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    Employer/Employee Relationship

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    Little Lamb Company needs an additional programmer for a special project. The company enters into a contract with Mary to complete this project. Just as the project is nearing completion, a new need arises for her services. She is asked to continue with the company to complete the new project. While completing the new project, the supervisor begins working more closely with Mary and requires her to use company materials and equipment while adhering to company work schedules. After two years, economic conditions force the company to make budget cuts. Mary is asked to leave. Thirty days later, a major contract is acquired by the company, which reinstates the need for Mary's services as a programmer. However, the supervisor chooses to hire his equally-qualified cousin and not offer Mary the opportunity to return.

    b. Answer the following questions based on the scenario:
    1) Is Mary an independent contractor or an employee? Describe the factors that led to your determination.
    2) Has the employer/employee relationship changed over the course of time? If so, how?
    3) Was Mary's release legal under the doctrine of employment-at-will? Why or why not? If not, which of the following exceptions to employment-at-will have been violated? Why?
    a) Breach of public policy
    b) Breach of implied covenant of good faith and fair dealing
    c) Breach of implied contract

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    Solution Preview

    Question 1
    In 1992, the U.S. Supreme Court ruled that when determining when a person is an independent contractor or an employee (usually at-will), the courts are to look at the hiring party's right to control the "manner and means" by which the product or project is accomplished. The courts are to look at: the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additoinal projects to the hired party; the extent of the hired party's discretoin over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.
    In looking at the fact pattern, this situation meets some of the elements for employee status: Mary obviously has a special skill the company needed; after Mary finished the special project, she started to work on other services for the company; Mary was asked to use company tooks and instrumentalities; Mary worked at the business's office; even though she originally had an employment contract with the business (independent contractor status), her employment morphed into employee status when she was asked to work on additional projects; the business told Mary to work within the company's regularly scheduled working hours; Mary's work was part of the regular business of the company; and the company was in business.
    Mary's employment status at the time she was released was employee, unless the ...