman calls his newly promoted service manage, Jake, to explain the backlog. Jake emerges from the service bay holding his bloody thumb in a rag. He explains as certified auto mechanic, he is doing a thorough job on each car en though he is working overtime without overtime pay. The manager tells him to do a quick, “lousy” job of the oil changes just to get them done. He doesn't care about Jake's mechanics standards. Jake retaliates by complaining he's hurt his thumb due to his long hours and threatens a worker’s compensation claim if he isn't compensated fairly for his work. The video give rise to a number of ethical questions. The purpose of this paper is to address these questions as detailed in the assignment using readings on employee and consumer privacy law, as well as business ethics and corporate policy.

Answers to Assignment #3 Questions
The questions (in bold type face) follow as detailed in our assignment.
1. Explain whether Jake's actions are in or out of his "scope of employment." How is the scope of employment determined? What is the employee's duty with respect to his employment? In this episode, our service manager Jake is working to complete the oil changes with which his boss has saddled him. Through his advertising gimmick of free oil changes for existing customers, Herman has overloaded his employee. Jake is working within his scope of employment and is furthermore endeavoring to do a thorough and responsible job of ensuring each car is road worthy. Although we have little actual information beyond Jake’s word in our vignette, it appears as if Jake was in the mist of his work duties when his thumb injury occurred.
If this is indeed fact, Jake was undertaking action consistent with his job duties and were not personal in nature. Thus Herman is liable for the injury he suffered under the doctrine of respondeat superior. Respondeat Superior is a doctrine of law established in the 1600’s defining the legal liability of an employer for the actions of an employee. It states the employer is liable for the actions of the employee as long as said actions are performed within the employee’s scope of employment.
The worker’s scope of employment consists of the duties for which he is paid. His scope of employment is the duties which further the business of the employer and are not personal business. They are the acts done while performing one's job duties. The employer is liable for those actions committed while the employee performs job duties. As with a worker’s compensation claim for a work related injury, the employee must be actively engaged in his or her duties, at the time of the act, injury or behavior in question. Minor deviations from the acts involved in a job task are not considered outside the scope of employment. Acts like going to the rest room or getting a soda while on the job are still within the scope of employment.
When an employee engages in an activity solely for his or her own benefit, whether on the clock or not, they are considered outside the scope of their employment. In the law, this is called a frolic. An employer is liable for harm done both to and by the employee whether the employee’s act is accidental or not. This would include Jake’s thumb injury but it may also include any accident or injury that may arise after one of the serviced car has left the dealership. The employer is responsible for intentional wrongs if they are committed on the employer's behalf.
Let’s say Jake does a lousy job on one of the serviced cars. He neglects to fill the oil reservoir and the car becomes inoperable causing an accident; the employer is now liable for Jake’s neglect. It is up to the court to determine if the employee is acting within his job duties. The court will evaluate the employee's job description, the time, place, and purpose of the employee's act, the extent to which the employee's actions conformed to what she was hired to do, and whether such an occurrence could reasonably have been expected. When the facts show that an employer- employee relationship exists, the employer can be held responsible for the injuries caused by the employee. The theory behind respondeat superior is that the employer controls the employee’s behavior and must assume some responsibility for his or her actions. The doctrine is quite broad in the sense that the employee is not necessarily acting outside the scope of employment merely because she does something that she should not do. An employer cannot disclaim liability simply by showing that the employee had been directed not to do what he or she did. The existence of the doctrine of Respondeat Superior allows an injured party a better chance to recover damages. If an employee causes injury or damage to a customer, the customer can sue to recover damages from not just the paid worker but from the business for which he or she works. These rules do not allow the employee to evade responsibility for harm he or she has caused. Injured parties may sue both the employee and employer, but because the employee usually is unable to afford to pay the amount of damages awarded in a lawsuit, the employer is the party who is more likely to pay.

Being an employee has responsibilities and duties involved. In our example, Jake also has a

duty to his employer. He has the duty to avoid and communicate to his employer any hazards in

the workplace. He should avoid any work practices that are unsafe or dangerous. Jake is

responsible for avoiding any foreseeable dangers to his wellbeing, mental health and life. In our

class example, it appears Jake is taking both responsibilities seriously. He is attempting to do a

thorough job of his free oil changes and to work safely within the extended hours his job duties

are requiring. An employee has a duty to avoid bringing community disrepute or legal problems

to his employer. Jake wants to protect both his employer’s reputation and his own by completing

thorough evaluations of the cars coming in for oil changes.

