Business Legal and Ethical Issue - Research Paper Example

Business Legal and Ethical Issue Scenario Sam is the manager of computer supplies firm by the Brighton Computers Ltd. He hired Kimberly two years ago as a salesperson with an at-will employment agreement subject to a 30-day probationary employment period. Kimberly did not have any experience, but she is young and aggressive in the market especially when selling the computers. In the course of her employment, Sam consistently calls Kimberly sexually suggestive names amongst them “Honey pie”. Kimberly is extremely shy and is usually embarrassed when Sam calls her that and has told him to stop calling her that in the course of the employment. In the course of her employment, Kimberly interacts with many male customers who have a soft spot for her due to her beauty and at times demanding sexual favours from her in exchange for big contracts as her earning is pegged on a commission basis. This week, Sam has openly found her behaving unprofessionally in the office with a male client, and has verbally reprimanded her as well as documenting it in her employment file. On another occasion, Sam finds Kimberly at the beach enjoying herself with one of the male customers, when she should be in the city marketing Brighton Computers Ltd. On this day, Sam went to her and told her: “I can find a hundred beautiful ladies to market my computers; I don’t need a brainless “Honey pie” like you in my company. You are fired.” Kimberly is owed $ 2, 000 for that month’s salary and files claims of sexual harassment and wrongful termination against Sam and Brighton Computers Ltd. Meanwhile, William has been one of the most loyal customers of Brighton Computers Ltd and had an outstanding debt with the computer firm for the delivery of computers worth $ 50, 000. Being a loyal customer of the computer firm owned by Sam, he has been paying for his debt at his own convenience or in instalments. Due to his relationship with Brighton Computers Ltd, Kimberly had assured William that Sam has waived the debt of $ 50, 000 that he owed the company. Being convinced by the promise that his debt has been waived, William uses the money that he was supposed to paying the debts to construct additional workstations at his cyber cafe. However, six months later, Sam asks William to repay the debt of $ 50, 000 arguing that Kimberly was not authorized to waive the debt and he should repay it within twenty-one days. William feels that the condition put forth by Brighton Computers Ltd that he pays the money is unfair, as he had relied on the assurance by Kimberly to invest money in the expansion of his business. Introduction The questions raised by the business legal and ethical issues scenario are whether Kimberly who was employed under employment at-will doctrine has a claim against Sam and Brighton Computers Ltd for sexual harassment at the work place and wrongful dismissal. Further, does William have a claim under the contract doctrine of promissory estoppel by relying on the assurance by Kimberly that his debt had been waived after which he invested the money elsewhere without repaying the debt? An employee at-will who has been sexually harassed and wrongfully dismissed from employment has a legal remedy against the employer, just as a person who has relied on a promise for an action or forbearance in a contractual relationship to his detriment. Analysis Sexual Harassment Claim by Kimberly against Sam In the United States, it is unlawful to harass a person because of the sex of that person and this includes sexual harassment, which may include unwelcome advances, requests for sexual favors or verbal or physical harassment that are sexual in nature and includes remarks (McLaughlin, Uggen and Blackstone, 2012). The constant calling of Kimberly as ‘Honey pie’ by Sam constitute sexual harassment only if they were frequent or severe that it created a hostile and offensive environment for her to carry out her tasks. Under Title VII of the Civil Rights Act of 1964, sexual harassment is expressly prohibited as a form of discrimination at the work place and may occur in two instances namely Quid pro quo and a hostile work environment. Quid pro quo is used when complying or failing to comply with a sexual demand is used as a basis for an employment decision while a hostile environment occurs when the employee is subjected to unwelcome sexual behavior that may be verbal or physical. In the case of Kimberly, she has been subjected to sexual harassment in a verbal nature that is pervasive and severe, which has affected her performance at the workplace. In Meritor Savings Bank v. Vinson, 