The Principal-Agent Relationship:

The employer-employee relationship is based on the principal-agent relationship, where one person (the agent) performes an act for another (the principal). The relationship is consensual, and in most cases, contractual.

DUTIES OF THE AGENT:

• Fidelity-an agent owes the utmost duty of loyalty to the principal. Any and every act must be for the best interest and only the best interest of the principal. No agent may acquire a gain as a result of the relationship without the knowledge and consent of the principal
• Obedience-an agent is charged to obey all lawful instructions of the principal. When in doubt, the agent must inquire whether he or she possesses the authority to act. Failure to inquire may result in grounds for breach of this duty. At-will employment allows an employer to retain or discharge any employee for any reason, good reason, but not bad reason. Since the relationship continues from second to second, at any time, either may terminate the relationship.
• Reasonable Care-in the discharge of the duties possessed by an agent, he or she must exercise reasonable care and perform the duty in a safe and careful manner. This duty encompasses the agent's background, experience, physical ability, etc., requiring the agent to perform according to a standard, unless otherwise agreed to a higher standard, like all other agents in similar relationships. See resondeat superior below.
• Notification-an agent must inform a principal of all matters given to an agent which affects the relationship.
• Accounting-an agent must deliver to a principal all assets coming into the agents possession which are rightly those of the principal.

• Compensation-the principal must compensate the agent the agreed upon compensation, and if not agreed upon, the market value for such services.
• Reimbursement-the principal must reimburse the agent for any out-of-pocket expenses incurred by the agent in the performance of the requested act.
• Indemnification-the principal must indemnify, that is, hold the agent harmless from any liability resulting from performing the requested act, assuming the agent has breached no duty in the performance of such act.
• Safe working conditions-the principal must provide working conditions which are safe, and present no danger to the agent, without the agent's knowledge and consent to work therein, but an agent cannot agree to work in an environment which is in violation of statute or regulation (i.e. OSHA, etc.)

Since a principal receives the benefit of the services of an agent, the principal must also incur the liability of an agent's act, should the act result in injury. Under the doctrine of respondeat superior, a principal is liable for the unintentional or negligent injuries caused by an agent, if the injuries occur within the "scope of employment" of the agent. "Scope of employment" is considered those activities furthering the master's business and over which the employer has the ability of some physical control, whether he or she actually exercised such control. The basis for this principle is that the principal has placed the agent in such activity to promote the employer's business, and because of that, the principal/employer must answer for the injuries caused by the agent/servant. If the injury occurs beyond the scope, it is said to have occurred on a frolic by the agent/employee, and the principal/employer is not liable.

An employer is generally not liable for the intentional injuries of an agent/employee even occurring within the scope of employment, unless:

• the employer authorized such activity,
• the employer knew or should have known the agent/employee had a propensity to commit such act, or,
• the type of intentional injury was one which could reasonably be said to occur out of the particular agency relationship.

• Hiring practices: Employers have a duty to the general public to verify that the employee is capable of performing the requested act, and possesses nothing in their background, related to the employment relationship, which could result in an injury to third persons. To that end, employers must affirmatively seek the accuracy and truth of information provided by an employee in any application seeking employment. Failure to ascertain this information may result in a "negligence in hiring" claim.
• Employers have a further duty to train, and then supervise the employee in the performance of the requested act. As a corollary to the agent's duty of obedience, an employer must monitor the conduct of an employee to assure third persons that the employee is performing according to instructions from the employer, and that, in the event, any evidence of improper performance arises, the employer must supervise the employee and correct such deficiency. Failure to monitor may result in a "negligence in the supervision of an employee" claim.
• Employers have a duty to assure the general public that any employee not performing according to acceptable standards must be re-trained, and if re-training does not correct the problem, an employer may be required to terminate such employee. Continuing to present a danger to the public by an employee's improper performance exposes the employer to a "negligent retention" claim.

PRIVACY MATTERS:

Since the relationship centers around a commercial activity, an employee is presumed not to have a great expectation of privacy at the workplace or in the working relationship. Therefore, private employers enjoy a great deal of surveillance of the employee to assure he or she is performing according to their relationship. Further, to protect the general public and other employees for safety matters, matters of public health, and to prevent theft, employers may generally inspect the property of the employee and the person of the employee. Video and audio surveillance is permitted, with the potential limitation of invading an employee's expectation of privacy in a restroom or possibly a changing room.

Generally, see Smyth, v. Pillsbury Co., page 522.

WORKER'S COMPENSATION

To provide compensation to an employee, injured in a work-related activity, states provide coverage under a "no-fault" concept to avoid employees seeking to recover for injury and loss of income. The threshold however is that the injury must "arise out of employment," and requires proof of just more that the event occurring at the work place. See Miedema v. Dial Corp., Page 515.

PROTECTION FROM WRONGFUL TERMINATION

Although an employer may terminate an employee for no reason or good reason, the employee is protected against discharge for "bad reason," including breach of contract, public policy considerations, and protected discriminatory employment action (see Chapter 13.)

• Breach of contract- although the normal employment relationship is "at-will," employers may, either intentionally or unintentionally modify the relationship. This may be done by communicating to the employee (in an employment manual, or by words) an indication that their relationship carries along with it protection against termination except for cause. By such communication, the employer has expressly modified at-will employment to employment terminable only for cause. Should an employer make a promise to an employee that he or she will not be terminated except for cause, or that the employee will enjoy a continued term of employment unless cause arises to terminate, even though the promise may not be enforceable by law pertaining to express contracts, the doctrine of promissory estoppel may be applied. Should an employer make a reasonably certain promise, reasonably relied upon by the employee and upon which the employee suffers some legally recognized detriment, then the employer will be prevented from denying the existence of that promise. Enforcement of such promise is via implied contracts.
• Ohio does not recognize that, in employment contracts, there exists an implied promise of good faith and fair dealing. If the parties expressly agree, then the employment relationship will include a promise that the parties will be honest and fair to the other regarding performance.
• Judicial review of termination is available in those instances where the employer takes action against an employee which, in some way, violates public policy considerations. Directing an employee to commit a "provable" unlawful act, intentionally causing an injury, ect., violates public policy if the employee is then terminated for refusing to do so. See generally, Wagenseller v. Scottsdale Memorial Hospital, page 531.

Make sure to create a "paper trail," showing you have properly created the relationship, monitored it, and, if necessary be able to show that any action regarding termination of an employee was truly for no reason or good reason. When dealing with a "protected class" member, make sure that any employment action is not taken "because of their protected class status."