USA: +1(669)289-8683 
Sign in
Legal Framework of HRM:
Describe the importance for an employer to strive for a diverse workforce.
Define the possible benefits or risks of DEI initiatives.
The Legal Environment
3
©Willard/iStock/Thinkstock
Learning Objectives
After reading this chapter, you should be able to do the following:
Identify the sources of employment law in the United States.
Describe how the U.S. legal system is structured.
Explain how “employment-at-will” is interpreted in the United States and identify exceptions to this doctrine
that provide for employee rights.
Determine which laws apply to a specific employer.
Describe the key laws and regulations governing HRM and explain HRM’s role in ensuring compliance with
employment laws in the United States.
Introduction
Although human resource management (HRM) has taken on a strategic role, everyday operations continue to be shaped by an elaborate system of laws and
regulations that human resource professionals need to understand thoroughly and implement consistently. Furthermore, human resource laws and
regulations evolve and change on a regular basis. Human resource professionals need to stay current on those changes as they may directly influence the
organization’s operations and relationships with its employees. Examples of recent federal laws and regulations include the Patient Protection and Affordable
Care Act (PPACA) and the Defense of Marriage Act (DOMA), which can have significant repercussions on employment benefits. Legal compliance is not
sufficient to achieve the strategic objectives of human resource management, but it is certainly a necessary precondition to avoid disrupting the organization’s
daily operations, compromising its reputation, or incurring substantial litigation costs.
In essence, law is a body of rules of conduct or actions prescribed as binding and enforced by a controlling authority (Merriam-Webster, 2013). As is evident
from the opening case, the myriad of laws that govern the workplace are complex, fragmented, and capable of producing great confusion. Compliance with
employment law is obviously critical for an organization’s survival and reputation. However, more important than compliance to the letter of the law is a clear
understanding of the “heart” and the “spirit” of various employment laws and regulations, which are designed to protect employee rights. The concepts in this
chapter are critical as the basis for interpreting the influence of law on employment practice.
Before discussing the key laws that impact the employment process, this chapter will give the reader a general legal framework for understanding and
appreciating some of the legal issues surrounding employment practices. We discuss the origins and foundational concepts for many of the current HR laws
and regulations, as well as the legal and regulatory structure for their implementation. The key laws and regulations governing HRM are then discussed. These
laws and regulations are also revisited and applied in subsequent chapters.
OPENING CASE STUDY
Lawsuits That Are Changing the Employment Landscape
Click the following link:
https://www.shrm.org/hr-today/news/hr-news/conference-today/pages/2017/top-10-employment-cases-of-2017-reviewed.aspx
(https://www.shrm.org/hr-today/news/hr-news/conference-today/pages/2017/top-10-employment-cases-of-2017-reviewed.aspx )
Employers are increasingly challenged with litigation directed against them by disgruntled employees, former employees, or applicants who
have been denied employment for various reasons. As you will learn in this chapter, employment laws are quickly changing, and employers are
expected to keep up. Furthermore, employment policies and practices are shaped by numerous factors and processes, not just by current laws.
For example, past court rulings, also referred to as “precedent,” influence subsequent rulings. The cases summarized in the above link are a
few examples. For additional details on each case, including updates on those that were pending at the time of publication, you can research
each individual case online. You should also attempt the following discussion questions twice: before and after reading this chapter. Note any
changes in your answers.
Discussion Questions
1. When can an employee have an expectation of privacy in the workplace?
2. What constitutes sexual harassment?
3. Is discrimination ever justified? If so, under what circumstances?
3.1 From Conception to Statute
Many HRM professionals who are tasked with ensuring compliance of their employer’s policies and practices with existing laws and regulations have little
understanding of the process that creates such laws and regulations. Yet, such an understanding enables an HRM professional to more fully grasp the realities
and challenges required to advance the strategic goals and objectives of the employer while at the same time addressing the concerns of employees. This
section explains how many of these laws and regulations came about.
The Constitution As the Source of All U.S. Law
Critical to understanding how law has eventually come to influence employment practices is an acknowledgement that the Constitution of the United States
represents the paramount document in our legal system. The first ten amendments to the Constitution are commonly known as the Bill of Rights, and as
amended the Constitution is the supreme law of the land. The principles put forth in the Constitution are given substance and clarity through the courts. Any
law found in violation of the Constitution will be declared unconstitutional and not enforced. For example, in the aftermath of the Sandy Hook elementary
school shootings in Newtown, Connecticut, which took the lives of 20 children and 6 teachers, there have been fierce debates regarding increased licensing
restrictions on legal weapon possession. However, the constitutionality of these restrictive propositions was questioned on grounds that they may be in
violation of the Second Amendment’s clause regarding the right to bear arms. Read the following article to fully appreciate its logic and see the outcome.
WEB LINKS
The Constitution of the United States provides for a system of government in which
specific powers are granted to the federal government. It is important to bear in mind
that all powers not designated to the federal government reside within the individual
Gun laws
http://www.japantimes.co.jp/news/2013/04/
18/world/nixed-u-s-gun-control-bill-shows-majority-cantmatch-minoritys-firepower/
states. Currently, the power to create employment laws within the federal government is
divided between three branches: the executive branch (headed by the president and
includes the Cabinet department personnel and other officials within his power to
appoint), the legislative branch (made up of the two houses of Congress), and the
(http://www.japantimes.co.jp/news/2013/04/18/world/nixed-u-s-
judicial branch (made up of the federal court system). The individual states follow the
same general structure but mirrored by a governor instead of a president, a state
legislature instead of a Congress, and state court system instead of the federal court
system.
gun-control-bill-shows-majority-cant-match-minoritysfirepower/#.Uzv1xaiSySo)
This link discusses the complicated debate over the
constitutionality of gun control legislation in the wake of the
Sandy Hook elementary school shooting.
Executive Orders
Executive orders are declarations issued by the U.S. president to officers and agencies
of the executive branch to guide their day-to-day operations. For example, recently,
President Obama issued two executive orders aiming at facilitating innovation and job creation. The first initiates the establishment of three new
manufacturing innovation institutes through partnerships between public universities and private firms. The second mandates that more government data
should be made available online in order to facilitate the access and innovation necessary for business startups. For more information on these executive
orders, follow the link.
WEB LINKS
President Obama’s New Executive Orders to Facilitate Innovation and Job Creation
http://www.usnews.com/news/articles/2013/05/09/obama-announces-two-new-executive-orders-to-create-jobs-the-administrationhopes-that-open-data-and-spending-on-manufacturing-can-spur-growth-and-shift-the-conversation
(http://www.usnews.com/news/articles/2013/05/09/obama-announces-two-new-executive-orders-to-create-jobs-the-administration-hopes-that-open-dataand-spending-on-manufacturing-can-spur-growth-and-shift-the-conversation)
The link provides additional information on President Barack Obama’s executive orders aimed at pro-moting innovation and job growth.
Until 1952, there were no rules or guidelines outlining what the president could or could not do through an executive order. In 1952, the Supreme Court ruled
in Youngstown Sheet & Tube Company v. Sawyer that Executive Order 10340 from President Truman placing all steel mills in the United States under federal
control was invalid because it attempted to make law rather than clarify or act to further a law enacted by Congress or established in the Constitution (Anstine,
2013; Jones, 2013). Thus, executive orders, in theory, are to be concerned with enforcing current law or helping to manage the enforcement of current law
(Jones, 2013). Within these rather tight parameters, an executive order is considered law as in the case of Executive Order 1124, which was issued by
President Lyndon B. Johnson in 1965, prohibiting federal contractors and subcontractors holding contracts valued in excess of $10,000 from discriminating in
employment decisions on the basis of race, color, religion, sex, or national origin and requiring affirmative action to ensure that equal opportunity was
inherent in all employment decisions.
Although there appears to be no constitutional provision explicitly justifying executive orders, most executive orders cite the Constitution’s reference to
“executive power” and the declaration that the president has the responsibility to “take care that the laws be faithfully executed as authorization for their
issuance” (Anstine, 2013). Congress has generally granted latitude to the executive branch on this matter. However, such latitude is not guaranteed, as
witnessed by Congress’s successful court challenge to President Clinton’s 1995 Executive Order 12954 attempting to prevent the federal government from
contracting with firms that employed strike replacement workers, also known as “strike breakers” (LeRoy, 1996).
