CHAPTER 2
The Legal Environment
Learning Objectives
After studying this chapter, the student should be able to:
1. Describe the legal context of human resource management.
Chapter Outline
Opening Case: Collective Bargaining or Collective Begging?
A new Wisconsin law limited public-sector unions to bargaining only on the issue of base pay. It
also pegged raises to the Consumer Price Index. The overall effect of the new measures was a cut
in take-home pay of about 8 percent. The Wisconsin law does not apply to private-sector unions,
Introduction
Managing within the complex legal environment that affects human resource practices requires a
full understanding of that legal environment and the ability to ensure that others within the
organization understand it as well.
I. The Legal Context of Human Resource Management
The legal context of human resource management is shaped by different forces. The catalyst for
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HRM process.
A. The Regulatory Environment of Human Resource Management
Regulation consists of three steps—creation of the new regulation, enforcement, and
implementation in organizations—that are elaborated as follows:
• Regulation can come in the form of new laws or statutes passed by national, state, or,
II. Equal Employment Opportunity
Regulations exist in almost every aspect of the employment relationship. As is illustrated in
Figure 2.1, equal employment opportunity intended to protect individuals from illegal
discrimination and is the most fundamental and far-reaching area of the legal regulation of
A. Discrimination and Equal Employment Opportunity
It is instructive to note that discrimination per se is not illegal. As long as the basis for this
discrimination is purely job-related. Illegal discrimination is the result of behaviors or
actions by an organization or managers within an organization that cause members of a
protected class to be unfairly differentiated from others.
Title VII of the Civil Rights Act of 1964
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The most significant single piece of legislation specifically affecting the legal context for
human resource management to date has been Title VII of the Civil Rights Act of 1964.
Disparate Treatment
Disparate treatment discrimination exists when individuals in similar situations are
treated differently and when the differential treatment is based on the individual’s race,
A bona fide occupational qualification (BFOQ) states that a condition like race, sex, or
other personal characteristic legitimately affects a person’s ability to perform the job, and
Disparate impact
A second form of discrimination is disparate impact discrimination that occurs when an
apparently neutral employment practice disproportionately excludes a protected group
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The most common approach to establish a prima facie case relies on the so-called four-
fifths rule. The four-fifths rule suggests that disparate impact exists if a selection criterion
(such as a test score) results in a selection rate for a protected class that is less than four-
fifths (80 percent) of that for the majority group.
A plaintiff might be able to demonstrate disparate impact by relying on so-called
The McDonnell-Douglas test, named for a Supreme Court ruling in McDonnell-Douglas
v. Green, is another basis for establishing a prima facie case. Four steps are part of the
McDonnell-Douglas test:
Pattern or Practice Discrimination
The third form of discrimination that can be identified is patterns or practice
Retaliation
A final form of discrimination that has become more prevalent in recent years is retaliation.
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might work.
Employer Defense
The defendant (usually an organization) must be able to prove that decisions were made so
B. Protected Classes in the Workforce
A protected class consists of all individuals who share one or more common characteristics
C. Affirmative Action and Reverse Discrimination
Affirmative action refers to positive steps taken by an organization to seek qualified
employees from underrepresented groups in the workforce. When affirmative action is part of
a remedy in a discrimination case, the plan takes on additional urgency and the steps are
somewhat clearer. Three elements makes up any affirmative action program, which are as
follows:
• Utilization analysis is a comparison of the racial, sex, and ethnic composition of the
Reverse discrimination refers to a practice that has a disparate impact on members of
nonprotected classes. They typically stem from the belief by white males that they have
suffered because of preferential treatment given to other groups. This issue is complicated.
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The concept of affirmative action is increasingly being called into question. In a more recent
case (Ricci v. Stefano, 2009), the Supreme Court ruled that the city of New Haven,
Connecticut, violated the rights of a group of white firefighters when they decided to discard
the results of a recent promotion exam that was shown to have disparate impact. The white
firefighters subsequently sued the city for reverse discrimination.
HR in the 21st Century: The Role of Power in Sexual Harassment
In 2012, nearly 13,000 charges of sexual harassment were filed with the U.S. Equal
Employment Opportunity Commission (EEOC), 84 percent of them by women. According
D. Sexual Harassment at Work
Sexual harassment is defined by the EEOC as unwelcome sexual advances in the work
environment. If the conduct is indeed unwelcome and occurs with sufficient frequency to
create an abusive work environment, the employer is responsible for changing the
environment by warning, reprimanding, or perhaps firing the harasser.
