18 Part IV
Business Management and Governance
Chapter 20 Management: Employment Discrimination
18
CHAPTER 20
MANAGEMENT: EMPLOYMENT DISCRIMINATION
LECTURE OUTLINE
20-1 History of Employment Discrimination Law (See Exhibit 20.1 and PowerPoint Slides 20-1, 20-2 and 20-3)
· No Protection Under Common Law (See PowerPoint Slide 20-4)
· Civil Rights Act of 1866 (not really effective)
· Equal Pay Act of 1963
· Title VII of the Civil Rights Act of 1964 (See PowerPoint Slide 20-5)
· Prohibited discrimination in employment on the basis of race, color, religion, sex, or national origin
· Amended by the Equal Employment Opportunity Act of 1972
· EEOC created
· Federal courts given jurisdiction for suits
· Amended by the Pregnancy Discrimination Act
· 1975
· Prohibited discrimination on the basis of pregnancy or childbirth
· Age Discrimination Act of 1967 (See PowerPoint Slide 20-6)
Expanded Title VII protections to include age
· Rehabilitation Act of 1973
Prohibits federal contractors from discriminating against the handicapped
· Americans with Disabilities Act of 1990
Provides protection for workers with disabilities and imposes requirements for access
· Family and Medical Leave Act (See PowerPoint Slide 20-7)
Right to 12 weeks unpaid leave for family medical emergency
· Title II of the Genetic Information Nondiscrimination Act of 2008 (See PowerPoint Slide 20-8)
Prohibits employers from discriminating on the basis of genetic information (due to concerns about health care costs and attendance)
· Lilly Ledbetter Fair Pay Act
Effect is to change U.S. Supreme Court decision that imposed a 180-day statute of limitations on pay discrimination cases; law changed to allow recovery for 180 days AFTER the discovery of the discrimination, i.e., after the last paycheck
· Executive Orders
Apply to agencies and federal contractors
20-2 Employment Discrimination: Title VII of the Civil Rights Act (Fair Employment Practices Act)
· Prohibits Discrimination on Basis of (See PowerPoint Slide 20-9):
· Race
· Color
· Religion
· National origin
· Sex
· Pregnancy
20-2a Application of Title VII (See PowerPoint Slide 20-10)
· Groups covered
· Employers with 15 or more employees (for at least 20 calendar weeks)
· Labor unions with 15 members and/or a hiring hall
· Employment agencies that work for covered employers
· Any labor union or employment agency with 15 or more employees
· State and local agencies
NOTE: All of the above must be involved in interstate commerce but, as noted in Chapter 5, that is easy to establish.
· Noncovered employers (See PowerPoint Slide 20-11)
· Employment of aliens outside the United States
· Religious corporations, and so on when hiring for religious positions
· Congress
· Federal government (they have a separate scheme)
· Indian tribes
20-2b Employment Procedures Covered (See PowerPoint Slide 20-12)
· Hiring
· Compensation
· Training
· Promotion
· Demotion
· Transfers
· Fringe benefits
· Rules
· Working conditions
· Dismissals
· For employment agencies – referrals
20-3 Theories of Discrimination Under Title VII
20-3a Disparate Treatment (See PowerPoint Slide 20-13)
· Treating employees or potential employees differently on the basis of race
· McDonnell Douglas v. Green established the required elements (U.S. Supreme Court)
· Plaintiff belongs to a minority
· Plaintiff applied for and was qualified for job
· Plaintiff was rejected (despite qualifications)
· Job remained open
· Employer’s burden of proof to show nondiscriminatory reason for the nonhire
See PowerPoint Slide 20-14.
CASE BRIEF 20.1
Chescheir v. Liberty Mutual Ins. Co.
713 F.2d 1142 (5th Cir.1983)
FACTS: Liberty Mutual prohibits its adjustors and firstyear supervisors from attending law school. Joan Chescheir (an adjustor) was fired in 1976 after she admitted she attended law school. Charity O’Connell, another employee, was also fired. However, Liberty’s house counsel in Houston attended law school while working as an adjustor and was hired as house counsel upon his graduation, and two other male employees were attending law school at the time Chescheir and O’Connell were fired. Chescheir and O’Connell filed complaints with the EEOC.
DECISION BELOW: The trial court found that Liberty had violated Title VII and awarded the two women back pay.
ISSUE ON APPEAL: Does Title VII apply to work rules and their application?
