Again, we will be going through a variety of hypothetical scenarios. For each scenario, you need to explain the reasoning behind your answer and use at least one reference from the background materials to support your answer. Overall you need to have a minimum of three references from the background materials cited in your paper. In addition to three sources from the background materials, feel free to cite additional sources that are not included in the background materials. However, any citation should be from credible sources such as articles. Your paper should be 4- to 5-pages total in length. Suppose you own a shipping business and have your own fleet of trucks. When you hired your truck drivers you did a thorough background check and made sure they all had clean driving records. However, recently you had more business than you could handle with your existing fleet and used an independent contractor for some of your shipping. This independent contractor ends up getting in a huge accident and destroying some of your client’s merchandise in the process. Your client finds out that this independent contractor, unlike your own employees, does not have a good driving record and has had his driving license revoked or suspended on several occasions. Are you liable for the damages your client faced? Now suppose as owner of your business you have been generally satisfied with the performance of all of your employees. But one of your employees begins to slip a bit in their performance and has also gotten on your nerves a bit recently. One day when you are in a bad mood you decide to fire this employee without any kind of warning. However, a few days later you begin to worry about legal consequences even though none of your employees have contracts and your employee handbook states that anyone can be terminated at your own discretion. What kind of legal risks, if any, do you face for terminating this employee? You are the owner of an Italian restaurant famous for your very tasty pesto sauce that no other restaurant in the city can beat. As a result of your tasty recipes, you are the only successful Italian restaurant in town. To protect your business from potential competitors, you make all new chefs that you hire sign a noncompetition agreement that forbids them from opening up an Italian restaurant anywhere in the U.S. for five years if they leave. Would such an agreement be likely to hold up in court if one of your chefs violates it? Now suppose you are the owner of a company and have designated your personal assistant as your purchasing agent for the purchase of all office supply orders of less than $500. Your assistant makes a purchase of some discount office supplies for a total price of $450. You are unhappy with the quality of these supplies but there is a no-return policy for these supplies since there were purchased in a special clearance sale. Are you obligated to pay the $450 even though you did not specifically approve this purchase? You are the owner of a retail business, and you have fallen behind for many months on your loan repayments to the bank (you owe a total of $100,000). The bank has become fed up and now wants you to hand them over all of your remaining company funds to pay back the loan. However, the holiday shopping season is coming up in a few months and this is where you typically do 60-70% of your business for the year. Without your company funds you will not be able to pay your rent and pay your staff, so you will not be able to pay back the bank until after the holiday season. If you end up needing to file for bankruptcy, what type do you think would be most appropriate for this situation – Chapter 7, Chapter 11, or Chapter 13? (This will be under the Pearson background material)

 

Employment law

 

Name of student

Course title

Tutor’s name

Date

 

Employment law

Independent contractor

Independent contractors are hired by firms on a one-time base. Contractors are hired according to job demand that entails inclusion of an extra work force that is terminated once the job is completed. The firm that hires them pays for their services but do not control their activities thus they remain as their own boss. The firms do not pay for their social security taxes, also does not offer them a compensation policy, are not subjected to rules that the employer impose and their incomes taxes are not withheld. The firm is not liable to any actions or injury that the contractor obtains. 

The owner of the business is liable for damages that a client faced when the contracted driver caused an accident and the client merchandise was destroyed. The business owner would take care of all the damages because he carelessly hired the independent contractor who was working on his behalf. His careless hiring is supported by the fact that he hired a driver who driving license had been revoked.

This indicates that the owner did not carry out a background study on the contractor’s record. The owner was not diligent in his employment procedure as he did not subject the contractor to tests that qualify him. The act show negligence from the owner in contracting qualified drivers. This entails that his liable for the merchandise damages for assigning the work to a driver who is not qualified and is inefficient (Pearson, 2014)

Employee termination

Legal risks are the possibilities that arise from violating various regulatory obligations. The employer’s risks being sued by the terminated employee. The employee files a lawsuit indicating that the employer terminated him wrongful without warning. The labor laws state that for an employee to be terminated there should be a just reason for the employer to do so. Also the employee should be given a probation period after the warning to monitor whether the will improve. Lack of improvement is justified after the probation period (DuBoff, 2004).

