1. Copyright Atomic Dog Publishing, 2007 Chapter 2 Understanding the Legal and Environmental Context of HRM

2. Copyright Atomic Dog Publishing, 2007 Chapter Outline 2-1 Legal Issues in the Workplace 2-2 Environmental Issues in the Workplace

3. Copyright Atomic Dog Publishing, 2007 2-1 Legal Issues in the Workplace HRM laws address a variety of issues.  Some pertain to specific employment practices such as: -The administration of polygraph tests -The need to offer medical or family-based leaves  Others deal with broader issues such as: -Employment discrimination -Safety -Privacy -Employees’ rights to due process

4. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity Passed by Congress beginning in the 1960s Designed to eradicate employment discrimination based on race, color, sex, religion, national origin, age, and disability  These categories are referred to as protected classifications. Protected groups are sub-categories of people within each protected classification.

5. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Civil Rights Act of 1964 (Title VII)  Prohibits discrimination that is based on race, color, religion, national origin, and sex  Covers organizations that employ 15 or more workers for at least 20 weeks during the year  Covers the greatest number of classifications  Victim is entitled to relief in the form of legal costs and back pay

6. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Civil Rights Act of 1991  Amendment to Civil Rights Act of 1964  Expands the list of remedies  An employer may now be charged with punitive and compensatory damages  “Cap” for these damages ranges from $50,000 to $300,000, depending on the size of the company  Mixed-motive decisions in which an employment decision is based partly on a “legitimate” motive and partly on a discriminatory one are unlawful

7. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Pregnancy Discrimination Act of 1978  Amends Civil Rights Act of 1964 by specifically including discrimination against women based on pregnancy, childbirth, or related medical conditions.  Employees who are unable to perform their jobs because of a pregnancy-related condition must be treated in the same manner as employees who are temporarily disabled for other reasons.

8. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Immigration Reform and Control Act of 1986  Prohibits discrimination based on national origin and citizenship -The law states that employers of four or more employees cannot discriminate in the selection of any individual (other than an illegal alien) because of that person’s national origin or citizenship status.  Makes it unlawful to knowingly hire an unauthorized alien

9. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Age Discrimination in Employment Act of 1967  Intended to protect “older workers” from age discrimination -Workers ages 40 and above  Applies to nearly all employers of 20 or more employees, promotes the employment of older persons based on their ability, rather than age  Protects only “older” individuals from discrimination; people under 40 are not protected  Prohibits employers from giving preference to individuals within the 40 or older group

10. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Americans with Disabilities Act of 1990 (Title I)  “Provides a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.” -Applies to nearly all organizations with 15 or more employees  Individual is considered disabled if a physical or mental impairment “substantially limits” one or more major life activities  To win a complaint, an individual must establish that, with accommodation, he or she is qualified to perform the essential functions of the job in question.  Employer must provide reasonable accommodation unless it would impose an “undue hardship.” -Would require significant difficulty to effect or significant expense on the part of the employer

11. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Courts recognize two different types of discrimination:  Intentional -Disparate treatment: Treating people unfairly based on their membership in a protected group  Unintentional -Disparate impact: Any practice without business justification that has unequal consequences for people of different protected groups

12. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Discrimination and the courts  Courts first require that the plaintiff establish a prima facie case of discrimination. -Prima facie is a Latin phrase meaning “first appearance.”  To establish a prima facie case, the plaintiff must present evidence that makes the employer’s actions appear discriminatory.  When a plaintiff establishes a prima facie case, The burden then shifts to the employer to rebut the case by presenting evidence that justifies the fairness of its actions.

13. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Establishing a Prima Facie Case of Intentional Discrimination  Restricted company policy -Plaintiff proves that the company has a formal policy that restricts the selection of a protected group.  Discriminatory remarks -Plaintiff must produce evidence that certain biased remarks were made by the employer regarding the protected group.

14. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.)  McDonnell-Douglas Test -Requires the plaintiff to show that he or she: 1.Belongs to the protected group in question 2.Has applied for and is qualified for the job for which the employer was seeking applicants 3.Was rejected 4.After rejection, the position remained open or was filled by someone who was not a member of that protected group.

15. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Establishing a Prima Facie Case of Unintentional Discrimination  The four-fifths rule -Helps the courts determine whether between-group differences in hiring rates are large enough to be important -Calculated by comparing the hiring rate of the “disadvantaged” protected group with the rate of the “advantaged” group -A prima facie case of discrimination is established when the hiring rate of the former group is less than four-fifths of the latter group.

16. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Rebutting a Prima Facie Case of Intentional Discrimination  Restricted company policy -When the employer has a policy that excludes an entire protected group, its only viable option is the use of a BFOQ defense. -The term BFOQ refers to “bona fide occupational qualification.” -The employer argues that it purposely discriminated against all members of a group for one of the following four reasons: 1.All or nearly all 2.Authenticity 3.Propriety 4.Safety

17. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.)  Discriminatory remarks -Considered strong evidence of bias -If a plaintiff can prove that such remarks have been made, the employer will lose the case unless it can successfully argue that the remarks were not very derogatory. -Employer can also try to argue that the person who made the remarks had no influence on the hiring decision.

18. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.)  The McDonnell-Douglas Test -Employer’s burden is to present evidence showing that its employment decision was based on legitimate, nondiscriminatory reasons. -The plaintiff could still win the case if they can prove that the reason offered by the employer was merely a pretext or an excuse; the “real” reason for the action was discrimination.