2. Explain whether or not Herman is responsible for Jake's injury. How does the law allocate the risk of on-the-job injury, and what would be the result in this case. Provided Jake is attending to his mechanics duties at the car dealership, Herman is, in some regards, responsible for his injury. Not in the sense of it being his fault but in the sense that he has a duty to provide for Jake’s care and well being. The duty of care doctrine is determined by the legal relationship between the two parties involved. Jake is undertaking his work at the direction and control of Herman. As such, Herman has a responsibility to ensure that no harm comes to Jake in the performance of his job. The harm mentioned here and intended by the law is called foreseeable harm. Duty of care is a legal obligation to protect others from foreseeable injury. It requires Herman to provide a work environment and tasks which would not lead to any harm due to negligence on his part. As long as the work assignments are consistent with good judgment and common sense, it can be argued that they are consistent with his duty of care. If not, Jake may have a case called a tort. This is established upon the fact that an employee/employer relationship exists between them and the injury occurred as part of Jake’s scope of employment. He must be about his employer’s business and within his job description when the injury occurs. An employee’s actions are not so fully inspected however. As long as they are essentially undertaking their employer’s business and not acting in their own right, the employer will be held accountable for an accident or injury. This means that an employer must maintain a prudent attentiveness in performing their supervisory functions. Although there is no federal law determining the duty of care, each state may establish its own version of tort law pertaining to the duty of care. Most state doctrines include a test of whether the harm occurring was foreseeable. If an individual is injured on the job, the court must determine if a reasonable person could have foreseen the injury, if the supervisor’s behavior or policies may have given rise to the injury and to what extent the supervisor has created policy preventing future injurious incidents. There are two levels involved in the duty of care. An employer may be guilty of negligence or strict liability. If the supervisor has taken all the precautions that a reasonable person would consider and an injury still occurs, he has not been negligent. The worker may then be covered under the strict liability statutes. An employer may be held legally accountable in either a civil or criminal court. The civil court can award damages to employees who are injured due to their employer’s breach of duty to care and by a criminal court in the event that an employee his killed due to their breach of duty.

3. Explain whether or not Jake should be paid the overtime. What law governs overtime, how does it apply, who is covered, are there any exceptions? In most situations, employees are paid overtime for working more than 40 hours per week. It can be applied on a daily basis or weekly basis. Overtime pay is generally at least one and a half times the regular pay rate. Once an employee works past an eight hour day or past 40 hours in the week, additional hours should be paid as overtime. A workweek is defined as a recurring period of 168 hours, or seven consecutive 24-hour periods. Overtime pay is governed by the Fair
Labor Standards Act (FLSA). This act regulates the minimum wage and overtime pay. Under the overtime rules, workers earning less than $23,660 per year are guaranteed overtime pay. The overtime pay requirement may not be waived by agreement between the two parties. The overtime pay requirement cannot be met through the use of compensatory time off or comp time. In our case we do not know Jake’s schedule or his rate of pay. There are exceptions to the law standardizing overtime pay. There are also special circumstances applied to first responders and some health care workers. The most common exception is called an exemption. There are numerous exemptions from the FLSA’s overtime rules. The most common are commissioned salespeople, executive and administrative professionals, salaried workers, and drivers, loaders and mechanics if employed by a motor carrier and/or automobile dealerships. In our example, Herman states that Jake is not eligible for overtime pay due to his recent promotion to service manager. He implies Jake is now a salaried worker which likely does not qualify him for overtime pay. Had he not been promoted and was still an hourly mechanic, it might be assumed that Jake was eligible for overtime pay (once he surpassed a 40 hour work week.) However, the FSLA regulations are enormously complicated. Jake’s job as a mechanic for an automobile dealership falls in to a couple of exemption criteria. The FSLA specifies an exemption for automobile dealership employees depending on two factors – the amount of total sales per year and whether the work involved crosses state lines. In our example, we do not know the gross sales of Herman’s business or whether his business work involves other states. So this exemption may or may not apply. The other exception criterion is for workers in businesses which engage in selling or servicing automobiles that do not engage in manufacturing them. This includes salesmen, parts-men and mechanics. A service manager who does not actually service the vehicles is not exempt. But in this case Jake is a service manager who , in fact, spends most of his time and then some doing the actual mechanical repairs as well as the recent overload of oil changes. He is likely not eligible for overtime pay or to even to work overtime hours given this exception. There is a matter of insuring public safety underlying certain jobs. For Jake to choose or be forced to work overtime could result in shoddy work leaving someone in harm’s way.