The Legislative Branch and Special Interests
The legislative branch of the federal government is granted the power to create laws, and it is rather naïve to conclude that Congress creates employment
laws only out of a sense of neutrality, objectivity, and fairness (Ponzetto & Fernandez, 2008). That is, although statutes passed by duly elected legislators are to
be considered as being closely aligned to the preferences of the public because of the process of democratic representation (Scalia, 1997), this may not always
be the case. Legislators are placed in power as a result of an imperfect democratic process that weights disproportionately the preferences of special interest
groups, and employment legislation is an expression of the will of such forces (Ponzetto & Fernandez, 2008). One should consider that beginning with
preliminary congressional hearings or inquiries through to a presidential signing, a bill has to pass through as many as ten distinct stages, and at each stage
powerful interest groups have exerted their influence on its language and scope (Westlaw, 2010). In some cases, special interest groups may exert their power
in a positive direction that benefits the general public, while in others they may only further the interests of a smaller but powerful group of individuals,
organizations, industries, or political entities. Follow the following link for a realistic demonstration of this dynamic process and its outcomes.
WEB LINKS
The Role of Special Interest Groups in Shaping Legislation
http://articles.orlandosentinel.com/2013-05-06/news/os-florida-legislature-special-interests- 20130506_1_tax-break-florida-bluejacksonville-jaguars (http://articles.orlandosentinel.com/2013-05-06/news/os-florida-legislature-special-interests-20130506_1_tax-break-florida-bluejacksonville-jaguars)
The link provides an example of how special interest groups shaped legislation in Florida.
Once a statute is passed, there remains no potential for its terms to evolve further through efforts of the legislative branch of government to reflect the will of
special interest groups (Ponzetto & Fernandez, 2008).
The Federal Judiciary and Case Law
After a statute becomes written law, it is common for various entities to disagree over what the law means, how the law should work, and who is subject to the
law and who is exempt from it. These disagreements often end up in court. Once entered into the judicial system, statutes become case law (also known as
common law). In simple terms, case law can be considered an evolutionary process by which the judicial system creates its own law based on its interpretation
of the intent of the legislative branch in creating a particular statute. To ensure their impartiality and to remove outside political pressures as much as possible,
federal judges are appointed for life and are subject to removal only after impeachment or conviction of a serious crime. The fundamental rule guiding the
interpretation of federal judges is that of “stare decisis” (Latin for “let it stand”); more commonly this is referred to as precedent, the convention by which
previous court rulings are given weight in making present rulings. Thus, the practice of deciding new cases with reference to previous decisions represents the
cornerstone of our judicial system. The cases summarized earlier in this chapter are examples of case law resulting from the interpretation of statutes
governing privacy, discrimination, and other employment situations. In turn, the rulings in these cases will become precedent, shaping rulings in similar future
lawsuits.
Interestingly, judges are expected not only to apply an existing law to a particular case, but they are also expected to create or discover on their own the
appropriate law applicable to the case at hand (Ponzetto & Fernandez, 2008). If the original precedents of the case are no longer clearly applicable, judges can
depart from precedent and interpret existing law in a new and novel manner. Here, once again, special interest groups have an opportunity to exert their
power in shaping the long-term interpretation of a law, and there exists an extensive body of literature suggesting that court decisions are shaped as much by
ideology as by legal precedent (Ponzetto & Fernandez, 2008). However, the argument is often made that over the long term, precedent evolving from case law
can be expected to cancel out judicial bias and enable a high degree of certainty about what a statute means (Ponzetto & Fernandez, 2008). On the other hand,
D’Amato (2010) reaches the opposite conclusion in arguing that over time rules and principles propounded within a statute become more uncertain in content
and application because the legal system is biased toward unraveling those very rules and principles.
Federal Administrative Law
The dramatic growth of the size of the federal government during the twentieth century is indisputable (Garrett & Rhine, 2008), and thus the executive,
legislative, and judicial branches of the government often find it challenging to carry out their responsibilities as defined by the Constitution. In order to
perform the duties delineated by the Constitution, administrative bodies such as the Department of Labor, the Equal Employment Opportunity Commission,
and the National Labor Relations Board are created to administer and enforce legislation and to issue rules designed to carry out the goals of specific
legislation. Among the major functions of such agencies is rule making, and with the dramatic growth of the government, much concern has arisen about the
power and scope of these agencies to make and enforce what is commonly known as administrative law. The scope and power of government agencies have
been codified into statutes such as the Federal Administrative Procedure Act (Legal Information Institute, 2010). The rules generated by an administrative
agency are subject to judicial review, and an agency’s actions should be in accordance with its enabling statutes (USLegal, 2013).
Legislation and Law at the State Level
The U.S. Constitution mandates that all states uphold a “republican form” of government,
which means that the government is run by elected or duly appointed officials, and that
the head of the state is not a monarch. Although the three-branch structure is not
required by the Constitution, state governments in general mirror the three branches of
the federal government and operate similarly regarding the creation of laws that impact
employment within their borders. In all states, the executive branch is headed by a
governor directly elected by the people. All fifty states have legislatures made up of
elected representatives who consider matters brought up by the governor or by its
members. In general, state judicial branches are led by the state supreme court, which
hears appeals from the lower-leve courts.
The Tenth Amendment of the U.S. Constitution states that all powers not granted to the
federal government are reserved for the states and the people. However, the Supremacy
Clause of the U.S. Constitution specifies that the Constitution and laws of the United
States shall be the supreme law of the land, notwithstanding anything in the state
constitution and or in the laws of any state to the contrary. Notably, for HR purposes, a
state employment statute cannot pre-empt a federal statute occupying the same field,
nor can it directly conflict with a federal statute or frustrate federal purposes. On the
©Bettmann/Corbis
In keeping with the Constitution, administrative bodies, including
the U.S. Department of Labor, create and enforce legislation.
other hand, a state employment statute can be more restrictive than a federal statute or address an issue not specifically addressed by federal laws. For
example, a state can have a stricter interpretation of nondiscriminatory employment practices, such as mandating employer benefits to same-sex partners.
3.2 Pursuing Employment Justice Through U.S. Courts
The path to the pursuit of justice in the workplace is not necessarily simple, straightforward, or unambiguous. Rather, it often can appear to an HRM
professional as something akin to a tortuous maze. This section explains the various components of the justice system.
A Seemingly Fractured and Overlapping System of Justice
Seeking resolution to an employment dispute is not a transparent process because the U.S. judicial is system is composed of multiple autonomous courts that
give rise to a perception of fractured and overlapping employment laws. There is the federal court system that is divided into numerous geographical units and
various levels of hierarchy, and then each state has its own court system with a system of local courts that operate within the state. Then there are
administrative courts and special courts. The function of these multiple autonomous court systems is further complicated by the fact that there are multiple
sources of law, and the courts of one system are often called upon to interpret and apply laws of another jurisdiction (Fine, 1999). However, there exists what
might be called a standard model of precedent in which, with limited exceptions, lower courts within a geographical jurisdiction are bound by relevant
precedent announced by higher courts within that jurisdiction and in which courts are more loosely bound by prior relevant decisions issued by their own
court system (Dobbins, 2010).
Federal Judicial System
Viewed as a pyramid (Figure 3.1), entry into the federal court system occurs at the bottom through 94 district courts, with at least one court located in each
state. Although each district court has multiple judges, a single judge presides over each case. If a losing party in district court feels that an error of law was
made in deciding the case, then an appeal can be made to one of the U.S. Courts of Appeals located geographically into twelve circuits.
Figure 3.1: Federal judicial system
After a panel of three Court of Appeals judges has ruled on a case, litigants have several options. They may seek reconsideration of the decision by the same
three-judge panel, they may seek a rehearing of the panel’s decision by all of the judges of that circuit sitting together, or they may seek a review by the U.S.
Supreme Court. At the apex of the judicial pyramid is the U.S. Supreme Court, which consists of nine judges who hear and decide cases. There exists no
absolute right of appeal to the Supreme Court, whose decisions are final and cannot be appealed (Fine, 1999). The link below represents an example of
Supreme Court rulings.
