Essay Example on Agent and Employment Law

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Harvey Mudd College
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This paper focuses on the business environment. Placing emphasis on both the external and internal environment plus how the employees and the organization reacts to the environment in identifying the general success of the company. This is a SWOT (strengths, weaknesses, Opportunities and threats) analysis as employment costs continue to hike. Due to the hiked employment costs, it has become inevitable for organizations to monitor their internal operations in order to guarantee best practices being followed. This paper presents the internal environment via the principal agent relationship.

For any business that hires a contractors services or those of an outside expert, such a model forms a principal and agent relationship. Trust is the driving element for such a mutual relationship to withstand the test of time. It is important for the business to trust that the contractor bears similar incentives as them. However, this kind of relationship can have various impacts on the business itself and its employees. There is a higher possibility for the principal-agent problem to arise (Clark, 2017). This forms the weakness aspect of the SWOT analysis. This occurs when the incentives of both sides collide as both sides strive to attain peak values in maximizing their utility. For example, let us say you pay a contractor by the hour to achieve a particular task. The contractor realizes that they can achieve more income by taking up as much time as possible since the business has no idea of how to achieve the task in the first place. The business is powerless to prevent this from happening and ends up deploying more income to the contractor that the necessary figure. This problem can be eliminated by utilizing employees since they can be paid by a set fee irrespective of the time taken in achieving the particular task. Employees are an asset in eliminating instances where incentives between both sides conflict (Clark, 2017). Such an excellent workforce is the strength of possessing a stable internal workforce of employees.

Express authority created by the principal-agent relationship normally comes in oral form, in few instances does it have to be in written form. An implied authority comes into play whenever the agency is inferred according to either partys conduct while an apparent authority is created whenever a principals actions generates the existence of an agency that is not really there. This occurs when the principal is prevented from rejecting the relationship with the agency. These three authorities would impact positively for employees in that they would drive mutual agreement over the time lapse consumed and achieved purpose. Essentially this can still be achieved by utilizing employees.

Several Federal laws have been put into place to protect workers from discriminatory practices. In the United states, the discrimination of age in employment act that was made in the year 1967 protects persons with an estimated age of about 40 years or even older. In 1963, the act of equal pay was put into practice to protect women and men with equal job description from gender-based discrimination of wages. The act of civic rights made in 1964 is another law that was enforced within company boundaries to prevent the discrimination of employees based on gender, nationality, religion, color and even race (Wilson, 2017). In 1990, the act of Americans with disabilities was amended to protect against qualified persons being discriminated against due to their respective disabilities. This applied in all institutions from the local and state government all the way to the private sector. In 1991, the act of civic rights was further amended to provide damages in the form of money in instances where international employees were discriminated in either way. The act of pregnancy discrimination has also had its way in aiding to protect women from discrimination because of child birth, pregnancy or any other associated medical conditions. In 2008, the nondiscrimination act based on genetic information was implemented, its main aim was to ensure that no employee or applicant for any job discrimination gets discriminated based on their genetic information. The commission for equity in employment opportunities (EEOCC) is responsible for the enforcement of all these laws. These laws provide such a solid opportunity for companies to possess a purified and indiscriminate workforce.

There are a set of legal protections present in the workplace and these differ for both independent contractors and employees. While there may seem to be no difference between how these two parties are treated since these two might engage in similar job descriptions at the workplace. But there are critical differences that exist between being an employee and being a legal contractor. A legal contractor works independently while an employee is controlled by the directions of his or her employer (Carlson, 2017). A legal contractor receives no employment benefits while an employee does receive employment benefits such as disability insurance from the employer. A legal contractor always incurs performance costs while an employee incurs nothing at all (Carlson, 2017). A legal contactor has the potential to set their own preferable hours for working while an employee is subject to the working hours that have been set by his or her employer. Hiring an employee guarantees commitment, security and pre-determined salary sets. While hiring a contractor ensures the best skill set in the industry is in play. The undue threat of competition between these two parties comes into play.



Carlson, R. R. (2017). Employment by Design: Employees, Independent Contractors and the Theory of the Firm.

Clark, G. L., & Urwin, R. (2017). The Outsourced Chief Investment Officer Model of Management and the PrincipalAgent Problem. The Journal of Retirement, 4(3), 28-41.

Wilson, P. (2017). International humanitarian law. International Affairs, 93(3), 563-579.


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