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Legal Compliance

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Similar suits at Eckerd, Starbucks, and Farmer's Insurance ... Cases most often arise from layoff or dismissal. It is legitimate to consider salary in layoffs ... – PowerPoint PPT presentation

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Title: Legal Compliance


1
Legal Compliance
  • MANA 5341
  • Staffing and Performance Management

2
Major Staffing Laws
  • Classifying Employees
  • FLSA and Internal Revenue Code
  • Equal Opportunity
  • Civil Rights Acts (1964 and 1991)
  • ADA and ADEA
  • Affirmative Action
  • Executive Order 11246
  • Immigration
  • Immigration Reform and Control Act
  • Wages and Benefits
  • Equal Pay Act
  • Many others….

3
Classifying Employees
  • Flexible employment practices have risen
    sharply last 10-15 years.
  • Independent Contractors
  • FLSA (Salaried vs. Hourly)
  • Temporary Employees

4
What is an Independent Contractor?
  • An employer does not generally have to withhold
    or pay any taxes on payments to independent
    contractors.
  • W2 vs. 1099
  • General rule An individual is a contractor if
    the employer controls only the result of the work
    and not the means and methods of accomplishing
    the result.
  • Behavioral control
  • Financial control
  • Relationship with firm
  • http//www.irs.ustreas.gov/pub/irs-utl/emporind.pd
    f

5
IRS Example
  • Vera Elm, an electrician, submitted a job
    estimate to a housing complex for electrical work
    at 16 per hour for 400 hours. 
  • She is to receive 1,280 every 2 weeks for the
    next 10 weeks.  This is not considered payment by
    the hour.  Even if she works more or less than
    400 hours to complete the work, Vera will receive
    6,400. 
  • Vera sets her own schedule but is required to
    complete the work in 10 weeks subject to
    inspection upon completion. She also performs
    additional electrical installations under
    contracts with other companies, that she obtained
    through advertisements. 

6
IRS Example
  • Vera Elm, an electrician, submitted a job
    estimate to a housing complex for electrical work
    at 16 per hour for 400 hours. 
  • She is to receive 1,280 every 2 weeks for the
    next 10 weeks.  This is not considered payment by
    the hour.  Even if she works more or less than
    400 hours to complete the work, Vera will receive
    6,400. 
  • Vera sets her own schedule but is required to
    complete the work in 10 weeks subject to
    inspection upon completion. She also performs
    additional electrical installations under
    contracts with other companies, that she obtained
    through advertisements. 
  • Vera is an Independent Contractor

7
Temporary Employees
  • Temps are employees of an employment agency, not
    the organization where they work.
  • Companies cannot use long-term temporary
    employment only to deny benefits to employees.
  • Vizcaino vs. Microsoft (1999)
  • Microsoft Corp. will pay 97 million to settle a
    federal lawsuit from employees who claimed the
    software giant classified them as "temporary"
    workers for years to deny them standard benefits
    such as health insurance and the lucrative
    employee stock purchase plan, thereby saving the
    company millions.
  • Between 8,000 and 12,000 people were eligible for
    a share of the settlement.
  • LA Times 12.13.00

8
Changes at Microsoft
  • Guidelines to help managers figure out when a job
    shouldn't be given to a temporary employee.
  • Policy prohibiting temporary employees from
    working more than 12 months at a stretch without
    taking at least a 100-day break.
  • Temporary workers wear orange badges instead of
    the blue badges for permanent employees.
  • Temporary workers are not permitted to use the
    company health club, play on the company baseball
    and soccer fields or allowed to attend company
    parties.

9
Fair Labor Standards Act (FSLA)
  • Passed in 1938 and amended many times
  • Nonexempt workers earn a minimum wage of not less
    than 5.15 an hour, effective September 1, 1997.
  • Overtime pay at not less than one and one-half
    times regular pay is required after 40 hours a
    workweek.
  • An employee must be at least 16 years old to work
    in most non-farm jobs and at least 18 to work in
    non-farm jobs declared hazardous by the Secretary
    of Labor.
  • Youths 14 and 15 years old may work outside
    school hours in various non-manufacturing,
    non-mining, non-hazardous jobs under certain
    conditions