WEB LINKS
Supreme Court’s Affirmative Action Rulings
http://www.usatoday.com/story/news/politics/2013/06/24/ supreme-court-racial-preferences-affirmative-action/2155525/
(http://www.usatoday.com/story/news/politics/2013/06/24/ supreme-court-racial-preferences-affirmative-action/2155525/)
The link provides information on the U.S. Supreme Court’s past affirmative action rulings.
Alternative Dispute Resolution
In 1998, Congress passed the Alternative Dispute Resolution Act (ADRA) directing all U.S. district courts to develop, by local rule, alternative dispute
resolution (ADR) procedures for civil cases. Each court, at a minimum, is required to have litigants in civil cases consider at an appropriate stage in the
litigation several alternative processes for dispute resolution such as mini-trials, arbitration, and mediation. The legislative reasoning was that alternative
dispute resolution produces greater satisfaction to both parties and would reduce the backlog of pending civil cases. However, empirical research on the
outcomes of ADRA has been at best inconclusive (Stallworth & Kasper, 2013).
State Judicial Systems
State courts hear the overwhelming majority of civil cases and parallel the structure of the federal court system, with initial entry occurring at the bottom level
in courts having limited jurisdiction (for example, probate, family, and traffic cases). On the next layer are the trial courts commonly referred to as “county
courts.” Cases decided by trial courts at the state level are subject to appeal and review by a state appellate court whose purpose is, upon appeal, to review
decisions made by trial courts, but it is important to note that the appellate courts do not retry a case decided in a trial court, whose decisions can only be
appealed to the U.S. Supreme Court when issues of federal law are involved.
Administrative Courts
Perhaps administrative courts are the least complex of all the judicial systems in the United States because decisions are final and without appeal. In
conducting an investigation, an administrative agency can issue a subpoena requiring a witness to appear and testify and also to produce any relevant
documents (USLegal, 2013). The administrative law judge or hearing officer is a civil servant with a set term of employment who renders decisions based on
reasoned analysis, written finding of facts, and conclusions of law (Arbetter, Field, Boling, & Krudewagen, 2011).
3.3 An Overarching U.S. Law of the Land Regarding the Employment
Relationship
Might there be a core concept that can serve as a common guideline for HRM professionals seeking to master the most basic principles of employment law?
Well, for almost two centuries there has been such a concept, namely “employment at will” (EAW). However, this concept is increasingly being subjected to
examination and challenge.
Employment-at-Will (EAW)
Since the last half of the nineteenth century, employment in all fifty of the United States has been “at will” or terminable by either the employer or the
employee. Today, the majority of employees still work under the doctrine of employment-at-will, or EAW. That is, in the absence of a contract (either written
or oral) defining the nature of the employment relationship, an employer can release an employee for bad cause, good cause, or no cause at all (Muhl, 2001)
as long as the termination is not for any discriminatory or legally protected reason. On the other hand, the widely held misconception that an employee must
give the employer a two-week notice before departing is indefensible under the doctrine of EAW (although, if the employee has thoughts of returning to the
employer at some point in the future or might desire a job recommendation, a two-week notice has value).
However, it is important to understand that the EAW doctrine applies only to those situations in which a contractual agreement is absent. If the employment
relationship is defined by a contract, either written or implied, then a contract controls the relationship and the doctrine of EAW is not enforceable. For
example, Linda Dillon filed a lawsuit against her employer charging wrongful discharge. Her employer, Champion Jogbra, countered in trial court that the
employee handbook clearly stated that workers could be fired at will. Although the judge in the state trial court dismissed Dillon’s case citing the EAW doctrine,
Dillon appealed to the Vermont Supreme Court noting that the employee handbook made specific reference to a progressive disciplinary process that would
be applied to all employees in a fair and consistent manner and claimed that she had been fired without benefit of this process. The State Supreme Court noted
that the handbook statement regarding employees’ access to the progressive disciplinary process constituted an implied contract that confused, if not refuted,
the handbook claim that the employment relationship was one of EAW. The court ruled that Champion Jogbra’s employment practices were inconsistent with
EAW and overturned the ruling of the state trial court (Laurance, 2003).
Chipping Away at the Law of the Land
Although often referred to as common law, EAW is becoming less and less common because of legally recognized exceptions.
1. An employer cannot terminate an employee for discriminatory reasons associated
with race, gender, religion, skin color, or national origin.
2. Employers cannot retaliate by terminating the employment relationship because an
employee exercises his or her rights under federal and state anti-discrimination
laws.
3. An employer cannot terminate the employment relationship because an employee
refused to take a lie detector test.
4. Employers cannot fire a worker because of alien status (that is, non-citizen status)
if the worker is legally permitted to work.
5. Employers are prohibited from terminating employees who complain about the
employer’s possible violation of the Occupational Safety and Health Act.
6. An employer cannot fire a worker for engaging in legitimate collective bargaining
activity.
7. Employers are not permitted to terminate an employee because the employee
refused to commit an act that the public would find morally wrong or ethically
objectionable, such as refusing to commit an illegal act ordered by a supervisor or
making a complaint to a governmental agency about an employer’s illegal activity
(Arbetter et al., 2011; FindLaw, 2013).
Fuse/Thinkstock
Legally recognized exceptions to EAW protect employees from
termination on various grounds, such as race, gender, religious,
skin color, or national origin discrimination.
Wide Variation Across States
EAW is not interpreted uniformly in all fifty states. Employment statutes in Montana now require “good cause,” such as a performance deficiency or business
necessity, for justifying employee termination (Salmon, 2013). In some states, the EAW is interpreted very broadly, while other states have created exceptions
or greatly restricted the doctrine. The clear trend is toward granting greater rights to employees in their employment relationships, thus narrowing the scope
of EAW and presenting employers with greater risks in terminating employees (Arbetter et al., 2011).
3.4 The Two Most Important Legal Questions About Employment
What should be the starting point for any HRM professional who is setting about to ensure compliance of an employer’s policies and practices with existing
employment laws? In short, there are two questions that must be the primary focus in setting about such a task.
Who Is an Employer and Who Is an Employee?
A critical question in any pursuit of employment justice through the courts concerns determining the presence of an employment relationship. That is, who is
the employer and who is the employee?
Who Is an Employer?
On the surface, this may seem a rather mundane question, but in pursuit of employment justice it can become a very complex question. For instance, an
employer might be a single enterprise, an agency, or even two firms at once. In Zheng v. Liberty Apparel Company, Inc., the court held that garment assembly
workers employed by a subcontractor of a clothing manufacturer could also be considered employees of the manufacturer (Liberty Apparel) and that the
manufacturer could be liable for the subcontractor’s failure to pay its employees statutorily mandated wages (Wears & Fisher, 2012). In the final dispensation
of the case in 2009, the 25 plaintiffs were awarded more than $500,000 in damages (Overtime Law, 2010). The Code of Federal Regulations broadly defines an
employer in the United States as a person, firm, corporation, contractor, or other association or organization that has an employer-employee relationship in
which the employer may hire, pay, fire, supervise, or otherwise control the work of the employee (United States Citizenship and Immigration Services, 2010).
Who Is an Employee?
Again, what appears to be a rather mundane question is in reality somewhat complex. For instance, is a
summer intern an employee? How about college athletes? What about contingent workers? A case cited
in almost every HRM text as the worst consequence of incorrectly evaluating the employment
relationship, Vizcaino v. Microsoft Corporation, centered on a series of decisions by Microsoft concerning
its contingent workforce. The court ruled that employees previously classified as contingency workers—
that is, employees of a third-party contractor—were indeed common-law employees of Microsoft, which
settled the case out of court for $97 million (Wears & Fisher, 2012).
What about doctors in private practice? In Solomon v. Our Lady of Victory, the Court of Appeals ruled that
Dr. Solomon, who might normally be considered an independent contractor at the hospital, could sue for
employment discrimination associated with a peer review that he alleged was a sham if the hospital
exerted so much control over the physicians involved in the review that it established a common-law
employment relationship or took action that interfered with his future employment (Terrell, 2008).
Elements of three broad and overlapping tests are commonly used to determine whether a worker is an
employee.
1. The Common Law test holds that an employment relationship exists if the employer has the right to
control the work process as determined by evaluating the totality of the circumstances and specific
factors.
2. The Economic Realities test holds that an employment relationship exists if the individual worker is
economically dependent on the firm for continued employment.
