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Chapter 2: The Legal Environment
Chapter 2
The Legal Environment
Learning Objectives
Opening Case: Unequal Pay for Equal Work?
Chapter Outline
Closing Case: Power Plays at Work
Discussion Questions
Additional Resource: The Supreme Court’s Decision on Affirmative Action in Fisher v.
University of Texas, No. 14–981
Learning Objectives
After studying this chapter, students should be able to accomplish the objectives given below.
2. Identify key laws that prohibit discrimination in the workplace and discuss equal
employment opportunity
4. Discuss the importance to an organization of evaluating its legal compliance
Opening Case: Unequal Pay for Equal Work?
Case Summary
Men and women with comparable credentials, comparable experience, and comparable
performance ratings performing the same tasks should make comparable pay, right? But while it
may seem logical, in reality, men tend to make more than women even when there are no
obvious reasons for the discrepancy. Nor is this pattern new. Indeed, Title VII of the Civil Rights
Act of 1964 broadly outlawed discrimination on the basis of gender in any aspect of the
employment relationship (which would obviously include pay) and the Equal Pay Act of 1963
specifically stipulates that organizations must pay the same wages to men and women who are
doing equal work.
For years, experts attributed the problem to two things. First, some organizations have continued
to practice outright discrimination. Some managers, for instance, either intentionally or
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Chapter 2: The Legal Environment
unconsciously, may tend to reward men more if they are seen as the family “breadwinner” and
reward women less if they are seen as providing only “secondary income.” Another long-
standing explanation is the so-called “mommy track” phenomenon. The premise here is that even
Think It Over
1. Suppose you offer a woman a job for $80,000, and she accepts it. You then offer a similar
job to a man for $80,000. He demands $85,000, and you agree to pay him that amount.
Should you now go back and adjust the woman’s salary? Why, or why not?
2. Richard Branson’s Virgin Hotels Group has a policy that half of all management positions
must be filled by women. Do you agree or disagree with this kind of policy? Why?
Students’ answers will vary. Some students may agree with such kind of policy because it
Chapter Outline
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Chapter 2: The Legal Environment
Introduction
Managing within the complex legal environment that affects human resource (HR) practices
requires a full understanding of that legal environment and the ability to ensure that others within
the organization also understand it.
I. The Legal Context of Human Resource Management
The legal context of HRM is shaped by different forces. The catalyst for modifying or enhancing
the legal context may be legislative initiative, social change, or judicial rulings. Thus, the
regulatory environment itself is quite complex and affects different areas within the HRM
process.
A. The Regulatory Environment of Human Resource Management
The legal and regulatory environment of HRM in the United States emerges as a result of a
three-step process. First is the actual creation of new regulation. This regulation can come in
the form of new laws or statutes passed by national, state, or local government bodies;
II. Equal Employment Opportunity
Regulations exist in almost every aspect of the employment relationship. As illustrated in Figure
2.1 of the text, equal employment opportunity intended to protect individuals from illegal
discrimination is the most fundamental and far-reaching area of the legal regulation of HRM. In
one way or another, almost every law and statute governing employment relationships is
essentially attempting to ensure equal employment opportunity.
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Chapter 2: The Legal Environment
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provide equal protection for all citizens of the United States. The Reconstruction Civil Rights
Acts of 1866 and 1871 further extended protection offered to people under the Thirteenth and
Fourteenth Amendments, and together with those amendments, these laws still form the basis for
present-day federal court actions that involve the payment of compensatory and punitive
damages.
A. Discrimination and Equal Employment Opportunity
The basic goal of all equal employment opportunity regulation is to protect people from unfair
or inappropriate discrimination in the workplace. It is also instructive to note that
discrimination per se is not illegal. As long as the basis for this discrimination is purely job
related, however, such an action is legal and appropriate when based on performance or
seniority and when applied objectively and consistently. 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
The most significant single piece of legislation specifically affecting the legal context for
HRM to date has been Title VII of the Civil Rights Act of 1964. Title VII of the act states
that it is illegal for an employer to fail or refuse to hire any individual, to discharge any
individual, or to discriminate in any other way against any individual with respect to any
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,
color, religion, sex, national origin, age, or disability status. To prove discrimination in this
situation, an individual filing a charge must demonstrate that there was a discriminatory
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Chapter 2: The Legal Environment
motive; that is, the individual must prove that the organization considered the individual’s
protected class status when making the decision.
Disparate Impact
A second form of discrimination is disparate impact discrimination that occurs when an
apparently neutral employment practice disproportionately excludes a protected group
from employment opportunities. This argument is the most common for charges of
discrimination brought under the Civil Rights Act.
One of the first instances in which disparate impact was defined involved a landmark legal
case, Griggs v. Duke Power. Following the passage of Title VII, Duke Power initiated a
new selection system that required new employees to have either a high school education
or a minimum cutoff score on two specific personality tests. Griggs, a black male, filed a
A plaintiff might be able to demonstrate disparate impact by relying on geographical
comparisons. These involve comparing the characteristics of the potential pool of
qualified applicants for a job (focusing on characteristics such as race, ethnicity, and
gender) with those same characteristics of current employees in the job.