10
New Overtime Rules
  • First major change to FSLA in 50 years.
  • http//www.dol.gov/esa/regs/compliance/whd/fairpay
    /
  • In 2003 record 212.5 million in back wages was
    collected from employers a 20 increase from
    2002.
  • RadioShack will pay 29.9 million in unpaid
    overtime claims of 1,300 managers in California.
    Similar suits at Eckerd, Starbucks, and Farmers
    Insurance
  • U-Haul suit by 1,200 managers was dismissed due
    to substantial evidence that the supervisors
    "spend the majority of their time performing
    exempt managerial tasks"

11
To be exempt from FLSA
  • Salary Basis Test
  • Be paid a salary
  • Salary Level Test
  • Earn a minimum of 23,660/yr (old 8060/yr)
  • White collar workers who earn more than 100k are
    exempt
  • Blue collar workers skilled trades are NOT
    exempt
  • Duties Test
  • Administrative
  • Professional
  • Executive
  • Outside Sales
  • An employee who leads a team of other employees
    assigned to complete major projects

12
Administrative Duties
  • Whose primary duty (50) is the performance of
    office or non-manual work directly related to the
    management or general business operations of the
    employer or the employers customers and
  • Whose primary duty includes the exercise of
    discretion and independent judgment with respect
    to matters of significance.

13
FSLA Special Cases
  • Tipped employees
  • Domestic service workers
  • Teachers and administrative personnel in
    elementary and secondary schools
  • Outside sales employees
  • Employees in certain computer-related occupations
  • Employees of certain seasonal amusement or
    recreational establishments
  • Employees engaged in fishing operations
  • Employees engaged in newspaper delivery
  • Farm workers
  • Casual babysitters
  • Certain commissioned employees of retail or
    service establishments
  • Employees of railroads and air carriers
  • Taxi drivers
  • Nurses
  • Announcers of certain non-metropolitan
    broadcasting stations
  • Employees of motion picture theaters
  • Employees of certain bulk petroleum distributors
  • Many others….

14
What are the differences between
  • Diversity
  • Equal Employment Opportunity
  • Affirmative Action?

15
EEO Laws
  • Title VII of the Civil Rights Act 1964
  • Civil Rights Act of 1991
  • Age Discrimination in Employment Act of 1967
  • Americans with Disabilities Act of 1990 (ADA)

16
Protected Groups
  • Race
  • Color
  • Religion
  • Sex
  • National origin
  • Age
  • Disability

17
Civil Rights Act of 1964 Title VII
  • (a) It shall be an unlawful employment practice
    for an employer
  • (1) to fail or refuse to hire or to discharge any
    individual, or otherwise to 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
    which 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.

18
Civil Rights Act of 1964 Title VII
  • (a) It shall be an unlawful employment practice
    for an employer
  • DISPARATE TREATMENT
  • (1) to fail or refuse to hire or to discharge any
    individual, or otherwise to 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
  • ADVERSE IMPACT
  • (2) to limit, segregate, or classify his
    employees or applicants for employment in any way
    which 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.

19
Court Cases
  • Griggs v. Duke Power (1971)
  • McDonnell Douglas vs. Green (1972)
  • Connecticut vs. Teal (1982)
  • Watson vs. Ft. Worth Bank Trust (1988)
  • Rudder vs. District of Columbia (1995)

20
Court Cases
  • Griggs v. Duke Power (1971)
  • Adverse impacts must be job related
  • Discriminatory intent not sufficient defense
  • McDonnell Douglas vs. Green (1972)
  • To establish prima facia in disparate treatment
    cases
  • Connecticut vs. Teal (1982)
  • Applies to each parts of a multi-step process
  • Watson vs. Ft. Worth Bank Trust (1988)
  • Adverse impact applied to interviews
  • Rudder vs. District of Columbia (1995)
  • Affirm job analysis and content validity of tests

21
Civil Rights Act of 1991
  • Followed Wards Cove Packing vs. Antonio (1989)
  • Prohibits race norming of tests.
  • Plaintiffs can sue for punitive damages in cases
    of intentional discrimination.
  • Adverse impact prohibited for each piece of a
    selection system.
  • Burden of proof on the employer.
  • Prohibits quotas in selection.

