4 6 15 Chapter 14 Agency and the Employment Relationship Agency relationship o Principle Person hiring the agent Gives certain authority to the agent to act on behalf of the principle o Agent Provide services produce or sell product Individuals businesses whatever Hiring an Agent is less expensive than hiring an employee No Insurance benefits taxes relationships or other requirements Voluntary relationship terminate not have to give severance Expand business and sometimes lower cost and exposure than Full Time employees Get authority from principle Types of Agents Universal designated to do all acts General executed to do all transactions generally related to a specific business o General manager to run business authority to conduct all actions necessary to run business Special represent principles for a specific transaction for a specific period of time Gratuitous agent Acts as an agent for no compensation o Real Estate Agent o Charities Sub Agents Principle gives authority to agent and authorizes agent to hire or engage sub agent to help the agent o Has duty to agent and principle Agency relationship created Agreement written or oral o Written power of attorney Ratification agent engages in activity even without actual authority Principle then is okay with it and ratifies the relationship Stopple Doctrine arises from 3rd party Agent negotiates deal with 3rd party while principle is sitting there Agent doesn t actually have authority but Principle is bound to the agreement if they don t stop it at that time Operational law emergency situation or sever necessity o Person is acting on publics behalf or for public safety o Creates or extends agents authority Types of Authority agents have Actual Authority principle gives to agent in writing or orally Ch 14 pg 1 4 6 15 Implied Authority If you appoint agent to do something that agent has implied authority to carry out the job you hired them for o Ex General Manager Don t set out list of actual things but court says they have the implied authority to make every decision eneded to run everyday business Apparent Authority created by principle s action inaction or words o Principle leaves agent to believe they have the authority not saying anything when something s going on court says they have authority and that binds the principle Duties 1 for both act in good faith Principle o Pay Agent o Reimburse any expenses that the agent incurs Agent o Duty to account to the principle o Duty of loyalty to principle put principle s interest ahead of yours not an exclusive relationship though agent can have multiple principles Disclosed Principle Agent negotiating with 3rd parties and discloses to 3rd party who they are acting on behalf of Vicarious liability principle isn t directly liable agent gives authority to is acting within the scope of their authority also liable can be sued directly by 3rd party if there s a breach Undisclosed Principle 3rd party can only sue the agent if there s a breach of contract 3rd party sues agent agent then sues principle of breach of agency agreement Agency relationship terminated Voluntary can be terminated at any time by either party o If that happens principle should contact 3rd party that the agency has dealt with in the past to let them know they don t represent you If you don t agent still has apparent authority to represent principle and principle can still be held liable After a lapse of a specific stated time Automatically terminated relationship o Agent principle dies o Agent principle goes bankrupt o Subject matter of arrangement is destroyed Real Estate and house burns down Agency can bind principle in contract point of view and create Independent Contractor tort liability Ch 14 pg 2 4 6 15 o Person contracts to do work with someone else but isn t controlled by them More control you have more they look like an employee Less control more they look like independent contractor o Supposedly independent Perform job they were hired for how and when they please without much day to day contrsl by you o Independent contractor cannot create contract nor tort liability for the person that hires them Employee creates same liability for a principle as an agent does Employee acting within scope of employment can create contract and tort liability for their employer o Care No liability No added cost taxes benefits severance etc Reporting it no w2s o If you re an employee you re generally an employee at will unless they have written employment contract Be fired or quit anytime with no continuing legal obligation by either party Employment contract still can be fired with reason but entitled to continuing compensation Public policy exceptions to employee at will Get fired just before you get your bonus court says you re still fired but entitled to your bonus Get fired just before you vest in your retirement benefits continuing obligation to make sure you get paid Retaliatory discharges employee takes legal action that makes employer mad so you re fired whistleblower or something You ll get compensated for some payments o Handout 20 factors IRS looks at when they audit you Most question control over employee s day to day actions The more control you have the more they look like an employee Independent contractor doesn t usually have office at that companies office sets own schedule usually works for multiple companies Employees need training from employer has office has set schedule employer provided tools Employees and Agents similar from Liability point of view as long as they re acting within the scope of their employment create tort and contract liability Independent Contractors are not Employer Handbooks Set forth acceptable conduct minimize liability employers held for etc Creates binding agreement on behalf of employers though so they should be careful Sue employer for wrongful discharge and get damages o Monetary for injuring reputation back pay future pay Ch 14 pg 3 4 6 15 Employment status or relationship rules apply to US if employee operates abroad foreign rules will apply If you re doing business in 40 foreign countries have to understand the law in all of those Foreign laws may override US laws o Roam 1 regulations Need someone who understands them and then work with European union countries Doesn t help in any other countries Vicarious liability concept o You employer or you principle are going to be held responsible for employee or agent s actions if they are under the scope of authority acting