Chapter 28

Employee vs. Independent Contractor

Employee – If the employer exercises a considerable amount over the details of the work, you have an employee status. If the work is usually done under the employer’s direction, you have an employee status. The employer supplies the tools. If the person is employed for a long period of time, you have a employee status. If the method is by time period, you have an employee status. An employee may not require as much skill as an independent contractor.

* Employer exercise a considerable amount over the details of the work * Work is done under employer’s direction * Employer supplies the tools * Worker is employed for a long period of time * Method of payment is by time period * Employee may not require as much skill as an independent contractor *
Independent Contractor – The worker is engaged in an occupation or business distinct from that of the employer. If the work is done by a specialist without supervision, you have an independent contractor status. If the worker is employed for a short period of time, you have an independent contractor status. If the payment is made at the completion of the job, you have an independent contractor status. An independent contractor may require more skill than an employee.

* Worker is engaged in an occupation or business distinct form that of the employer * Work is done by a specialist without supervision * Worker is employed for a short period of time * Payments are made at the completion of the job * An independent contractor may require more skill than an employee

Express Authority vs. Implied Authority vs. Apparent Authority

Express authority is authority declared in clear, direct and define terms. Express authority can be given orally or in writing.

Implied authority is the authority an agent has to do what is reasonably necessary to carry out express authority and accomplish the objectives of the agency. Authority can also be implied by custom or inferred from the position the agent occupies.

Apparent authority is when the principal, by either word or action, causes a third party reasonably to believe that the agent has authority to act, even though the agent has no express or implied authority.

Course & Scope of Employment

Chapter 29

Advantage & Disadvantages of a Sole Proprietorship

A major advantage of the sole proprietorship is that the proprietor owns the entire business and has a right to receive all of the profits. In addition, it is often easier and less costly, a few legal formalities are involved. One does not need to file any documents with the government to start a sole proprietorship. It is more flexible and you are free to make any decision you want to. A sole proprietorship pays only personal income taxes on the business’s profits. Sole proprietors are also allowed to establish certain retirement accounts that are tax-exempt until funds are withdrawn.
The major disadvantage of the sole proprietorship is that the proprietor alone bears the burden of any losses or liabilities incurred by the business enterprise. The sole proprietor has unlimited liability. The sole proprietorship also has the disadvantage of lacking continuity on the death of the proprietor. Another disadvantage is that the proprietor’s opportunity to raise capital is limited to personal funds and the funds of those who are willing to make loans.

3 Types of Franchises discussed in class/text

Distributorship- A distributorship arises when a manufacturing concern (franchisor) licenses a dealer (franchisee) to sell its product. Often, a distributor covers an exclusive territory.

Chain-Style Business Operation – In a chain-style business operation, a franchise operates under a franchisor’s trade name an,,,,,≤ d is identified as a member of a select b group of dealers that engage in the franchisor’s business.

Manufacturing or processing-plant arrangement – In a manufacturing or processing plant arrangement, the franchisor transmits to the franchise the essential ingredients or formula to make a particular product. The franchise then markets the product either at wholesale or at retail in accordance with the franchisor’s standards.

Chapter 30

3 elements of a partnership

1. A sharing of profits and losses. 2. A joint ownership of the business. 3. An equal right to be involved in the management of the business.

Advantages & Disadvantages of a Partnership

Joint and Several liability – what is it?

Joint and several liability mean that a third party has the option of suing all of the partners together (jointly) or one or more of the partners separately (severally).

Chapter 31

Advantages & Disadvantages of the LLC

Advantages- A key advantage of the LLC is that the members are not personally liable for debt or obligations of the entity: their risk of loss is limited to the amount of their investment. An LLC is flexible in regard to both taxation and management. The entity will exist beyond the illness or death of its members. An LLC can also include foreign investors.

Disadvantages- The main disadvantage of the LLC is that state LLC statues are not uniform. Therefore, businesses that operate in more than one state may not receive consistent treatment. Generally, though, most states will apply to a foreign LLC the law of the state where the LLC was formed.

2 options for management of a LLC

The members may decide in their operation agreement to be either “member-managed” LLC or a “manager-managed” LLC. Most LLC statutes and the ULCCA provide that unless the articles of organization LLC specify otherwise, an LLC is assumed to be a member managed. In a member-managed LLC, all of the members participate in management, and decisions are made by majority vote. In a manger-managed LLC, the members designate a group of persons to mange the firm. The management group may consist of only members, both members and nonmembers, or only nonmembers. Managers in a manager-managed LLC owe fiduciary duties to the LLC and its members, including the duty of loyalty and the duty of care, just as corporate directors and officers owe fiduciary duties to the corporation and its shareholders.

Chapter 40

What is employment at will?

A common law doctrine under which either party may terminate an employment relationship at any time for any reason, unless a contract specifies otherwise.

Chapter 41

Disparate-treatment vs. disparate-impact

Disparate-treatment discrimination is a form of employment discrimination that results when an employer intentionally discriminates against employees who are members of a protected class.

Disparate-impact discrimination is a form of employment discrimination that results from certain employer practices or procedures that, although not discriminatory on their face, have a discriminatory effect.

Defenses to employment discrimination

Several federal statutes prohibit employment discrimination against members of a protected class. The most important stature is Title VII of the civil rights act of 1964. Title VII prohibits discrimination on the basis of race, color, religion, national origin, or gender at any stage of employment.