19. Copyright Atomic Dog Publishing, 2007 2-1a Equal Employment Opportunity (cont.) Rebutting a Prima Facie Case of Unintentional Discrimination  The four-fifths rule -A firm must demonstrate that the procedure in question is a business necessity. -CRA of 1991: When several selection devices are used, only those causing the disparate impact must be justified. -The lone exception to this rule occurs when the “elements of a respondent’s decision-making process are not capable of separation for analysis, the decision- making process may be analyzed as one employment practice.”

20. Copyright Atomic Dog Publishing, 2007 2-1b Affirmative Action What is it?  “The aim of affirmative action is to remedy past and current discrimination.” Is it legally mandated?  Only in some cases  Mandatory for all federal government contractors (Executive Order 11246, issued by Lyndon Johnson)  When court ordered as part of a settlement in a discrimination case Most firms are under no obligation to implement AA programs.

21. Copyright Atomic Dog Publishing, 2007 2-1b Affirmative Action (cont.) Firms voluntarily implementing affirmative action believe that they can:  Attract and retain a larger and better pool of applicants  Create a more diverse workforce  Avoid discrimination lawsuits  Improve the firm’s reputation within the community and its consumer base.

22. Copyright Atomic Dog Publishing, 2007 2-1b Affirmative Action (cont.) How Is affirmative action implemented?  Consists of two primary steps: -Conduct a utilization analysis -Develop an affirmative action plan

23. Copyright Atomic Dog Publishing, 2007 2-1b Affirmative Action (cont.)  Utilization analysis -A statistical procedure that compares the percentage of each protected group for each job category within the organization to that in the available labor market -If the organizational percentage is less than the labor market percentage, the group is classified as being “underutilized.”

24. Copyright Atomic Dog Publishing, 2007 2-1b Affirmative Action (cont.)  Affirmative action plans -Targets the underutilized protected groups -An AAP is a written statement that specifies how the organization plans to increase the utilization of targeted groups. -The AAP consists of three elements: 1.Goals 2.Timetables 3.Action steps

25. Copyright Atomic Dog Publishing, 2007 2-1b Affirmative Action (cont.) The affirmative action program must be designed to remedy underutilization and must be temporary, flexible, and reasonable. Preferential treatment—when is it legal?  Serves a remedial purpose  Necessary to meet goals and timetables targeted in AAP  Must consider more than protected group status  Temporary in nature  Numerical hiring goals must be “reasonable”  Must not “unjustly burden” the rights of non-minorities  Applicant must meet minimum qualifications for job

26. Copyright Atomic Dog Publishing, 2007 2-2 Environmental Issues in the Workplace Cultural diversity The changing nature of work Mergers and takeovers Corporate downsizing

27. Copyright Atomic Dog Publishing, 2007 2-2a Cultural Diversity in the Workplace Diversity training  Attempts to make employees aware of their biases regarding minority groups and teaches them ways to overcome those biases Breaking the “glass ceiling” Meeting the needs of older employees Implementing work and family programs  Telecommuting  Flextime  Job sharing

28. Copyright Atomic Dog Publishing, 2007 2-2b The Changing Nature of Work How work has changed  Technological changes  Shift in the type of work being performed—from manufacturing to service How the changing nature of work impacts HRM practices  Changes signal the need for training programs to provide employees with the skills needed to move into more technical and/or service-oriented jobs.  More workers experience difficulty learning advanced skills because of deficiencies in their basic skills.  Such individuals must overcome these deficiencies before they can master the more advanced skills.

29. Copyright Atomic Dog Publishing, 2007 2-2c Mergers and Takeovers Occurrence of a merger or takeover can create a variety of problems for an organization.  Individuals who had been loyal, longtime employees learned that their jobs were no longer safe.  Merger trend has resulted in: -Increased voluntary turnover -Rise in organizational conflict  HRM practices that help restore employee loyalty and organizational commitment are thus becoming increasingly important.

30. Copyright Atomic Dog Publishing, 2007 2-2d Corporate Downsizing The process of reducing the workforce size, called downsizing, usually takes the form of massive layoffs. Why so many companies are downsizing  Triggered by three factors: 1.Decline or crisis in the firm 2.Advent of technological advances 3.Organizational restructuring, in which the structure of a firm is modified to become less hierarchical by cutting out the “layer” of middle management

31. Copyright Atomic Dog Publishing, 2007 2-2d Corporate Downsizing (cont.) Problems associated with downsizing efforts  Downsizing often creates as many problems as it solves.  Poor employee morale -Employees begin to worry about job security after seeing their colleagues leave the organization. -Economic benefits expected by the organization often fail to materialize.

32. Copyright Atomic Dog Publishing, 2007 2-2d Corporate Downsizing (cont.) Deciding when and how to downsize  Alternatives to layoffs should be considered. -Delay any pay increases -Shift some health costs to employees -Freeze hiring -Restrict overtime -Retrain or redeploy employees -Switch to part-time employees -Switch to job sharing -Switch to consultants -Use unpaid vacations, sabbaticals, and days off -Use a shorter workweek -Use across-the-board pay reductions -Implement early retirement programs

33. Copyright Atomic Dog Publishing, 2007 2-2d Corporate Downsizing (cont.)  When a massive layoff is the only viable option, the firm must manage this workforce reduction very carefully.  One of management’s most difficult tasks is to reestablish morale and motivation following layoffs. -Draft a new corporate mission statement that conveys the organization’s new vision and goals in an optimistic way. -To help employees who have lost their jobs, employers can provide services such as: Outplacement Relocation assistance Personal and family counseling