3. A Hybrid test holds that an employment relationship should be evaluated under both common law
and economic reality test factors, with a focus on who has the right to control the means and manner
of a worker’s performance (Muhl, 2002).
©Goodluz/iStock/Thinkstock
Employers must tackle the gray areas of HR and
define who is an employee and who is not. Would
an intern be considered an employee, and if so,
would they receive any sort of benefits?
The following link provides an example of these tests in action.
WEB LINKS
Are Lawyers Independent Contractors or Employees?
http://www.forbes.com/sites/robertwood/2012/03/29/ lawyers-are-employees-not-independent-says-fifth-circuit/
(http://www.forbes.com/sites/robertwood/2012/03/29/lawyers-are-employees-not-independent-says-fifth-circuit/)
The link provides an example of employment tests in action.
Which Laws Apply to Whom?
Recognizing the fractured landscape of employment, it is often difficult to make a cursory judgment as to whether a law does or does not apply to a particular
employment relationship. The following discussion provides some initial guidelines when considering the relevance of the multiplicity of employment laws.
Public Sector or Private Sector Employer
Whereas private-sector employees work primarily for businesses or nonprofit agencies, public-sector employers hire employees to fulfill official functions and
perform public service, such as law enforcement, public education, and public safety. Given that public-sector employers are government agencies,
constitutional law grants public employees certain rights that their private-sector counterparts do not enjoy. While most private-sector workers are “at-will”
employees, public-sector employers generally cannot discipline, demote, or fire employees unless there is “cause,” such as the violation of work rules,
dishonesty, misconduct, or poor performance. Furthermore, public-sector employees are entitled to present at a hearing evidence and reasons why there
exists no basis for their firing or other discipline. Federal law gives private-sector—but not most public-sector employees—the right to join unions, negotiate
with employers for wages and working conditions, and take group action concerning their employment, including the right to strike. However, many states
have granted public employees the right to join unions and collectively negotiate for certain benefits (Raines, 2013).
Union or Non-Unionized Workplace
While many employers in non-unionized workplaces espouse an “open-door policy,” it often means they will listen to workers but reserve the right to take
whatever action management deems necessary. In a unionized workplace both management and labor must listen to each other’s concerns and then work
toward a compromise that is acceptable to both parties. In a non-unionized workplace, wages benefits, and working conditions are determined exclusively by
management, but in a unionized workplace these must be jointly negotiated. For purposes of discipline, workers in a non-unionized workplace have
traditionally been considered at-will employees, while discipline of workers in a unionized workplace has been considered to be determined by the terms of a
collective bargaining agreement.
Employer Size
The multiplicity of employment laws is accompanied by varying employee thresholds at which they become enforceable. For instance, the requirement to file
an EEO-1 report applies only to firms with 99 or more employees. The Family and Medical Leave Act applies only to firms with 50 or more employees, the
threshold for the Americans With Disabilities Act is 15 employees, and the Occupational Safety and Health Act applies to firms employing more than 11
employees. However, all employers are bound by laws such as the Fair Labor Standards Act, the Immigration Reform and Control Act, and the Equal Pay Act.
Each of these laws is discussed in more detail toward the end of this chapter.
Government Contracts
An employer having a contract with the federal government of $10,000 or greater and 50 or more
employees is bound by numerous but somewhat obscure employment laws such as Executive Orders
11246, 11375, and 11478, Section 503 of the Rehabilitation Act of 1973, the Vietnam Era Veterans’
Readjustment Assistance Act of 1974, and the Vocational Rehabilitation Act. In addition, such employers
are also subject to major employment laws such as the Americans with Disabilities Act of 1990 and
Family Medical Leave Act.
Industry-Specific Laws
Employment laws become even more fractured as amendments and exemptions are made across
industries. For example, amendments to the Fair Labor Standards Act (FLSA) are made for employment
of youth in the amusement and recreational industry. Exemptions to the FLSA regarding minimum wage
and overtime pay are made for employment in the computer industry. Employees of security firms are
not granted protection from refusing to take a lie detector test under the Employee Polygraph Protection
Act as are workers in other industries. Railroad, airline, pipeline, and motor transportation workers are
subject to more rigorous and onerous drug testing requirements under the Omnibus Transportation
Employee Testing Act than workers in other industries under the Drug-Free Workplace Act.
Geography
While federal employment law is indeed the law of the land, each state has its own set of unique laws
governing the employment relationship. Some states such as New York, New Jersey, and California
provide employees with layers of judicial protections not found in states like Texas, Georgia, and North
Dakota. So, where an employer is located has a direct impact on laws that extend and complicate
interpretation of federal laws.
Exactostock/SuperStock
Some employment laws are industry-specific,
while others have industry-specific exceptions.
For example, security firm employees are not
protected under the Employee Polygraph
Protection Act in refusing to submit to testing. Is
this exception necessary? Why?
3.5 Key Laws and Regulations Governing HRM
Although most HRM professionals are not trained as lawyers, they need to recognize when a legal issue places the employer at risk, and to have a solid
understanding of the rights and obligations of both the organization and the employees in order to avoid, minimize or mitigate these situations. While
personnel policies at one company may not be appropriate at another, well-drafted personnel policies serve as defensive mechanisms to help employers
control or minimize employment-related exposures and should be viewed as loss-prevention and risk-management devices (Arbetter et al., 2011). When
dealing with legal issues of employment that are not clearly defined, wise HRM professionals know when and where to seek good legal counsel. This section,
while not exhaustive, highlights landmark employment legislation and legal concepts, and explains how they can affect organizations’ HRM processes.
Discrimination Based on Gender, Religion, Race, National Origin, or Ethnicity
One of the key roles of various HR functions is to differentiate between high- and low-performing employees and job candidates. However, when these
attempts also lead to practices that treat applicants differently based on other factors such as race, age, or sex, they are said to be discriminatory. At all stages
of the HRM process, organizations must clearly demonstrate equal opportunity for current and potential employees regardless of their age, sex, religion, or
ethnic background. For example, organizations must carefully review their job advertisements and other recruitment tools to ensure that the language does
not suggest any discriminatory preferences. Organizations must also clearly state and outline their job selection and promotion criteria and be able to justify
their hiring or rejection decisions in case the organization’s practices come under question as being discriminatory. For that reason, organizations should keep
well-organized records of all HR activities.
All HR functions are regulated by the Civil Rights Act of 1964 and 1991. The act is divided into several sections, called titles, each of which deals with
particular facets of discrimination—for example, voting rights, public accommodations, and public education. For an employer, discrimination occurs when an
employee is treated differently due to a legally protected characteristic such as gender, religion, race, national origin, or ethnic background. Title VII of the act
guarantees equal opportunity in employment, and it prompted the establishment of the Equal Employment Opportunities Commission (EEOC), which
enforces Title VII and facilitates its application in organizations through education and technical assistance. EEOC also enforces laws that prohibit
discrimination based on other protected classes such as disability and age. Equal opportunity laws apply not only to employee recruitment and selection but
also to other human resources practices such as compensation, training, promotion, discipline, layoffs, and other terms and conditions of employment. The link
below provides an interesting example of discriminatory issues that employers have to contend with.
WEB LINKS
Is Veganism a Religion?
https://hrdailyadvisor.blr.com/2013/03/19/is-veganism-a-religion/ (https://hrdailyadvisor.blr.com/2013/03/19/is-veganism-a-religion/)
This link provides information on a unique request for religious accommodation in the workplace.
Age Discrimination
Age discrimination occurs when an employer treats an employee differently based on his or her age; it is legally defined in the Age Discrimination in
Employment Act (ADEA) of 1967. The ADEA is a federal law and protects all employees in the United States over the age of 40 from the moment they contact
an employer about a job opening. Specifically, this law forbids employers from making employment decisions based on a person’s age. For example, employers
cannot terminate employment, deny a bonus or raise, or refuse to hire or promote someone simply because they think that person is too old unless there is a
legitimate business-related reason that warrants an exception, such as the physical abilities required for airline pilots, professional athletes, and others. This
issue is further addressed later in this chapter. However, it is important to note that persons under age 40 are not protected under the ADEA. Thus, it is
possible, without legal repercussions, for an organization to discriminate against an individual for being too young. Even older workers face significant
challenges in proving that they have been discriminated against due to their age. The article linked below provides a realistic perspective on some of these
challenges.