In this case, there is no justification for firing the employee. A bad mood is a personal aspect that should not interfere with the business operation. The employee does not put the employee on prohibition to monitor his operation after he start to slip in his performance. This is termed as wrongful termination, because the employer did not go through the right termination procedures. Also, the employee was not prepared for the termination, which affects him both financially and emotionally. Suing the employer offers him a chance to get a compensation for the wrongful termination.

Noncompetition agreement

A noncompetition agreement is an understanding between an employer and the employee. The agreement entails that the employee is not allowed to use information that he has absorbed during his employment period. The use of the information is limited in that the employee cannot start a business similar to that of the employee. The agreements also prevent the employee upon resignation from working for competitor business. The non-compete ensure that the employee does not disclose the business secrets to competitors or use them elsewhere (Pearson, 2014)

In case a chef violates the agreement and the case is taken to court, the agreement is likely to hold up if it meets the stipulated elements. These elements include protection of legitimate engagement of the employer. Legitimate interests of the business include conditional information, customer relation and trade secrets. For the agreement validity, it has to be reasonable in terms of geographical factors which translates to application of the agreement in the employer states.

Time elements entails that the agreement is valid for only a couple of years. Scope is a non-compete element that guide the length and breadth that the agreement is applicable. For the agreement to be effective, it must be in writing stating all terms and signed by the both parties in approval. The employee who is limited by the agreement has to receive a certain award in return.

The agreement may not hold up if the business is located in a country that does not enforce the noncompetition agreement. If the agreement is too restrictive it will not hold up in court. Lack of clarity of terms in the agreement leading to confusion and mislead makes the agreement invalid.

Purchase approval

The employer is obligated to pay the cost incurred in purchase due to no-return policy that limits the employer option. The no-return policy states that once the goods are bought they cannot be return to seller.  He is obligated because he gave the assistant the authority to act on his behalf in purchase of the supply. In this case, the assistant and the employer have an agency relationship. 

The relationship entails an understanding between the agent who is the assistant and the principal who is the employer. The assistant gives the employers interest priority ensuring that the required orders are purchased. The agency is fully disclosed because the principals knows that the agent is acting on his behalf and he is liable for any action that the agency takes.

Due to the full disclosure of the relationship the employer has to pay for the purchase though he does not approve. This is because it is his responsibility to purchase the suppliers but he chooses to delegate his assistance to do the task. The employer also did not give specific information about the quality he desires which make him more liable as he did not provide sufficient information.

 

Bankruptcy

Bankruptcy is considered to be legal proceeding where by a business lack the ability to pay its outstanding debts hence giving it protection. The proceeding offer the creditor some form of payment in that the debtors assets are evaluated, measured and used to pay the debts. In situations where the debt cannot be repaid the debtor, debts are forgiven. Filing bankruptcy increases businesses chances of getting consumer credit later and creditors can measure repayment abilities of the borrower. 

Chapter 11 is the most appropriate bankruptcy to file. The bankruptcy is closely supervised by a trustee who oversees the case progress. Chapter 11 is commonly referred to as the reorganization of a business. Through this proceeding the business owner proposes a plan that is profitable that helps in minimizing the costs and provides an alternative source of income. This is to hold the bank at a bay till the holiday shopping season starts which is in a few months (Chava, 2004)

Reorganization protects the company from handing back its funds to the bank. The protection of for a given period of time that the debtor must comply with failure to that the bank claims the company’s funds.   This enables the company to retain funds that enable it to pay workers and the rent. Continuation of the company operation is enhanced in readiness of the approaching shopping season to generate more income. The generated income will be used to fully repay the bank loan. References

Chava, S., & Jarrow, R. A. (2004). Bankruptcy prediction with industry effects. Review of Finance, 8(4), 537-569.

Debtor/creditor relationships, agency law, and employment law. (2014). Pearson Learning Solutions. New York, NY:

DuBoff, L. D. (2004). The Law (in Plain English) for Small Business. SphinxLegal

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