DECISION: Yes, there was a prima facie case. They were members of a protected group and treated differently.
20-3b Disparate Impact (See PowerPoint Slides 20-15 and 20-16)
· Not intentional discrimination
· Rule results in different effect on groups
Example: Dothard v. Rawlinson – minimum height and weight requirement for prison guards had the effect of eliminating women
· Mostly statistical cases showing impact
· In Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642 (1989), the Supreme Court put greater burdens of proof on Title VII plaintiffs
· In response to Wards Cove case, the U.S. Senate and House passed the Civil Rights Act of 1991 that has been called a “quota bill.” Key provisions of the bill include a provision for jury trials in discrimination cases. This provision carried strong employer objections because presently only the Age Discrimination Act carries jury trial requirements and employees have been quite successful with recoveries under the Act due to the jury sympathy factor of “someday I’ll be that age too.” The act provides for compensatory damages whereas now the only remedies are back pay and reinstatement. In direct response to the Wards Cove decision the legislation requires employers to carry the burden of business necessity in establishing a defense to a Title VII case.
· 1991 Amendments also require the plaintiff employee to show causation between the practice of the employer and the disparate impact
· Case law now clarifies the meaning of disparate impact and the level of proof required
See PowerPoint Slide 20-17.
· Disparate impact and class action suits
Not all cases are recognized for class actions (Wal-Mart case)
20-3c Pattern or Practice of Discrimination (See PowerPoint Slide 20-18)
Generally involves a statistical comparison
Example: Thirty-eight percent of work force in a community is black; six percent of an employer’s work force is black
ANSWER TO CONSIDER 20.3:
The court held that the numbers alone do not establish discrimination – the statistics cases allow the employer to rebut the case on the grounds that it is not discriminating, but has factual circumstances that result in the stats. For example, the waterfront card was a barrier to entry for minority applicants – they were not as likely to go through that upfront process when they did not first have a job. Also, FAPS was required to hire certain car company employees – from Nissan, etc., as quality control employees on vehicle processing. Also, FAPS was advertising in technical schools and through state-sponsored job programs so it was actively recruiting, but there were no takers. The court held that there would have to be proof of discrimination on a case-by-case basis and not on the numbers themselves. EEOC v. FAPS, Inc., 2014 WL 4798802 (D.N.J.).
20-4 Specific Applications of Title VII
20-4a Sex Discrimination (See PowerPoint Slide 20-19)
· “Protective” legislation is prohibited
Examples: Lifting (30 lbs.) restrictions, safety restrictions, height/weight requirements
· Proof same as under Green
· Ads cannot specify male or female
· Glass ceiling issues
· “Mixed motives” in making decisions
· If race, gender, and so forth were a factor, it is discrimination
· Glass Ceiling Act – allows funding for research into why there is a problem
· Sexual Harassment (See PowerPoint Slides 20-20 and 20-21)
· Covered by EEOC guidelines
· Employers must have policies on harassment
· Types of offenses
· Demands for sexual favors – “quid pro quo”
· Environment of sexual suggestion
· Hostile conduct for refusal to provide sexual favors
· Verbal or physical suggestions
· Cannot be fired for refusal to accept sexual advances
· Managers and companies have liability for failure to take action on complaints of sexual harassment
See PowerPoint Slide 20-22.
CASE BRIEF 20.3
Burlington Industries, Inc. v. Ellerth
524 U.S. 742 (1998)
FACTS: Kimberly Ellerth was a salesperson with Burlington. Her interaction with her supervisor was as follows:
Summer 1993 While on a business trip, Ellerth accepted Slowik’s invitation to the hotel lounge. Slowik made remarks about Ellerth’s breasts, told her to “loosen up” and said, “You know, Kim, I could make your life very hard or very easy at Burlington.”
March 1994 Ellerth was being considered for a promotion and Slowik expressed concern during the interview that she was not “loose enough.” Slowik then reached out and rubbed her knee.
March 1994 Slowik called Ellerth to give her the promotion and said, “You’re gonna be out there with men who work in factories, and they certainly like women with pretty butts/legs.”
May 1994 Ellerth called Slowik for permission to insert a logo into a fabric sample. Slowik said, “I don’t have time for you right now, Kim – unless you want to tell me what you’re wearing.” Ellerth ended the call.
May 1994 Ellerth called again for permission and Slowik said, “Are you wearing shorter skirts yet, Kim, because it would make your job a whole heck of a lot easier.”
