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					Legal Issues


Lecture #3
Legal Issues in HRM
• Staffing
    • Hiring and firing procedures
    • EEO (coming attraction…)
• Compensation & benefits
• Safety
• Labor relations


 Page 2              MGMT 412 | Legal Issues   Fall 2008
                                                                                                More

    Why Worry?
       • Aren’t all these laws just a burden on
            business?
       • Legal compliance important
          • Cost of non-compliance
          • Public image
       • Also, too, legal compliance is generally good
            business

Sources: “Add “value…” (2002);Grossman (2002); “Off the clock” (2003); Wright & Ferris (1995)

          Page 3                                    MGMT 412 | Legal Issues                      Fall 2008
Hiring & Firing Procedures
• IRCA (1986)
• Employee Polygraph Protection Act (1988)
• WARN (1988)
• Fair Credit Reporting Act (1970)
• Uniformed Services Employment and
  Reemployment Rights Act (1994)
• Employment at will


 Page 4            MGMT 412 | Legal Issues   Fall 2008
Immigration Reform and Control
Act (1986)

• All employees must prove eligibility to
  work in U.S.
    • The I-9
• Problems…..
    • Day labor
    • Companies providing fake IDs
• Visa varieties and issues…

 Page 5             MGMT 412 | Legal Issues   Fall 2008
Employee Polygraph Protection Act
(1988)

 • Use of pre-employment polygraphs forbidden
 • Can be used       in the investigation of
   “workplace incidents”
 • Governments, security firms, and employees
   of pharmaceutical manufacturers with access
   to controlled substances are exempt




  Page 6           MGMT 412 | Legal Issues   Fall 2008
WARN (1988)
• Worker Adjustment and Retraining Act)
• Provides for advance notification of
  facility closings or major layoffs (33%+
  of workforce or 500+ people)




 Page 7          MGMT 412 | Legal Issues   Fall 2008
Fair Credit Reporting Act (1970)

• If you use background checking for
  employment purposes, you must:
    • Have written consent from applicant (or
          current employee) to do so
    • Must notify employee if adverse decision is
          due to background check




 Page 8                 MGMT 412 | Legal Issues   Fall 2008
Uniformed Services Employment and
Reemployment Rights Act (1994)
 •    Employers must rehire or reinstate military service members, provided
      that:
        •     The person held a civilian job;
        •     The person provided notice to the employer that he or she was leaving the
              job for service in the uniformed services (unless giving notice was precluded
              by military necessity or otherwise impossible or unreasonable)
        •     The cumulative period of service must not have exceeded five years;
        •     The person was not released from service under dishonorable or other
              punitive conditions
        •     The person reported back to the civilian job in a timely manner
 •    This includes active duty as well as reserve obligations
 •    Finally, prior service, current service or plans to serve are protected
      (employment discrimination)


     Page 9                              MGMT 412 | Legal Issues                    Fall 2008
Employment at Will
• Common law doctrine:
    • Employers may hire, fire, demote and promote whomever
      they choose, unless a law exists to the contrary
    • Depends on state courts’ interpretations
• General exceptions to EAW:
    • Public policy
       • Violation of law
       • Filing workers’ comp claim
       • Refusal to commit illegal acts)
    • Implied employment contract (the employee handbook)
    • Good faith and fair dealing



 Page 10                     MGMT 412 | Legal Issues     Fall 2008
   Time Away From Work
      • Jury duty
      • Military service
      • FMLA




Sources: “Ex-juror’s case… (1991); Hansen (2003); Segal, 2003


         Page 11                                  MGMT 412 | Legal Issues   Fall 2008
Family And Medical Leave Act
(FMLA)
•    Unpaid leave up to 12 weeks per year
       •      Seriously ill family member
       •      Family member injured in military service (new)
       •      Emergencies arising from family member in military (new)
       •      Own illness
       •      Birth of a child
       •      Adoption of a child
•    Companies with 50 or more employees, after 1 year employment
•    Return to same or equivalent job
•    Top 10% paid employees not eligible
•    State laws may be more generous (for example, New York, New
     Jersey, Rhode Island, Hawaii, and California)



    Page 12                             MGMT 412 | Legal Issues          Fall 2008
Compensation
• Fair Labor Standards Act (1938)
• Davis-Bacon Act (1931)
    • Requires payment of “prevailing wage” for
           public works construction




 Page 13                 MGMT 412 | Legal Issues   Fall 2008
Fair Labor Standards Act
• Originally passed in 1938
• Covers four main areas
   • Overtime
   • Minimum wage
   • Child labor
   • Peonage
• Enforcement by Wage and Hour
  Division, Department of Labor

 Page 14        MGMT 412 | Legal Issues   Fall 2008
 Overtime Provisions
   • Overtime applies after 40 hours per week *
   • Overtime rate is 1½x regular hourly rate
   • Time worked:
         • Any time employees permitted or allowed to work
         • Waiting time
         • On-call if mobility restricted
         • Rest periods (< 20 minutes) covered, but not meal breaks