Discrimination Based on Disability
The Americans with Disabilities Act (ADA) of 1990 prohibits employers with 15 or
more employees from discriminating against disabled employees who are otherwise
qualified in all areas of employment, including hiring practices, testing, firing, promotion,
job training, and wages. A disability is defined as a physical or mental impairment that
substantially limits one or more major life activities. Examples of individuals with
physical disabilities include people with epilepsy, diabetes, severe forms of arthritis,
hypertension, paraplegia, impaired vision, and carpal tunnel syndrome. Individuals with
mental impairments include people with major depression, bipolar (manic-depressive)
disorder, autism, and mental retardation. The law also makes it unlawful to discriminate
against any applicant or employee, disabled or not, based on that person’s relationship
or association with an individual with a disability.
WEB LINKS
Challenges in Proving Age Discrimination
http://www.forbes.com/sites/nextavenue/2013/04/30/
what-it-takes-to-win-an-age-discrimination-suit/
(http://www.forbes.com/sites/nextavenue/2013/04/30/what-ittakes-to-win-an-age-discrimination-suit/)
The link provides additional information regarding the
challenges associated with proving age discrimination in the
workplace.
In addition, it is unlawful for an employer to retaliate against an applicant or employee for asserting his
or her rights under the ADA. However, an individual with a disability must be able to perform the
essential functions and meet the qualifications of the job, with or without accommodation, in order to be
protected by the ADA. In other words, the person must satisfy requirements for education, employment
experience, skills, licenses, and any other job-related qualification standards. Additionally, the employer
must provide any reasonable accommodation that a person with a disability needs in order to apply for
a job, perform a job, or enjoy benefits equal to those offered to other employees. The employer does
not have to provide any accommodation that would impose an undue hardship on the organization.
However, the employer may be required to reassign an employee with disabilities to a vacant position
when the employee cannot be accommodated in his or her current position (EEOC, 2013).
The definition of “disability” has recently been expanded to include many factors not traditionally
covered by ADA. The following links provide some examples.
James Woodson/Digital Vision/Thinkstock
The Age Discrimination in Employment Act
protects employees aged 40 and over from
discrimination in the workplace.
WEB LINKS
Obesity a Disability?
http://www.diversityinc.com/diversity-and-inclusion/obesity-is-a-disability-says-eeoc/ (http://www.diversityinc.com/diversity-andinclusion/obesity-is-a-disability-says-eeoc/)
Cancer As a Disability
http://www.eeoc.gov/laws/types/cancer.cfm (http://www.eeoc.gov/laws/types/cancer.cfm)
Chemo Brain?
http://www.huffingtonpost.com/idelle-davidson/is-chemo-brain-a-disabili_b_758975.html (http://www.huffingtonpost.com/idelledavidson/is-chemo-brain-a-disabili_b_758975.html)
The links demonstrate how the definition of disability has expanded since the creation of ADA.
Affirmative Action
Affirmative action policies require that employers show initiative in recruiting a diverse pool of applicants for their job openings. Organizations in which
women and minorities are underrepresented are required to expand their search efforts to include more women and minorities in their applicant pools. For
example, an organization with a predominantly white male employee base that relies on employee referrals may be asked also to use job advertisements to
reach out to more women and minorities.
Nevertheless, an organization is not required to hire less qualified candidates simply because they belong to an underrepresented group. In fact, such practice
is illegal because it is discriminatory; this practice is often referred to as reverse discrimination because it discriminates against the majority group. Contrary
to common misconceptions, affirmative action is not about “hiring quotas” forced upon the organization by law. In fact, hiring quotas of any form are illegal in
the United States. Quotas may be imposed temporarily, but only in rare circumstances such as when a court is responding to an established and egregious
pattern of discrimination. Affirmative action is primarily a recruitment philosophy that was originally designed to promote a wider, more inclusive applicant
pool. The link below provides additional insights on the controversies surrounding affirmative action.
WEB LINKS
Affirmative Action
http://www.economist.com/news/leaders/21576662-governments-should-be-colour-blind-time-scrap-affirmative-action
(http://www.economist.com/news/leaders/21576662-governments-should-be-colour-blind-time-scrap-affirmative-action)
The link provides additional information on affirmative action.
Recent Developments
Although equal employment laws and regulations are relatively well established, their
interpretations continue to change along with changes in the legal environment in
general. A notable recent change is the U.S. Supreme Court’s ruling that portions of the
Defense of Marriage Act (DOMA) are unconstitutional. Same-sex couples may now be
eligible for many of the benefits traditionally afforded only to opposite-sex
couples.These benefits may extend to workplace benefits, which will require
adjustments to many workplace policies related to pay, benefits, leaves of absence, tax
withholding, and other HR concerns.
The legal profession keeps up with recent changes in laws, regulations and
interpretations. For example, the link below provides an extensive update on the recent
developments at the EEOC.
AP Photo/Noah Berger
With the Supreme Court ruling against the Defense of Marriage Act,
same-sex couples were granted workplace benefits that were once
only available to opposite-sex couples.
WEB LINKS
Recent Developments at the EEOC
http://www.americanbar.org/content/dam/aba/events/labor_law/2013/04/nat-conf-equal-empl-opplaw/4_dreiband.authcheckdam.pdf (http://www.americanbar.org/content/dam/aba/events/labor_law/2013/04/nat-conf-equal-empl-opplaw/4_dreiband.authcheckdam.pdf )
The link provides additional information on recent development at the EEOC.
Foundational Legal Concepts
Several concepts are critical for the implementation and enforcement of the above employment laws. For example, illegal discriminatory practices can be in the
form of disparate treatment or disparate impact. A policy or practice may not explicitly discriminate against members of a protected class (which would be
a form of disparate treatment), yet this fact does not make it legal. If the policy or practice has a discriminatory effect (that is, a disparate impact), it can be
illegal even if the effect is unintended.
For example, setting height or weight requirements for job applicants in a particular job may not be intended as a discriminatory practice. However, because
these requirements exclude more women and certain racial groups whose members tend to be shorter or lighter, they can be found to be discriminatory
unless they are justified by specific job requirements, as is the case in some military jobs. These job requirements must create what is referred to as a business
necessity.
As a case in point, it has been found justifiable that an individual in a wheelchair may be denied a job as a firefighter. On the other hand, for the same job,
height and weight requirements have been replaced with job sample tests through which applicants are evaluated on their fitness levels and abilities to
successfully carry out the job’s physical requirements, regardless of their body types.
While members of a protected class are shielded from employer retaliation for filing claims of disparate treatment or disparate impact under the provisions of
Title VII of the 1964 and 1991 Civil Rights Act, a recent ruling by the Supreme Court has somewhat limited such protection. In University of Texas Southwestern
Medical Center v. Nassar, the court ruled that proving a retaliatory motive for filing a claim of disparate treatment is not sufficient evidence of discrimination. In
addition, plaintiffs must show that no action would have been taken against them “but for” their employer’s desire to retaliate (Legal Information Institute,
2013).
Like discrimination, harassment in the workplace can assume two forms: quid pro quo or a hostile work environment. Quid pro quo (Latin for “this for
that”) is a more explicit form of harassment wherein the harassing member of the organization may require the harassed member to exchange sexual favors
against his or her will. A hostile work environment is a more subtle but comparably illegal form of harassment. Some members of an organization can create a
hostile work environment by offending others, causing them undue hardships, or hindering their abilities to adequately perform their jobs. Examples include
sexual or racial remarks or displays of inappropriate forms of art (for example, posters that would make female employees uncomfortable). Unfortunately,
many employees are unaware that their actions can cause their employers to be held legally liable for a hostile work environment. For example, employees
who use company e-mail to forward jokes with sexual, racial, or religious connotations expose their employers to such risks.
It is also important to note that discrimination laws protect members of majority as well as minority groups. For example, in the context of affirmative action,
some organizations may consider hiring less qualified women and minorities in an attempt to appear less discriminatory and more diverse. However, these
attempts can be found discriminatory against better qualified white male applicants. This “overcompensation” effect is referred to as reverse discrimination
and is illegal.
