This Document Contains Chapters 15 to 16 Chapter 15 Creditors apos Rights and Bankruptcy True/False 1. If a debtor does not pay a mechanic’s lien, the debtor’s property can be sold to satisfy the debt. A. True B. False Answer: True 2. With a mechanic’s lien, real estate becomes security for a debt. A. True B. False Answer: True 3. If a creditor wins a judgment against a debtor and the debtor will not or cannot pay the amount due, the dispute is at an end. A. True B. False Answer: False 4. A writ of execution applies to a debtor’s non exempt real or personal property wherever located. A. True B. False Answer: False 5. Liens generally take priority over other claims against the same property. A. True B. False Answer: True 6. There is no limit to the amount that can be taken from a debtor’s weekly take-home pay through garnishment. A. True B. False Answer: False 7. Only a few types of property—a debtor’s wages or bank account, for example—can be garnished. A. True B. False Answer: False 8. A fixed-rate mortgage is a standard mortgage with a rate of interest that changes periodically. A. True B. False Answer: False 9. Foreclosure is the legal process by which a lender repossesses and auctions off property that has secured a loan. A. True B. False Answer: True 10. If a homeowner defaults, or fails to make the mortgage payments, the lender has the right to foreclose on the mortgaged property. A. True B. False Answer: True 11. The lender does not have to strictly comply with the state statute governing foreclosure—substantial compliance is sufficient. A. True B. False Answer: False 12. A surety can be required to pay an obligation only after the principal debtor defaults and usually only after the creditor has made an attempt to collect from the debtor. A. True B. False Answer: False 13. When a surety or guarantor pays a debt owed to a creditor, he or she acquires any right that the creditor had against the debtor. A. True B. False Answer: True 14. A surety is entitled to receive from the debtor the actual amount of the debt paid to the creditor on behalf of the suretyship arrangement but not other expenses incurred. A. True B. False Answer: False 15. A guaranty contract must always be in writing to be enforceable. A. True B. False Answer: False 16. A homestead exemption allows a debtor to subtract the value of the family home from the amount of a debt. A. True B. False Answer: False 17. Personal property that is most often exempt from satisfaction of judgment debts does not include equipment that the debtor uses in a business or trade. A. True B. False Answer: False 18. One goal of bankruptcy law is to ensure equitable treatment of creditors who are competing for a debtor’s assets A. True B. False Answer: True 19. Rulings from bankruptcy courts are final—they cannot be appealed. A. True B. False Answer: False 20. The clerk of a bankruptcy court must provide consumer-debtors with information on the types of services available from credit counseling agencies. A. True B. False Answer: True 21. The means test forces more people to file for Chapter 7 bankruptcy rather than gave their debts discharged under Chapter 13. A. True B. False Answer: False 22. An involuntary bankruptcy occurs when the debtor forces his or her creditors into bankruptcy proceedings. A. True B. False Answer: False 23. An involuntary bankruptcy occurs when a debtor’s creditors are forced to accept a discharge of the debtor’s debts. A. True B. False Answer: False 24. An individual debtor cannot exempt or exclude any property from the bankruptcy. A. True B. False Answer: False 25. When a debtor has no assets, creditors are notified of the debtor’s petition for bankruptcy but are instructed not to file a claim. A. True B. False Answer: True 26. In the distribution of the debtor’s estate, unsecured creditors take priority over secured creditors. A. True B. False Answer: False 27. In putting together a repayment plan under Chapter 13, a debtor must apply the means test to identify the amount of disposable income that will be available to repay creditors. A. True B. False Answer: True 28. Certain debtors may not qualify to have all debts discharged in bankruptcy. A. True B. False Answer: True 29. A bankruptcy court may deny a discharge based on a debtor’s conduct. A. True B. False Answer: True 30. For individual debtors, the plan in a reorganization case must be completed before discharge will be granted. A. True B. False Answer: True 31. In a Chapter 11 case, the court cannot confirm a reorganization plan over the objections of a class of creditors. A. True B. False Answer: False 32. If the circumstances indicate bad faith, a court can dismiss a debtors’ Chapter 13 petition. A. True B. False Answer: True 33. A reorganization plan is a plan to conserve and administer a business’s assets in the hope of an eventual return to successful operation and solvency. A. True B. False Answer: True 34. In a repayment plan case, the plan must provide for payment of all obligations in full. A. True B. False Answer: False 35. The procedure for filing a family-farmer bankruptcy plan is very similar to the procedure for filing a repayment plan. A. True B. False Answer: True Multiple Choice 36. Cal owes Devin $500 on their roof repair contract, but refuses to pay. To collect, Devin files a mechanic’s lien. Under a mechanic’s lien, security for the debt is represented by A. Cal’s personal property. B. Cal’s real estate. C. the $500 owed under the contract. D. the contract. Answer: B 37. Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done. Michael refuses to return the car until she pays. If Michael imposes a lien on Jill’s car, it will end A. in thirty days. B. in sixty days. C. when Michael voluntarily surrenders possession of the car. D. when Jill obtains a court order requiring Michael to return the car. Answer: C 38. Sasha’s debt to Tully is past due. Tully brings a legal action against Sasha to collect the debt. To ensure that a judgment in Tully’s favor will be collectible, he asks the court to order the seizure of Sasha’s property. This is a request for A. a contract of suretyship. B. an order that would violate most state laws. C. a writ of attachment. D. an order of receivership. Answer: C 39. A court awards a judgment to Loan Collection Agency, who is the creditor, against Margret, who is the debtor. After the judgment, the creditor requests a court order to seize Margret’s property to ensure that the judgment will be collectible. This is A. a judicial lien. B. a writ of attachment. C. a writ of execution. D. a violation of most state laws. Answer: C 40. Ronaldo’s debt to Sofia is past due. Ronaldo obtains a judgment against Sofia to collect the debt, but Sofia will not pay. Ronaldo requests a writ of execution. The property that is seized under the writ of execution must be A. in Ronaldo’s possession. B. in Sofia’s possession. C. in the possession of Sofia’s employer or other third party. D. located within the court’s geographic jurisdiction. Answer: D 41. Nell’s debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell’s employer Pro Transmission Service, Inc., to pay part of Nell’s pay check to Olsen. The law A. limits the amount that can be taken from Nell’s take-home pay. B. permits Olsen to dismiss Nell because her wages are garnished. C. practically does not allow Olsen to collect the awarded amount. D. requires Pro to retain Nell as an employee until the debt is paid. Answer: A 42. George borrows funds from Hometown Credit Union (HCU) to buy real property. George signs a written instrument that gives HCU an interest in the property as security for the debt’s payment. This is A. a mortgage. B. an artisan’s lien. C. a reaffirmation. D. a suretyship arrangement. Answer: A 43. Ridgeline Bank provides Shirley with a mortgage to buy a home. The rate of interest is fixed for three years and then adjusts annually. This is A. a fixed-rate mortgage. B. an adjustable-rate mortgage. C. a creditor’s composition agreement. D. a guaranty agreement. Answer: B 44. Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to buy a home. When Erin and Dooley divorce, they are unable to make payments on the mortgage. The market value of the home has declined to less than the balance of the loan. Capital & Credit agrees to a sale of the property for this amount. This is A. a prepayment penalty. B. forbearance. C. foreclosure. D. a short sale. Answer: D 45. Vito borrows $110,000 from Watershed Bank to buy a home. If he fails to make payments on the mortgage, the bank has the right to repossess and auction off the property securing the loan. This is A. a short sale. B. forbearance. C. foreclosure. D. the right of redemption. Answer: C 46. Gena borrows $350,000 from Fish Island Bank to buy a home, which secures the mortgage. In the seventh year of the loan, Gena stops making payments. After the bank repossesses the property but before it is sold, Gena may buy it by paying A. an amount that equals the potential proceeds from the property’s sale. B. an amount that exceeds the potential proceeds from the property’s sale. C. the amount of the missed payments, but not more. D. the full amount of the debt, plus any interest and costs. Answer: D 47. Denise borrows $90,000 from Clear Lake Credit Union to buy a home. Denise loses her job and fails to make payments on the mortgage, but assures Clear Lake Credit that she will soon secure a new job. The lender agrees to postpone the payments. This is A. a right of redemption. B. a forbearance. C. a short sale. D. a reorganization. Answer: B 48. Fleet Trucking, LLC, buys a white van from Go Motors, Inc. , on credit under a guaranty signed by Herbie, Fleet’s president, making him personally liable if the company does not pay. Herbie is A. a surety. B. a mechanic. C. a guarantor. D. an artisan. Answer: C 49. Dina asks Edie to co-sign a credit application so that she can borrow money and buy a piano from First Chair, a musical instruments and supplies seller. If, after the loan agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then Edie is A. discharged from the agreement. B. liable at the higher rate of interest. C. liable at the lower rate of interest. D. liable for the principal only. Answer: A 50. Jordan is a surety for Kelly’s loan from Lenders Credit Corporation. When the loan comes due, Kelly tries to pay Lenders Credit, but the creditor rejects the payment. Jordan is A. released from any obligation on the debt. B. required to pay the amount of the debt to Lenders Credit. C. required to pay up to half of the amount of the debt to Lenders Credit. D. required to pay the amount of the debt to Kelly. Answer: A 51. Beatrix defaults on a debt