Scenario One: Cost Club Essay Sample

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The attached memo addresses ongoing HR situations requiring immediate response. As human resources managers, we have recommended a course of action for each situation according to employment laws and regulations. We also considered the best interest of Cost Club and all parties involved. Moving forward, we ask that management document and retain details for each situation for future reference. Message 1: Discharges at the Anderson Cost Club store.

In regards to the discharges at the Anderson Cost Club store, we believe that the GM did not have the company’s best interest in mind. The two employees do have the right to sue the company for wrongful termination regardless if it is a right to work state. Title VII protects them if they feel they have been discriminated against. The company runs the risk of having to pay for reinstatement or compensatory and punitive damages for the loss they encountered if it is found that they were wrongfully terminated. Again had the GM been mindful of the company, he would have had documentation showing the reason for his decision to terminate the two employees.

Perhaps we should consider refresher trainings for the GM to ensure that terminations are not in violation of any basic principles of dignity, respect, or social justice (Bennett-Alexander, 2007). Message 2: Regional CEO’s question about reducing employee costs. In an effort to reduce costs, our Region’s CEO has asked us to look at the viability of using temporary agency employees and independent contractors. To that regard, here are a few pieces of key information that should be considered prior to making that decision: the generally accepted definition of an employee is that they are a worker who performs services at the instruction or direction of an employer. If the organization can control what will be done and how it will be done by the person, then they are typically seen as an employee.

An independent contractor is usually an individual or organization that provides services to another business. The independent contractor is a separate entity and is not considered an employee. They do not receive their day-to-day instruction from the employer. We deduct Social Security/Medicare taxes from employees and pay an equivalent amount to the Social Security Administration. We do not have to make those payments if an individual is working as an independent contractor. The independent contractor must pay all of his or her own “self-employment taxes” along with income tax on earnings. There are implications that may still arise in employment laws even if we use independent contractors and temporary employees. You should be aware of be the following: Although we may save money in employment taxes we may not be excluded from all potential liability due to an independent contractor or temporary employee’s actions. We may still be held to be liable or responsible for claims that are non-compensation or tax related.

Therefore, in terms of reducing employee costs, we should give careful consideration to whether we would really save enough to justify the risks associated with allowing important aspects of our work to be conducted by non-employees. Message 3: Safety Manager’s concern about injury and damages Determining who is liable for injuries and damages requires Cost Club to clearly define if the worker is an employee or independent contractor. The common-law agency test, the Internal Revenue Service 20-factor analysis, and the economic realities analysis are all tests used by the courts to identify the status of a worker (Bennett-Alexander & Hartman, 2007). After the workers’ status is classified, Cost Club should evaluate the authorized duties assigned to the worker and note whether or not the worker performed within or beyond his or her authorized duties.

The status of the worker and authorized duties are both determinates of who is liable for injuries and damages. In the employment agency relationship, the employee acts as authorized by the employer and the employer is liable to the third party if the employee chooses to perform beyond authorized duties (Bennett-Alexander & Hartman, 2007). However, the employee is liable to the employer if it is determined that his or her acts were unauthorized (Bennett-Alexander & Hartman, 2007). Cost Club is liable for injuries and damages in the customer service, electronics, and real estate case as described if the workers are indeed employees. On the other hand, the relationship between the employer and independent contractor are defined by the contract agreement between the parties (Bennett-Alexander & Hartman, 2007). Any worker who is classified as an independent contractor is liable for injuries and damages if he or she performs outside of the contract (Bennett-Alexander & Hartman, 2007).

Cost Club is not liable if a worker classified as an independent contractor performs beyond the contract agreement. Message 4: Resolving disagreements that arise in employment Anderson Cost Club can use mediation or arbitration as alternative dispute resolution methods between the company and employees. Mediation involves disputing parties reaching a mutual agreement by using a third party mediator. The mediator does not make a binding decision in the dispute. Mediation and arbitration can be used in discrimination and harassment claims from employees. Mediation should be used first, and if that does not work then follow with arbitration. An advantage of mediation is that it is less expensive than litigation. In arbitration, the employer and employee present their sides to a neutral arbitrator. After listening to both sides, the arbitrator makes a binding decision. Arbitration is less time consuming and inexpensive compared to litigation. The difference between mediation and arbitration is the mediator does not make a binding decision.

However, in arbitration, the arbitrator makes the final decision that binds the disputing parties. ( Message 5: Legal implications of Employment-related processes There are many Employment Law matters than can arise in the selection process. The legal dimension of this very important part of human resource management is quite vast. The best way for us to ensure that we do not discriminate in the hiring process is to make sure we know exactly what jobs we need to fill and what requirements each of those jobs have. If we select our employees based on essential job requirements and provide equal access to all qualified applicants we will be okay. While this sounds pretty simple, there are a lot of things that can get in our way. Therefore, I have compiled a list of important legal considerations to keep in mind as they relate to the selection process: We need to protect the organization against disparate treatment and disparate impact claims.

This means we need to continue to advertise and market our open positions in diverse areas and make sure we are not unintentionally precluding any potential applicants who may be qualified for the open positions. We need to keep our job descriptions current and true and accurate to what the employees in those jobs are really doing. We should continue to use our application form which only asks job related questions. We should have it reevaluated annually. We need to make sure we are doing the background checks as recommended so that we do not have to worry about negligent hiring claims. We should do a brief informational meeting with hiring managers on the importance of the selection process including the compliance issues. We would recommend that they be looked at. For example, we are not sure if we are on solid legal footing with the psychological profile. We should have the legal department take a look at all of our hiring tests. Finally, in terms of selection, our reference checking process seems pretty solid. Conclusion

ACC conducts business in an employment at will state. Therefore, ACC can terminate an employee for good cause, bad cause or no cause at all. The law is on the side of ACC concerning the two fired employees. ACC did not violate their rights and did not have to provide notice prior to discharge. ACC must correctly distinguish between an employee and an independent contractor due to different tax implications.

ACC works on a wide variety of projects with different needs, temporary employment allows us the flexibility to hire the right people for each job. However, ACC should consider balancing this with a smaller team of permanent employees who can help train the new hires. ACC does not want to be held vicariously liable for the actions of temporary workers. Therefore, it would be in our best interest to have an employment contract with the temporary agency addressing this matter. ACC should consider having employment contracts with all employees from permanent to independent contractors.


Bennett-Alexander, D. D. & Hartman, P. L. (2007). Employment law for business (5th ed.). New York: McGraw–Hill.

Chapter 1: The Regulation of Employment ISBN: 0073028959 Author: Dawn D. Bennett- Alexander, Laura P. Hartman copyright © 2007 The McGraw-Hill

Chapter 3: Legal Construction of the Employment Environment ISBN: 0073028959 Author: Dawn D. Bennett-Alexander, Laura P. Hartman copyright © 2007 The McGraw-Hill Companies

Distinguishing between independent contractor and employee S. (1988). Risk Management, 35(5), 34-34. Retrieved from

Martin, Chris What is mediation and arbitration? Retrieved from

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