Another legal concept used to distinguish discriminatory from legitimate HR practice is the concept of business necessity. For example, ADA classifies job
functions into two categories:
Essential job functions are all basic, recurring job duties and responsibilities.
Marginal job functions are duties that are only supplementary to the job.
HR managers must identify, segregate, and clearly explain the differences between these two functions. Disabled individuals need to be able to complete
essential job functions because these constitute a business necessity. However, a disabled individual should not be denied a job or a promotion due to inability
to complete a marginal job function. In these cases, reasonable accommodations by the employer are often possible and expected.
Classification of essential and marginal job functions is based on three considerations:
the amount of time required to perform the task
the task’s frequency
the task’s significance, compared to other tasks
For instance, a task that is performed more often than others on a job obviously carries more weight and is deemed more essential than those other tasks.
Similarly, a task that is performed on a continuous or daily basis is more essential than another task carried out on a monthly or occasional basis, or a task
that is only a support function rather than a core function of the job. Finally, a task may be easily transferred, taught, or performed by more than one person.
This task is then considered a marginal job function when it is compared to a unique task that can only be accomplished by a limited number of employees
who have specific experiences or talents. Careful job analysis and job design can help in differentiating essential from marginal job functions. This
differentiation can become the basis for more effective and nondiscriminatory selection, compensation, performance evaluation, and training decisions.
A special case of business necessity is what is often referred to as a Bona Fide Occupational Qualification (BFOQ). BFOQ is a criterion that may be
otherwise be discriminatory but is legitimate in a particular context. For example, an authentic Chinese restaurant may want to hire Chinese servers as part of
the ambiance it is trying to provide to its customers. Although this practice may be discriminatory in another context, in this context it can be considered a
BFOQ because the ethnic origin of the server can be considered a business necessity, one that is reasonably necessary for the successful operations of the
business. Similarly, a Catholic school would not be found in violation of equal opportunity laws for hiring Catholic teachers. The most frequently cited example
of BFOQ was when several males sued Hooters, a restaurant chain known for the sex appeal of its waitresses, for being denied employment as servers.
Finally, it is important to note that filing a claim with EEOC comes at no cost to the employee and that most of the laws discussed above also have clauses that
prohibit employers from retaliating against employees who choose to report discriminatory practices. Once an employee provides basic evidence of
discrimination, the burden of proof shifts to the employer, who may lack the documentation and evidence that would make it possible to prove that the work
environment was not discriminatory. Discrimination lawsuits can cost an employer millions of dollars in punitive damages. As mentioned earlier, employment
laws cover not only current employees, but also job applicants and past employees, making them particularly relevant for all HR practices.
Other Employment Laws
Several other laws are relevant for employment. For example, the National Labor Relations Act (NLRA) of 1935 legalized unionization and collective
bargaining. The Fair Labor Standards Act (FLSA) of 1938 distinguished between exempt and nonexempt employees based on the nature of their work. In
order to be exempt from overtime pay, an employee’s primary duties must be geared towards executive and administrative tasks rather than manual or
routine activities. Shortly before the Civil Rights Act of 1964, the Equal Pay Act (EPA) of 1963 prohibited pay differentials for equal jobs across genders. The
Pregnancy Discrimination Act of 1978 prohibits dismissal of an employee due to pregnancy and ensures job security during maternity leave. The link below
provides additional insights and more recent developments in EPA legislation and application.
WEB LINKS
The Gender Pay Gap
(https://hrdailyadvisor.blr.com/2013/05/20/gender-pay-gaps-which-occupations-are-worst/)
This link provides information on occupations with the largest gender pay gap, as well as initiatives aimed at addressing income inequality.
More recently, the Immigration Reform and Control Act of 1986 prohibits hiring illegal aliens. The Employee Polygraph Protection Act of 1988 limits the
scope of lie detector use and prohibits it as the sole determinant in hiring and firing decisions. The Family and Medical Leave Act (FMLA) of 1993 affects
organizations that employ 50 or more workers. Employees who have worked at such organizations for at least one year are granted up to 12 weeks of unpaid
leave for family or medical reasons in any given one-year period. As discussed in more detail in Chapter 2, the recent Patient Protection and Affordable Care
Act (PPACA) increases the responsibilities of employers, employees, and insurance companies to expand coverage, accessibility, and affordability of healthcare
benefits. The next link provides an updated list of these and other pertinent employment laws.
WEB LINKS
Summary of Major HR Laws
https://www.dol.gov/general/aboutdol/majorlaws (https://www.dol.gov/general/aboutdol/majorlaws)
The Department of Labor provides this summary of major HR laws. Various links on this page also provide more details and assistance with
interpreting the statutes and regulations governing employ-ment in the United States.
A MOMENT IN THE LIFE OF AN HR MANAGER
Is This Legal?
Many managers do not monitor their actions for potential violations of employment law, exposing their organizations to costly litigation and
negative publicity. Consider the following situations:
1. Tom hires Paolo as a production worker because Paolo is an immigrant and Tom believes that immigrants are hard workers. All the
references listed in the application gave Paolo favorable recommendations. Two weeks later, it turns out that Paolo is an illegal alien. Paolo
gets deported, and the organization is fined.
2. Jaime goes to diversity training and comes back convinced that the organization should exert more effort and resources in hiring women
and minorities. So, for the next six months, she favors women and minorities in all of her selection decisions, even in cases where there
are better qualified white males in the applicant pool. As a result, performance suffers and the organization faces a class action lawsuit.
3. Randy is hiring for his predominantly male construction crew. He is thrilled to find a highly qualified female candidate, Jenny. He shares
with Jenny that he thinks a female crew member will encourage his male employees to “behave” better on the job (e.g., stop cussing), and
that this will even be better for business because it will put female clients at ease and attract new clientele. Randy is right. However, a few
months later, Jenny threatens to sue Randy’s company because of the hostile environment he allows among his crew, citing his comments
during the job interview as evidence of his awareness of the discriminatory environment.
Despite these hiring managers’ good intentions, they have made critical mistakes. As a result, they compromised the performance and
reputation of their organizations. Tom should have done due diligence in confirming Paolo’s immigration status, which would have been more
likely if he had given all applicants a fair chance and followed the proper procedures regardless of each applicant’s background. The same
applies to Jaime. She should have kept the job requirements front and center in her decision, rather than any applicant’s gender or race. As for
Randy, he was right to consider the importance of diversity on his crew, but he should have dealt with the hostile environment first to ensure
that his male crew members understood the need to behave more professionally, especially around female co-workers and clients, instead of
throwing Jenny to the sharks and expecting her to be the agent of change, which was not her role.
EYE ON THE GOAL
Litigation Costs
Litigation costs are on the rise. Considering the following recent examples, it is surprising how often managers make decisions without
contemplating their legal repercussions.
National Food Corporation, a major supplier of eggs, will pay $650,000 to five workers to settle a sexual harassment lawsuit. Over a
seven-year period, a supervisor repeatedly demanded sexual favors from a female agricultural laborer in exchange for retaining her
job. Co-workers who complained about sexual harassment were fired or forced out of their jobs.
New Breed Logistics, a North Carolina-based logistics services provider, will pay more than $1.5 million ($177,094 in back pay, $486,000
in compensatory damages, and $850,000 in punitive damages) to discrimination victims. The victims are three female temporary
workers whose supervisor subjected them to unwelcome sexual touching and inappropriate sexual remarks and then fired them for
complaining. A fourth, male employee also suffered from retaliation. He was fired for objecting to the harassment and agreeing to serve
as a witness.
PFERD Milwaukee Brush will pay $65,000 to settle a lawsuit for pay discrimination between male and female employees in comparable
jobs and with comparable skills. The settlement also requires costly measures to prevent future discrimination such as training
managers and employees on discrimination, employer obligations, and employee rights.
BMO Harris Bank will pay $400,000 to 14 former employees to resolve a disability discrimination case. BMO Harris Bank terminated
disabled employees at the end of their medical leave of absence and did not offer reasonable accommodations to disabled employees.
Based on recent precedent, the bank will also change its accommodation policy to allow job transfers as accommodations for
employees who may be unable to return to the same job because of a disability.
Needless to say, litigation costs are not limited to financial costs. Significant time and energy may be wasted, and the harm to an organization’s
internal culture and external reputation can be substantial.