to Credit Loan Corporation (CLC). As a creditor, CLC can place liens on all of Beatrix’s property except A. motor vehicles used to commute to work. B. stock in various corporations. C. items that the debtor selects. D. vacant commercial property. Answer: A 52. Nancy joins with other creditors to force Odette, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors is to A. provide that creditors will continue to lend to insolvent debtors. B. protect creditor assets from diminution in value. C. ensure equitable treatment of creditors who are competing for a debtor’s assets. D. make all debtor property available for creditors. Answer: C 53. Jim wishes to appeal a decision of a bankruptcy court. Jim may appeal to A. no court—there is no appeal from a bankruptcy court decision. B. a federal district court. C. the U.S. Supreme Court. D. a state court. Answer: B 54. Charise files a petition in bankruptcy in a liquidation proceeding. If the court administers the means test and concludes that Charise is abusing the bankruptcy process by filing for a liquidation, most likely A. Charise will be forced to file for relief through an individual repayment plan. B. the court will discharge Charise’s debts. C. the court will distribute Charise’s property to her creditors. D. the court will issue an automatic stay against any actions by Charise’s creditors. Answer: A 55. Sheri files a petition for bankruptcy. She must include with the petition A. a plan to turn over her future income to a trustee. B. a certificate proving credit-counseling from an approved agency. C. a provision of adequate means to make periodic cash payments to creditors. D. a statement of preference for one creditor over another. Answer: B Fact Pattern 15-1A (Questions 21–22 apply) Damian owns a pick-up truck and a motorcycle. He sells the motorcycle to Eden for $10,000. Eden pays for the cycle with a check, knowing that she had insufficient funds in her account to cover the amount. A week later, Damian files a petition in bankruptcy for relief through a liquidation. 56. Refer to Fact Pattern 15-1. Regarding the sale of the cycle, the bankruptcy trustee can A. cancel it as a fraudulent transfer. B. cancel it as a voidable preference. C. not cancel it or sue to recover the price because it occurred before Damian filed his petition in bankruptcy. D. not cancel it, but can sue Eden to recover the price. Answer: A 57. Refer to Fact Pattern 15-1. Regarding the pick-up truck, Damian A. can exempt an interest in it up to $3,675 from the bankruptcy. B. must include it as part of the estate because Damian sold the cycle. C. must include it as part of the estate because Eden’s check did not cover the cost of the cycle. D. must include it as part of the estate unless the trustee recovers the price from Eden. Answer: C 58. Roland files a petition in bankruptcy. After all his assets have been sold and the proceeds distributed among his creditors, Roland’s remaining debts A. are discharged. B. will be paid by the court. C. must be paid by Roland. D. are put on hold until Roland has sufficient means to pay them. Answer: A 59. Gerald files a petition in bankruptcy. An automatic stay will apply to actions by creditors seeking to collect Gerald’s debts comprised of A. alimony. B. child-support. C. none of the choices. D. car payments. Answer: D 60. Paul files a petition in bankruptcy. He turns his assets over to O’Brien, who sells them and then distributes the proceeds to Paul’s creditors. O’Brien is A. a preferred creditor. B. a bankruptcy court judge. C. a bankruptcy trustee. D. a debtor. Answer: C 61. Leif files a petition in bankruptcy. Among his debts are un-paid taxes, fines owed to the government, student loans owed to Metro University, and support owed to his ex-wife Nadia. Most likely to be dis-charged are A. back taxes accrued within the previous three years. B. fines outstanding less than eight years. C. student loans whose payment would impose undue hardship. D. spousal-support debts unpaid for more than eighteen months. Answer: C 62. Milos files a petition in bankruptcy. His dischargeable debts include A. domestic-support obligations. B. student loans unless the lender would suffer undue hardship. C. court costs, trustee fees, and attorney’s fees associated with the bankruptcy. D. unsecured credit-card debt. Answer: D 63. Paxton agrees to pay Quik Chek Lenders a debt that is otherwise dis-chargeable in bankruptcy. This is A. a reaffirmation. B. a rescission. C. a reorganization. D. a revocation. Answer: A 64. Wild River Tours Corporation wants to formulate a plan under which it pays a portion of its debts and is discharged of the remainder while continuing in business. To accomplish this goal, Wild River should file a petition in bankruptcy for relief through A. a liquidation. B. a reorganization. C. a repayment plan. D. a family-farmer bankruptcy plan. Answer: B 65. Shale Oil, Inc., files a petition in bankruptcy for relief through a reorganization and assumes the role of a debtor in possession. In this role, Shale Oil is simi-lar to A. a creditor at a creditors’ meeting. B. an individual debtor who is denied a discharge under the means test. C. a secured creditor in possession of collateral. D. a trustee in a liquidation. Answer: D 66. To adjust debt and institute a repayment plan, Bianca—who is not a corporation, a