CASE STUDY SITUATION GO FAST is a motorcycle manufacturer in the southern United States. Though sales have been steady, profits have declined because of increasing operational costs. The Board of Directors felt a fresh look at the operations side was needed. They developed a 5-year plan to increase operating efficiency and set out to find someone to lead the effort. Four months ago, GO FAST found what they saw as “the person” to be the new operations director and develop a new operational plan to reduce costs. Jill Jones had an outstanding reputation as operations director for a manufacturer of a closely related product. While she was located in a different state and was happy with her current job and lifestyle, she found the 5-year plan exciting. Besides, the offer was too tempting to refuse. Jill was offered the position, including a substantial increase in salary and benefits. She accepted the job, sold her home, and purchased a home near her new job. Her husband runs an in-home business and her children had adapted well to the new community and schools. She did not have a written contract, but was promised a great future with GO FAST and was given a salary of $90,000 per year. With the economic downturn, sales for this past year were the lowest in five years. The company needs to make drastic cost reductions or it could face bankruptcy. All senior managers agreed to a 25% pay cut. Several other high-paid positions will be eliminated. Among them is Jill Jones’ operations director position.
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YOUR CHALLENGE The CFO has been asked by the board of directors to investigate GO FAST’S obligation to Jill Jones. You have been assigned the task of doing research. The board of directors assumes their agreement with Mrs. Jones is “terminable-at-will” based on the law in the state, and therefore GO FAST has no obligation to her. You will prepare recommendations to be presented to the chief financial officer (CFO). Since the decision is ultimately up to the CFO, your presentation should include, at a minimum: 1. How you expect Jill would react to the board’s hard-line approach. 2. Possible ways to deal with Mrs. Jones’ situation, including the positives and negatives of each. 3. Of these, you are to advise the CFO on the best course of action, and how to present it to Jill. While the financial challenges of the company are not a secret, Jill does not yet know that her position has been targeted for elimination. Your presentation to the CFO will begin in one hour. As part of your research you have pulled a copy of The Fair Debt Collections Practices Act, as well as cases related to this issue (see reference information provided).
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State Employment Law
Under state law, employment generally is considered to be at will, terminable by either party at any time. This means that an employer may terminate an employee with or without just cause, in the absence of an agreement limiting the employee’s discharge to just cause or specifying the term of the employment. Even where an employer makes assurances seeming to mean job permanence, such assurances are generally considered mere statements of policy indicating only at-will employment. However, state courts have also held that employee personnel manual...