Question 1

Which of the following employees is most likely eligible for unemployment insurance?

Accepted Answer

A)   Joe is fired for continually refusing to wear a hard hat in a restricted area in violation of company policy
B)   Kathy quits her job because of a pervasive and continuing hostile environment
C)   Mike quits his job as an English professor because he s insulted that a new hire in Management is getting a higher salary than he does
D)   all of the above
E)   none of the above B

Question 2

Because of the worsening economic situation, your firm needs to drastically cut back, and downsize up to 40% of its workers. The firm has a reputation and tradition of being a firm that rewards the good skills and loyalty of its workers, and many have been with your firm for more than 30 years. The firm has been in your family for more than 100 years, and you are the 3 rd generation CEO. Frankly, what would help the most is to lay off all of those workers who are earning in excess of $80,000/year, retaining those who are earning between $40,000 and $50,000/year. That would reduce your overhead dramatically (and your health insurance costs). But almost all of the workers who earn in excess of $80,000 are age 50 or over, and unlikely to ever find comparable jobs elsewhere. Which of the following options would be consistent with your firm s core values and its long-term survival?

Accepted Answer

A)   downsize all workers making in excess of $80,000/year; since salary is the only consideration, the action is legal
B)   offer significant early retirement packages in exchange for a waiver of claims to workers earning in excess of $80,000/year; it may cost you in the short term, but it is consistent with your family s legacy and the firm s core values, and ultimately will help the firm s long-term survival
C)   do a targeted review of the skill sets of all employees, including those earning less than $80,000/year, to determine where there is an overlap and you can afford to let people go without damaging the firm s knowledge and skill base; downsize the people who are earning the most in each skill set, whatever their ages
D)   either b or c might be consistent with your core values and long-term survival D

Question 3

Legal issues concerning downsizing include:

Accepted Answer

A)   the decision to downsize
B)   the manner in which downsizing is implemented
C)   prior notification of downsizing
D)   the decision about which individuals to downsize
E)   all of theseF)  none of these E

Question 4

In Roquet v. Arthur Anderson , the plaintiffs sued for an alleged violation of the WARN Act s notification provisions. Arthur Anderson defended by saying that they should not be held to the 60 day requirement because of the particular business circumstances in this case. The court said that:

Accepted Answer

A)   the 60 notice obligation is eliminated if the layoff is caused by business circumstances that were not probably foreseeable
B)   the 60 notice obligation is eliminated if the layoff is caused by business circumstances that were not reasonably foreseeable
C)   the moment the Department of Justice informed the defendant that they were considering an indictment, the defendant had the obligation to notify its employees of the inevitable layoffs
D)   when a company s felonious misconduct is the cause of its financial difficulties, this negates the exception to the WARN notification requirements, and the company cannot claim that they were trying to avoid layoffs or fighting to stay afloat

Question 5

Imagine that you are the judge hearing a Motion for Summary Judgment. The case before you concerns the former Vice-President of Marketing at May Department stores, who has recently been hired by Victoria s Secret. May Department stores has sued to enforce the non-competition agreement in which the VP agreed not to work for firms competing directly against May Department store. Both parties agree that both stores sell women s intimate apparel, but to different ages of women, and to different customer bases. They also agree that about 8% of May s business is women s intimate apparel, while 98% of Victoria s business is women s intimate apparel. What should you decide?

Accepted Answer

A)   even though both companies sell women s intimate apparel, there is no meaningful or material competition between them
B)   when both companies sell the same category of products, in determining whether the companies are in competition, the sale of the products is important, not the percentages of overall sales of the product
C)   when both companies sell the same category of products, the fact that they both sell these products to women is important in determining whether the companies are in competition, not the ages of the women, nor the typical customer base

Question 6

Under the WARN Act:

Accepted Answer

A)   large employers are prohibited from closing plants or laying employees off for the purpose of defeating unionization
B)   large employers must give their employees three months (90 days)  advance notice of plant closings and mass layoffs
C)   large employers must provide outplacement services to employees affected by plant closings and mass layoffs
D)   all of the above
E)   none of the above

Question 7

Which of the following is true of a trade secret?

Accepted Answer

A)   it derives economic value from not being known to others
B)   the owner must take steps to preserve its secrecy
C)   it must be registered with the government
D)   a and b
E)   all of the above

Question 8

Which of the following is a type of restrictive covenant?