Ellerth never told anyone of these incidents, nor did she complain about them. Ellerth quit after a supervisor reprimand and then filed suit against Burlington for sexual harassment.
DECISION BELOW: The District Court held Slowik’s conduct constituted an atmosphere of harassment but that Burlington did not know or should have known. The Court of Appeals reversed and imposed vicarious liability.
ISSUE ON APPEAL: Are employers vicariously liable for social harassment?
DECISION: Yes, employers are held liable.
ANSWER TO CONSIDER 20.4:
1. Atmosphere of harassment. Gleason v. Mesirow Financial, Inc., 118 R.3d 1134 (7th Cir. 1997).
2. Harassment. Brill v. Lante, 119 R.3d 1266 (7th Cir. 1997).
3. Surprisingly, the court held that there was not an atmosphere of harassment because after these incidents, the manager asked the employee out for drinks, the employee declined, and the comments and touching stopped. There were other aspects to the case that involved religious issues (working on Sunday), but there were performance issues and no claim that he was treated differently – the case is a surprising one in its conclusions. In fact, the company got a summary judgment and the case was dismissed. Underlying the conduct, there must be some form of discrimination and not just a claim based on a termination for cause. McElroy v. American Family Insurance Co., 51 F.Supp.3d 1093 (D. Utah 2015).
4. The court held that an isolated comment here and there on sexual issues is not harassment, but an ongoing pattern of such statements and conversations would be harassment. In the case, the court found two isolated comments and held that they were not sufficient for a harassment claim. Fugett v. Security Transport Services, Inc., 147 F.Supp.3d 1216 (D. Kan. 2015).
5. Atmosphere of harassment. Penry v. Federal Home Loan Bank of Topeka, 970 F.Supp. 833 (D. Kan. 1997).
FOR THE MANAGER’S DESK − ROMANCE AT WORK:
Cover the various rules:
1. No romances between employees.
2. Inform the company.
3. Cannot continue to work in the area or if there is a reporting line.
4. Inform employees of risk and possible sexual harassment issues
5. Adulterous relationships present difficult issues for everyone.
· Sex discrimination and pensions – City of LA Department of Water v. Manhart – females cannot be required to pay more to pension plans
· Pregnancy Discrimination Act (See PowerPoint Slide 20-23)
· Pregnancy Discrimination Act of 1978 added to Title VII
· Coverage and protections
· Can’t require pregnant employee to quit
· Cannot demote upon return to work
· Cannot refuse to allow employee to return to work
· Same sick rules for pregnancy as other ailments
· Same insurance coverage
· No promotion or hiring refusals because of pregnancy
See PowerPoint Slide 20-24.
CASE BRIEF 20.4
International Union v. Johnson Controls, Inc.
499 U.S. 187 (1991)
FACTS: Johnson Controls adopted a policy that prohibited women who are pregnant or capable of bearing children from holding jobs involving lead exposure. Several employees (male and female) filed suit alleging the policy violated Title VII.
DECISION BELOW: The District Court entered summary judgment for Johnson. The Court of Appeals affirmed.
ISSUE ON APPEAL: Was the restriction on area of employment a violation of Title VII?
DECISION: Yes. It is a sex-based classification that does not apply to males who are affected as well by exposure to lead.
BUSINESS STRATEGY − DANGEROUS EXPOSURE:
Discuss the need for legislation on tort immunity for Title VII compliance.
20-4b Religious Discrimination (See PowerPoint Slide 20-25)
· Permitted when religious organization is hiring people as pastors and so on
· Employers must make reasonable accommodations for employees
Examples: Ansonia v. Philbrook, TWA v. Hardison
· Reasonable accommodation
· Need not burden other employees
· Need not restructure workplace or schedule
CASE BRIEF 20.5
EEOC v. Abercrombie & Fitch Stores, Inc.
135 S.Ct. 2028 (2015)
FACTS: Abercrombie & Fitch Stores, Inc. (Respondent), operates several lines of clothing stores, each with its own “style.” Consistent with the image Abercrombie seeks to project for each store, the company imposes a Look Policy that governs its employees’ dress. The Look Policy prohibits “caps” – a term the Policy does not define – as too informal for Abercrombie’s desired image.
