BUS205 Study Guide

Unit 7: Employment Law

7a. Distinguish between employment-at-will and contractual employment

  • How does employment-at-will differ from contractual employment?
  • What are the limitations placed on employment-at-will?

Contractual employment differs from employment-at-will in that it sets forth the terms and conditions of employment. This means that an employee cannot be terminated without cause. Employment-at-will allows either party in an employment relationship to terminate at any time and for any reason.

The right to terminate an at-will employee is not absolute. An employer may not violate the law when terminating an employee (engage in unlawful discrimination, for example). An employee cannot be terminated for performing his or her civic duty (such as serving on a jury). An employee cannot be terminated for reporting employer misconduct (whistleblowing) or for refusing to violate the law. Likewise, an employer cannot terminate an employee for exercising a legal right (such as filing for workers' compensation).

There are other reasons why courts place limitations on employment-at-will. Under contract law, a court may hold that an employer is required by law to comply with the implied promise of good faith and fair dealing. Concern for public policy may also be a reason for a court to limit employment-at-will.

Contract law can impact employment-at-will where the employer has adopted an employee handbook for the workplace. An employee handbook can create a binding contract with employees. Therefore, an employer must follow its own policies and procedures as set forth in the handbook. Otherwise, the employer may be liable for breach of contract.

To review, read Employment-at-will.


7b. Identify and discuss laws that generally regulate the employer-employee relationship

  • Which laws generally regulate the employer-employee relationship?

Title VII of the 1964 Civil Rights Act prohibits unlawful discrimination. It applies to employers with more than fifteen employees. It eliminates job discrimination on the basis of race, color, religion, sex, and national origin.

Any act of discrimination on any of these bases is illegal. These acts may be a refusal to hire, a discharge or termination, a temporary layoff or retrenchment, compensation, an opportunity for advancement, or any other term or condition of employment. Title VII allows for 3 causes of action. In a disparate impact case, the plaintiff must prove to the court that the employer engaged in intentional discrimination against the plaintiff. If there is no intentional discrimination, the plaintiff must prove disparate impact. That is, the plaintiff must prove that the employer used practices or policies that had a discriminatory effect on the protected class. To successfully defend against a disparate impact case, an employer must prove business necessity. For the business necessity defense, the employer must show that its practices or policies were job related and necessary for the job function. Lastly, Title VII also prohibits acts of retaliation against anyone who complains about, or participates in, any employment discrimination complaint.

The Lily Ledbetter Fair Pay Act of 2009 gives victims the right to file a complaint within 180 days of their last discriminatory paycheck. The law is powerful in that it starts the statute of limitations over with each discriminatory paycheck.

The Equal Pay Act of 1963 seeks to eliminate the wage gap between women and men by prohibiting pay discrimination. All forms of compensation are covered by the act, including benefits such as vacation and compensation such as salary and bonus.

The Age Discrimination in Employment Act of 1967 (ADEA) prohibits age discrimination against employees who are least 40 years of age. Bona fide occupational qualification can also serve as a defense to age discrimination. Mandatory retirement is required in some industries due to public safety concerns. For example, airline pilots are required to retire at age 65.

The Pregnancy Discrimination Act of 1978 amended Title VII to make it illegal to discriminate on the basis of pregnancy, childbirth, or related medical conditions. This means employers cannot refuse to hire a woman because she is pregnant or is considering becoming pregnant, or because of prejudices held by coworkers or customers about pregnant women.

The Americans with Disabilities Act of 1990 prohibits unlawful discrimination against qualified disabled workers. It also prohibits discrimination against workers who are perceived as having disabilities. To be qualified, disabled workers must be able to perform essential job duties. The employer may be required to provide reasonable accommodation to assist disabled workers with performing essential job tasks. However, employers are not required to endure undue hardship (incur great expense to accommodate a disabled employee, for example).

The Occupational Safety and Health Act requires certain workplace safety and health standards. The act imposes on each employer a general duty to furnish a place of employment free from recognized hazards likely to cause death or serious physical harm to employees.

The Fair Labor Standards Act (FLSA) determines the minimum wage employees are to be paid. It also requires overtime pay for non-exempt employees who work in excess of 40 hours per week. The Davis-Bacon Act (prevailing wage law) requires that workers employed by government contractors are paid the prevailing wage. The prevailing wage is the wage set by the Department of Labor based on the employee's location and job category. To review, read Other Employment-Related Laws and Prevailing Wage Laws.


7c. Describe the process of and rights under collective bargaining

  • How are unions formed?
  • What acts constitute unfair labor practices under collective bargaining?


Unions can be formed if at least 30% of the workforce signs work cards or petition the National Labor Relations Board for an election. The National Labor Relations Board will certify the union if it receives a majority of the votes. Alternatively, an employer may choose to recognize the union if it has determined that a majority of the workers make it known that they want union representation. A clear indication would be a majority of the workers signing union-authorization cards. To review, read Your Right to Form a Union.

Unfair Labor Practices under Collective Bargaining

Unfair labor practices are those that interfere with worker's right to bargain collectively. Workers have the right to choose their representatives for collective bargaining. Among other things, the National Labor Relations Act requires an employer to acknowledge a duly elected union, negotiate in good faith, refrain from dominating and/or controlling the union, and refrain from interfering with workers' right to participate in concerted activities.

To review, read Collective Bargaining FAQs.


Unit 7 Vocabulary

This vocabulary list includes terms that might help you with the review items above and some terms you should be familiar with to be successful in completing the final exam for the course.

Try to think of the reason why each term is included.

  • employment-at-will
  • wrongful discharge
  • employment discrimination
  • protected class
  • Title VII of the 1964 Civil Rights Act
  • retaliation
  • bona fide occupational qualification (BFOQ)
  • Equal Employment Opportunity Commission (EEOC)
  • Lilly Ledbetter Fair Pay Act of 2009
  • disparate treatment
  • disparate impact
  • business necessity
  • Equal Pay Act of 1963
  • Age Discrimination in Employment Act of 1967
  • Pregnancy Discrimination Act of 1963
  • Americans with Disabilities Act of 1990
  • Fair Labor Standards Act (FLSA)
  • minimum wage
  • Davis-Bacon Act (prevailing wage law)
  • Occupational Safety and Health Act
  • unionization
  • collective bargaining
  • unfair labor practices