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The following case study features problems and issues related to employment law. The case is fictional yet realistic to illustrate points in the lecture and text and to provide problems within legal cases to solve. This case and Case Study B will be used for a number of weeks.
Important Note: Your weekly class assignments will notify you when to work on this case.
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A small corporation, Discrimina, Inc. is a small parts machining shop owned by Hank Discrimina and his daughter, Eunice Discrimina. Discrimina, Inc. makes high quality agricultural parts for some of the agricultural implement manufacturers.
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Mr. Discrimina is thinking of retiring and has considered selling out for about $1.2 million. His machine shop has only 15 employees and is appraised at only $600,000.00 including the steel building, grounds, machines, parts, and going business value.
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Defense Plants, Inc. has just offered to acquire the entire company for $1 million, and Hank Discrimina is allowing them to check out his company to see why they want to pay so much for a small machine shop. The agreement at this point gives both parties full rights to back out and allows Defense Plants executives to check out the place.
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Defense Plants, Inc. has large government contracts and also does work for private individuals. They sell ammunition for military and sporting uses.
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Because of their large contracts with the government, Defense Plants, Inc. has a group of people whose sole job is to comply with government regulations. Defense Plants also has an excellent human resources department that has developed a policy for nearly everything likely to come up in the area of employment disputes. The company is non-union. In contrast, Discrimina, Inc. is the alter ego of one man and to a lesser extent, his daughter. The company does not comply with employment laws. Up until recently, Discrimina was regulated mostly by state law, but recent expansions have put them into federal jurisdiction in a number of areas.
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During the tour of his plant, Mr. Discrimina asks his visitors from Defense Plants what military purpose his small machine shop could possibly have. Dave from Defense Plants politely declines to answer the question.
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A uniformed Navy officer appears the next day and asks Mr. Discrimina to sign a secrecy agreement. Mr. Discrimina recognizes the officer’s voice from calls made from a small implement manufacturer in another state. He puts two and two together and concludes that the whole reason the government and the other machine company are cooperating on this whole deal is to obtain access to the one specific machined part that has a military use. He also realizes that only one specific employee is qualified to machine the specific part. In fact, the employee, Jim Arbor, his best machinist, was the one who invented the part. Jim had come to work for Discrimina because he had needed to stay in the area for domestic reasons. One more important detail is that Jim is dating Eunice Discrimina.
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Mr. Discrimina is now considering selling the part directly to the government instead of selling his business. But there are employment law problems to solve before he can qualify as a government contractor.
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One problem has to do with terminating employees. The Discrimina, Inc. handbook says, “If you are a good employee and keep up with your work, I won’t fire you. But, if I want to close the plant, I can immediately fire everyone. I can also change this manual any time I want.”
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During the past six months, without updating the manual, Mr. Discrimina has fired three employees, all without logging any problems into Discrimina’s employment records. When asked, Mr. Discrimina says the three employees were harassing Rita Land, his bookkeeper, and he does not tolerate that at his company.
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The men consider Rita part of management because she works mostly in the office annex. Rita considers herself an ordinary employee, even though she is frequently in on confidential business planning with Hank Discrimina and his daughter, Eunice, the Vice President.
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If the company becomes a government contractor, Discrimina would have to have a health plan and would have to raise wages. There is no health plan now, due to increased costs resulting from the illnesses of the oldest employee, Frank Oldburr.
Case Study A Problems
Problem 1. Employment contracts and wrongful discharge
Mr. Discrimina, through Eunice, requests that his employee Jim Arbor sign what he calls a confidentiality agreement. He offers to “consider profit sharing and salary increases” if Jim signs, but does not put profit sharing and wage increases in writing. Jim asks to read the paper before he signs and finds that it also contains a non-competition agreement not allowing Jim to do any machining, mechanical engineering or any work on industrial parts for a period of five years after leaving the company, anywhere in the world. Jim feels that he is being taken advantage of, but does not know what to do. He has been threatened with discharge if he doesn’t sign.