22
EEO Applied
  • Organizations with more than 15 employees.
  • Uniform Guidelines on Employee Selection
    Procedures
  • http//www.dol.gov/dol/allcfr/Title_41/Part_60-3/t
    oc.htm
  • Principles for Validation and use of Employee
    Selection Procedures
  • http//www.siop.org/_Principles/principles.pdf
  • EEO does NOT require preferential treatment
  • Quotas are illegal by Civil Rights Act of 1991
  • Must keep records of applicants for 6 months

23
EEO Applied
  • Employer must show practices are job-related for
    the position in question and consistent with
    business necessity
  • Company Defenses
  • Merit
  • Bona Fide Occupational Qualification
  • Business Necessity
  • An alternative employment practice must be
    accepted if shown to meet the business necessity
    and have less adverse impact.

24
Presentation of Evidence
25
Selection Rate Tests
4/5ths RULE The selection rate for any protected
group should be no less than 4/5ths or 80 of the
selection rate for the group with the highest
rate of selection. If SR1 .8 gt SR2, then
Adverse Impact. Number Hired Selection
Rate (SR) Number of
Applicants
Std. Dev. RULE Number selected needs to be
within (-) 2 standard deviation units from the
expected case. Minority applicants X
NonMinority applicants X Selected
S.D.
26
4/5ths Rule
  • Assume 200 employees were selected from a pool of
    500 applicants (200 black and 300 white). Of the
    employees selected 60 were black and 140 were
    white.
  • Selection Rates
  • White 140 / 300 46.7
  • Black 60 / 200 30
  • 4/5ths Rule .467 X .8 .374 37.4
  • Since 30 (actual selection rate) is less than
    37.4 (4/5ths
  • comparison selection rate) evidence of
    discrimination exists.

27
Std. Deviation Rule
of Minority Applicants of Non
Applicants X X
Selected of Applicants of
Applicants
S.D.
  • Assume 200 employees were selected from a pool of
    500 applicants (200 black and 300 white).

200 300 X X 200
500 500
6.92
S.D.

.4 X .6 X 200
28
Std. Deviation Rule
  • Overall selection rate 40 (200 out of 500)
  • If blacks were selected at the same rate as
    whites we would expect
  • 200 X .4 80 Blacks
  • 300 X .4 120 Whites
  • Std. Rule states that the actual number selected
    should be within /- 2 Std. Deviations from the
    expected number.
  • S.D. 6.93 or 7 2 S.D. 14
  • Target Range for Blacks 80 /- 14 66 to 94
  • According to this, if fewer than 66 out of 200
    were selected, then evidence of discrimination
    exists.

29
Wal-Mart's Women Troubles
  • Wal-Mart, employs 1.3 million workers at roughly
    3,522 Wal-Mart and Sam's Clubs.
  • Certified as a class 1.6 million women who
    worked for Wal-Mart's U.S. stores at any time
    since Dec. 26, 1998.
  • Women comprise over 72 of Wal-Mart's sales
    workforce and less than 33 of its managers.

30
The Plaintiffs Case
31
Wal-Marts Defense
  • Wal-Mart says it classifies management positions
    differently from its competitors. For example, it
    says department "managers" are not included in
    the count of managers because they are not
    salaried positions.
  • "If we included these, our overall percentage
    would probably be close to 50," the company
    says.
  • Wal-Mart men average higher seniority and are
    more willing to relocate.

32
ADEA (1967) and Age Discrimination
  • Age Discrimination in Employment Act of 1967
  • Protects employees 70 million workers over 40
  • Nearly 50 of workers
  • Cases most often arise from layoff or dismissal
  • It is legitimate to consider salary in layoffs
  • No standard of reverse discrimination for age
    suits
  • Disparate impact rules apply
  • Adams vs. Florida Power Corp
  • Dismissed by the Supreme Court 2002
  • Smith vs. City of Jackson
  • Affirmed by the Supreme Court 2005

33
Americans with Disabilities Act (ADA)
  • Discrimination is prohibited against individuals
    with disabilities who can perform essential job
    functions with reasonable accommodation unless it
    would cause undue hardship.
  • Employers not required to change work rules if
    they are business necessity.
  • OFCCP vs. Ozark Airlines (1986) employers must
    prove applicant could not perform the job safely.

