Sources of Employment Law

December 30, 2012 in Articles | MARTIN WREN, P.C. | LEAVE A COMMENT

Virginia Business Lawyers

robert-bryne-homeThe employment relationship is a challenging one.  In addition to the emotional complexities inherent in any human relationship, the relationship between an employer and its employees can be further obscured by the numerous intersecting federal, state, and even local rules and regulations governing the workplace.  For the most part, federal and Virginia law views the employment relationship with a laissez-faire recognition that an employment relationship is at-will and can be terminated by either party, at any time, for any cause good or bad, or for no reason at all.  Though a simple concept in theory, in practice the contours of at-will employment are both broad and deep, and pitfalls await unwitting employers and employees who make missteps in the employment relationship, whether in hiring, disciplining, or firing, or with the numerous terms and conditions of employment regarding job assignments, promotions or demotions, layoffs, training, fringe benefits, and any other term or condition of employment.

The starting place for navigating the field of employment law is to first understand what employment law is and what it encompasses.  With that in mind, employment law, generally speaking, refers to any set of legal standards that governs the employment relationship.  There are six main sources of such laws:  federal and state constitutions, federal and state statutes and regulations, labor laws, other statutes that indirectly implicate employment law, common law, and employment contracts and agreements.

I.             Federal and State Constitutions

Rights and rules flowing from federal and state constitutions are the first and highest source of employment laws.  Constitutional guarantees most notably protect the rights of government employees, ensuring those workers have access to, most notably, their First Amendment rights (free speech), their Fourth Amendment protections (freedom from unreasonable searches and seizures), and their Fifth Amendment rights (freedom from self-incrimination).   These rights ensure public employees can exercise their First Amendment freedoms in the workplace and, in the context of internal investigations and disciplinary proceedings, such employees will receive a number of additional protections.

II.            Federal and State Statutes and Regulations

There are a number of federal and state statutes and regulations that modify employment relationships by prohibiting discriminatory employment practices.  Enforced primarily by the Equal Employment Opportunity Commission, the relevant federal anti-discrimination statutes prohibit discrimination on the basis of age (Age Discrimination in Employment Act & Older Workers Benefit Protection Act); disability (Americans with Disabilities Act); equal pay (Equal Pay Act); genetic information (Genetic Information Nondiscrimination Act); national origin (Title VII and Immigration Reform and Control Act); pregnancy (The Pregnancy Discrimination Act); race and color (Title VII); religion (Title VII); military and uniformed service (Uniformed Services Employment and Reemployment Rights Act); and sex and sexual harassment (Title VII).  In addition, each of these statutes prohibits retaliation against employees who exercise rights under these laws.

Federal statutes also govern wage and hour matters across the country.  The federal Department of Labor (DOL) retains jurisdiction to enforce federal statutes dealing with labor standards, most notably the Fair Labor Standards Act, which addresses, among other things, overtime law, minimum wage requirements, and child labor standards.

The federal DOL’s jurisdiction is not limited to wage and hour matters, but also reaches into the workplace safety and employee benefits arenas.   The DOL oversees workplace safety via the Occupational Safety and Health Act (OSHA) and the Migrant and Seasonal Agricultural Worker Protection Act, employee benefits and retirement through the Employee Retirement Income Security Act (ERISA), leaves from work under the Family and Medical Leave Act (FMLA), worker rights during layoffs and plant closures through the Worker Adjustment and Retraining Notification Act (WARN), and continuation of health care coverage for departed workers under COBRA.

State statutes often overlap many of the subject areas covered by federal statutes and regulations, but, as compared to the federal statutes, the state provisions are oftentimes subject to smaller employers or offer different remedies for noncompliance.  In Virginia, for instance, the Human Rights Council has authority to enforce the Virginia Human Rights Act, which provides many of the same protections as the federal statutes—protection of members of protected classes from discrimination and harassment, guarantees of equal pay and overtime pay, etc.—but some of the state touches on those laws place restrictions on smaller employers, including those with as few as five employees.  In some instances, local ordinances or rules may create another layer of regulation and offer a slight substantive variation of their federal and state antidiscrimination statutes.

Virginia also has a state counterpart agency to the DOL, called the Virginia Department of Labor and Industry.  Modeled after the federal DOL, Virginia’s Department of Labor and Industry has authority to enforce laws pertaining to wage and hours, workplace safety, and asbestos and lead programs.