4. Explain the rights Jake and Herman have individually in this scenario. What obligations do employers and employees have to one another? In this scenario Jake, as the employee, has the right to a safe work environment that is free from health hazards. Employers must comply with the workplace standards established by the
Occupational Safety and Health Association (OSHA). Jake has the right to avoid work injury.
The law states that an employer has to give an employee a work environment that is free from hazards and foreseeable risks. He has the right to a workplace that is free from potential safety issues, toxic substances and other dangerous conditions. An employer must protect his physical security. He has the right to training so that he has both the knowledge necessary to avoid harm and the chance to advance or improve on the job. He has the right to express his concerns and voice his complaints to his employers as they affect his safety. Ideally, employees have the right to fair treatment and respect. Employers can demonstrate trust by communicating well, hearing each other out even when their opinions differ. They also can give praise wherever it is warranted and express appreciation for work done. Further, in this regard, Jake has the right to be free from any type of harassment and discrimination. He has a “whistleblower right” wherein he is free from retaliation for filing a complaint or claim against Herman. Employers enter into a contract with an employee and the employee has a right receive the funds and benefits they were promised by the employer. In our example, the wage agreement between Jake and Herman is not specified. Recently, Jake has been promoted from an hourly employee to the manager of the service department. Nonetheless, Jake has a right to expect the agreed upon amount of pay, benefits, and compensation in exchange for his service. Jake has the right to fair wages for the type of work he performs. As addressed in our two previously assigned class papers an employee also has some minimal rights to privacy and to time-off for medical reasons under the Family and Medical Leave Act
(FMLA).
On the opposite side of the coin, Herman has rights as well. It is Jake’s duty to perform his duties with care. He is obligated to respect his employer’s property and to follow his employer’s policies. He must not abuse his employer's resources and must follow the employer guidelines and rules. An employee has the duty to perform the work assigned to the best of his ability and to adapt to job changes whenever they are required. Herman has the right to expect
Jake will perform his duties diligently, using all his skill to ensure his work meets quality standards. In our example, Jake takes his duties as a certified mechanic seriously and wants to ensure quality. He is concerned both for his own reputation and likely for the dealership’s reputation. However, Herman is rather short sighted, suggesting Jake rush his work and do a lousy job. Jake is cognizant of the pitfalls and appears to recognize the imprudence of this. It would likely result in possible harm and waste his employer’s resources. Nonetheless, as the employer, Herman has a right to have his authority respected and instructions followed. Good employees are generally honest and loyal. They are obligated to keep a clean attendance record, come to work on time, and to keep company trade secrets.
Businesses suffer when a competitor steals away concepts or key personnel. For this reason, employees are supposed to be loyal to their employer. They are not supposed to divulge company secrets or work for their competitors, or to have conflicting interests. Also, the employee has a responsibility to not accept any bribes. They must abide by any and all confidentiality rules. Employers, also, have a right to the same expectations that they afford their employees. They have the right to respect, trust and confidence in their leadership. They have the right to have their power and authority respected as long as they are not abusing it. Employers have a right to choose a wage amount for employees, as long as it is higher than the federal (or state) minimum wage amounts. Currently the federal minimum wage amount is
$7.25 per hour and $2.13 per hour for tipped employees.

References

Halbert, T. and Ingulli, E. (2010) Law and Ethics in the Business Environment.

FSLA 29 CFR Section 779.372. Nonmanufacturing establishments with certain exempt employees under section 13(b)(10).

US Department of Labor. (2009) Office of the Assistant Secretary for Policy-Office of Compliance Assistance Policy. Fleischer, C. (2005) HR for Small Business: From Hiring to Firing and Everything in Between.

Guerin, L and DelPo, A. (2004) Everyday Employment Law: The Basics.

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Guerin, L and DelPo, A. (2007) The Manager's Legal Handbook.

Repa, B. and Delpo, A. (2000) Your Rights in the Workplace.

Guerin, L and DelPo, A. (2002) The Manager's Legal Handbook.

Butler, D. (2002) Employer Liability for Work Place Trauma.

Steingold, F., Delpo, A. and Guerin, L. (2004) The Employer's Legal Handbook

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Dauchy, C. (2009) The Entrepreneur's Guide to Business Law.