34
Americans with Disabilities Act (ADA)
  • Disability is a physical or mental impairment
    that affects a major life activity.
  • Essential vs. marginal job functions
  • Categories of "reasonable accommodations"
  • changes to a job application process
  • changes to the work environment
  • changes to the way a job is usually done
  • employee training

35
Undue Hardship
  • Undue hardship means significant difficulty or
    expense.
  • Not only financial difficulty
  • Those that would fundamentally alter the nature
    or operation of the business.
  • Every request for reasonable accommodation should
    be evaluated separately taking into account
  • Nature and cost of the accommodation needed
  • Overall financial resources of the business
  • Number of persons employed by the business
  • Impact of the accommodation on the business

36
Record Keeping
  • EEOC requires that employers keep all personnel
    records for one year after termination.
  • Written descriptions of benefits plans (such as
    pensions) and any seniority or merit system.
  • Fair Labor Standards Act (FLSA) and the Equal Pay
    Act, require employers to keep payroll records
    for at least three years.
  • All records relevant to wages including wage
    rates, job evaluations, and seniority and merit
    systems.

37
Employment Information Report (EEO-1)
  • EEO-1 survey is authorized by Title VII and the
    Equal Employment Opportunity Act of 1972.
  • All employers with 15 or more employees are
    required to keep employment records as.
  • Employers are required to file an EEO-1 report
    on an annual basis if they
  • Employ 100 or more employees
  • Employ 50 or more employees and have Federal
    contracts totaling 50,000 or more.

38
EEO vs. Affirmative Action
  • Equal Employment Opportunity
  • Collection of laws that apply to all
    organizations
  • Aimed at ending discrimination
  • Affirmative Action
  • Executive Order 11246
  • Applies only to (1) government and contractors
    over 10,000 (2) court orders and (3) voluntary
    programs.
  • NO affirmative action requirements for others.
  • Written document with targets for minority
    hiring.

39
Enforcement Agencies
  • Equal Employment Opportunity Commission (EEOC)
  • All private employers with more than 15 employees
  • EEO 1 for more than 100 employees
  • Office Of Federal Contract Compliance Programs
    (OFCCP)
  • Government contractors or sub-contractors.
  • Covers approximately 26 million or nearly 22 of
    the total civilian workforce.
  • OFCCP requires a contractor to engage in a
    self-analysis for the purpose of discovering any
    barriers to equal employment opportunity.
  • Investigates complaints of discrimination.

40
Affirmative Action Program (AAP)
  • Develop a written program for each establishment
  • Identify potential problems in the participation
    and utilization of women and minorities.
  • Gives the specific procedures and the good faith
    efforts to provide equal employment opportunity.
  • If there is underutilization, provides gives
    targets (not hard quotas) and timetables.
  • Expanded efforts in outreach, recruitment and
    training.

41
AAP Statistics
  • Flow Statistics
  • Examines selection rates by group
  • 4/5 ths rule / Std. Deviation Rule
  • Availability and utilization analyses
  • Employee distribution compared with local
    population
  • Stock Statistics
  • Concentration Statistics
  • Examining placement of women and minorities by
    job category

42
Availability Analysis
  • U.T. System determines minority availability by
  • The minority population in the surrounding labor
    market.
  • The minority unemployment rate in the surrounding
    labor market.
  • The percentage of the minority workforce as
    compared with the total workforce in the
    surrounding labor market and Texas.
  • The availability of promotable and transferable
    minorities within U. T. System Administration.
  • http//www.eeoc.gov/stats/jobpat/2000/pmsa/2800.ht
    ml
  • http//www.census.gov/hhes/www/eeoindex.html

43
Utilization Analysis
  • Compares the percentage of minorities and
    women in each Job Group with the calculated
    availability of minorities and women.
  • "Underutilized" is defined as having fewer than
    would reasonably be expected by their
    availability.

44
Concentration Statistics
45
This all means….
  • Make sure that selection criteria are fair.
  • Use validated selection tests.
  • Use the same procedure for all applicants.
  • Collect data and keep records.
  • Only ask job-related questions.
  • No medical exams before making job offers.
  • No business is ever required to hire someone not
    qualified for a job.

46
How to Proceed?
  • What can companies do to navigate the differences
    between targets and preferences (which are legal)
    vs. quotas and reverse discrimination (which are
    illegal)?
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