Legal Environment

1
Chapter 10

• Legal Environment

2
Promoting Fair Business Competition

• Antitrust laws - is legislation that prohibits
  firms from combining in a way that would stifle
  competition within that industry.
• Sherman Antitrust Act of 1890 and Clayton Act of
  1914 - were written to prevent large businesses
  from forming trusts and preventing new small
  businesses from entering the market.
• Federal Trade Commission Act of 1914 - created
  the Federal Trade Commission (FTC) which oversees
  business practices.

3
Laws Protecting Consumers

• Nutrition Labeling and Education Act of 1990
• Fair Debt Collection Practices Act of 1977
• Truth-in-Lending Act
• Consumer Practices Act of 1977
• Consumer Product Safety Act

4
Laws Protecting Employees

• Equal Pay Act of 1963 - states equal pay for
  equal work regardless of gender.
• Equal work is defined in terms of skills, effort,
  job conditions, and responsibilities.
• Covered employers must provide on request,
  detailed records of compensation, overtime
  payment, wage surveys, job descriptions, etc.
• Governed by the EEOC

5
Laws Protecting Employees

• Civil Rights Act of 1964 - prevents
  discrimination on the basis of sex, race, color,
  religion, or national origin in any terms of
  employment.
• Title VII applies to all employers with 15 or
  more employees working 20 or more weeks a year in
  commerce.
• Religious organizations, private clubs, and
  employment connected with a Native American
  reservation are not covered.

6
Laws Protecting Employees

• Americans with Disabilities Act of 1990 (ADA) -
  seeks to guarantee individuals with disabilities
  the right to obtain and hold a job, travel on
  public transportation, enter and use public
  facilities, and use telecommuncations services.
• The act covers private employers with 15 or more
  employees (including part-time) working 20 or
  more calendar weeks per year.

7
Laws Protecting Employees

• Americans with Disabilities Act of 1990 (ADA
• Disability is defined as a person who
• has a physical or mental impairment that
  substantially limits one or more major life
  activities
• Has a physical or mental impairment
• is regarded as having such an impairment.
• Specifically included are recovering drug
  addicts, alcoholics, and individuals infected
  with HIV and AIDS.

8
Laws Protecting Employees

• Americans with Disabilities Act of 1990 (ADA
• According to the ADA, covered employers are
  required to make reasonable accommodations
• Job selection should be job related.
• Asking a job applicant about the nature, origin,
  or severity of a known disability is prohibited.
• An employer may not refuse to hire simply because
  of the disability.
• Title III includes virtually all businesses and
  requires making facilities accessible to the
  disabled.

9
Laws Protecting Employees

• Civil Rights Act of 1991 - this act amends Title
  VII and ADA with these provisions
• It prohibits race norming, the practice of using
  different cutoff test scores for different
  groups.
• Requires disparate impact to be job related
  and/or a business necessity.
• Intentional discrimination can be awarded both
  compensatory and punitive damages.
• Caps on damages - 14 - 100 employees 50,000

10
Laws Protecting Employees

• Family and Medical Leave Act of 1993 - requires
  private employers with 50 or more employees to
  provide 12 weeks of unpaid leave to its
  employees.
• Employee must have worked for an employer for at
  least 12 months and put in at least 1,250 hours.
• May take leave for birth or placement of a child
  for adoption or foster care, care for an
  immediate family member with a serious health
  condition, when employee themselves is seriously
  ill.

11
Laws Protecting Employees

• Family and Medical Leave Act of 1993 -
• Leave may be taken during any 12-month period, in
  a block or intermittently.
• Employers are required to maintain group health
  insurance for employees on FMLA leave.
• Employers are required to provide equivalent job
  restoration upon completion of leave.
• Employers are allowed to exempt key employees -
  employees who are among the highest-paid 10 of
  employees from the restoration requirement.

12
Bankruptcy

• Chapter 7 Bankruptcy - is when the business is
  liquidated. All assets are sold by a trustee.
• 75 of all bankruptcies are chapter 7.
• After filing chapter 7, most states will allow
  individuals to maintain equity in their homes,
  autos, and some personal property.

13
Bankruptcy

• Chapter 11 - provides a second chance for a
  business that is in financial trouble. It is a
  reorganization plan with the bankruptcy court.
• Reorganization plans include repayment schedules
  and future plans for profitable operations.
• Keeps creditors from foreclosing on debts during
  the reorganization period.

14
Bankruptcy

• Chapter 13 Bankruptcy - Allows businesses with
  less than 250,000 unsecured debt and 750,000
  secured debt to repay loans over a 3 - 5 year
  period.
• Debt must be paid in full at the end of the
  period.

15
Elements of a Contract

• Legal - contract must not violate any statutory,
  licensing or public policy requirements.
• Agreement - must have proper offer and
  acceptance.
• Consideration - must have something of equal
  value going both ways.
• Capacity - persons must be legally and mentally
  capable of entering into a contract.