106 S.Ct. 2399. (1986), Vinson filed a suit claiming that she had been sexually harassed by her supervisor while working for the petitioner in this case Meritor Savings Bank contrary to the provisions of Title VII of the Civil Rights Act of 1964. The U.S. Supreme Court confirmed that the environment in which she worked in constituted a hostile environment, and therefore the sexual harassment claims were actionable due to their prohibition under the Civil Rights Act of 1964. In Harris v. Forklift Systems (92-1168), 510 U.S. 17 (1993), the U. S. Supreme Court held a lady had been sexually harassed at the workplace due to the utterances of the company’s president, which could be reasonably be perceived or are perceived to be hostile leading to psychological injury on another person. From the above case law and argument, it is important to note that Sam has a legal duty to stop any form of sexual harassment at the workplace. He is therefore liable for his engagement in sexual harassment of Kimberly, which has resulted in an adverse employment action against her. However, Sam may limit liability if he shows that he took reasonable steps to prevent and promptly address his habit of sexually harassing Kimberly, and she unreasonably failed to take advantage of the measures put in place. For Sam to be absolved from any liability, he must prove to the court that he took immediate and appropriate action to stop his habit of sexually harassing his employee Kimberly and address the conflict. Wrongful Dismissal Claim In analyzing the wrongful termination case by Kimberly, it is important to note that her employment is an employment at will agreement. This means that the employer or the employee can terminate the contract at any time for any reason and they do not have to be necessarily for good reason (Gertz, 2008). As long as she is within the jurisdiction of the United States, the claim by Kimberly for wrongful termination will not sustain, as her employment was that of employment at will and can be terminated at any given time by her employer Sam. However, there are exceptions whereby the employer in this case Sam held for wrongful dismissal of Kimberly, for example if he breached the employment contract or an implied covenant of good faith and fair dealing, or a violation of public policy. Kimberly may be successful in a suit for wrongful termination of her employment at will if there is a clear breach of the contract such as the termination of the contract before its duration elapses if it was expressly provided for in the main contract. The employer is therefore prohibited from terminating the contract of the employee during the employment period without a “good cause”. In most cases this may be contained in handbooks or manuals that give an outline of the disciplinary procedure that must precede any termination of the employment, failure to follow a suit of wrongful dismissal arises. In Toussaint v. Blue Cross & Blue Shield of Michigan 408 Mich. 579, 292 N.W.2d 880 (1980), the Supreme Court of Michigan held that even if the employment did not give a definite period of employment, an employee could only be fired for a just cause. Therefore, firing Kimberly arbitrarily contrary to reasonable and “just cause” is actionable against Sam and Brighton Computers Ltd. Further, the doctrine of breach of good faith and fair dealing in employment at will contracts requires that the employer treat the employee in a fair manner without any malice when terminating her employment services (DiMatteo, Bird and Colquitt, 2011). This principle will only hold if the employer in this case Sam deliberately dismisses Kimberly in order not to pay her the accrued benefits, which in this case amounts to $ 2,000. Sam will therefore be obliged to clear the amount owed to Kimberly including accrued commissions under the principle of good faith before terminating her employment. In Lawrence M. Cleary v. American Airlines, Inc 111 Cal.App.3d 443 (1980), the California Supreme Court held that an employee who had satisfactorily worked for a company could not be wrongfully dismissed without any reason especially when there were accrued benefits to the employee. Kimberly can therefore succeed in her claim for wrongful dismissal under the fair dealing doctrine and be entitled to the benefits, which include the salary owed for that month and the commission. Claim by William under Promissory Estoppel In the United States, promissory estoppel applies to promises or future conducts and a promissee may have cause of actions when the promissor reneges on the promise made. The promissee can have a cause of action only if the promissor