partnership, or a family farmer or fisherman—may file a petition in bankruptcy for relief through A. a liquidation. B. a reorganization. C. a repayment plan. D. a family-farmer bankruptcy plan. Answer: C 67. Philo files a petition in bankruptcy for relief through an individual’s repayment plan. He is granted a discharge. Generally, all debts are dischargeable except A. debts provided for by the repayment plan. B. money owed for services rendered. C. claims allowed by the plan. D. credit-card debt. Answer: C 68. Eduardo is a debtor. Furniture Mart is Eduardo’s employer. Guaranty Credit, Inc., and the government are Eduardo’s creditors. For these parties, a petition in bankruptcy for relief through an individual’s repayment plan could be filed by A. Eduardo alone, Furniture Mart alone, or Guaranty Credit and the government jointly. B. Eduardo only. C. Guaranty Credit and the government only. D. the government only. Answer: B 69. Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual’s repayment plan. If she is granted a discharge, debts that will most likely be discharged include A. tax claims. B. payments on retirement accounts. C. claims for domestic support obligations. D. credit-card debt incurred more than one year before filing. Answer: D 70. To adjust debt and institute a repayment plan, Delton, a family fisherman in the Gulf of Mexico, may file a petition in bankruptcy for relief under the Bankruptcy Code’s Chapter A. 1. B. 3. C. 5. D. 12. Answer: D Essay 71. Big Data Enterprises borrows $10,000 from Creditworthy Loans, Inc., but cannot repay the loan when it comes due. Creditworthy refuses to extend the time for repayment unless Big Data can provide an acceptable surety. Dependable Capital, LLC, agrees to act as a surety for the loan after Big Data offers Dependable a stake in the company and shows Dependable financial statements, compiled with Credit worthy’s assistance, that misrepresent Big Data’s financial situation. Later, Big Data again defaults on repayment of the loan, and Creditworthy files a suit against Dependable to collect the amount of the debt. Is Dependable liable? Why or why not? Answer: No, Dependable is not liable, because Big Data committed fraud in obtaining Dependable’s agreement to serve as surety and Creditworthy knew about, and assisted in, the fraud. A surety is released from an obligation to pay a debt that he or she agreed to pay if the creditor fraudulently induced the surety to guarantee the debt. The surety can assert the fraud as a defense. In this problem, the debtor defrauded the surety, but the debtor did it with the help of the creditor. Thus, the creditor could not claim to be innocent of the fraud. Even if the creditor had only known about the fraud, and had not actively participated by supplying the financial statements that misrepresented the debtor’s financial condition, the surety could still avoid liability because nondisclosure of a material fact is a form of fraud. 72. Federal Bank is a secured party on a $50,000 loan to Gigi, who owns Home HealthCare, an assisted living facility. When Gigi experiences financial difficulty, creditors other than Federal Bank petition her into involuntary bankruptcy. The value of the secured collateral has substantially decreased in value. On its sale, the debt to Federal Bank is reduced to $25,000. Gigi’s estate consists of $100,000 in exempt assets and $20,000 in non exempt assets. After the bankruptcy costs and back wages to Gigi’s employees are paid, nothing is left for unsecured creditors. Gigi receives a discharge in bankruptcy. Later she decides to go back into business. By selling a few exempt assets and getting a small loan, she is able to buy Indulgence, a small, profitable nightclub. Gigi goes to Federal Bank for the loan. The bank claims that the balance of its secured debt was not discharged in Gigi’s bankruptcy. She signs an agreement to pay Federal Bank the $25,000, and the bank makes a new unsecured loan to her. Is Federal Bank correct that the balance of its secured debt was not discharged in bankruptcy? What is the legal effect of Gigi’s agreement to pay the bank $25,000 after the discharge in bankruptcy? Answer: A secured creditor is entitled to priority to the proceeds from the disposal of the secured collateral of the bankrupt debtor up to the amount of the debt owed. Should the proceeds not cover the secured debt, the secured party becomes an unsecured creditor for the balance. Unless the debtor is denied a discharge in bankruptcy, all debts of the debtor are rendered void on the granting of the discharge. In this case, Federal Bank is incorrect. Federal Bank became an unsecured creditor to the balance of $25,000 owed. Gigi’s discharge in bankruptcy discharged her obligation to pay the debt. The Bankruptcy Code restricts the legality of reaffirmations—agreements to pay debts discharged in bankruptcy. For these agreements to be binding, they must be executed before the discharge in bankruptcy is granted. All reaffirmation agreements must be filed with the court. Unless the debtor (Gigi) is represented by an attorney, court approval is required. The court will only approve the reaffirmation if the agreement will not cause the debtor a hardship and is in her best interests. If Gigi is represented by an attorney, the attorney must file a declaration or