Legal Stuff

1. Legal Stuff

2. Legal Issues in HRM • Staffing • Hiring and firing procedures • EEO (coming attraction…) • Compensation & benefits • Safety • Labor relations

3. 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)

4. 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

5. 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

6. 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 statecourts’ interpretations • General exceptions to EAW: • Public policy • Implied employment contract • Good faith and fair dealing • However, EAW is all but dead

7. 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

8. 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)

9. 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)

10. EEO Enforcement • Equal Employment Opportunity Commission (EEOC) • Office of Federal Contract Compliance Programs (part of Department of Labor) Source: Shuit (2003).

11. 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)

12. 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 EEO Coverage: In General

13. 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???

14. 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

15. 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...

16. EEO Terminology • Protected class • BFOQ • Reliability and validity • Disparate treatment • Disparate impact Uniform Guidelines on Employee Selection Procedures (1978)

17. 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

18. 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?

19. 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 Validity

20. 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

21. 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

22. Americans With Disabilities Act • Disability • Essential function • Reasonable accommodation • Undue hardship • Prohibited inquiries

23. Other EEO Issues and Controversies • Gender • Sexual harassment • “Glass Ceiling” • Race • Affirmative action • Religion • The extent of accommodations

24. 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

25. 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

26. 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.

27. 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

28. “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

29. 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

30. 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.”

31. Time Away From Work • Jury duty • Military service • FMLA Sources: “Ex-juror’s case… (1991); Hansen (2003); Segal, 2003

32. Family And Medical Leave Act(FMLA) • 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

33. Compensation • Fair Labor Standards Act (1938) • Davis-Bacon Act (1931) • Requires payment of “prevailing wage” for public works construction

34. 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

35. 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

36. 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)

37. Eliminated as of August 23, 2004 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

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

39. 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 Eliminated as of August 23, 2004 Source: http://www.dol.gov/_sec/media/speeches/541_side_by_side.htm

40. 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.”

41. Eliminated as of August 23, 2004 Outside Sales Exemption • Sales away from employer’s place of business • No more than 20% of time on non-exempt work Source: http://www.dol.gov/_sec/media/speeches/541_side_by_side.htm

42. 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

43. 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 Child Labor Restrictions

44. 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)

45. 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 Hazardous Occupations Source: Lica (2003)

46. Minimum Wage • Currently $5.15 / hour • States may enact higher minimums (and that then applies) • Should minimum wage be raised?

47. Trends in Minimum Wage Source: DoL, Wage and Hour Division

48. State Minimum Wage Laws State minimum higher than Federal Same No state minimum State minimum lower than Federal Source: DoL, Wage and Hour Division, 2003

49. 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)

50. 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?