makes a promise and encourages the promissee to have an impression or assumption that the contract will come into existence or the promise will carried out (Farber and Matheson, 1985). A cause of action will also arise when a promissee relies on the promise to his detriment or when the promissor deliberately ignores the promise or fails to carry it out. The estoppel is important especially when the agreements do not seem to meet the requirements of a formal contract and a dispute arises. It is also important in providing a remedy to a party that has an existing contract and has met a variance in how the contract is to be performed especially on the rights of the parties. The basis and justification of this rule is that a person has made a promise to another person who has gone ahead to execute the contract based on that promise leading to his detriment. When the promise is changed to the detriment to the person to whom it was made, and then there is a breach of the terms of the contract and in such an instance, the person who made the promise is stopped from reneging on it (Epstein, Arbuckle and Flanagan, 2010). Therefore, the reliance by the promissee is treated as an self-regulating and adequate foundation for implementing the promise and prohibits the promissor from denying the existence of a contract for lack of consideration. In the United States, the Restatement (Second) of Contracts §90 – Promise Reasonably Inducing Action or Forbearance has jurisdiction over matters that involve contracts made under the promissory estoppel doctrine. It states that if a promissor gives a promise to a promissee and reasonably expects to induce action or forbearance on the part of the promissee or a third party, the mere act in the prescribed manner is enforceable as a contract (Barnett, 2001). Further, a charitable subscription or a settlement in marriage will be binding under the aforementioned provision, without proof that the promise led a person to act or forbearance under the contract. This means that a promissory estoppel can only stand if a promise that is reasonably expected by the promissor induces an action or forbearance, the promissee relies on the promise to his detriment and injustice can only be avoided through enforcement of the promise (Bridgeman, 2005). William has relied on the assurance by Kimberly of the waiving of the debt of $ 50, 000 that is owed to Brighton Computers Ltd, and subsequently used the money in investments elsewhere. He has failed to pay the debt by relying on the promise that the debt has been written off as communicated to him by Kimberly acting on behalf of Brighton Computers Ltd to his detriment He is therefore protected under the doctrine of promissory estoppel as enshrined in the Restatement (Second) of Contracts §90 – Promise Reasonably Inducing Action or Forbearance. This depends on the specific state that a person comes from, but the majority rule is similar to the one held in Drennan V Star Paving Co 51 Cal.2d 409, 333 P.2d 757 (Cal. 1958). In this case, the California Supreme Court held that acting in a justifiable reliance on a subcontractor’s bid is enough to make it irrevocable for a reasonable period. Therefore, William simply has to prove that he acted on the assurance of Kimberly not to repay the debt, which resulted into his detriment and he should not be forced to pay it back. Remedies and Recommendation Victims of sexual harassment claims like Kimberly have remedies provided by the law under the amended Civil Rights Act of 1991. She will therefore be entitled to recover damages from Sam and Brighton Computers Ltd and may include future pecuniary losses, emotional pain and suffering as well as mental anguish amongst several other remedies. However, for Kimberly to be entitled to punitive damages against Sam, she must prove that he acted maliciously, recklessly or callous indifference in the sexual harassment claim. For the employer like Brighton Computers Ltd and Sam, it is important that there is a written policy on what constitutes harassment whether sexual or not at the workplace. Through this, the business can minimize on liability or they can be legally protected as it will show that it took preventive measures to avoid or stop the sexual harassment. The policy must include the person designated to receive complaints, the chain of command when handling the complaint and the punishment or disciplinary measures to be taken against anyone found to have harassed another person (Kelly, Kadue and Mignin, 2005). The courts or the jury will therefore evaluate the extent of the sexual harassment claims by Kimberly and compare whether efforts were made to stop the continuation of the harassment. After proving that the termination of employment of Kimberly was contrary to the provisions of the law, she may be entitled to remedies such as compensatory damages or punitive damages. The compensatory damages will be entitled to her once it can be proven that her dismissal were contrary to the law and not in good faith or without reasonable just cause (Brudney, 2010). However, the courts prefer to add punitive damages as a means of deterring employers who would arbitrarily discharge their employees from employment with intention to avoid paying them their benefits. In Kelsay v. Motorola, Inc 74 111. 