Chapter 14--Agency

Actual v. ApparentActual v. ApparentExpress v. ImpliedExpress v. Implied

Employees/Independent ContractorsEmployees/Independent Contractors

Agent’s AuthorityAgent’s Authority

3

Degreeof

Control

Employee or Independent Contractor?

• Why is this important to determine the difference?– “Vicarious Liability” as to employer if employee does

something wrong.– Rights attach to employees and violating law could

result in penalties to employer.

• How can we determine the difference?– Case-by-case basis but we take in consideration 20

factors...

4

20 Part I.R.S. “Test”--only a tool• Instructions• Training• Integration• Services Rendered Personally• Hiring, Supervising & Paying

Assistants• Continuing Relationship• Set Hours of Work• Full Time Required• Doing Work on the Employer’s

Premises• Order or Sequenced Set

• Oral or Written Reports

• Furnishing Tools & Materials

• Payment by Hour, Week or Month

• Payment of Business/Travel Expenses

• Significant Investment

• Realization of Profit/Loss

• Working for more then one firm at a time

• Making Service available to general public

• Right to Discharge

• Right to Terminate

Agent’s DutiesAgent’s DutiesObey Obey InstructionsInstructions

LoyaltyLoyaltyConflict of InterestConflict of InterestConfidentialityConfidentiality

Duties of Agent/PrincipalDuties of Agent/Principal

Principal’s Principal’s Duy:Duy:

Compensate Compensate Agent;Agent;

Indemnify Indemnify Agent Agent (reimburse)(reimburse)

Respondeat Superior- Respondeat Superior- Agent:Agent:EmployeeEmployeeWithin Scope Within Scope of Employmentof Employment

Direct LiabilityDirect LiabilityIndependent ContractorsIndependent ContractorsAgent MisrepresentationsAgent Misrepresentations

Tort Liability- PrincipalTort Liability- Principal

Act of PartiesAct of PartiesOperation of LawOperation of LawAgency Powers GivenAgency Powers Given As SecurityAs SecurityEffect on Agent’s Authority- Effect on Agent’s Authority-

NoticeNotice

Agency TerminationAgency Termination

Employer’s Liability:

Employers can find themselves liable for the negligence of their employees and for their own negligence in hiring, retaining & supervising their employees.

Respondeat Superior (let the master respond)

Why go after anEmployer? Is theEmployee releasedfrom liability forher/his actions?

Justification?

Employee orIndependent Contractor?

Employee: The employer has a greater “control” over the person, pays payroll taxes, offers insurance benefits, & instructs on how to undertake the assignment with a greater degree of participation.

Independent Contractor: The employer has less “control” over the person, unlikely that payroll taxes are taken out, has less involvement/participation in the completion of a job.

Respondeat Superior applies to Employer/Employees and not independent contractors

Respondeat Superior applies if:

1) The employee was subject to the employer’s supervision.

2) The employee was motivated (at least in part) by a desire to serve the employer’s interests.

3) The problem arose substantially within normal working hours and in a work location.

4) The act in question was of the general type the employee was hired to perform.

JUDGE JUDY READY TO RULE----

Case: Carroll Air Systems v. Greenbaum--- Employer sued after deathcaused by drunk driving of employee going home from a convention.Employer argued no “vicarious liability”….. Plaintiff disagrees…...

Now its time to pay the piper. You play…you pay

Employee w/n scope ofemployment therefore

employer is liable

Employer’s Negligence:

An employer is negligent in the hiring and/or retention of an employeewhom they know (or should have known)is likely to commit harm

to others or for careless

training or supervision. As an x-employer shouldyou give a reference? What are liabilities?

Official Language Clause