Samantha Elauf is a practicing Muslim who, consistent with her understanding of her religion’s requirements, wears a headscarf. She applied for a position in an Abercrombie store and was interviewed by Heather Cooke, the store’s assistant manager. Using Abercrombie’s ordinary system for evaluating applicants, Cooks gave Elauf a rating that qualified her to be hired; Cooke was concerned, however, that Elauf’s headscarf would conflict with the store’s Look Policy.
Cooke sought the store manager’s guidance to clarify whether the headscarf was a forbidden “cap”. When this yielded no answer, Cooke turned to Randall Johnson, the district manager. Cooke informed Johnson that she believed Elauf wore her headscarf because of her faith. Johnson told Cooke that Elauf’s headscarf would violate the Look Policy, as would all other headwear, religious or otherwise, and directed Cooke not to hire Elauf.
The EEOC sued Abercrombie on Elauf’s behalf, claiming that its refusal to hire Elauf violated Title VII. The District Court granted the EEOC summary judgment on the issue of liability (798 F.Supp.2d 1272 (N.D. Okla. 2011)), held a trial on damages, and awarded $20,000. The Tenth Circuit reversed and awarded Abercrombie summary judgment (731 F.3d 1106 (2013)). It concluded that ordinarily an employer cannot be liable under Title VII for failing to accommodate a religious practice until the applicant (or employee) provides the employer with actual knowledge of his need for an accommodation. The Supreme Court granted certiorari.
ISSUES: Is it discrimination to prohibit religious clothing in the workplace when employees are required to wear certain types of clothing? Is it undue hardship to require an employer to waive its dress standards for religious accommodation?
DECISION: The District Court held that the employer did not have an affirmative defense to discrimination and that there were factual issues that needed to be tried in order to determine whether the employer had discriminated on the basis of religion.
ANSWER TO CONSIDER 20.5:
The district court granted summary judgment for Costco and Cloutier appealed. The court held that Costco had a reasonable policy that was grounded in professional appearance and had made a reasonable accommodation. Excerpts from the opinion appear below:
Cloutier asserts that the CBM mandate to be a confident role model requires her to display all of her facial piercings at all times. In her view, the only reasonable accommodation would be exemption from the no-facial-jewelry policy. Costco maintains that such an exemption would cause it to suffer an undue hardship, and that as a result it had no obligation to accommodate.
An accommodation constitutes an “undue hardship” if it would impose more than a de minimis cost on the employer. TransWorldAirlines, Inc. v Hardison, 432 U.S. 63, 84, 97 S.Ct. 2264, 53 L.Ed.2d 113 (1977). This calculus applies both to economic costs, such as lost business or having to hire additional employees to accommodate a Sabbath observer, and to non-economic costs, such as compromising the integrity of a seniority system.
Cloutier argues that Costco has not met its burden of demonstrating that her requested accommodation would impose an undue hardship. She asserts that she did not receive complaints about her facial piercings and that the piercings did not affect her job performance. Hence, she contends that any hardship Costco posits is merely hypothetical and therefore not sufficient to excuse it from accommodating her religious practice under Title VII.
Courts are “somewhat skeptical of hypothetical hardships that an employer thinks might be caused by an accommodation that never has been put into practice.” “Nevertheless, it is possible for an employer to prove undue hardship without actually having undertaken any of the possible accommodations . . .”
The district court acknowledged that “Costco has a legitimate interest in presenting a workforce to its customers that is, at least in Costco’s eyes, reasonably professional in appearance.” Costco’s dress code, included in the handbook distributed to all employees, furthers this interest. The preface to the code explains that, “Appearance and perception play a key role in member service. Our goal is to be dressed in professional attire that is appropriate to our business at all times. . . . All Costco employees must practice good grooming and personal hygiene to convey a neat, clean and professional image.”
It is axiomatic that, for better or for worse, employees reflect on their employers. This is particularly true of employees who regularly interact with customers, as Cloutier did in her cashier position. Even if Cloutier did not personally receive any complaints about her appearance, her facial jewelry influenced Costco’s public image and, in Costco’s calculation, detracted from its professionalism.
Costco is far from unique in adopting personal appearance standards to promote and protect its image. As the D.C. Circuit noted, “Perhaps no facet of business life is more important than a company’s place in public estimation. . .? Good grooming regulations reflect a company’s policy in our highly competitive business environment. Reasonable requirements in furtherance of that policy are an aspect of managerial responsibility.” Courts have long recognized the importance of personal appearance regulations, even in the face of Title VII challenges. Such regulations are often justified with regard to safety concerns. E.g., Bhatia v Chevron U.S.A., Inc., 734 F.2d 1382 (9th Cir. 1984) (affirming summary judgment for employer who refused to exempt a Sikh employee from the requirement that all machinists be clean-shaven, where the policy was based on the necessity of being able to wear a respirator with a gas-tight face seal because of potential exposure to toxic gases).