In additional to the litany of federal and state statutes protecting employees, whistleblower statutes on both the federal and state level protect whistleblowing employees from retaliation and, under certain circumstances may provide financial rewards when those employees report and expose fraud against the government.  Such whistleblower claims, known as qui tam actions, proceed in conjunction with the government’s involvement and seek to remedy fraud perpetrated on the government

III.           Labor Laws

Labor law, as opposed to employment law, generally refers to a set of statutes that govern labor-management relations in America.  Based generally around the National Labor Relations Act (NLRA), also known as the Wagner Act, and the Labor Management Relations Act, also known as the Taft-Hartley Act, labor laws regarding union and management relations are enforced by the National Labor Relations Board and are primarily concerned with establishing rules whereby employees can form or join unions and enter collective bargaining agreements with their employers.

IV.          Other Statutes that Implicate Employment Law

In addition to the numerous federal and state statutes that have the chief aim of placing restrictions on the employment relationship, a number of statutes on both levels reach into and impact the employment relationship.  The Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act, for example, may both arise in the hiring process when employers conduct background checks of prospective employees.  The Electronic Communications Privacy Act is also implicated by the employment relationship when electronic communications, such as emails and voicemails, are intercepted or reviewed by employers.

In addition to the harassment and discrimination statutes, Virginia has a number of statutes that may be relevant by virtue of the employment relationship, such as the Uniform Trade Secrets Act, the Statutory Business Conspiracy Act, and the Virginia Computer Crimes Act.  Violations of these statutes are typically alleged when an employee is making plans to leave their employment but, in doing so, the employee arranges with their new employer to take trade secrets or take some other unlawful action.

V.            Common Law

The fourth source of substantive employment law and duties arises out of judge-created law, also known as common law.  Employment law has early roots in the common law, originally flowing from a long established rule known as respondeat superior, which recognizes that an employer bears legal responsibility for the wrongful or negligent acts or omissions of employees committed in the scope of employment.   This form of vicarious liability permits third parties outside the employment relationship to sue employers for such claims as negligent hiring or negligent retention, both of which occur when an employee, who should not have been hired or should have been terminated, causes harm.  Similarly, employees may expose their employers to a claim of intentional interference with contract or prospective economic advantage by interfering with a competitor or engaging in conduct that unfairly severs a competitor’s profitable relationship.

Naturally, some forms of liability exist directly between employers and employees.  Virginia, though an employment-at-will state, may permit an employee to sue an employer for wrongful discharge, known as a “Bowman” claim or a claim for termination against public policy.  Bowman claims arise when an employee is discharged in violation of a prevailing public policy, usually for exercising a statutory right, but it may equally apply in whistleblowing contexts and when employees refuse to commit crimes for their employer.

But the legal risks in the employment relationship also expose workers to potential liability. Virginia employees owe their employers fiduciary duties, requiring those employees to act in their employer’s interests at all times and not obtain any advantage at their employer’s expense.  Employees who fail to heed this advice may face a lawsuit for breaching their fiduciary duties of loyalty, care, or disclosure.

Employees who are injured in the course of their employment are, for the most part, barred from suing their employers as such claims will be compensated through workers’ compensation insurance, but some tort claims may arise during the employment context and still give rise to a cause of action against the employer.   Despite the workers compensation bar to recovery, employees may nevertheless be able to recover for their injuries from a third party, and, under certain circumstances, such employees might have claims directly against their employer for torts such as defamation or invasion of privacy.

VI.          Contracts

Though the at-will employment doctrine is deeply established in Virginia, Virginia courts will honor, within limits, certain employment contracts, including those with noncompetition, non-solicitation, noninterference, non-piracy, and confidentiality provisions.   Such restrictive covenants in contracts are known as restraints of trade, and, though the Supreme Court of Virginia has demonstrated its willingness to declare such restraints unenforceable, restrictive covenant clauses may nevertheless be enforced when those covenants are narrowly tailored to protect an employer’s legitimate business interests without unduly and unreasonably burdening an employee’s right to find alternative employment.

Virginia courts cast a less skeptical eye on severance agreements, including those for employees subject to the Age Discrimination in Employment Act, so long as such contracts follow all legal requirements.  Despite that, a multitude of difficult issues exist with severance and compensation packages, especially with executives or stock holders, and care must be taken to avoid a host of issues, including unforeseen tax consequences.

VII.         Conclusion

Given the extensive role that employment plays in most of our lives, it is little surprise that the laws and regulations regarding the employment relationship are every bit as vast.  Employers and employees alike need to understand these intricate rules to prevent unknowing legal violations, or to seek appropriate redress when the rules are violated.

Robert E. Byrne, Jr., the author of this post, is  Charlottesville Business Litigation Attorney who represents business in a wide variety of matters.  Bob practices throughout Virginia from the Charlottesville office of MartinWren, P.C., and he is experienced handling employment law matters and disputes from all sources of law, in both state and federal courts.  For more information about Bob’s services, please contact him at (434) 817-3100 or by email at [email protected].

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