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with any such penalties.
Although most sexual harassment cases involve men harassing women, there are, of course,
many other situations of sexual harassment that can be identified. Females can harass men and
E. Other Equal Employment Opportunity Legislation
The Lilly Ledbetter Fair Pay Act of 2009
The Equal Pay Act clearly outlaws differential pay for male and female employees doing
The Equal Pay Act of 1963
The Equal Pay Act of 1963 requires that organizations provide the same pay to men and
The Age Discrimination and Employment Act
The Age Discrimination and Employment Act (ADEA) was passed in 1967 and
amended in 1986. The ADEA prohibits discrimination against employees forty years of
The Pregnancy Discrimination Act of 1978
The Pregnancy Discrimination Act of 1978 was passed to protect pregnant women from
discrimination in the workplace. The act specifies that a woman cannot be refused a job or
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The Civil Rights Act of 1991
The Civil Rights Act of 1991 was passed as a direct amendment to Title VII of the Civil
The Americans with Disabilities Act of 1990
The Americans with Disabilities Act of 1990 (ADA) prohibits discrimination based on
disability in all aspects of the employment relationship. The ADA also requires that
employers make reasonable accommodations for disabled employees as long as they don’t
pose an undue burden on the organization.
The reasonable accommodation stipulation adds considerable complexity to the job of
human resource manager and other executives in organizations. Clearly, for example,
organizations must provide ramps and automatic door-opening systems to accommodate
individuals confined to a wheelchair. In 1999 the U.S. Supreme Court ruled that
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In June 2009, the EEOC finally voted on a set of guidelines to be used with the new law.
The Family and Medical Leave Act of 1993
The Family and Medical Leave Act of 1993 was passed in part to remedy weaknesses in
the Pregnancy Discrimination Act of 1979. The law requires employers of fifty or more
Regulations for Federal Contractors
All banks and most universities would qualify as federal contractors. Executive Order
Executive Order 11478 required the federal government to base all of its own employment
policies on merit and fitness and specifies that race, color, sex, religion, and national origin
should not be considered. The Vocational Rehabilitation Act of 1973 requires that
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Vietnam-era veterans are specifically defined as those serving as members of the U.S.
armed forces between August 5, 1964, and May 7, 1975.
Discrimination on the Basis of Sexual Orientation
Sexual orientation discrimination refers to being treated differently because of one’s real or
perceived sexual orientation—whether gay, lesbian, bisexual, or heterosexual. There is no
couples are afforded.
F. Enforcing Equal Employment Opportunity
The Equal Employment Opportunity Commission (EEOC) was created by Title VII of the
1964 Civil Rights Act and today is given specific responsibility for enforcing Title VII, the
Equal Pay Act, and the Americans with Disabilities Act. The EEOC has following three major
functions:
• Investigating and resolving complaints about alleged discrimination
The first function is illustrated in Figure 2.3, which depicts the basic steps that an individual
who thinks she has been discriminated against in a promotion decision might follow to get her
complaint addressed. If the EEOC believes that discrimination has occurred, then its
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decisions are violations of the law enforced by the EEOC. The OFCCP conducts yearly audits
of government contractors to ensure that they have been actively pursuing their affirmative
contracts with that organization.
III. Other Areas of Human Resource Regulation
A. Legal Perspectives on Compensation and Benefits
The Fair Labor Standards Act (FLSA), passed in 1938, established a minimum hourly
wage for jobs. The first minimum wage was $0.25 per hour. The FSLA also established the
B. Legal Perspectives on Labor Relations
The National Labor Relations Act, or Wagner Act, was passed in 1935 in an effort to
control and legislate collective bargaining between organizations and labor unions, granting
significant rights to workers and unions. The Labor Management Relations Act (Taft-
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C. Employee Safety and Health
The basic premise of the Occupational Safety and Health Act of 1970 (OSHA), also known as
the general duty clause, is that each employer has an obligation to furnish each employee with
D. Drugs in the Workplace
The Drug-Free Workplace Act of 1988 was passed to reduce the use of illegal drugs in the
workplace. This law applies primarily to government employees and federal contractors, but it
E. Plant Closings and Employee Rights
The Worker Adjustment and Retraining Notification (WARN) Act of 1988 stipulates that
an organization with at least 100 employees must provide notice at least 60 days in advance of
F. Privacy Issues at Work
The Privacy Act of 1974, applies directly to federal employees only, but it has served as the
impetus for several state laws. This legislation allows employees to review their personnel
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IV. Evaluating Legal Compliance
The assurance of compliance with the law can best be achieved through a three-step process,
which are as follows:
• To ensure that managers clearly understand the laws that govern every aspect of human
Closing Case: Managers in Name Only?