Questions
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Analyze Jim Arbor’s situation. Does he have an employment contract now? What is it? Should he ask for the salary increase to be in writing? Why or why not?
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Is it fair for Eunice to take advantage of the fact that Jim does not know why his invention and services have suddenly become more valuable? Explain. Is it fair for her to be the one to approach him, given their personal relationship? Explain.
Problem 2. Lack of minority hiring, evidence of discrimination
There are no minority or foreign born employees at Discrimina, Inc, even though the local community consists of many newly arrived people of Mexican extraction. For years, the ads for new employees all contained the phrase, “must have solid ties to the community and top English communication skills.” For that reason, few Mexican people have ever applied for work at Discrimina.
Assignment
Rewrite the ad, in a way that will attract, rather than repel, Mexican or other foreign born applications. Then prepare a memo to the executives at Discrimina, Inc. advising them of why they should use your version of the ad.
Problem 3. Hostile atmosphere for one gender
The atmosphere at Discrimina, due more to the influence of a few employees, not the owner himself, is markedly hostile to women. Rita Land and Shirley Baker are the only two women employees in the plant. Rita, who does billing and bookkeeping, needs to go onto the plant floor to tally up parts and make sure items have been shipped. She has warned Shirley Baker not to even go onto the shop floor. Unless the owner is present, Rita is at risk of being harassed with rude or suggestive comments. Rita maintains a tough exterior, but she has had to pay over $5,000.00 for counseling and medication to overcome the depression and fear that her doctor says is caused by the harassment.
Questions
- Review Rita’s problem in the light of Sexual Harassment laws and related cases.
- Next go over the legal case “Harris v. Forklift Systems, Inc.,” 510 U.S. 17 (1993).
- In a Word document, evaluate whether Discrimina, Inc. would likely be held liable in court for Rita Land’s counseling and medication expenses if she sues.
Problem 4. English Only?
Be sure to refer to the Garcia v. Spun Steak Company case.
The job ad that Discrimina created to encourage legal immigrants to apply for jobs was successful. Three new machine operators are immigrants from Mexico, all who speak some English as a second language to their Spanish. They all have Vo-Tech training and are considered excellent employees. They are Luis, Carlo, and Benito.
Luis, one of the new employees, is married to Juana, an immigrant from Guatemala, who is very good with numbers. She was hired part-time to assist Eunice with inventory control and clerical tasks. After she started, Juana complained that the other two Mexican men were calling her names. Eunice is normally the only supervisor around when the name calling takes place, and she does not speak Spanish. Juana has asked for an English only policy and Eunice thinks it might be illegal to do that.
Questions
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How should Eunice solve this problem?
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How might the case of Garcia v. Spun Steak Company provide guidelines to resolve some of the issues?
Problem 5. Safety First
Discrimina, Inc. recently received a number of correction orders from OSHA. The local Fire Marshall has also warned them that the welding area does not comply with the fire codes. In particular, the stairwell is not up to OSHA or state fire codes. It is an open stairs in the office annex next to the shop. The owner contends that it is not a problem, since it is not even in the same building where welding occurs, but the inspectors all say it is not up to code. Both OSHA and the fire inspector want an entirely new enclosed stairway to be built. They also want a completely fireproof wall between the shop and the office annex. The CEO has heard negative things about OSHA and doubts he needs to follow their recommendations.
Question
Draft a memo to the CEO explaining that OSHA compliance saves lives. Use examples from the OSHA website. http://www.osha.gov. Check out OSHA Saves Lives within the site to illustrate your point.
Problem 6. Health Care Plan
Frank Oldburr is the oldest employee at Discrimina, Inc. He is now 62 and has some health problems. The company-wide health plan has been discontinued, partly due to Frank’s health problems. The premium kept going up. Some of the employees who don’t like Frank have asked Discrimina to fire him and then reinstate the health plan.
Questions
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What is Discrimina Inc.’s legal responsibility to provide health insurance to employees?
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What legal options does Frank Oldburr have to get himself covered with a health plan?