affidavit stating that Gigi was fully informed of the consequences, the agreement was voluntarily made, and the agreement does not impose a hardship on Gigi or her dependents. Gigi has a right to rescind this agreement. Because the reaffirmation agreement in this case was made after Gigi’s discharge in bankruptcy, she is not legally obligated to pay the $25,000 debt previously discharged in bankruptcy. Chapter 16 Employment Immigration and Labor Law True/False 1. Through agents, a principal can conduct multiple business operations simultaneously. A. True B. False Answer: True 2. Real estate brokers are independent contractors. A. True B. False Answer: True 3. The relationship between a principal and an independent contractor always involves an agency relationship. A. True B. False Answer: False 4. An agency relationship can only be formed with a written agreement. A. True B. False Answer: False 5. Remedies of the agent for breach of duty by the principal arise out of contract and tort law. A. True B. False Answer: True 6. Under the doctrine of respondeat superior, an agent is liable for the principal’s negligence. A. True B. False Answer: False 7. A principal is responsible for all intentional torts committed by an agent. A. True B. False Answer: False 8. Children must be at least thirteen years old to work in hazardous occupations. A. True B. False Answer: False 9. Employees who receive tips on the job cannot be paid less in direct wages than the federal minimum wage. A. True B. False Answer: False 10. Employees are entitled to overtime pay only at their employer’s discretion. A. True B. False Answer: False 11. All employers must provide their employees with up to twelve months of family or medical leave. A. True B. False Answer: False 12. Under federal law, only key employees who take temporary family or medical leave are entitled to job reinstatement. A. True B. False Answer: False 13. A key employee is defined as an employee whose pay falls within the top 10 percent of the firm’s workforce. A. True B. False Answer: True 14. State workers’ compensation laws establish a procedure for employees injured on the job to sue their employers. A. True B. False Answer: False 15. If an employee dies in a work-related incident, the employer must notify OSHA within eight hours. A. True B. False Answer: True 16. Only the federal government sets safety standards governing workplaces. A. True B. False Answer: False 17. An employee can usually recover workers’ compensation for injuries occurring on the commute to and from work. A. True B. False Answer: False 18. Both employers and employees contribute to help pay for benefits that will partially make up for the employees’ loss of income on retirement. A. True B. False Answer: True 19. The basis for an employee’s contribution to Social Security is the employee’s age. A. True B. False Answer: False 20. All unemployed workers who are willing and able to work are not eligible for unemployment compensation. A. True B. False Answer: False 21. There is no federal regulation of employers’ retirement plans for employees. A. True B. False Answer: False 22. Employers that fall under the provisions of the Federal Unemployment Tax Act of 1935 are taxed at regular intervals. A. True B. False Answer: True 23. An employee can continue the health benefits provided by his or her employer for a period of time only on an involuntary loss of employment. A. True B. False Answer: False 24. Generally, an employer’s monitoring of electronic communications in the workplace does not violate employees’ privacy rights. A. True B. False Answer: True 25. An employer may avoid laws regulating monitoring activities by informing employees that they are subject to monitoring. A. True B. False Answer: True 26. Only federal law governs drug tests of private-sector employees. A. True B. False Answer: False 27. The privacy rights of private-sector employees are governed by state law, which varies widely. A. True B. False Answer: True 28. An employer may hire an illegal immigrant under some circumstances. A. True B. False Answer: False 29. To hire employees from other countries, an employer must first obtain the approval of the U.S. Immigration and Customs Enforcement. A. True B. False Answer: True 30. The Norris-LaGuardia Act effectively declared a national policy permitting employees to organize. A. True B. False Answer: True 31. Unfair labor practices are defined by the Norris-LaGuardia Act. A. True B. False Answer: False 32. An employer can refuse to bargain collectively with a duly designated employee representative A. True B. False Answer: False 33. Individual states may pass their own right-to-work laws. A. True B. False Answer: True 34. Management may never legally limit unionizing activities. A. True B. False Answer: False 35. An employer may not hire substitute workers to replace strikers. A. True B. False Answer: False Multiple Choice 36. Jackson Lumber hires Owen to purchase wood from various sources on behalf of Jackson Lumber. In this relationship, Jackson Lumber is the A. employee. B. independent contractor. C. principal. D. agent. Answer: C 37. Delite Candy Company hires Elton to sell Delite’s products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The most important factor in whether Elton is Delite’s employee is A. the amount of Elton’s