* Some states have more generous provisions

      Page 15                       MGMT 412 | Legal Issues     Fall 2008
Exemptions From Overtime
 • Depends on actual content of work, not title
 • Types of exemptions
    • Executive
    • Administrative
    • Professional
    • Outside sales
 • Exemptable workers may be paid overtime as
      market demands
Sources: “Managers to get $2.9 million” (2001); “Overtime pay target of Eckerd lawsuit” (1999)

    Page 16                                    MGMT 412 | Legal Issues                           Fall 2008
Executive Exemption
  • Management is primary duty
  • Direct 2 or more full-time employees
  • Authority to hire, fire, or recommend
    personnel actions
  • Exercise high degree of independent
    judgment
  • No more than 20% of time on non-
    management duties (40% in retail &
    service)
                                                                                Eliminated as of
Source: http://www.dol.gov/_sec/media/speeches/541_side_by_side.htm             August 23, 2004
      Page 17                                         MGMT 412 | Legal Issues               Fall 2008
Administrative Exemption
   • Office or non-manual work related to
     management policies or general business
     operations
   • Exercise discretion and judgment
   • Assist a owner or executive or perform
     specialized or technical work or execute
     special assignments
   • No more than 20% of time on non-
     management duties (40% in retail &
     service)
                                                                                 Eliminated as of
Source: http://www.dol.gov/_sec/media/speeches/541_side_by_side.htm
                                                                                 August 23, 2004
       Page 18                                         MGMT 412 | Legal Issues               Fall 2008
Professional Exemption
 •    Type of work:
        •      Work requires advanced knowledge and education
        •      Original and creative artistic work
        •      Teaching
        •      IT professions (depending on pay)
 • Work is intellectual and varied in character
 • Work cannot be standardized as to time
 • Salary requirement met (except for physicians, attorneys,
   teachers and some IT occupations)
 • No more than 20% of time on non-exempt work
 • Must pay OT if paid by hours worked
                                                  Eliminated as of
                                                  August 23, 2004
Source: http://www.dol.gov/_sec/media/speeches/541_side_by_side.htm


     Page 19                                        MGMT 412 | Legal Issues   Fall 2008
Computer Employees
• “Work requires theoretical and practical application of
  highly-specialized knowledge in computer systems
  analysis, programming, and software engineering.”
• “Consistently exercises discretion and judgment.”
• “Performs work that is predominantly intellectual and
  varied in character and is of such character that the
  output produced or result accomplished cannot be
  standardized in relation to a given period of time.”
• Minimum pay = $27.63/hour


 Page 20               MGMT 412 | Legal Issues      Fall 2008
 Outside Sales Exemption
     • Sales away from employer’s place of
       business
     • No more than 20% of time on non-
       exempt work
                                                                      Eliminated as of
                                                                      August 23, 2004




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


        Page 21                                         MGMT 412 | Legal Issues          Fall 2008
Child Labor
• Regulated by age categories:
    • Bars hazardous work
    • Hours worked
• Provisions do not cover family-owned
  farms or businesses
• Also some exemptions for legitimate
  apprenticeships

 Page 22             MGMT 412 | Legal Issues   Fall 2008
Child Labor Restrictions
• Under age 14                   • 16 and 17 years old
  • Acting                          • No hazardous work
  • Newspaper sales              • 18 and above
  • Casual babysitting              • No restrictions
    and the like
• 14 and 15 years old
   • No hazardous work
   • Limited hours



 Page 23             MGMT 412 | Legal Issues            Fall 2008
Hours Limitations
• No work during school hours
• No more than 3 hours on a school day
• No more than 8 hours on a non-school day
• No more than 18 hours in a week when
  school in session
• No more than 40 hours a week when school
  not in session
• Between 7 am and 7 pm (9 pm in summer)

 Page 24              MGMT 412 | Legal Issues   Fall 2008
Child Labor Enforcement




 Page 25    MGMT 412 | Legal Issues   Fall 2008
Hazardous Occupations
•    Manufacturing or storing               •     Power-driven meat
     explosives                                   processing (including
•    Driving a motor vehicle                      restaurant slicers)
•    Coal and other mining                  •     Power-driven bakery equipment
•    Wrecking and demolition                •     Power-driven paper
•    Logging and sawmilling                       processing (including
                                                  balers, compactors)
•    Power-driven woodworking
     machines                               •     Brick & tile manufacturing
•    Exposure to radioactive                •     Operate circular saws, band
     substances                                   saws
•    Power-driven hoisting apparatus        •     Roofing (even on ground)
•    Power-driven metal working             •     Trenching and excavating



    Page 26                     MGMT 412 | Legal Issues                      Fall 2008
Minimum Wage
• Currently $6.55 / hour (as of July 24,
  2008)
    • July 24, 2009: $7.25
    • Also – for tipped employees, it is $2.13
• States may enact higher minimums
  (and that then applies)
• Should minimum wage be raised?

