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ECON 442 – Economics of Human Resources Management
Spring Quarter ‐ May 29, 2012
Legal Cases for Discussion
Legal Case #1:
1. Apples & Oranges, Inc. (“A&O”), an agricultural firm in California, has employees that perform a
variety of tasks. Management at this firm has hired you as a consultant to advise them on how they
should pay their fruit pickers. Fruit pickers have standard size boxes which they fill with whichever
fruit is in season. Management is considering hourly pay or piece‐rate pay.
a. As an economist, how would you advise management?
b. What is your economic rationale for recommending this compensation system? Why do you
think this is better than the alternative system?
2. Regardless of your recommendation, suppose management decides to pay its fruit pickers a piece
rate ‐‐ a set amount per box of fruit picked.
a. What, if any, warnings would you give management regarding potential problems with this
method of pay?
3. After several years, you receive a call from in‐house legal counsel for A&O. She informs you that
A&O fruit pickers have filed a class‐action lawsuit against the firm. Attorneys representing the
plaintiffs (A&O fruit pickers) claim that they have sustained economic damages as a result of this
piece‐rate compensation system. It is your job to review the claims made by the class and review
years of data to calculate economic damages, if any.
In their complaint filed with the court, plaintiffs claim that the piece‐rate compensation system has
resulted in violations of California State and federal labor laws. Specifically, the complaint argues
that fruit pickers have economic damages due to minimum wage violations, unpaid overtime and
missed paid rest breaks.
a. How would you compare the minimum wage to a piece‐rate worker’s piece rate?
b. What are your initial thoughts regarding how fruit pickers are compensated for working ...