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Human Resource Management: Gaining a Competitive Advantage

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1 Human Resource Management: Gaining a Competitive Advantage
Chapter 03 The Legal Environment: Equal Employment Opportunity and Safety Chapter 3 presents an overview of the U.S. legal system, noting the different legislative bodies, regulatory agencies, and judicial bodies that determine the legality of certain HRM practices. It discusses the major laws and executive orders that govern these practices. The legal environment, particularly the laws affecting the management of people, is one of several environmental factors affect an organization’s HRM function. Managers often want a list of “dos and don’ts” that will keep them out of legal trouble. They rely on rules such as “Don’t ever ask a female applicant if she is married” without understanding the “why” behind these rules. Clearly, certain practices are illegal or inadvisable, and this chapter will provide some valuable tips for avoiding discrimination lawsuits. However, such lists are not compatible with a strategic approach to HRM and are certainly not the route to developing a competitive advantage. They are simply mechanical reactions to the situations. Our goal is to provide an understanding of how the legislative, regulatory, and judicial systems work to define equal employment opportunity law. Armed with this understanding, a manager is better prepared to manage people within the limits imposed by the legal system. Doing so effectively is a source of competitive advantage. Doing so ineffectively results in competitive disadvantage. Rather than viewing the legal system as a constraint, firms that embrace the concept of diversity can often find that they are able to leverage the differences among people as a tremendous competitive tool. McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Learning Objectives Identify the three branches of government and the role each plays in influencing HRM legal environment. List major federal laws that require equal employment opportunity (EEO) and the protections provided by each of these laws. Discuss the roles, responsibilities, and requirements of the federal agencies responsible for EEO laws. Identify four theories of discrimination under Title VII of the Civil Rights Act and apply these theories to different discrimination situations. After reading Chapter 3, you should be able to: Identify the three branches of government and the role each plays in influencing the legal environment of HRM. List the major federal laws that require equal employment opportunity and the protections provided by each of these laws. Discuss the roles, responsibilities, and requirements of the federal agencies responsible for enforcing equal employment opportunity laws. Identify the four theories of discrimination under Title VII of the Civil Rights Act and apply these theories to different discrimination situations. 3-2

3 Learning Objectives, cont.
Discuss the legal issues involved with preferential treatment programs. Identify behavior that constitutes sexual harassment and list things than an organization can do to eliminate or minimize it. Identify the major provisions of the Occupational Safety and Health Act (OSHA) (1970) and the rights of employees guaranteed by this act. You should be able to: Discuss the legal issues involved with preferential treatment programs. Identify behavior that constitutes sexual harassment and list things an organization can do to eliminate or minimize it. Identify the major provisions of the Occupational Safety and Health Act (1970) and the rights of employees that are guaranteed by this act. 3-3

4 U.S. Legal System Legislative Branch Judicial Executive Branch Branch
The U.S. Constitution sets forth the foundation of our system. It established three major governing bodies: the legislative, executive, and judicial branches. The legislative branch of the federal government consists of the House of Representatives and the Senate. These bodies enact laws that govern many HR activities. The executive branch consists of the president of the United States and the regulatory agencies the president oversees. The judicial branch consists of the federal court system, which is made up of three levels: U.S. district courts and quasi-judicial administrative agencies. The U.S. Court of Appeals The Supreme Court 3 Branches 3-4

5 Equal Employment Opportunity (EEO)
EEO– the government's attempt to ensure that all individuals have an equal chance for employment, regardless of race, color, religion, sex or national origin. Constitutional Amendments: 13th Amendment - abolished slavery 14th Amendment – provides equal protection for all citizens and requires due process in state action. Equal employment opportunity refers to the government's attempt to ensure that all individuals have an equal chance for employment, regardless of race, color, religion, sex, or national origin (see Table 3.1 in the text for a summary of EEO laws). Constitutional Amendments: The Thirteenth Amendment of the Constitution abolished slavery in the United States. The Fourteenth Amendment forbids the state to take life, liberty, or property without due process of law and prevents the states from denying the equal protections of the law. 3-5