Accepted Answer

A)   non-competition agreement
B)   non-solicitation agreement
C)   all of the above
D)   none of the above

Question 9

An employer who closes the business rather than deal with the union his employees have formed:

Accepted Answer

A)   does not violate the National Labor Relations Act
B)   violates the National Labor Relations Act if it can be proven that the motive was hostility toward unionization
C)   must bargain in good faith with the union before deciding to go out of business
D)   is required under the WARN Act to give the employees 60 days notice

Question 10

Regarding early retirement incentives, all of the following are true EXCEPT:

Accepted Answer

A)   early retirement incentives are discriminatory if based on age
B)   early retirement incentives may be offered to employees above a certain age, for example, age 55, but not, for example, also to those between 40 and 45
C)   early retirement incentives are a legal way to reduce the workforce
D)   early retirement incentive may be used to reduce the number of highly-paid employees

Question 11

Which of the following laws has the most exacting requirements for a valid separation agreement?

Accepted Answer

A)   The Age Discrimination in Employment Act
B)   Title VII
C)   The Older Workers Benefit Protection Act
D)   The Americans with Disabilities Act

Question 12

Non-competition agreements:

Accepted Answer

A)   are almost always enforced by the courts
B)   will be enforced unless former employees can show that the agreements are overly broad
C)   will not be enforced unless the former employer can show that they are no more restrictive than necessary
D)   are less commonly used now than in the past
E)   none of the above

Question 13

A 55 year old supervisor who has always received good performance appraisals is downsized. Two younger (42 and 45 year old) supervisors from the same department, whose performance had been rated lower, were nonetheless retained. The employer says that it had to save money and that the older supervisor earned considerably more money (he did). If the termination is legally challenged, a court would most likely decide:

Accepted Answer

A)   For the employer because employee could not establish a prima facie case of age discrimination under the ADEA
B)   For the employer because the employees retained were also over 40 years of age
C)   For the employer because it had a lawful, non-discriminatory motive for the termination
D)   For the employee because the employer has engaged in disparate treatment based on age
E)   For the employee because salary level is a neutral criterion that creates adverse impact against older employees

Question 14

Regarding the bankruptcy filing of an employer, which of the following statements is NOT true?

Accepted Answer

A)   employees are secured creditors
B)   employees are unsecured creditors
C)   employees as creditors stand high in priority in a Chapter 11 bankruptcy filing
D)   none of these is true

Question 15

An employer decides to downsize to cut costs. It plans to eliminate 100 jobs out of 250 total jobs. The employer notifies the employees union representative on May 15. The layoffs will be effective May 30. If the employer s action is legally challenged, a court would most likely decide:

Accepted Answer

A)   For the employer because it is not large enough to be covered under the WARN Act
B)   For the employer because there is no plant closing or mass layoff that would trigger the WARN Act s requirements
C)   For the employees because they did not receive individual notification as required by the WARN Act
D)   For the employees because they did not receive the amount of advance notice of a mass layoff required by the WARN Act
E)   For the employees because they did not receive severance pay as required by the WARN Act

Question 16

With regard to unemployment insurance, which of the following statements is true?

Accepted Answer

A)   only workers who have been fired are eligible for unemployment insurance
B)   only workers who quit are eligible for unemployment insurance
C)   only workers who are involuntarily terminated are eligible for unemployment insurance
D)   employers should routinely context all claims for unemployment insurance

Question 17

In Cotter v. Boeing , a 52 year old employee with 34 years on the job was downsized during a RIF. On a new performance scale prepared for the RIF, the one item at which she excelled was eliminated, and she scored badly, compared to a younger worker with less experience. The younger worker was retained. Earlier that same year, her supervisor had rated her as doing a great job. She sued under the ADEA, and the trial court entered Summary Judgment against her. On appeal, the court ruled:

Accepted Answer

A)   for the employer, because the employee scored poorly on the performance scale
B)   for the employer, because the employee had not conclusively proven that she was terminated because of her age
C)   for the employee because she had proven age discrimination in her termination
D)   for the employee, because she had raised material questions of fact, so that summary judgment was reversed, and the case remanded for trial

Question 18

Regarding restrictive covenants, which of the following statements is NOT correct?

Accepted Answer

A)   restrictive covenants help protect an employer s business assets
B)   restrictive covenants are upheld only for top level managers and CEOs
C)   restrictive covenants attempt to curtain many types of competitive conduct
D)   all of these are true

Question 19

To be eligible for unemployment insurance:

Accepted Answer

A)   the employee must be involuntarily unemployed
B)   the employee must be willing to perform any work that is offered
C)   the employee must be available to work within 90 days of becoming unemployed
D)   all of the above
E)   none of the above

Question 20

Changes in benefit plans are under serious consideration when:

Accepted Answer

A)   top managers meet to discuss implementation of a specific plan
B)   the employer has firmly committed to offering the revised benefit plan
C)   information has been gathered regarding alternative plan options
D)   all of the above
E)   none of the above

Exam 19: Downsizing and Post Termination Issues