Courts considering Title VII religious discrimination claims have also upheld dress code policies that, like Costco’s, are designed to appeal to customer preference or to promote a professional public image.
Costco has made a determination that facial piercings, aside from earrings, detract from the “neat, clean and professional image” that it aims to cultivate. Such a business determination is within its discretion.
Cloutier argues that regardless of the reasons for the dress code, permitting her to display her facial jewelry would not be an undue hardship because Costco already overlooks other violations of its policy. In support of her position, she cites affidavits from two Costco employees identifying co-workers who “were allowed to wear facial piercing[s] . . . and were not disciplined.” Costco responds that any employees who displayed facial jewelry did so without its permission or knowledge, noting that constant monitoring is impossible in a facility with several hundred employees.
We find Cloutier’s contention, and the affidavits underlying it, unpersuasive. To the extent that the ambiguous term “allowed” implies that Costco was aware of the piercings, the affidavits are marred by an evidentiary flaw: the affiants do not appear to have personal knowledge of Costco’s awareness.
Costco’s offer of accommodation was manifestly reasonable as a matter of law.
The temporary covering of plaintiff’s facial piercings during working hours impinges on plaintiff’s religious scruples no more than the wearing of a blouse, which covers plaintiff’s tattoos. The alternative of a clear plastic retainer does not even require plaintiff to cover her piercings. Neither of these alternative accommodations will compel plaintiff to violate any of the established tenets of the CBM.
Affirmed. Cloutier v. Costco, 390 F.3d 126 (1st. Cir. 2004).
20-4c Racial Discrimination
· Some cases of reverse discrimination have been prohibited
Example: McDonald – cannot reinstate blacks while not reinstating whites after the same violations
· Employers can, however, institute affirmative action plans
Example: Patterson v. McClean Credit Union, 491 U.S. 164 (1989), a black woman worked at the McClean Credit Union as a teller and file coordinator for ten years until she was laid off. Section 1981 deals with discrimination in contract rights and nothing like that was at issue in her promotion or layoff. To recover for discrimination in her layoff, she has the burden of establishing purposeful discrimination. She could not succeed with such a claim by simply establishing that she was better qualified than a white clerk.
AFTERMATH: Again, the Civil Rights Act of 1990 contains provisions that negate the effect of the Patterson decision. First, section 1981 can now be used as a basis for employment discrimination charges and not just the hiring as noted by the court. This expansion will be helpful to employees of employers with less than fifteen employees. Since Title VII is applicable to only employers with fifteen or more employees, those employers with fewer than fifteen employees were not subject to Title VII and under the Patterson decision would not be subject to section 1981. Second, compensatory damages could be awarded to plaintiffs along with back pay and reinstatement, thus making it easier for attorneys to recoup fees.
20-5 Antidiscrimination Laws and Affirmative Action
20-5a What is Affirmative Action? (See PowerPoint Slide 20-26)
· Prohibits discrimination against any group
· Protects African-Americans, Hispanics, Native Americans, Asians, women, persons with disabilities, and Vietnam veterans
20-5b Who is Required to Have Affirmative Action Programs? (See PowerPoint Slide 20-27)
· Those who have been subject to court orders or consent decrees
· Those who are state and local agencies receiving federal funds
· Those who are colleges and universities receiving federal funds
· Government contractors
· Preparing an Affirmative Action Program (See PowerPoint Slide 20-28)
· Begin with equal employment opportunity statement
· Appoint an affirmative action officer
· Conduct an internal audit
· Establish overall goals and even goals for certain areas
20-5c Affirmative Action Backlash: The Theory of Reverse Discrimination (See PowerPoint Slide 20-29)
· California’s proposition to eliminate programs in government agencies (including universities)
· Adarand case requires affirmative action programs to withstand strict scrutiny – Supreme Court heard oral argument on the case that there was a compelling government interest in preferences, but issued no opinion letting the lower court decision stand in favor of the preferences
· Taxman v. Board of Education – reverse discrimination case settled before it reached U.S. Supreme Court