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7 Congressional Legislation
Civil Rights Acts (1866 and 1871) Equal Pay Act of 1963 Title VII of the Civil Rights Act of 1964 Age Discrimination in Employment Act of 1967 Rehabilitation Act of 1973 The Thirteenth Amendment eradicated slavery in the United States, and the Reconstruction Civil Rights Acts were attempts to further this goal. The Civil Rights Act passed in 1866 was later broken into two statutes. Section 1982 granted all persons the same property rights as white citizens. Section 1981 granted other rights, including the right to enter into and enforce contracts. Courts have interpreted Section 1981 as granting individuals the right to make and enforce employment contracts. Equal Pay Act of requires that men and women in the same organization who are doing equal work must be paid equally. Title VII of the Civil Rights Act of makes it illegal for an employer to "fail or refuse to hire or discharge any individual because of the individual's race, color, religion, sex, or national origin. Title VII states that it is illegal for an employer to “(1) fail or refuse to hire or discharge any individual, or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual’s race, color, religion, sex, or national origin, or (2) to limit, segregate, or classify his employees or applicants for employment in any way that would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee because of such individual’s race, color, religion, sex, or national origin.” The act applies to organizations with 15 or more employees working 20 or more weeks a year that are involved in interstate commerce, as well as state and local governments, employment agencies, and labor organizations. The Age Discrimination in Employment Act of prohibits discrimination against employees over the age of 40. Vocational Rehabilitation Act of covers federal contractors and requires them to engage in affirmative action for disabled individuals. 3-7

8 Congressional Legislation
Vietnam Era Veteran’s Readjustment Act of 1974 Pregnancy Discrimination Act Civil Rights Act of 1991 Americans with Disabilities Act of 1990 Vietnam Era Veteran’s Readjustment Act of requires federal contractors to take affirmative action toward employing Vietnam veterans. Pregnancy Discrimination Act-An amendment to Title VII of the Civil Rights Act, it makes illegal discrimination on the basis of pregnancy, childbirth, or related medical conditions: i.e., it is a form of unlawful sex discrimination. In addition, regarding pregnancy and maternity leave, employers may not single out pregnancy-related conditions for special procedures to determine an employee’s ability to work, and if an employee is temporarily unable to perform during her pregnancy, the employer must treat her the same as any temporarily disabled employees. The act also requires that any health insurance must cover expenses for pregnancy-related conditions on the same basis as costs for other medical conditions. Finally, pregnancy-related benefits cannot be limited to married employees, and if an employer provides any benefits to workers on leave, they must also provide the same benefits for those on leave for pregnancy-related conditions. Civil Rights Act of allows compensatory and punitive damages when discrimination has been intentional or reckless. Americans with Disabilities Act of 1990-protects individuals with disabilities from being discriminated against in the workplace by prohibiting discrimination in all employment practices. Requires that "reasonable accommodations" be made as long as they do not present an "undue burden" upon the employer. 3-8

9 Disability According to EEOC, a disability is a physical or mental impairment that “substantially limits one or more major life activity; a record or past history of such an impairment; and/or being ‘regarded as’ having a disability by an employer whether you have one or not, usually in terms or hiring, firing or demotion A disability, according to EEOC’s most recent guidelines, is defined as a physical or mental impairment that “substantially limits one or more major life activity; a record or past history of such an impairment; and/or being ‘regarded as’ having a disability by an employer whether you have one or not, usually in terms or hiring, firing or demotion.” In essence, a person is considered disabled not only if he or she cannot DO something but just because he or she has a medical condition whether or not it impairs functioning. 3-9

