legal stuff. legal issues in hrm staffing – hiring and firing procedures – eeo (coming...

Legal StuffLegal Stuff

Legal Issues in HRM

Staffing– Hiring and firing procedures– EEO (coming attraction…)

Compensation & benefits Safety Labor relations

Why Worry?

Aren’t all these laws just a burden on business? Legal compliance important

– Cost of non-compliance– Public image

Also, too, legal compliance is generally good business

Sources: “Add “value…” (2002);Grossman (2002); “Off the clock” (2003); Wright & Ferris (1995)

More Costs

Texaco. $175 million. That was the legal settlement. It has been estimated that the total cost to Texaco shareholders could have been $500 million.

Rent-a-Center. $47 million. Chuck E. Cheese. $13 million. Outback Steakhouse. 1 plaintiff. $2.2 million. $64,000

in back wages, $50,000 in compensatory damages for her emotional pain and suffering, and $2.1 million in punitive damages.

Sources: Labich (1999); Pruitt & Nethercutt (2000); www.eeoc.gov

Hiring & Firing Procedures

Immigration Reform and Control Act (1986)– All employees must prove eligibility to work in U.S.– The I-9

Polygraphs WARN (1988)

– Worker Adjustment and Retraining Act)– Provides for advance notification of facility closings or major

layoffs (33%+ of workforce or 500+ people)

Employment at will (state laws) EEO

Employment at Will

Common law doctrine:– Employers may hire, fire, demote and promote

whomever they choose, unless a law exists to the contrary

– Depends on state courts’ interpretations General exceptions to EAW:

– Public policy– Implied employment contract– Good faith and fair dealing

However, EAW is all but dead

Just Cause

Reason for termination stems from a job-related, work performance problem

Employee knew that the problem could result in termination

If necessary, a fair and impartial investigation has been conducted (and documented)

Substantial evidence supports firing employee Firing is not an unusually harsh action Problems are handled consistently

EEO Laws

Equal Pay Act (1963) Civil Rights Act, Title VII (1964) Age Discrimination in Employment Act (1967) Executive Order 11246 (1964) Rehabilitation Act (1973) Pregnancy Discrimination Act (1978) Uniform Guidelines on Employee Selection Procedures

(1977) Americans with Disabilities Act (1990) Civil Rights Act (1991)

Other Sources of EEO Guidance

Uniform Guidelines on Employee Selection Procedures (1978)– Outlines standards for validating selection

procedures (any procedure is a “test”)– Defines adverse impact and adverse treatment– 4/5 rule– Mandates recordkeeping

Court cases (Federal courts)

EEO Enforcement

Equal Employment Opportunity Commission (EEOC)

Office of Federal Contract Compliance Programs (part of Department of Labor)

Source: Shuit (2003).

Court Cases

Griggs vs.Duke Power (1971) U.S. vs. Georgia Power (1973) McDonnell Douglas vs. Green (1973) Spurlock vs. United Airlines (1972) Connecticut vs. Teal (1982) Watson vs. Ft. Worth Bank and Trust (1988) OFCCP vs. Ozark Air Lines (1986) Auto Workers vs. Johnson Controls (1991) Wards Cove Packing vs. Atonio (1989)

EEO Coverage: In General

What’s covered Recruitment, hiring and

firing Pay Transfer and promotion Use of company facilities Training programs Other terms and

conditions of employment

Who’s covered Gender

– Pregnancy treated as other medical conditions

– Sexual harassment Race or color Religion National origin Age (> 40) Disability

The WalMart Suit

Based on gender and promotions to management– 2/3 of employees female; only 1/3 of

managers– Only 14% of store managers are women

Certified as a class action (1.5 to 1.6 million plaintiffs)

Cost to WalMart???

Remedies Under EEO

Back pay Compensatory damages Hiring Promotion Reinstatement Reasonable accommodation Other actions that will make an individual "whole” * Payment of:

– Attorneys' fees– Expert witness fees– Court costs

* In the condition s/he would have been but for the discrimination

Equal Pay Act

Covers gender only Requires equal pay for work requiring similar:

– Effort– Skill– Responsibility– Working conditions

Exceptions for:– Merit– Seniority

Remember these… They’ll appear again...

Uniform Guidelines on Employee Selection Procedures (1978)

EEO Terminology

Protected class BFOQ Reliability and validity Disparate treatment Disparate impact

BFOQ

Bona fide occupational qualification A legal basis for taking into account an otherwise

impermissible factor Why?

– Authenticity (actress, undercover police officer)– Personal service (nursing assistant, clothing fitter)– Religion (religious organizations)– Public safety

Why not?– Paternalism– Perceived customer preference– Stereotypes

Reliability

Selection procedures need to be both reliable and valid Called for under Uniform Guidelines, but a standard psychometric

concept Reliability

– Does a procedure (test, interview) provide consistent results?