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Is there any way to come to a win-win situation here? Explain.
Problem 7. Dollars for Waiting?
Jeffrey Swift has been a messenger used by a couple of the local businesses where the Discrimina, Inc. machine shop is located. Sometimes he has done some extra errands inside the Discrimina building for a couple of hours. For the last several weeks, he has helped package items for shipment on Thursdays. Things have gone well, but Jeffrey is concerned because sometimes he has waited over two hours in the waiting room while waiting for the packaging to begin. He wouldn’t mind but Discrimina pays only for packaging time, not for waiting time. He can never be certain when the parts will be ready for packaging because final quality checking time varies wildly.
Jeffrey has his own delivery business, but Discrimina has only paid him cash. Each time, Jeffrey has given the company a receipt for the cash. While he waits, he sometimes goes out for donuts for the crew. At other times, he plays games on his PDA or makes cell calls to friends.
Question
If Jeffrey Swift sues for the waiting time hours, what is the likely result and why? Write your answer in a Word document in 1-2 pages.
Problem 8. Help Wanted!
Evaluate the Want Ads below in terms of employment law.
Help Wanted at Discrimina, Inc.
In recent weeks, Discrimina, Inc. has advertised for the following openings. Evaluate the notices from the standpoint of employment law:
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New “parts man” to keep track of inventory. Must be able to go up and down numerous steps without assistance, do a dead lift of 75 pounds and read and write the English language as a native speaker. The applicant has to be polite to the ladies in the office.
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Female needed to do typing and light bookkeeping. Must have H.S. diploma, solid ties to the community, and be able to handle rough talk and mild teasing. Applicant should have between 2 and 5 years of experience. Applicant needs to solve any day care problems before taking job.
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Machinist needed. High pay for the right able bodied man (or gal!). Experience and Vo-Tech training needed. Health and retirement benefits are available after initiation period. Must be willing to work Mondays through Saturdays. Must not have disruptive attitudes or lifestyle. No religious nuts, addicts, crazies, or drunks.
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Junior executive position, personnel. Work with machinists and office staff. Prefer an Asian, Black, Latino, or White woman with experience in personnel matters including anti-discrimination compliance. No old white dudes, please, we are full up!
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Gal Friday. Go-fer and greeter in sales office, willing to run errands and do light office work. Will consider young man for this job, if willing to forgo advancement.
Problem 9. Americans with Disability Act
Discrimina, Inc. has no policy regarding disabled employees. The only disabled employee has the title of “inventory parts man” and is in a wheel chair. His name is Bob Yates. Bob has to go back and forth from the shop floor to the office annex. He is unable to access his computer on the second floor of the office annex without having to interrupt another employee to push him up the steps. Bob has become upset about this and several times has asked management for an elevator or for his office to be moved. He says he feels he has been treated as a second class employee.
Question
The EEOC has decided not to require the company to provide an elevator for Bob or to mover his office, because it would create too much of a hardship for the employer. Bob belongs to a religion that prohibits him from “going to court,” except in extreme situations, so realistically, Discrimina doesn’t have to do anything. Nevertheless, Eunice is thinking about helping Bob. What advice can give her to help make this determination? What are the pros and cons for this decision?
Problem 10. Is alcohol abuse a disability?
The employee handbook allows discharge of an employee for any Driving Under the Influence conviction, or for alcoholism, whether job related or not. This is because the owner’s sister was killed by a drunken driver.
Question
Is Discrimina, Inc. in compliance with laws in regard to alcohol use? Explain and cite support for your answer.
Problem 11. Union organization of a small shop
About 6 months ago, Arnold, one of the machinists at Discrimina, Inc., and Rita in the office, posted union signs in the shop and tried to organize the employees into the new Brotherhood and Sisterhood of Machinists Union. Mr. Discrimina hollered and tore down the posters and said that he would burn down the place before he would allow a union to organize his shop.
Question
What rights do Arnold and Rita have to unionize? What are acceptable responses from the employer?
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