Case Summary
Although the Fair Labor Standards Act requires employers to pay time and a half to workers who
work more than forty hours a week, salaried managers, administration, and professionals are
exempt from the rule. RadioShack, the Chicago Police Department, and Verizon all have faced
Case Questions
1. From a management perspective, what are the key issues in this case?
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Students’ answers will vary. Some of them may mention the following—what an employer
can expect of its employees in relation to what it pays them, the lines between different
kinds of work have blurred because the nature of so many jobs has changed, and The Fair
Labor Standards Act specifically exempts those in executive, administrative, or
professional jobs from overtime payments.
2. How might you respond if your employer (current or future) directly or indirectly requires
you to work extra hours with no additional compensation?
Students’ opinions will vary.
3. What might you as a manager do to ensure your employees never feel compelled to work
“off the clock?”
Students’ answers will vary. Some of them may say that work should be planned and
distributed in such a way that employees never feel compelled to work “off the clock.”
Discussion Questions
1. Describe the process through which the legal context of human resource management is
created.
The legal context of human resource management is shaped by a variety of forces.
2. Summarize the role of the Thirteenth and Fourteenth Amendments to the U.S. Constitution
in equal employment opportunity.
The Thirteenth Amendment, abolishing slavery, was the beginning of the long road toward
equal employment opportunity for African-American citizens of the United States. The
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3. What is illegal discrimination? What is legal discrimination?
Discrimination is the failure to treat people equally. The law requires that employers treat
4. Identify and summarize the various forms of illegal discrimination.
Disparate treatment is intentionally treating employees or applicants differently because of
their race, color, sex, religion, national origin, age, or disability status. Bona fide
occupational qualifications are rare exceptions when sex, religion, age, or national origin
5. Identify and summarize five major laws that deal with equal employment opportunity.
Title VII of the Civil Rights Act of 1964 prohibits discrimination in a broad range of
employment actions on the basis of race, color, sex, religion, or national origin. Executive
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6. Why is most employment regulation passed at the national level, as opposed to the state or
local level?
States and localities compete with each other in attracting businesses. Laws and regulations
that restrict the freedom of employers may be viewed as undesirable and result in a
7. Which equal employment opportunity laws will likely affect you most directly when you
finish school and begin to look for employment?
If one is a member of a protected group, one may be encouraged by the fact that employers
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8. Which equal employment opportunity law do you think is most critical? Which do you think
is least critical today?
Students will answer this question from their own perspective. It would be interesting if
9. Which equal employment opportunity law do you think is the most difficult to obey? Which
do you think is easiest to obey?
The laws that are the most difficult to obey are the ones that are the least clear. The
10. In the case of a conflict between a legal and an ethical consequence of a human resource
decision, which do you think should take precedence?
A person cannot justify breaking the law by reference to ethical behavior. However, it is
Ethical Dilemmas in HR Management
Scenario summary
Assume that one overhears that an OSHA inspector will inspect his or her place of employment
Questions
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1. What are the ethical issues in this situation?
One issue is whether the plant manager should spend the extra resources to fix the hazard
immediately or wait until it is less expensive to do so. There is room for disagreement as to
2. What are the pros and cons for keeping this information to yourself versus telling your
plant manager what you heard?
It may be illegal to warn the plant manager about the inspection, regardless of how one
3. What do you think most managers would do? What would you do?
Assignment
Purpose: Affirmative action was created as a way of directly and proactively attracting more
qualified members of protected classes into the workforce. Although most people believe that
affirmative action has served a useful function, some people now believe that it is no longer
Step 1: The instructor should ask the students to form groups of seven members each. Using a
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Step 3: Reconvene as a group of seven. The moderator will randomly select one side to present
Step 4: The moderator will then summarize the relative persuasiveness of each group regarding
the affirmative action issue. In addition, the moderator should feel free to add whether or not
either group did not bring up any additional thoughts he or she had about the issue.