10 Executive Orders Executive Order 11246 - Prohibits government
contactors from discrimination Executive Order government employment policies based on merit and fitness Executive Orders are directives issued and amended unilaterally by the president. Two affect HRM practice: 1. Executive Order prohibits government contractors from discrimination based on race, color, religion, sex, and national origin. Affirmative action must be taken. 2. Executive Order requires the federal government to base all its employment policies on merit and fitness and specifies that race, color, sex, religion, and national origin should not be considered. 3-10

11 Opportunity Commission (EEOC) Office of Federal Contract
Enforcement of EEO Two agencies responsible for the enforcement of these laws and executive orders: Equal Employment Opportunity Commission (EEOC) Office of Federal Contract Compliance Programs Equal employment opportunity (EEO) refers to the government’s attempt to ensure that all individuals have an equal chance for employment, regardless of race, color, religion, sex, age, disability, or national origin. Two agencies responsible for the enforcement of these laws and executive orders: The Equal Employment Opportunity Commission (EEOC) is a division of the Department of Justice responsible for enforcing most of the EEO laws. The Office of Federal Contract Compliance Programs (OFCCP) is responsible for enforcing executive orders that cover companies that have federal government contracts. 3-11

12 Equal Employment Opportunity Commission
3 major responsibilities of EEOC: Investigate and resolve discrimination complaints Gather information Issue guidelines (ex. – Uniform Guidelines on Employee Selection Procedures) Lilly Ledbetter Fair Pay Act EEOC has three major responsibilities: 1. Investigation and Resolution—After the filing of a complaint, the EEOC has 60 days to investigate. Dismissal or reconciliation are the two possible outcomes. The complainant may sue in federal court if not satisfied. 2. Information Gathering—EEOC monitors hiring practices by reviewing EEO‑1 reports filed annually by firms. The EEOC also plays a role in monitoring the hiring practices of organizations. Each year organizations with 100 or more employees must file a report (EEO-1) with the EEOC that provides the number of women and minorities employed in nine different job categories. The EEOC computer analyzes these reports to identify patterns of discrimination that can then be attacked through class-action suits. 3. Issuance of Guidelines—EEOC determines and issues guidelines that help employers comply with the law. These guidelines are not laws themselves, but the courts give great deference to them when hearing employment discrimination cases. Refer to Table 3.1 for a Summary of Major EEO Laws and Regulations on page 112. 3-12

13 Office of Federal Contract Compliance Programs (OFCCP)
3 components: Utilization analysis Goals and timetables Action steps The OFCCP annually audits government contractors. There are three components of OFCCP: --The utilization analysis compares the race, sex, and ethnic composition of the employer's workforce with that of the available labor supply. --The employer must develop specific goals and timetables for achieving balance in the workforce. They specify the percentage of women and minorities that an employer seeks, and the date by which that percentage is to be attained. --Employers must develop a list of action steps, which are the written affirmative plan that specifies what an employer plans to do to reduce underutilization of protected groups. The OFCCP annually audits government contractors to ensure that they actively pursue the goals in their plans. These audits consist of (1) examining the company’s affirmative action plan and (2) conducting on-site visits to examine how individual employees perceive the company’s affirmative action policies. If the OFCCP finds that the contractors or subcontractors are not complying with the executive order, then its representatives may notify the EEOC (if there is evidence that Title VII has been violated), advise the Department of Justice to institute criminal proceedings, request that the Secretary of Labor cancel or suspend any current contracts, and forbid the firm from bidding on future contracts. This last penalty, called debarment, is the OFCCP’s most potent weapon. 3-13

14 Disparate Disparate Impact Treatment 3 Types of Discrimination
Reasonable Accommodation Legal scholars have identified three theories of discrimination: disparate treatment, disparate impact, and reasonable accommodation. A comparison of the theories of discrimination is given in Table 3.3. 3-14

