BUSI 2301 Business Law for Punitive Compensation
XYZ has been a publicly traded company since its initial public offering ("IPO") three years ago. XYZ's stock price has steadily increased since its IPO and the financial performance of XYZ has been strong. Two weeks ago, however, Norma and the CEO of XYZ, Bill Snerdly learned that XYZ's major customer, Jurasic, which constitutes 50% of XYZ's revenues will be terminating XYZ's contract and will be going with an XYZ competitor, ABC. Coincidently, XYZ was scheduled to file its 10-K two days after it learned that Jurasic was going to terminate its agreement with XYZ. XYZ made no mention of the termination of the Jurasic contract in its 10-K nor in any later SEC filings.
In the meantime, and following Jurasic's notice to XYZ, Snerdly started selling massive amounts of his shares in XYZ. Also, two days ago, Snerdly and Norma decided to call a meeting with their two largest investors, the California State Employee's Pension Fund and Loren Muffet, a multi-billionaire investor from Wyoming to give them "a heads up" on certain issues. During the course of the meeting, Snerdly did mention the Jurasic contract termination and the material impact it would have on XYZ.
Just today, Norma was terminated from her position as CFO. The reason she was given was "poor performance" even though all of her performance reviews were excellent. Shocked with the news, and when she pressed XYZ further, she was told by Snerdly that the widget industry was dominated by men and that the CFO role was really better suited for a man and that if that job were to go to a women "she better show some leg" and certainly "no one would be interested to see the legs of an old hag like you".
Using the IRAC method, describe the rights, obligations and liabilities of Norma, Snerdly, XYZ shareholders, or a government agency.
Answer
Issue 1
In the current case the termination of Norma, Chief Financial Officer has been done on wrongful basis.
Rule
With accordance to Genetic Information Non-Discrimination Act discrimination between employees on th
e grounds of genetic information is not allowed. As per the the decision of case law of Sporer v. UAL Inc which specifies the legal significance of the policies relating to a wrongful termination claim can be connected to the present specified situation.
Applicability
In present case since the termination of Norma is done unlawfully that is on the basis of discrimination which is considered as wrongful discrimination under U.S. department of labour. Further, in such cases workers have rights to take lawful action. Compensation which has to be provided for wrongful termination are:
- Punitive Compensation
- Accrued bonus
- Fundamental costs for reliance on job
Furthermore, in the case of Nelson v James H Knight DDS the applicant was not able of proving that the termination is done on wrongful basis. At the same time, in current case Norma is able of proving that termination is on gender basis. All the rules which are discussed above can be applied in present case as Norma is terminated on gender discrimination. Hence, she has the right to sue company for the discrimination. Moreover, such termination is considered as breach of contract. Thus, the case can be sued in the Equal Employment Opportunity Commission for unfair treatment and wrongful dismissal. Further, the employee has the right to seek for legal counsel and eligible for unemployment compensation and extension of healthcare benefits.
Conclusion
It can conclude that since the termination is on gender discrimination, thus decision will be held in favour of Norma.
Issue 2
The company (shareholders) has not complied with the provision relating to termination of employees in appropriate manner.
Rule
It is specified by the U.S department of labour that termination which is done on the gender basis is believed wrongful termination.
Applicability
In the present case Norma was terminated on gender basis and it was stated by Snerdly, CEO, that as the widget industry is dominated by men and hence the crucial position of CFO should be handled by man since nobody is concerned to perceive the legs of old hags. Moreover, if such type of termination takes place in the company than compensation has to be provided to employees and the same are:
- Compensation related to expenditure of court
- Outplacement support
- Lost Salary and keeps on offering the services for proper severance period.
Further, government agency (shareholder) is liable to follow the complaint procedure in an appropriate manner and to pay off the benefits. Further, in accordance with the Civil Right Act of 1964, government agencies are required to follow democratic principles and to provide the right to each employee on an equal basis.
Conclusion
It can be concluded that decision of government agency will be treated as breach of contract. However, the plaintiff will require proving that termination has been done on the inappropriate or wrongful basis.
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