· Gratz v. Bollinger and Grutter v. Bollinger – two cases decided the same day with opposite results
· Fisher v. University of Texas at Austion (2013) – The U.S. Supreme Court sent the case back for retrial because the lower court had not applied a strict scrutiny standard and the court held that such a test was required when there was discrimination on the basis of race – even when the race was white, as in the case of Fischer
· Fisher v. University of Texas (2016) – The court held that the university had the right to create a diverse environment through affirmative action
20-6 Defenses to a Title VII Charge
20-6a Bona Fide Occupational Qualification (BFOQ) (See PowerPoint Slide 20-30)
· Qualification of sex or religion necessary for job
Examples: Pastor of Methodist churches must be Methodist, actors and actresses for parts
· Customer preference is not a BFOQ
20-6b Seniority or Merit Systems (See PowerPoint Slide 20-31)
· Valid defense to Title VII sometimes
· Must be bona fide
· Must apply to all employees
· Origins of the system cannot be discriminatory
· Cannot be used to perpetuate discrimination
20-6c Aptitude and Other Tests (See PowerPoint Slide 20-32)
· Tests must be validated
· Jobrelated
· Do not eliminate certain races
· Validate by following employees for correlation between test scores and job performance
20-6d Misconduct (See PowerPoint Slide 20-33)
· Defense that there was a valid reason for termination or different treatment
· Employer could even use misconduct by employee discovered after termination
See PowerPoint Slide 20-34.
CASE BRIEF 20.6
McKennon v. Nashville Banner Publishing Co.
524 U.S. 742 (1995)
FACTS: Christine McKennon, 62, was fired as part of a reduction in force at Nashville Banner (NB). During her last year McKennon had copied financial information (confidential) because she was concerned about her job. NB admitted discrimination but raised the defense of copying the documents as absolute grounds for termination.
DECISION BELOW: The district court granted summary judgment for NB. The court of appeals affirmed.
ISSUE ON APPEAL: To what extent is previous employee misconduct (after-acquired) a defense to Title VII charges of discrimination?
DECISION: Such misconduct is not an absolute defense. The employer must show the conduct was so extreme as to warrant dismissal.
20-7 Enforcement of Title VII
· EEOC is Responsible (See PowerPoint Slide 20-35)
· Five-member commission
· Appointed by president/approved by Senate
· No more than three from same party
20-7a Steps in an EEOC Case (See PowerPoint Slide 20-36)
· Complaint
· Filed by employee
· Must be done within 180 days from the violation
· Filed with EEOC or state agency
· Employer is notified of the charge
· EEOC has 180 days from filing of complaint to take action
· If case not settled within 180 days, employee gets right-to-sue letter
· Certifies administrative remedies are exhausted
· Employee can go to federal court
· In Ledbetter v. Goodyear, 550 U.S. 618 (2007), the court ruled that the 180-day limit started at time of discrimination
· The Lilly Ledbetter Fair Pay Act, in effect, reversed the court’s decision and amended Title VII to allow recover for 180 days following each paycheck
· The right does not end within 180 days from action; ends after employee discovers pay issue, as is likely to happen with a paycheck
20-7b Remedies Available Under Title VII (See PowerPoint Slide 20-37)
· Injunctions
· Back pay
· Punitive damages
· Affirmative action
· Attorneys’ fees
20-8 Other Antidiscrimination Laws
20-8a Age Discrimination in Employment Act of 1967 (See PowerPoint Slide 20-38)
· Applies to employers with 20 or more employees
· Protects those between the ages of 40 and 75
CASE BRIEF 20.7
Gonzalez v. El Dia, Inc.
304 F.3d 63 (1st Cir. 2002)
FACTS: Lydia Gonzalez worked as a reporter at El Nuevo Dia, a Puerto Rico newspaper. Her supervisor, Maria Luisa Ferre, often said that Ms. Gonzalez’s demeanor and couture were “[o]ut of style” and “colorless,” and her coiffure was “like Phyllis Diller.” Ms. Ferre also said that Ms. Gonzalez was old-fashioned (viz., “manias de vieja,” or “old person’s ways”) and that she should have retired and gone to live with her grandchildren in Florida long ago. Ms. Ferre also taunted Ms. Gonzalez by saying that she would not live long enough to see her grandson play major league baseball.
Ms. Gonzalez asked Ms. Ferre if she could be assigned to cover fashion shows, but Ms. Ferre balked at the idea. Mr. Mercado would often accost Ms. Gonzalez when he visited the department in which Gonzalez worked by calling her “Mom,” and comments such as, “Are you still here?” or “I thought you had been discharged or terminated a long time ago.”