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16 Disparate Treatment Disparate treatment exists when individuals in similar situations are treated differently based upon race, color, religion, sex, national origin, age, or disability status. Bona fide occupational qualifications (BFOQ) UAW v. Johnson Controls, Inc. McDonnell Douglas Corp. v. Green Disparate treatment exists when individuals in similar situations are treated differently based upon race, color, religion, sex, national origin, age, or disability status. Whenever individuals are treated differently because of their race, sex, or the like, and there is an actual intent to treat them differently, there is disparate treatment. Bona fide occupational qualifications (BFOQ) - Characteristic that is necessary, rather than preferred, for a job. UAW v. Johnson Controls, Inc., illustrates the difficulty in using a BFOQ as a defense. Johnson Controls, a manufacturer of car batteries, had instituted a “fetal protection” policy that excluded women of childbearing age from a number of jobs in which they would be exposed to lead, which can cause birth defects in children. The company argued that sex was a BFOQ essential to maintaining a safe workplace. The Supreme Court did not uphold the company’s policy, arguing that BFOQs are limited to policies that are directly related to a worker’s ability to do the job. McDonnell Douglas Corp. v. Green delineated the four criteria for a prima facie case of discrimination. 3-16

17 Bona Fide Occupational Qualification (BFOQ)
BFOQ is a job qualification based on race, sex, religion, etc. that an employer asserts is a necessary qualification for the job. Bona Fide Occupational Qualification (BFOQ) is a a job qualification based on race, sex, religion, etc. that an employer asserts is a necessary qualification for the job. 3-17

18 Disparate Impact Disparate impact occurs when a neutral employment practice disproportionately excludes a protected group from employment opportunities. Four-fifths rule Standard deviation rule (Prima Facie case established where the difference between actual and expected representations is greater than 2 standard deviations from the mean – 95% confidence interval) Wards Cove Packing Co. v. Antonio Griggs v. Duke Power Disparate impact occurs when a facially neutral employment practice disproportionately excludes a protected group from employment opportunities. Four-fifths rule - a test has disparate impact if the hiring rate for the minority group is less than four-fifths (80 percent) of the hiring rate for the majority group. Standard deviation rule - uses actual probability distributions to determine adverse impact. -- The Wards Cove Packing Co. v. Antonio case involved a statistical analysis of utilization rates in cannery and noncannery jobs (pay rates for the types of jobs were quite different). -- In Griggs v. Duke Power, it was shown that the employer required either a high school diploma or passing scores on two nationally developed tests. However, the company had not studied the relationship of these selection devices to ability to do the job. Employees already on the job without high school degrees were performing satisfactorily. Thus, Duke Power lost the case. 3-18

19 Four Fifths Rule Examples
Example I: Applicant Number Pool of Hiring Race Applicants Hired Rate White 100 80 80.00% Black 60 20 33.33% Total: 160 Hiring Rate, Minority over Majority: 41.67% Less than 80%: Prima Facie Discriminatory Example II: 50 50.00% 25 83.33% Greater than 80%: No Prima Facie Discrimination Disparate impact occurs when a facially neutral employment practice disproportionately excludes a protected group from employment opportunities. Four-fifths rule - a test has disparate impact if the hiring rate for the minority group is less than four-fifths (80 percent) of the hiring rate for the majority group. Standard deviation rule - uses actual probability distributions to determine adverse impact. -- The Wards Cove Packing Co. v. Antonio case involved a statistical analysis of utilization rates in cannery and noncannery jobs (pay rates for the types of jobs were quite different). -- In Griggs v. Duke Power, it was shown that the employer required either a high school diploma or passing scores on two nationally developed tests. However, the company had not studied the relationship of these selection devices to ability to do the job. Employees already on the job without high school degrees were performing satisfactorily. Thus, Duke Power lost the case. 3-19