 Page 27             MGMT 412 | Legal Issues     Fall 2008
Trends in Minimum Wage
 $7.00
                                                               $6.55
 $6.00
 $5.00
 $4.00
 $3.00
 $2.00
 $1.00      $0.25
 $0.00
     37

     42

     47
     52

     57

     62

     67

     72
     77

     82

     87

     92

     97

     02
     07
  19

  19

  19
  19

  19

  19

  19

  19
  19

  19

  19

  19

  19

  20
  20
  Page 28           MGMT 412 | Legal Issues                        Fall 2008
                                              Source: DoL, Wage and Hour Division
     State Minimum Wage Laws
                                                                      State minimum
                                                                      higher than
                                                                      Federal
                                                                      Same
                                                                      No state
                                                                      minimum
                                                                      State minimum
                                                                      lower than
                                                                      Federal



   Special rate

Source: DoL, Wage and Hour Division, 2008


           Page 29                          MGMT 412 | Legal Issues       Fall 2008
Benefits
• Social Security Act (1936)
• ERISA (1974)
• COBRA (1985)
• Health Insurance Portability and Accountability Act
  (1996)
• Newborn and Mothers’ Health Protection Act (1996)
• Mental Health Parity Act (1996)
• Women’s Health and Cancer Rights Act (1998)



 Page 30               MGMT 412 | Legal Issues     Fall 2008
Social Security
• Originally provided for old age insurance and disability coverage
  (1935)
• Medicare added in 1965
• Benefits for:
       • Retirement
       • Disability
       • Survivors (lump sum and monthly payments)
• Based on contributions from employers and employees
• Majority of U.S. workers covered
• Should Social Security be privatized?




    Page 31                   MGMT 412 | Legal Issues        Fall 2008
ERISA Provisions
• Passed in 1974 in response to abuses of pension plans
• Does not require that a plan be offered
• Covers:
       • Who is eligible?
       • Vesting (entitlement to employer contributions)
       • Plan funding required
•    Also established Pension Benefit Guarantee Corporation
       • Employers required to pay premiums to PBGC to cover company
              bankruptcies; if necessary, PBGC will assume payments




    Page 32                         MGMT 412 | Legal Issues           Fall 2008
COBRA
• Provides for continuation of health
  coverage (if offered)
• Employee pays 102% of total cost
• Coverage period:
    • 18 months for terminated employees
    • 36 months for spouse / ineligible
           dependent

 Page 33               MGMT 412 | Legal Issues   Fall 2008
Other Federal Laws Regulating
Health Plans

• Health Insurance Portability and
  Accountability Act (1996)
• Newborn and Mothers’ Health
  Protection Act (1996)
• Mental Health Parity Act (1998)
• Women’s Health and Cancer Rights Act
  (1998)

 Page 34         MGMT 412 | Legal Issues   Fall 2008
Health Insurance Portability and
Accountability Act (1996)
 • Also known as HIPAA (also addresses confidentiality
   issues)
 • Limits exclusions for preexisting conditions (a condition for
   which you received treatment in the past 6 months)
 • Maximum pre-existing exclusion is 12 months (reduced by
   length of time of past coverage)
 • Pre-existing exclusion cannot be applied to pregnancy
 • Group plans cannot discriminate against employees and
   dependents based on their health status



  Page 35                 MGMT 412 | Legal Issues         Fall 2008
Newborn and Mothers’ Health
Protection Act (1996)

 • Health plans must cover:
   • Hospital stays of 48 hours following a
     normal delivery or
   • Hospital stay of 96 hours following a
     delivery by cesarean section
 • Mother can decide to leave earlier
 • No incentives (to physicians or mothers)
   for shorter lengths of stay

  Page 36           MGMT 412 | Legal Issues   Fall 2008
Mental Health Parity Act (1998)
 • Does not require that mental health be covered in
   health plan, but.....
 • If you do cover mental health, dollar limits on
   coverage must be the same as for medical and
   surgical (except for substance / alcohol treatment)
 • You can:
     • Have higher copays or limit the number of visits for mental
       health benefits
     • Limit the number of covered visits, even if the plan does not
       impose similar visit limits for medical and surgical benefits



  Page 37                   MGMT 412 | Legal Issues           Fall 2008
Women’s Health and Cancer Rights
Act (1998)

 • If health plan pays for mastectomy,
   must also pay for prostheses and
   reconstructive surgery
 • Many states mandate coverage for
   screening mammograms




  Page 38         MGMT 412 | Legal Issues   Fall 2008
Safety
• OSHA (1974)
  • Established standards for employee safety
  • Addresses on-the-job injuries and occupational
    illnesses
• Hazardous Communication Standard
  • Requires Manufacturers’ Safety Data Sheets
• OSHA requires recordkeeping and site
  inspections


 Page 39              MGMT 412 | Legal Issues    Fall 2008
Labor Relations
• Very much a specialist area
• Federal laws
    • Norris-LaGuardia Act (1932)
    •  Wagner Act (1935)
    • Taft-Hartley Act (1947)
    • Landrum-Griffith Act (1959)
    • Proposed: Employee Free Choice Act
• State laws
    • Right-to-work laws (union shop illegal)




 Page 40                   MGMT 412 | Legal Issues   Fall 2008
    Right to Work States




Source: http://www.nrtw.org. Note that this is a partisan source – the map is the only one I can find, though.


          Page 41                               MGMT 412 | Legal Issues                           Fall 2008

				
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