2d 172, 384 N.E.2d 353 (1979) the court stressed that punitive damages could accrue to the plaintiff for the wrongful dismissal during the course of her employment. Kimberly may therefore sue for additional punitive damages against Sam and Brighton Computers Ltd with so that it acts as deterrence to future conduct of arbitrary and wrongful dismissal of employees. William is also entitled to a remedy against Brighton Computers Ltd as it relied on the promise by Kimberly who was representing the company to his detriment. He can therefore rely on the doctrine of promissory estoppel and the Restatement (Second) of Contracts § 90 to claim remedies as long as it can be proven that there was a promise and a reliance on the promise to his detriment (Jimenez, 2010). Such remedies include the usual remedies for normal contracts such as damages as well as specific performance, which would force Brighton Computers Ltd, abandon its quest to force him to repay the debt. Conclusion From the scenario provided above, each of the persons involved has to some extent a remedy in law as long as he can prove that the other party contravened certain provisions of the law to their detriment. Kimberly has an actionable claim against Sam for sexual harassment at the work place, which is against the constitutional provisions on discrimination as well as the Civil Rights Act of 1964 and 1991. She must prove that indeed Sam has sexually harassed her at the work place through his either utterances or physical acts, which must be offensive as to create an hostile work environment. Sam on the other hand can minimize liability on his part by proving to the court or the jury that he stopped the harassment as soon as it was noted and that he has put in place a policy that administers harassment at the workplace. Kimberly is also entitled to sue for either compensatory damages or punitive damages if she can prove that her dismissal from employment by Sam who runs Brighton Computer Ltd was in breach of express provisions of her employment contract, carried out in bad faith and unjustly. William on the other hand may succeed his claim and not pay the debt as long as he can prove to the court that he relied on the promise by Kimberly not to repay the debt, an act that has led to his detriment businesswise. References Barnett, R. E. (January 01, 2001). Foreword: Is Reliance Still Dead?. The San Diego Law Review, 38, 1, 1. Bridgeman, C. (January 01, 2005). Allegheny College Revisited: Cardozo, Consideration, and Formalism in Context. U.C. Davis Law Review, 39, 1, 149. Brudney, J. J. (January 01, 2011). Reluctance and Remorse: The Covenant of Good Faith and Fair Dealing in American Employment Law. Comparative Labor Law and Policy Journal, 32, 3, 773-810. DiMatteo, L. A., Bird, R. C., & Colquitt, J. A. (January 01, 2011). Justice, Employment, and the Psychological Contract. Oregon Law Review, 90, 2, 449-524. Epstein, D., Arbuckle, M., & Flanagan, K. (January 01, 2010). Contract Laws Two ``P.E.S: Promissory Estoppel and the Parol Evidence Rule. Baylor Law Review, 62, 2, 397-432. Farber, D. A., & Matheson, J. H. (October 01, 1985). Beyond Promissory Estoppel: Contract Law and the "Invisible Handshake". The University of Chicago Law Review, 52, 4, 903-947. Gertz, S. (January 01, 2008). At-Will Employment: Origins, Applications, Exceptions and Expansions in the Public Service. International Journal of Public Administration, 31, 5, 489-514. Jimenez, M. J. (January 01, 2010). The Many Faces of Promissory Estoppel: An Empirical Analysis Under the Restatement (Second) of Contracts. Ucla Law Review, 57, 3, 669-724. Kelly, J. M., Kadue, D. D., & Mignin, R. J. (January 01, 2005). Sexual Harassment in the Workplace: a United States Perspective. International Journal of Discrimination and the Law, 7, 29-86. McLaughlin, H., Uggen, C., & Blackstone, A. (August 01, 2012). Sexual Harassment, Workplace Authority, and the Paradox of Power. American Sociological Review, 77, 4, 625-647. Read More