SPOTLIGHT ON EVIDENCE-BASED HRM
The Power of Statistics
https://www.youtube.com/watch?v=_IZNEGfrlYI (https://www.youtube.com/watch?v=_IZNEGfrlYI)
Employment litigation can be costly and time-consuming. This presentation provides a step-by-step statistical approach for building legally
defensible and evidence-based arguments to examine and support an organization’s most important HR practices such as hiring, termination,
and compensation. As you watch this presentation, note the following:
The building blocks of any statistical analysis are data. Any organization should accurately collect and store data on its current practices.
Without accurate and documented records, the organization is vulnerable to litigation. Simple statistical analysis of accurate and
consistent data is much more convincing than convoluted legal arguments based on hearsay.
HR requires having a solid understanding of basic statistics and being comfortable with numbers. You will often hear an HR
professional say (or maybe you have thought that way yourself): “I am in HR because I am a people person.” Although HR professionals
need adequate social skills, these skills are insufficient by themselves. Without being able to use numbers, HR professionals cannot build
evidence-based arguments. This is not only the case in litigation situations, but also in various HR activities. If HR professionals want “a
seat at the table” in strategic decision making, they need to be able to quantify the returns on HR investments in recruitment, selection,
training, compensation, and other HR activities. They need to be able to build financial arguments comparable to those used in finance,
accounting, marketing, production, research, and development.
The goal of statistical analysis in HR should not only be to “make the numbers” and avoid litigation. Statistical analysis is a powerful tool
for proactive internal assessment and action planning, even without the threat of litigation. It can reveal important information
regarding exemplary practices, as well as improvement areas.
Summary and Resources
There is an extensive legal framework that guides all HRM functions to ensure equity and protect employee rights. Employers need to be knowledgeable about
the laws and regulations affecting their HR practices and should carefully ensure that their policies and practices follow both the letter and the spirit of these
laws. This is not only to avoid substantial litigation costs but to also protect the organization’s reputation and to project a positive image that can help attract
and retain talent. Significant efforts should also be invested in educating managers and employees on how their actions can cause their employers to be found
legally liable, because every organizational member is considered an agent and a representative of their employer. Many of the laws covered in this chapter
will be revisited and applied in subsequent chapters in relation to specific HR functions.
Key Ideas
The Constitution is the supreme law of the land. Any law found in violation of the Constitution will be declared unconstitutional and not enforced.
The federal government, and all the states, follow a three-branch structure: executive, legislative, and judicial. A state law can be more restrictive but
cannot pre-empt or conflict with a federal law.
The legislative branch of the federal government is granted the power to create laws. However, case law and precedent also shape subsequent
interpretations of the law.
The court system at the federal level includes district and appeals courts and the Supreme Court. Similarly, states have trial, appellate, and supreme
courts.
Alternatives to litigation include mini-trials, arbitration, and mediation.
Many employment relationships in the United States are “at will” (except for discriminatory reasons) but are subject to exceptions. However, even in the
absence of an explicit contract, an implied one is possible. An employment relationship exists if the employer has the right to control work process and
the worker is economically dependent on the firm for continued employment.
Several laws influence human resource decisions such as the Civil Rights Act, the Age Discrimination in Employment Act, the Age Discrimination Act, the
National Labor Relations Act, the Fair Labor Standards Act, the Equal Pay Act, the Family and Medical Leave Act, and others. The legal principles
underlying these laws include disparate treatment, disparate impact, quid pro quo, hostile environment, business necessity, and bona fide occupational
qualification. A number of factors determine the laws applicable to each employer.
In part two of the extended case study, you will deal with some of the differences between HR practices across
countries and cultures.
Key Terms
Click on each key term to see the definition.
affirmative action
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A set of policies that require employers to show initiative in recruiting a diverse pool of applicants for their job openings.
Age Discrimination in Employment Act (ADEA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A federal law that prohibits discrimination against employees over age 40.
alternative dispute resolution (ADR)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
Any procedure, agreed to by each party, in which the service of a neutral third party is employed to assist in reaching agreement or avoiding further litigation.
Americans with Disabilities Act (ADA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that applies to employers with fifteen or more employees; it prohibits discrimination against a qualified individual with a disability in hiring practices,
testing, firing, promotion, job training, or wages—requiring employers to provide reasonable accommodations for persons with disabilities.
bona fide occupational qualification (BFOQ)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A criterion that may otherwise be discriminatory, but is legitimate in a particular context.
case law
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
An evolutionary process by which the judicial system creates its own law based on its interpretation of the intent of the legislative branch in creating a
particular statute.
Civil Rights Act
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A set of laws and regulations, divided into several sections or titles, each of which deals with particular facets of discrimination (e.g., voting rights, public
accommodations, and public education); Title VII of the act guarantees equal opportunity in employment and prohibits discrimination based on gender,
religion, race, national origin, or ethnic background.
disparate impact
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
An illegal situation where a policy or selection procedure that does not explicitly discriminate against members of a protected class has a discriminatory effect,
whether intended or unintended.
disparate treatment
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
An illegal situation in which an organization explicitly discriminates against an individual based on one of the protected classes.
Employee Polygraph Protection Act
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that limits the scope of lie detector use and prohibits it as the sole determinant in hiring and firing decisions.
employment at will (EAW)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
In the absence of a contract (either written or oral) defining the nature of the employment relationship, an employer can release an employee for bad cause,
good cause, or no cause at all, and an employee can do the same.
Equal Employment Opportunities Commission (EEOC)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
An entity that enforces antidiscriminatory laws and facilitates their application in organizations through education and technical assistance.
Equal Pay Act (EPA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that prohibits pay differentials for equal jobs across genders.
essential job functions
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
Basic, recurring job duties and responsibilities.
executive orders
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
Declarations issued from the president to officers and agencies of the executive branch to guide their day-to-day operations.
Fair Labor Standards Act (FLSA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that distinguishes between exempt and nonexempt employees based on the nature of their work.
Family and Medical Leave Act (FMLA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that requires an organization that employs 50 or more workers to grant up to 12 weeks of unpaid leave, for family or medical reasons in any given oneyear period, to employees who have worked at the organization for at least one year.
hostile work environment
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A discriminatory and thus illegal form of harassment where some organizational members create an uncomfortable or offensive environment for others,
causing them undue hardships and hindering their abilities to adequately perform their jobs.
Immigration Reform and Control Act
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that prohibits hiring illegal aliens.
legislative branch
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
The branch of the government granted the power to create laws.
marginal job functions
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
Job duties that are only supplementary or supportive to the job.
National Labor Relations Act (NLRA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that legalizes unionization and collective bargaining.
Patient Protection and Affordable Care Act (PPACA)
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A recent law that increases the responsibilities of employers, employees, and insurance companies to expand coverage, accessibility, and affordability of
healthcare benefits.
precedent
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
Previous court rulings are given weight in making present rulings.
Pregnancy Discrimination Act
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
A law that prohibits dismissal of an employee due to pregnancy and ensures job security during maternity leave.
quid pro quo
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
Latin for “this for that”; a discriminatory and thus illegal form of harassment where the harassing member of the organization requires the harassed member
to exchange sexual favors against his or her will.
reverse discrimination
(http://content.thuzelearning.com/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef.6160.19.1/sections/cover/books/Youssef
An illegal practice in which the majority group is discriminated against in favor of a minority group.
Critical Thinking Questions
1. What is the most effective approach for an employer to select employees without fear of employment litigation?
2. To what extent is it important for an employer to strive for a diverse workforce? What are the benefits and the risks of diversity initiatives? How can an
employer create a truly diverse workforce?
3. Apply the employment laws you learned in this chapter to each of the HR activities of job design, recruitment, selection, training, and compensation.
Give examples of situations when some of these laws are applicable to each set of activities.
4. Imagine a work environment where no employment laws exist. Provide a balanced perspective on the potential advantages and disadvantages of this
environment. Be sure to consider the interests of employers, employees, consumers, and the society at large.
5. What are the strengths and limitations of the U.S. legal system?
DEI Discrimination Article
The Supreme Court will hear arguments Wednesday in a case with potentially sweeping implications for
workplace discrimination claims, especially those mirroring the complaint of the petitioner – a female
police sergeant in St. Louis who says she was transferred out of a prestigious role because of her gender.