Interviewer A Interviewer B Candidate 1 90% 87%

Candidate 2 45% 51%

Candidate 3 71% 75%

Candidate 4 85% 90%

Candidate 5 18% 18%

Validity

Does the procedure measure what it is designed to measure?

Called for under Uniform Guidelines, but a standard psychometric concept

Establishing validity– Criterion– Content– Construct

50

70

90

0 1 2 3 4 5

50

70

90

0 1 2 3 4 5

Disparate Treatment

Differential treatment of individuals in a protected class

Examples– Asking only female applicants about child care

arrangements– Requiring minority applicants to have a high school

diploma, but not white applicants To defend:

– Establish lack of intent– Show nondiscriminatory reason for the practice

Disparate Impact

How it works– Statistically determine (4/5 rule) if protected classes

are impacted by a employment procedure– Assumption is that a prima facie case of

discrimination exists; defendant then bears burden of proof

Defending against a disparate impact case– BFOQ– Establish validity of procedure– Business necessity or job-relatedness

Americans With Disabilities Act

Disability Essential function Reasonable accommodation Undue hardship Prohibited inquiries

Other EEO Issues and Controversies

Gender– Sexual harassment– “Glass Ceiling”

Race– Affirmative action

Religion– The extent of accommodations

Sexual Harassment

Sexual harassment defined Employer’s responsibilities

Is it a “female thing” ???– In 2003, almost 15% of charges filed with

EEOC were filed by men

What is Sexual Harassment?

Typically male female, but can be any combination Quid pro quo

– Sexual favors as a condition of employment Hostile environment

– Creating an intimidating, hostile or offensive work environment– Reasonable person vs. reasonable woman standard (Harris case)

Can also involve third parties: suppliers, vendors, customers, clients, independent contractors and the general public

Important: Harassment can also involve race, religion or disability status

Hostile Environment

An intimidating, hostile or offensive work environment Causes harm

– Reduced work performance– Psychological harm– Forced resignation

Pervasive conduct (one or two incidents not sufficient) What can it include

– Offensive or demeaning language or references (“dumb-a** women”

– Inappropriate behaviors– Pictures, graffiti, etc.

Sexual Harassment: The Organization’s Policies

Company can be liable if no policy for handling harassment is in place and enforced

Have a policy, communicate it and train employees What to include in a policy?

– Define sexual harassment and make clear that it is not tolerated– Complaint procedure (including method for reporting harassment

by direct supervisor)– Time frame for investigation– Penalties for violating policy– Confidentiality for complainant and alleged harasser– Protection against retaliation

“Glass Ceiling”

Belief that there is a barrier preventing women and minorities from rising beyond a certain level in organizations

Does it exist?– Women are generally under-represented at higher levels of

the organization– Pervasive discrimination?– Time will take care of it?– Women make less investment in work?– Women gravitate towards staff vs. line positions– Undervaluing “emotional” work

Affirmative Action and Diversity

Definitions– Affirmative action: catching up with past

discrimination, making uses of goals and timetables for bringing protected classes into the workforce

– Diversity management: taking advantage of the diverse workforce, without expecting those who are different to fit in or conform

Legal issues with affirmative action– Voluntary plans– OFCCP (Federal contractors,banks)– Consent decrees

Religion and Work

Religion and hiring: religion can (rarely) be a BFOQ [religious institutions]

“An employer is required to reasonably accommodate the religious belief of an employee or prospective employee, unless doing so would impose an undue hardship.”

Time Away From Work

Jury duty Military service FMLA

Sources: “Ex-juror’s case… (1991); Hansen (2003); Segal, 2003

Unpaid leave up to 12 weeks per year– Seriously ill family member– Own illness– Birth of a child– Adoption of a child

Companies with 50 or more employees, after 1 year employment

Return to same or equivalent job Top 10% paid employees not eligible State laws may be more generous

Family And Medical Leave Act(FMLA)

Compensation

Fair Labor Standards Act (1938) Davis-Bacon Act (1931)

– Requires payment of “prevailing wage” for public works construction

Fair Labor Standards Act

Originally passed in 1938 Covers four main areas

– Overtime– Minimum wage– Child labor– Peonage

Enforcement by Wage and Hour Division, Department of Labor

Overtime Provisions

Overtime applies after 40 hours per week Overtime rate is ½ regular hourly rate Time worked:

– Any time employees permitted or allowed to work– Waiting time– On-call if mobility restricted– Rest periods (< 20 minutes) covered, but not meal

breaks

Exemptions From Overtime

Depends on actual content of work, not title Types of exemptions

– Executive– Administrative– Professional– Outside sales

Exemptable workers may be paid overtime as market demands

Sources: “Managers to get $2.9 million” (2001); “Overtime pay target of Eckerd lawsuit” (1999)