salary. B. the control Delite has over the details of the work. C. the length of the trial period. D. the title that designates Elton’s position. Answer: B 38. Rita is appointed as an agent for Superior Sales, Inc. The agency agreement is silent as to the level of sales that Rita is expected to achieve. She must A. achieve nothing because the agreement says nothing on the issue. B. attain the level that Rita achieved with her previous employer. C. maintain the level Superior attained before Rita became an agent maintain the level Superior attained before Rita became an agent. D. use reasonable diligence and skill in selling. Answer: D 39. Bob, a salesperson at a Carpets Galore store, tells Dita, a customer, “Buy your carpet here, and I’ll install it for half of what the store would charge.” Dita buys the carpet, which Bob in-stalls for half the store’s price. Bob keeps the money. Bob has breached A. no duty. B. the duty of loyalty. C. the duty of notification. D. the duty of obedience. Answer: B 40. Picabo drives a truck as an employee for Quik Delivery, Inc. Picabo would most likely be considered acting outside the scope of her employment if she A. crashed into a car at the airport while off duty. B. hit a pedestrian in a parking lot during a “working” lunch. C. ran over an attendant at Quik’s gas station while refueling the truck. D. smashed into a store-front while intoxicated on-duty. Answer: A 41. Taylor is seventeen years old. Under the Fair Labor Standards Act, she A. cannot work in a hazardous occupation. B. cannot work during school hours. C. must obtain a permit to work. D. none of the choices. Answer: A 42. Cash is an employee of Drowsy Resort, Inc., covered by federal overtime provisions, which apply only after an employee has worked more than A. eight hours in a day. B. forty hours in a week. C. 160 hours in a month. D. one year for the same employer. Answer: B 43. Café Cuisine Dining, Inc., employs one hundred workers at three locations in two states. Under federal law, Café Cuisine must pro-vide its employees, during any twelve-month period, family or medical leave of up to A. twelve days. B. twelve weeks. C. twelve months. D. twelve years. Answer: B 44. Big Drill Oil Company employees one hundred workers. Big Drill must do all of the following except A. keep occupational injury and illness records for each employee. B. report any work-related diseases directly to OSHA. C. report any employee death due to a work-related incident to OSHA within eight hours. D. pay employees higher wages for working in more dangerous areas. Answer: D 45. Quinn is an employee of Regional Industries, Inc. Quinn is threatened with a discharge when he refuses a transfer to a Regional department in which several employees suffered serious injuries from exposure to hazardous chemicals. Quinn may be entitled to protection from discharge under A. no law. B. the Family and Medical Leave Act. C. the Occupational Safety and Health Act. D. the state workers’ compensation act. Answer: C 46. Jo works for Tall Tales Publishing, Inc. The basis for Jo’s contribution under the Federal Insurance Contribution Act (FICA) is based on her A. seniority at Tall Tales. B. annual wage base. C. special job skills. D. county of residence. Answer: B 47. Hoppy, who works as an employee for Imperial Power Corporation, suffers an injury in an accident. Hoppy will be compensated under state workers’ compensation laws A. only if the injury occurred during working hours. B. only if the injury occurred off the job. C. only if the injury occurred on the job. D. whenever and wherever the injury occurred. Answer: C 48. Clive works for Digby Excavation Corporation. While operating a backhoe, Clive suffers an injury. Clive will be compensated under state workers’ compensation laws only if A. he does not have health insurance. B. he is completely disabled. C. his injury was accidental. D. his injury was intentional. Answer: C 49. Phyllis intentionally injures herself while performing her job for Stone Cutters, Inc. Phyllis will be entitled to A. full workers’ compensations. B. half of the normal workers’ compensation. C. 10 percent of the normal workers’ compensation. D. no workers’ compensation. Answer: D 50. Julie works as an employee for Organic Produce Express, Inc. (OPI). Rowan, who is unemployed, collects unemployment compensation. This compensation is provided by a tax on A. Julie and other employees. B. Julie, OPI, and other employees and employers. C. OPI and other employers. D. not Julie, OPI, or other employees or employers. Answer: C 51. Which of the following is not a common form of electronic surveillance of employees in the workplace? A. Reviewing employees’ emails B. Requiring employees to wear electronic location monitoring bracelets C. Video-recording job performance D. Listening to employees’ telephone conversations Answer: B 52. Investors Fund, a large financial institution, announces that it will start monitoring its employees’ electronic communications. If Mary, an Investors Fund employee, resists this policy, her best argument is that the monitoring violates A. employee privacy rights. B. worker health and safety. C. federal labor law. D. the employment-at-will doctrine. Answer: A 53. Network Industries, Inc., wants to monitor its employees’ electronic communications. To avoid liability