The case, Muldrow v. City of St. Louis, is being closely watched by civil rights groups who argue that valid
workplace discrimination claims are often dismissed in court because of a requirement that plaintiffs prove
they were harmed by the actions of their employers. The Biden administration is supporting petitioner
Jatonya Clayborn Muldrow, because it says Congress never intended to impose such a requirement
regarding job transfers.
The case also is being watched by employment attorneys and some conservatives who say a broad
ruling for Muldrow could open the door to a flood of reverse discrimination claims against certain
workplace diversity, equity and inclusion programs – such as mentoring and training programs for
underrepresented groups – that ordinarily would not survive in court. Such complaints have become more
common since the Supreme Court overturned race-conscious college admissions in June.
“The Supreme Court is going to address a very fundamental aspect of Title VII, namely: What does it
cover? What is actionable under Title VII?” said Ishan Bhabha, a partner at Jenner & Block and a co-chair
of the law firm’s DEI Protection Task Force, referencing the section of the 1964 Civil Rights Act that
prohibits discrimination by employers. “Given that Title VII is one of the main avenues through which
challenges to DEI programs … are being brought, certainly what the Supreme Court says here is going to
have a significant impact.”
A ruling narrowly focused on the facts of Muldrow’s case – alleged discrimination through a lateral transfer
– could have little impact on DEI programs, Bhabha and other legal experts said. But a broader ruling that
relaxes the need to prove harm could threaten DEI programs that previously had been thought safe.
“If the Supreme Court adopts a broader understanding of adverse action in Muldrow, that’s going to open
the door to more colorable discrimination challenges, period,” Andrea Lucas, an EEOC commissioner
appointed by Donald Trump, said in an interview. “That applies to possible challenges to DEI programs as
much as any employment discrimination claim.”
Muldrow alleges that St. Louis Police Department officials discriminated against her when they
transferred her out of her job within the intelligence division, where she had been deputized as an FBI
agent, had a steady schedule, and investigated public corruption and human trafficking cases. The
sergeant’s new job at a district-level station came with none of that prestige, she alleges. Even though her
pay remained the same, she lost her FBI privileges, worked patrol and was put on a schedule in which
she worked weekends. She was replaced in the intelligence division by a male sergeant, and no male
sergeants had been transferred out of the unit alongside her, she alleges.
But Muldrow’s case has not proceeded to trial because a district court judge – as well as a panel on the
U.S. Court of Appeals for the 8th Circuit – held that Muldrow failed to demonstrate that the transfer
amounted to an “adverse employment action” that caused material harm.
The high court will consider whether Title VII prohibits discrimination in employer transfer decisions
without additional proof that the transfer caused tangible harm, or “significant disadvantage.” Title VII
prohibits employment discrimination on the basis of race, color, religion, sex and national origin. Many
federal jurisdictions impose a form of the significant disadvantage standard for employment discrimination
claims.
With support from the Biden administration and advocacy groups like the NAACP Legal Defense Fund,
Muldrow argues that no such requirement exists in the text of Title VII. Conversely, the city of St. Louis
counters that the statute requires a showing of harm in transfer decisions – and eliminating it would
swamp the courts with relatively minor workplace grievances.
A ruling for Muldrow could dramatically expand the definition of an actionable claim under Title VII, legal
experts say – an expansion that some employment attorneys argue is long overdue because legitimate
discrimination lawsuits often fail to overcome barriers like the “significant disadvantage” requirement.
Fewer than 5 percent of all discrimination plaintiffs receive any form of relief, according to a 2015
Minnesota Law Review study.
“The state of the law is just terrible,” said Suja A. Thomas, a University of Illinois law professor who filed a
brief in support of Muldrow. “They are not allowing discrimination claims to go through, and hardly
anything gets tried because nothing gets to a jury and it gets dismissed.”
But removing the significant disadvantage requirement could also lead to more legal complaints from
employees who feel excluded from DEI programs meant to mentor, train and support underrepresented
groups, employment attorneys say.
Until recently, such programs have been operating under the assumption that their services could be
limited to specific groups so long as those groups did not gain an advantage in hiring, firing, promotions
and salaries, said Lindsay Burke, a partner at Covington and co-chair of the law firm’s employment
practice group. Lawsuits that have challenged such programs so far have not gained much traction.
But “depending on exactly the contours of the Supreme Court’s decision [in Muldrow], then they would be
vulnerable to challenge,” Burke said.
She emphasized that not every program would be vulnerable because many are designed to meet a core
obligation of Title VII: equal employment opportunity. The programs that would be most vulnerable would
be those that offer tangible employment benefits or are limited to employees of a specific race or gender,
she said.
There has already been a profusion of lawsuits, as well as complaints to the Equal Employment
Opportunity Commission, since the Supreme Court ruled in June that race-conscious admissions
programs at Harvard University and the University of North Carolina violated the equal protection clause
of the Constitution – a historic ruling that upended affirmative action in college admissions.
The same day as the June ruling, Reuters published an op-ed by Lucas, the EEOC commissioner, that
listed a number of programs that she saw as legally vulnerable, especially in light of the Muldrow case.
They included race-restricted mentoring, sponsorship or training programs; policies that tie executive or
employee compensation to achieving demographic targets; policies that select finalists for job interviews
partially based on diverse candidate slates; and various internship and fellowship programs open only to
underrepresented groups.
“Those kinds of initiatives already pose significant legal and practical risks given the current state of the
law,” Lucas told The Post. “But a decision in Muldrow by the Supreme Court to apply a more expansive
reading of the ‘terms, conditions and privileges’ provision of Title VII certainly could clarify and heighten
the risks posed by those kinds of programs.”
Other legal experts doubt the court will issue such a broad decision and say concerns around DEI are
overblown. Thomas, the University of Illinois professor supporting Muldrow, said discrimination claims are
so rarely tried in court that it’s unlikely a ruling for Muldrow would imperil DEI programs.
“I may be wrong, but I just don’t see this DEI thing as a thing,” Thomas said.
Nonetheless, conservative groups are watching closely. Like the Biden administration, Gene Hamilton,
vice president and general counsel at the conservative America First Legal, argued that the high court
“must give the plain text of the statute the meaning Congress stated,” adding that “[j]udges have no
authority to rewrite statutes.” The organization has filed numerous reverse-discrimination complaints over
DEI programs against major companies, including Unilever and Alaska Airlines.
“Employers should pay attention to what happens in these cases, but above all, they should stop all
discriminatory programs of any kind immediately,” Hamilton said in an emailed statement to The Post.
Hamilton referenced two other federal cases that also examine actionable employment conditions under
Title VII. One of those cases played out in August, when the U.S. Court of Appeals for the 5th Circuit
ruled that nine female detention officers with the Dallas County Sheriff’s Department could move ahead
with a lawsuit alleging that the agency allows male jailers – but not female ones – to take entire weekends
off. The ruling in Hamilton v. Dallas County, which turned on a question similar to the one presented by
Muldrow, expanded the scope of what is considered discrimination in the workplace.
While the Dallas case is, for now, largely confined to the 5th Circuit, it opens the door to reversediscrimination claims, according to a concurring opinion by U.S. Circuit Judge James C. Ho, a Trump
appointee. The court’s “decision today will help restore federal civil rights protections for anyone harmed
by divisive workplace policies that allocate professional opportunities to employees based on their sex or
skin color, under the guise of furthering diversity, equity, and inclusion,” Ho wrote.
Keith Markel, a partner and co-chair of labor and employment at the Morrison Cohen law firm in New York,
said the cases are unlikely to affect DEI programs that focus on hiring from diverse pools of applicants.
Rather, a ruling in Muldrow could affect DEI programs that attempt to diversify certain departments
through transfers, he said.
If the Supreme Court finds that Muldrow’s transfer is an adverse employment action, then “employers
might start to think twice about making such changes, even if the employer is well-intentioned in trying to
correct historical imbalances in the workplace,” Markel said.
Reference:
Mark, J. (2023). Workplace discrimination case may imperil DEI programs. Washington Post.
https://search.ebscohost.com/login.aspx?direct=true&AuthType=shib&db=n5h&AN=wapo.7f943c306390-11ee-bd1e-47ad2755be6a&site=ehost-live