Executive Exemption

Management is primary duty Direct 2 or more full-time employees Authority to hire, fire, or recommend

personnel actions Exercise high degree of independent

judgment No more than 20% of time on non-

management duties (40% in retail & service)

Source: http://www.dol.gov/_sec/media/speeches/541_side_by_side.htm

Eliminated as of August 23, 2004

Administrative Exemption

Office or non-manual work related to management policies or general business operations

Exercise discretion and judgment Assist a owner or executive or perform

specialized or technical work or execute special assignments

No more than 20% of time on non-management duties (40% in retail & service)



Professional Exemption

Type of work:– Work requires advanced knowledge and education– Original and creative artistic work– Teaching– IT professions (depending on pay)

Work is intellectual and varied in character Work cannot be standardized as to time Salary requirement met (except for physicians, attorneys,

teachers and some IT occupations) No more than 20% of time on non-exempt work Must pay OT if paid by hours worked



Computer Employees

“Work requires theoretical and practical application of highly-specialized knowledge in computer systems analysis, programming, and software engineering.”

“Consistently exercises discretion and judgment.” “Performs work that is predominantly intellectual

and varied in character and is of such character that the output produced or result accomplished cannot be standardized in relation to a given period of time.”

Outside Sales Exemption

Sales away from employer’s place of business

No more than 20% of time on non-exempt work



Child Labor

Regulated by age categories:– Bars hazardous work– Hours worked

Provisions do not cover family-owned farms or businesses

Also some exemptions for legitimate apprenticeships

Child Labor Restrictions

Under age 14– Acting– Newspaper sales– Casual babysitting and

the like

14 and 15 years old– No hazardous work– Limited hours

16 and 17 years old– No hazardous work

18 and above– No restrictions

Hours Limitations

No work during school hours No more than 3 hours on a school day No more than 8 hours on a non-school day No more than 18 hours in a week when

school in session No more than 40 hours a week when

school not in session Between 7 am and 7 pm (9 pm in summer)

Hazardous Occupations

Manufacturing or storing explosives

Driving a motor vehicle Coal and other mining Wrecking and demolition Logging and sawmilling Power-driven woodworking

machines Exposure to radioactive

substances Power-driven hoisting

apparatus Power-driven metal working

Power-driven meat processing (including restaurant slicers)

Power-driven bakery equipment

Power-driven paper processing (including balers, compactors)

Brick & tile manufacturing Operate circular saws, band

saws Roofing (even on ground) Trenching and excavating

Source: Lica (2003)

Minimum Wage

Currently $5.15 / hour States may enact higher minimums (and

that then applies) Should minimum wage be raised?

Trends in Minimum Wage

$5.15

$0.25

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

Source: DoL, Wage and Hour Division

State Minimum Wage Laws

Source: DoL, Wage and Hour Division, 2003

State minimum higher than Federal

Same

No state minimum

State minimum lower than Federal

Benefits

Social Security Act (1936) ERISA (1974) COBRA (1985) Health Insurance Portability and Accountability

Act (1996) Newborn and Mothers’ Health Protection Act

(1996) Mental Health Parity Act (1996) Women’s Health and Cancer Rights Act (1998)

Social Security

Originally provided for old age insurance and disability coverage (1935)

Medicare added in 1965 Benefits for:

– Retirement– Disability– Survivors (lump sum and monthly payments)

Based on contributions from employers and employees Majority of U.S. workers covered Should Social Security be privatized?

ERISA Provisions

Passed in 1974 in response to abuses of pension plans Does not require that a plan be offered Covers:

– Who is eligible?– Vesting (entitlement to employer contributions)– Plan funding required

Also established Pension Benefit Guarantee Corporation– Employers required to pay premiums to PBGC to cover company

bankruptcies; if necessary, PBGC will assume payments

COBRA

Provides for continuation of health coverage (if offered)

Employee pays 102% of total cost Coverage period:

– 18 months for terminated employees– 36 months for spouse / ineligible dependent

Other Federal Laws Regulating Health Plans

Health Insurance Portability and Accountability Act (1996)

Newborn and Mothers’ Health Protection Act (1996)

Mental Health Parity Act (1998) Women’s Health and Cancer Rights Act

(1998)

Safety

OSHA (1974)– Established standards for employee safety– Addresses on-the-job injuries and occupational

illnesses

Hazardous Communication Standard (mid-1980s)– Requires Manufacturers’ Safety Data Sheets

OSHA requires recordkeeping and site inspections

Labor Relations

Very much a specialist area– Federal laws– Norris-LaGuardia Act (1932)– Wagner Act (1935)– Taft-Hartley Act (1947)– Landrum-Griffith Act (1959)

State laws– Right-to-work laws (union shop illegal)

Right to Work States

Source: http://www.nrtw.org

legal stuff. legal issues in hrm staffing – hiring and firing procedures – eeo (coming...

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