CPCU 530 EXAM TESTBANK QUESTIONS
WITH 100% CORRECT ANSWERS
What does the traditional common-law doctrine of employment at will say about
terminating employees? - Answer-In the absence of an express contract or union
collective-bargaining agreement, an employer is free to terminate any employee at any
time-for any reason or no reason at all.
What are 4 common exceptions to Employment at Will? - Answer-1. Public Policy
exception
2. Implied-in-Fact contract exception
3. Covenant of good faith exception
4. Statutory exceptions.
What is the public policy exception with regard to Employment at Will? - Answer-The
most widely accepted and recognized by nearly every state- It states that an employee
may not be fired for reasons that violate established public policy for the state such as
refusing to participate in an illegal act at the employer's request.
Describe Wrongful Discharge - Answer-A cause of action an employee may have
against an employer for illegal termination of employment. Ex: If employee is fired
contrary to public policy, the employee may file a lawsuit based on wrongful discharge.
Describe Implied-In-Fact Contract Exceptions - Answer-This type of breach of contract
applies when terms and intentions are indicated by actions of the contract's parties and
surrounding circumstances, rather than expressly written. Ex: A supervisor's statement
that an employee could be fired only for "just cause" might be interpreted as an implied-
in-fact contract that prohibits termination without cause. The majority of states recognize
this exception.
Covenant Of Good Faith Exception (Implied-in-law Contract exception) - Answer-It
stipulates that parties in the employer-employee relationship have a basic obligation for
fair and ethical behavior- and that, as such, even in the absence of a contract, an
employer can act in bad faith by firing an employee without just cause. However, very
few states recognize this exception.
Statutory Exceptions - Answer-Congress and states have enacted laws and adopted
regulations specifically intended to protect employees and to define and prohibit certain
,discriminatory practices. Such statutes and regulations provide specific and generally
clear exceptions to the employment-at-will doctrine that are recognized by every state.
How can a company better protect itself from implied-in-fact contract exception
lawsuits? - Answer-By establishing an unambiguous policy outlining behavior, or a
written employee handbook clarifying expectations, and training supervisors to prevent
misunderstandings.
What do general antidiscrimination laws prohibit? - Answer-An employer from
intentionally treating individuals differently because of age, sex, race, color, religion,
national origin, citizenship, disability, or other distinguishable factors such as military
service, jury duty, and wage garnishment. (Sexual harassment is also categorized as a
form of illegal sex discrimination under these laws). Some states have further expanded
the list to include more categories.
What two antidiscrimination laws are related to age? - Answer-1. The Age
Discrimination in Employment Act (ADEA)
2. Older Workers Benefit Protection Act (OWBPA)
What two antidiscrimination laws are related to disability? - Answer-1. The
Rehabilitation Act (Rehab Act)
2. Americans with Disabilities Act (ADA)
What 3 antidiscrimination laws are related to sex, race, color, religion, and/or national
origin? - Answer-1. Civil Rights Acts
2. Equal Pay Act
3. Immigration Reform and Control Act (IRCA)
What 4 antidiscrimination laws are related to other general factors not specified? -
Answer-1. Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA)
2. Uniformed Services Employment and Re-employment Rights Act (USERRA)
3. Jury Systems Improvement Act
4. Consumer Credit Protection Act
Does the ADEA prohibit employers from asking job applicants their age? - Answer-No;
however, questions about the age of job applicants may be interpreted as age
discrimination and may deter older workers from applying. If an exact age is required for
a lawful reason, such as to determine eligibility for certain benefits, the employer should
make the request after the employee is hired.
Under what circumstance may an employer establish an age limit? - Answer-If age is a
bona fide occupational qualification/BFOQ (such as a mandatory retirement age for
commercial airline pilots that was established for general safety reasons).
What is the Occupational Safety and Health Act (OSH Act)? - Answer-A comprehensive
federal law that sets safety standards in the workplace.
, What standards are included in the Occupational Safety and Health Act? - Answer-Law
requirements to protect employees from workplace hazards and cover subjects such as
mandatory safety devices and equipment; training, protecting, and medically examining
employees; warnings of hazards; and ways employees can do their jobs safely.
How is the OSH Act enforced? - Answer-Through workplace inspections and
investigations, typically conducted by compliance officers from the Occupational Safety
and Health Administration. (Violations of the act may result in civil and criminal
penalties).
When can a state assume exclusive jurisdiction over the health and safety aspects of
employees' working conditions under the OSH act? - Answer-By developing and
enforcing programs that meet or exceed federal requirements.
What act establishes requirements related to minimum wage, overtime, compensation,
child labor, and equal pay for all? - Answer-The Fair Labor Standards Act.
What type of employee is exempt from Fair Labor Standards protections? - Answer-
Exempt employees whose duties meet several characteristics.
What elements must a legally binding contract have? - Answer-Agreement (including
offer & acceptance); capacity (competence) of all involved parties; mutual assent;
consideration; legal purpose; proper, legally required form.
Offerror - Answer-The party in a contract who promises to GIVE something in return for
a promise or act by another party.
Offeree - Answer-The party to a contract who receives.
What is the first essential ingredient of a legally binding contract? - Answer-A valid
agreement between the offeror and the offeree.
what do valid offers include? - Answer-intent to contract, definite terms, and
communication to the offeree.
What does acceptance in a contract include? - Answer-Acceptance by the offeree,
unconditional and unequivocal acceptance, and the offeree's communication of
acceptance.
What makes an agreement valid? - Answer-A valid offer and acceptance.
What is capacity in an agreement - Answer-Competence, or the ability for the parties
involved to understand the nature and consequences of the agreement.