20 Reasonable Accommodation
Reasonable Accommodation - places a special obligation on an employer to affirmatively accommodate an individual’s disability or religion. Religion and Accommodation Disability and Accommodation Reasonable Accommodation - places a special obligation on an employer to affirmatively do something to accommodate an individual’s disability or religion. Religion and Accommodation - Individuals who hold strong religious beliefs find that some of the observations and practices of their religion come into conflict with work duties. Disability and Accommodation - Employers are not only to refrain from discrimination (ADA) but they are also obligated to take affirmative steps to accommodate individuals who are protected under the act. 3-20

21 Retaliation for Participation and Opposition
Title VII states that employers cannot retaliate against employees for either "opposing" a perceived illegal employment practice or "participating in a proceeding” related to an alleged illegal employment practice. Employees do not have an unlimited right to talk about how racist or sexist their employers are. Title VII states that employers cannot retaliate against employees for either "opposing" a perceived illegal employment practice or "participating in a proceeding” related to an alleged illegal employment practice. However, employees do not have an unlimited right to talk about how racist or sexist their employers are. The courts tend to frown on employees whose activities result in a poor public image for the company unless those employees attempted to use the organization’s internal channels. 3-21

22 Diversity and EEO ISSUES
Sexual Harassment Affirmative Action and Reverse Discrimination Organizational demography is changing, and therefore issues regarding diversity are increasingly important. The important issue are: sexual harassment, affirmative action and reverse discrimination, and outcomes of American’s with Disabilities Act. The following slides explore these issues further. Outcomes of Americans with Disabilities Act 3-22

23 Sexual Harassment Sexual harassment -unwelcome sexual advances, requests for sexual favors, and other verbal or physical contact of a sexual nature constitute sexual harassment when 1. Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, 2. Submission to or rejection of such conduct by an individual is used as the basis of employment decisions affecting such individual, or 3. Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment. The EEOC definition of sexual harassment -unwelcome sexual advances, requests for sexual favors, and other verbal or physical contact of a sexual nature constitute sexual harassment when 1. Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, 2. Submission to or rejection of such conduct by an individual is used as the basis of employment decisions affecting such individual, or 3. Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment. 3-23

24 Sexual Harassment Quid Pro Quo harassment Bundy v. Jackson
Hostile Working Environment Quid pro quo harassment occurs when some type of benefit or punishment is made contingent upon the employee submitting to sexual advances. --The Bundy v. Jackson case facts showed that the plaintiff repeatedly received sexual propositions from her fellow employees and supervisor. She rejected these advances and was eventually passed over for promotion without reason. A hostile working environment occurs when someone's behavior in the workplace creates an environment that makes it difficult for someone of a particular sex to work. 3-24

25 Sexual Harassment 3 critical conditions for Sexual Harassment cases:
The plaintiff cannot have "invited or incited" the advances Harassment must have been severe The court must determine the liability of the organization for actions of its employees See Meritor v. Vinson Preventative steps include development of a policy statement, training, a reporting mechanism and disciplinary policy. Three critical conditions for Sexual Harassment cases: The plaintiff cannot have "invited or incited" the advances Harassment must have been severe The court must determine the liability of the organization for actions of its employees Preventative steps for firms include development of a policy statement, training in inappropriate behaviors, development of a reporting mechanism, and disciplinary policy. 3-25

26 Affirmative Action and Reverse Discrimination
Affirmative Action was conceived of as a way of taking extra effort to attract and retain minority employees. Imposed quota programs. The entire debate over affirmative action continues to evoke attention. See Ricci v. DeStefano Affirmative Action was conceived of as a way of taking extra effort to attract and retain minority employees. Imposed quota programs are negotiated with the EEOC and hold a certain number of positions for minorities or women. The entire debate over affirmative action continues to evoke attention. Many people consider quotas or preferential treatment as reverse discrimination. 3-26