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Chapter 2: The Legal Environment
Finally, the McDonnell-Douglas test, named for a Supreme Court ruling in McDonnell-
1. The applicant is a member of a protected class.
3. The individual was turned down for the job.
4. The company continued to seek other applicants with the same qualifications.
Pattern or Practice Discrimination
The third kind of discrimination that can be identified is pattern or practice
discrimination. This form of disparate treatment occurs on a classwide or systemic basis.
Specifically, Section 707 of Title VII states that such a lawsuit can be brought if there is
reasonable cause to believe that an employer is engaging in pattern or practice
discrimination.
Retaliation
A final form of discrimination that has become more prevalent in recent years is retaliation.
Retaliation refers to an organization taking some action against an employee who has
Employer Defense
The defendant (usually an organization) must be able to prove that decisions were made so
that the persons most likely to be selected (or promoted or given a pay raise) are those who
are most likely to perform best on the job (or who have already performed best on the job).
This situation is also referred to as validation of the practice in question.
B. Protected Classes in the Workforce
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Chapter 2: The Legal Environment
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 make up any affirmative action program.
• The first element is called the utilization analysis and is a comparison of the racial, sex,
and ethnic composition of the employer’s workforce compared to that of the available
labor supply. If the percentage in the employer’s workforce is considerably less than the
percentage in the external labor supply, then that minority group is characterized as
remove inappropriate barriers to employment.
Reverse discrimination refers to a practice that has a disparate impact on members of
nonprotected classes. Thus, charges of reverse discrimination typically stem from the belief
by white males that they have suffered because of preferential treatment given to other
groups. The text discusses two most famous court cases in this area to illustrate how
violated the rights of a group of white firefighters when it 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.
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Chapter 2: The Legal Environment
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.
One type of sexual harassment is quid pro quo harassment. In this case, the harasser offers
to exchange something of value for sexual favors. But a more subtle (and probably more
common) type of sexual harassment is the creation of a hostile work environment, and this
situation is not always so easy to define. For example, a group of male employees who
continually make off-color jokes and lewd comments and perhaps decorate the work
environment with inappropriate photographs may create a hostile work environment for a
female colleague to the point where she is uncomfortable working in that job setting. In
Meritor Savings Bank v. Vinson, the Supreme Court noted that a hostile work environment
constitutes sexual harassment, even if the employee did not suffer any economic penalties or
was not threatened with any such penalties.
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Chapter 2: The Legal Environment
E. Other Equal Employment Opportunity Legislation
In addition to the Civil Rights Act of 1964, a large body of supporting legal regulations has
also been created in an effort to provide equal employment opportunity for various protected
classes of individuals.
The Lilly Ledbetter Fair Pay Act of 2009
The Equal Pay Act clearly outlaws differential pay for male and female employees doing
essentially the same job. The Lilly Ledbetter Fair Pay Act of 2009 corrected the time
The Equal Pay Act of 1963
The Equal Pay Act of 1963 requires that organizations provide the same pay to men and
women doing equal work. The law does allow for pay differences when there are
legitimate, job-related reasons for pay differences such as difference in seniority or merit.
The Age Discrimination in Employment Act
The Age Discrimination in Employment Act (ADEA) was passed in 1967 and amended
in 1986. The ADEA prohibits discrimination against employees 40 years of age and older.
The Pregnancy Discrimination Act of 1979
As its name suggests, the Pregnancy Discrimination Act of 1979 was passed to protect
pregnant women from discrimination in the workplace. The law requires that the pregnant
woman be treated like any other employee in the workplace. Therefore, the act specifies
that a woman cannot be refused a job or promotion, fired, or otherwise discriminated
Chapter 2: The Legal Environment
against simply because she is pregnant (or has had an abortion). She also cannot be forced
to leave employment with the organization as long as she is physically able to work.
The Civil Rights Act of 1991
The Civil Rights Act of 1991 was passed as a direct amendment to Title VII of the Civil
Rights Act of 1964. It also reinforces the illegality of making hiring, firing, or promotion
decisions on the basis of race, gender, color, religion, or national origin; it also includes the
The Americans with Disabilities Act of 1990
The Americans with Disabilities Act of 1990 (ADA) is another piece of equal
employment legislation that has greatly affected HRM. Specifically, the ADA prohibits
discrimination based on disability in all aspects of the employment relationship such as job
application procedures, hiring, firing, promotion, compensation, and training, as well as
other employment activities such as advertising, recruiting, tenure, layoffs, leave, and
benefits. In addition, the ADA requires that organizations make reasonable
accommodations for disabled employees as long as they do not pose an undue burden on
the organization.
The ADA defines a disability as (1) a mental or physical impairment that limits one or
more major life activities, (2) a record of having such an impairment, or (3) being regarded
as having such an impairment. Clearly included within the domain of the ADA are
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Chapter 2: The Legal Environment
accommodate individuals confined to a wheelchair. A series of court decisions have
worked to actually narrow the protection offered by the ADA. For example, in 1999 the
U.S. Supreme Court ruled that individuals who can correct or overcome their disabilities
through medication or other means are not protected by the ADA.
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 with more than
fifty employees to provide as many as 12 weeks of unpaid leave for employees (1) after the
birth or adoption of a child; (2) to care for a seriously ill child, spouse, or parent; or (3) if
The Religious Freedom Restoration Act of 1993
This law was passed to reverse a 1990 Supreme Court ruling that set a looser standard for
laws that restrict religious practices. The law restored the old standard preventing the