WITH 100% CORRECT ANSWERS
What does the traditional common-law doctrine of employment at will say about
terminating employees? - Answer-In the absence of an express contract or union
collective-bargaining agreement, an employer is free to terminate any employee at any
time-for any reason or no reason at all.
What are 4 common exceptions to Employment at Will? - Answer-1. Public Policy
exception
2. Implied-in-Fact contract exception
3. Covenant of good faith exception
4. Statutory exceptions.
What is the public policy exception with regard to Employment at Will? - Answer-The
most widely accepted and recognized by nearly every state- It states that an employee
may not be fired for reasons that violate established public policy for the state such as
refusing to participate in an illegal act at the employer's request.
Describe Wrongful Discharge - Answer-A cause of action an employee may have
against an employer for illegal termination of employment. Ex: If employee is fired
contrary to public policy, the employee may file a lawsuit based on wrongful discharge.
Describe Implied-In-Fact Contract Exceptions - Answer-This type of breach of contract
applies when terms and intentions are indicated by actions of the contract's parties and
surrounding circumstances, rather than expressly written. Ex: A supervisor's statement
that an employee could be fired only for "just cause" might be interpreted as an implied-
in-fact contract that prohibits termination without cause. The majority of states recognize
this exception.
Covenant Of Good Faith Exception (Implied-in-law Contract exception) - Answer-It
stipulates that parties in the employer-employee relationship have a basic obligation for
fair and ethical behavior- and that, as such, even in the absence of a contract, an
employer can act in bad faith by firing an employee without just cause. However, very
few states recognize this exception.
Statutory Exceptions - Answer-Congress and states have enacted laws and adopted
regulations specifically intended to protect employees and to define and prohibit certain
,discriminatory practices. Such statutes and regulations provide specific and generally
clear exceptions to the employment-at-will doctrine that are recognized by every state.
How can a company better protect itself from implied-in-fact contract exception
lawsuits? - Answer-By establishing an unambiguous policy outlining behavior, or a
written employee handbook clarifying expectations, and training supervisors to prevent
misunderstandings.
What do general antidiscrimination laws prohibit? - Answer-An employer from
intentionally treating individuals differently because of age, sex, race, color, religion,
national origin, citizenship, disability, or other distinguishable factors such as military
service, jury duty, and wage garnishment. (Sexual harassment is also categorized as a
form of illegal sex discrimination under these laws). Some states have further expanded
the list to include more categories.
What two antidiscrimination laws are related to age? - Answer-1. The Age
Discrimination in Employment Act (ADEA)
2. Older Workers Benefit Protection Act (OWBPA)
What two antidiscrimination laws are related to disability? - Answer-1. The
Rehabilitation Act (Rehab Act)
2. Americans with Disabilities Act (ADA)
What 3 antidiscrimination laws are related to sex, race, color, religion, and/or national
origin? - Answer-1. Civil Rights Acts
2. Equal Pay Act
3. Immigration Reform and Control Act (IRCA)
What 4 antidiscrimination laws are related to other general factors not specified? -
Answer-1. Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA)
2. Uniformed Services Employment and Re-employment Rights Act (USERRA)
3. Jury Systems Improvement Act
4. Consumer Credit Protection Act
Does the ADEA prohibit employers from asking job applicants their age? - Answer-No;
however, questions about the age of job applicants may be interpreted as age
discrimination and may deter older workers from applying. If an exact age is required for
a lawful reason, such as to determine eligibility for certain benefits, the employer should
make the request after the employee is hired.
Under what circumstance may an employer establish an age limit? - Answer-If age is a
bona fide occupational qualification/BFOQ (such as a mandatory retirement age for
commercial airline pilots that was established for general safety reasons).
What is the Occupational Safety and Health Act (OSH Act)? - Answer-A comprehensive
federal law that sets safety standards in the workplace.
, What standards are included in the Occupational Safety and Health Act? - Answer-Law
requirements to protect employees from workplace hazards and cover subjects such as
mandatory safety devices and equipment; training, protecting, and medically examining
employees; warnings of hazards; and ways employees can do their jobs safely.
How is the OSH Act enforced? - Answer-Through workplace inspections and
investigations, typically conducted by compliance officers from the Occupational Safety
and Health Administration. (Violations of the act may result in civil and criminal
penalties).
When can a state assume exclusive jurisdiction over the health and safety aspects of
employees' working conditions under the OSH act? - Answer-By developing and
enforcing programs that meet or exceed federal requirements.
What act establishes requirements related to minimum wage, overtime, compensation,
child labor, and equal pay for all? - Answer-The Fair Labor Standards Act.
What type of employee is exempt from Fair Labor Standards protections? - Answer-
Exempt employees whose duties meet several characteristics.
What elements must a legally binding contract have? - Answer-Agreement (including
offer & acceptance); capacity (competence) of all involved parties; mutual assent;
consideration; legal purpose; proper, legally required form.
Offerror - Answer-The party in a contract who promises to GIVE something in return for
a promise or act by another party.
Offeree - Answer-The party to a contract who receives.
What is the first essential ingredient of a legally binding contract? - Answer-A valid
agreement between the offeror and the offeree.
what do valid offers include? - Answer-intent to contract, definite terms, and
communication to the offeree.
What does acceptance in a contract include? - Answer-Acceptance by the offeree,
unconditional and unequivocal acceptance, and the offeree's communication of
acceptance.
What makes an agreement valid? - Answer-A valid offer and acceptance.
What is capacity in an agreement - Answer-Competence, or the ability for the parties
involved to understand the nature and consequences of the agreement.