27 Americans with Disabilities Act (ADA) Outcomes
Under ADA, a firm must make "reasonable accommodation" to a physically or mentally disabled individual unless doing so would impose "undue hardship.” Consequences of ADA: Increased litigation Cases being filed do not reflect Congressional intent Act was passed to protect people with major disabilities The law has not resulted in a major increase in the proportion of people with disabilities who are working. Under ADA, a firm must make "reasonable accommodation" to a physically or mentally disabled individual unless doing so would impose "undue hardship.” Consequences of this act: There has been increased litigation. The kinds of cases being filed do not reflect Congressional intent. The act was passed to protect people with major disabilities; however, major disabilities account for less than 4 percent of claims. The law has not resulted in a major increase in the proportion of people with disabilities who are working. 3-27

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29 Employee Safety Employee safety is regulated by both federal and state governments. Research into workplace safety is conducted by NIOSH (National Institute for Occupational Safety and Health) The Occupational Safety and Health Act (OSHA) authorized federal regulation of workplace safety General Duty Clause – general duty to furnish each employee with a place of employment free from recognized hazards that cause or are likely to cause death or serious physical harm Employee safety is regulated by both the federal and state governments. The Occupational Safety and Health Act (OSHA) authorizes the federal government to establish and enforce occupational safety and health standards for all places of employment engaging in interstate commerce. --The General duty clause of OSHA states that an employer has an overall obligation to furnish employees with a place of employment free from recognized hazards. 3-29

30 Employee Rights under OSHA
Request an inspection. Have a representative present at inspection. 3. Have dangerous substances identified. 4. Be promptly informed about exposure to hazards and given access to accurate records regarding exposures. 5. Have employer violations posted at work-site. Under OSHA, employees have a right to: 1. Request an inspection. 2. Have a representative present at an inspection. 3. Have dangerous substances identified. 4. Be promptly informed about exposure to hazards and be given access to accurate records regarding exposures. 5. Have employer violations posted at the work-site. 3-30

31 OSHA Inspections Citations and Penalties
OSHA inspections are conducted by compliance officers, specially trained Department of Labor agents. Violation results in a citation to the employer. Criminal and civil penalties OSHA is responsible for inspecting businesses, applying safety and health standards, and levying fines for violations. OSHA regulations prohibit notifying employers of inspections in advance. OSHA inspections are conducted by specially trained agents of the Department of Labor called compliance officers. If compliance officers believe that a violation has occurred, they issue a citation to the employer specifying the practice or situation that violates the act. Criminal and civil penalties may be assessed for willful violations that kill an employee. 3-31

32 Safety Awareness Programs
Safety Awareness Programs attempt to instill symbolic and substantive changes to a safety program. 3 Components of a Safety Awareness Program: Identify and Communicate Job Hazards Job hazard analysis technique Technic of Operations Review (TOR) Reinforce Safe Practices Promote Safety Internationally Safety Awareness Programs attempt to instill symbolic and substantive changes to a safety program. There are three primary components of a safety awareness program: --Identifying and Communicating Job Hazards The job hazard analysis technique breaks jobs down into basic elements that are then rated for their potential for harm. Technic of Operations Review (TOR) focuses on past accidents and their causes. --Reinforcing Safe Practices --Promoting Safety Internationally 3-32

33 Summary One of HRM’s major challenges is the legal constraints imposed by the government. HR and line managers need to understand legal requirements and prohibitions to manage their businesses in ways that are financially and ethically sound, and in so doing they will also create a competitive advantage. Viewing employees as a source of competitive advantage results in dealing with them in ways that are ethical and legal as well as providing them with a safe workplace. An organization’s legal environment—especially the laws regarding equal employment opportunity and safety—has a particularly strong effect on its HRM function. HRM is concerned with the management of people, and government is concerned with protecting individuals. One of HRM’s major challenges is within the legal constraints imposed by the government. Given the multimillion-dollar settlements resulting from violations of EEO laws (and the moral requirement to treat people fairly regardless of their sex or race) as well as the penalties for violating OSHA, HR and line managers need to understand legal requirements and prohibitions in order to manage their businesses in ways that are sound, both financially and ethically. Organizations that do so effectively have a competitive advantage. 3-33


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