under laws related to employee monitoring, Network should announce the monitoring to A. no one. B. the employees. C. the government. D. the public generally. Answer: B 54. Samson is a government employee. Samson is limited in drug testing by the A. First Amendment. B. Second Amendment. C. Fourth Amendment. D. Eighth Amendment. Answer: C 55. The Employee Polygraph Protection Act of 1988 prohibits most private employers from doing all of the following except A. requiring or causing employees or job applicants to take lie-detector tests. B. using, accepting, or referring to, or asking about the results of lie-detector tests taken by employees or applicants. C. taking or threatening negative employment-related action against employees or applicants based on results of lie-detector tests. D. using lie-detector tests to investigate losses due to theft. Answer: D 56. Nimble Numbers Accounting Corporation, a private employer, handles bookkeeping for small employers. In most circumstances, with exceptions, federal law clearly prohibits Nimble from subjecting its employees to A. job-skills tests. B. monitoring of business communications. C. drug tests. D. lie-detector tests. Answer: D 57. Mineral Mining Corporation is a U.S. employer. Mineral, and other U.S. employers, must perform I-9 verifications for A. a random selection of new hires. B. every other new hire. C. only new hires with certain characteristics. D. each new hire. Answer: D 58. Southwestern Foods Corporation operates a packaging plant near the border between the United States and Mexico. Due to the location, it would be easier for Southwestern to employ noncitizens. With respect to persons not authorized to work in the United States, an employer can A. hire them. B. recruit them. C. refer them for a fee. D. not hire them, recruit them, or refer them for a fee. Answer: D 59. Hu, Ivan, and Juana apply to work for King Meatpacking Company. These individuals’ identities and eligibility to work must be verified by A. the employer. B. the individuals. C. the individuals’ countries of origin. D. the U.S. Citizenship and Immigration Services. Answer: A 60. Fruits & Vegetables, Inc., employs hundreds of seasonal and permanent workers, both skilled and unskilled, in seven states. Fruits & Vegetables can hire illegal immigrants A. if either the employer or the immigrants file special forms. B. only if the employer files a special form. C. only if the immigrants file special forms. D. under no circumstances. Answer: D 61. Finance Professionals Union represents the workers of Business & Commerce Banking Corporation. The management of the firm refuses to bargain with the union. This violates A. federal labor law. B. state right-to-work laws. C. federal wage and hour laws. D. no federal or state law. Answer: A 62. Employers are not allowed to interfere with employees’ efforts to form or join a union under A. the Norris-LaGuardia Act. B. the National Labor Relations Act. C. the Labor-Management Reporting and Disclosure Act. D. the Labor-Management Relations Act. Answer: B 63. Elections for union officers are regulated by A. the Labor-Management Relations Act. B. the Civil Rights Act. C. the Labor-Management Reporting and Disclosure Act. D. no federal law. Answer: C 64. Food Packagers Union represents the workers of Garden Variety, Inc. The company does not require its workers to join the union as a prerequisite to obtaining employment. The union would like the employer to require the workers to join after a specified amount of time on the job. This would violate A. federal labor law. B. federal full employment law. C. federal employment discrimination law. D. no federal law. Answer: D 65. Clerical Workers Union represents the employees of Miracle Medical Research Company. The management of the firm refuses to bargain with the union over the hiring of unnecessary workers. This violates A. federal labor law. B. state right-to-work laws. C. federal employment discrimination law. D. no federal or state law. Answer: D 66. During a union election campaign, Residential Interim Healthcare, Inc., prohibits on-site solicitations by any party, including Service Employees International Union, which is seeking the workers’ unionization. This violates A. federal labor law. B. federal elections law. C. federal income security law. D. no federal law. Answer: D 67. During a union election campaign, Bonds & Loans Finance Company prohibits on-site solicitations by Credit Workers Union, which is seeking the workers’ unionization, while permitting charities to solicit the same workers. This violates A. federal labor law. B. federal elections law. C. federal income security law. D. no federal law. Answer: A 68. Following a union election campaign by Hospitality Workers Union among the employees of Idyll Hotels & Resorts, Inc., the union does not obtain a majority vote in the election. This most likely violates A. federal labor law. B. federal elections law. C. federal income security law. D. no federal law. Answer: D 69. Dag is an employee of Ridge Mining Company. Under federal labor law, Dag and other employees have the right to A. bargain collectively with Eagle through their representatives. B. insist that Ridge require union membership as a condition of work. C. interfere with the efforts of others to form labor organizations. D. refuse to bargain with Ridge through their representatives. Answer: A 70. The employee union at Top Tech Toys decides to go on strike. Their strike will be legal if A. the strikers form a picket line. B. the strikers form a massed barrier and deny management and non union workers access to Top Tech Toys’ plant. C. the strikers stay in Top Tech Toys’ plant without working. D. the strikers violently attack management. Answer: A Essay 71. Principal Resources Corporation contracts with Quality Construction to build an addition to Principal’s corporate office building. Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials. Meanwhile, Principal hires Skye, a certified public accountant, to work in its cost-accounting division as an employee, with no authority to hire or supervise others. Skye asks Theo, an outside experienced accountant, to advise her on certain accounting procedures but fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to solicit orders for its products in a designated territory. Uma obtains an order from Verity Industries, Inc., which is assured the order will be filled soon. But Uma does not follow through with the paperwork and fails to submit the order to Principal. Verity suffers a loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law. Discuss fully whether an agency relationship was created by Principal with Quality Construction, Skye, or Uma. Answer: Whether Principal can be held liable by Rite Supply, Theo, and Verity Industries de-pends on the relationship created by Principal in its contracts with Quality Construction, Skye, and Uma. If the relationship is one of principal agent, the parties agree that the agent will act on behalf of the principal, and any proper contracts made by an agent with a third person are binding on the principal. In analyzing the agency relationship in this problem, it is important to distinguish the principal-agent relationship from that of employer‑employee (master‑servant) or employer–independent contractor. Contracts made with third parties by employees or independent contractors who are not also agents are not binding and are not enforceable against the employer. Quality Construction is employed as an independent contractor. It is neither an agent for Principal nor an employee. Because Quality Construction has no authority to make contracts on behalf of Principal, Quality is not an agent. In addition, because Principal has no control over the details of Quality’s conduct, Quality is not an employee. Therefore, only Quality, not Principal, can be liable to Rite Supply for non performance of contract. Skye is hired strictly as an employee and has no authority to contract with third persons. Consequently, Skye is not authorized to hire a consultant on Principal’s behalf. Therefore, Theo must look to Skye, not to Principal, for payment for ser-vices. Uma is both an employee and an agent. As an agent she is hired specifically to solicit orders for Principal’s products from third persons. If she has authority to so con-tract, Principal is bound by her contract. 72. Healthy Harvest Company runs a candy and fruit processing and packaging plant. Most of Healthy Harvest’s business is done during holiday seasons, especially between Halloween and New Year’s Day, and in the spring. The company hires a large temporary workforce during its busiest times. Occasionally, a position opens for an individual with highly specialized skills, particularly to operate and maintain the company’s inventory and sales control systems. Can Healthy Harvest hire noncitizens for its temporary, seasonal work? Can the company hire a noncitizen with special skills for certain jobs? If so, what procedures must the employer follow in both situations to do this hiring? If not, how can Healthy Harvest be assured that it is hiring only citizens? Answer: It is illegal to hire for work in the United States a person who is not authorized to work here. Thus, under no circumstances can an employer legally hire a noncitizen who is in the United States unlawfully. But an employer may hire a noncitizen who is a lawful permanent resident. The principal responsibility to verify an individual’s identity and eligibility to work rests with the employer. The U.S. Citizenship and Immigration Services (CIS) supplies a form—Form I-9, Employment Eligibility Verification—that an employer must complete within three days of hiring an employee (and retain for three years). An employer has some defenses against alleged violations but is otherwise subject to penalties for illegally employing noncitizens. Lawful permanent residency can be proved by an I-551 Alien Registration Receipt, or “green card.” Subject to certain strict requirements, an employer may apply for a “green card” for a noncitizen. Persons who immigrate to the United States to work include those with special skills, such as an individual who might qualify to fill the job with Healthy Harvest in this question. To hire such an individual who is not otherwise authorized to work here, an employer must petition the CIS. The employer can obtain a visa for a person to work in the United States in a highly qualified, specialty occupation as part of the H-1B visa program. Test Bank for Essentials of the Legal Environment Today Roger LeRoy Miller 9781305262676
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