Following a serious work-related injury in April, 1997, Ms. Gonzalez took medical leave while receiving treatment and rehabilitative therapy. During Ms. Gonzalez’s medical leave, Ms. Ferre contacted the El Dia human resources department regarding retirement packages which might be offered Gonzalez.
During one discussion during her leave, Ms. Ferre asked Ms. Gonzalez whether she would like to retire, adding, “Look, you are already 63 years old and your health is not good.” Ms. Gonzalez offered to return to work immediately, but Ms. Ferre rejected her offer and advised Gonzalez to take a vacation and return to work on July 1st. Ms. Gonzalez had no remaining paid vacation time, and was in difficult financial straits. Ms. Ferre arranged for a $6,000 advance on salary for Ms. Gonzalez, what Ms. Ferre believed was part of a voluntary retirement package the two had agreed to.
Four days later, Ms. Gonzalez was presented with a resignation, release, and compensation agreement. Ms. Gonzalez refused to retire and returned to work 3 days later, when she signed a note agreeing to repay the $6,000. Ms. Gonzalez then took work from a competing newspaper in order to meet her repayment obligations
on the note. Working for a competing newspaper was a violation of the conflict-of-interest clause in her contract.
DECISION BELOW: The district court granted summary judgment to El Dia.
ISSUE ON APPEAL: Did El Dia discriminate on the basis of age?
DECISION: The court held that El Dia met its burden of proof in showing that it had other reasons than age for Gonzalez’s termination. El Dia’s decision to not allow her to work the fashion shows reflected more the fact that Gonzalez was insufficiently attuned to current fashions; and, therefore, that her representation of El Dia at fashion shows could very well reflect adversely upon its business image in such circles.
The Court held that El Dia had established that Gonzalez engaged in a series of infractions. She defaulted on a promissory note which she had insisted that Mr. Mercado draw up, and thereafter deliberately went to work for a competing newspaper in direct contravention of the CBA. El Dia had “just cause” to terminate Gonzalez. Affirmed.
20-8b Equal Pay Act of 1963 (See PowerPoint Slide 20-39)
Equal pay for equal work (see Chapter 18)
20-8c Communicable Diseases in the Workplace
Arline case held could not discriminate on the basis of tuberculosis
20-8d Rehabilitation Act of 1973 (See PowerPoint Slide 20-40)
· Protection for handicapped
· Enforced by Labor Department
· Employers covered
· Federal contracts over $2,500
· States and municipalities
· Covers:
· Diabetes, epilepsy, heart diseases, cancer, retardation, blindness, deaf persons
· Former drug addicts and alcoholics
· Must make reasonable accommodations for handicapped
20-8e Americans with Disabilities Act (See PowerPoint Slide 20-41)
· Applies to employers with 25 or more employees (went down to 15 or more – 1994)
· Required to make reasonable accommodations for handicapped (cost, size of work force, nature of operations)
· Cannot use tests to screen out handicapped applicants
· Local governments required to make transportation available to handicapped
See Exhibit 20.2 and PowerPoint Slides 20-42 and 20-43 to cover ADA obligations. See Exhibit 20.3 and PowerPoint Slide 20-44 to cover interview questions.
20-8f The Family and Medical Leave Act (See PowerPoint Slide 20-45)
· Twelve weeks’ unpaid leave each year for birth or adoption of child, illness of spouse, parent, or child
· Must return to same job or equivalent
20-9 The Global Workforce (See PowerPoint Slide 20-46)
· Companies Must Follow Restrictions of Host Country
· UN Treaties Support Equal Pay and Nondiscriminatory Treatment
· EU Follows All the Treaties
· Conflicts Between U.S. Law and Most Country Law, Companies Follow Host Country Law
BIOGRAPHY: ANN HOPKINS, A SHUNNED PARTNER
Key points for students:
1. Hopkins may have been a rainmaker but she seemed to have interpersonal issues.
2. Employers need to be honest with employees.
3. Hopkins got her remedies of back pay plus reinstatement.
ETHICS, ORGANIZATIONAL BEHAVIOR, & THE LAW: ENGLISH ONLY IN EMERGENCIES?
For English-only policies to work:
1. Must have a need;
2. Communications with customers, co-workers, supervisors is important;
3. Employees need to communicate quickly/or safety is at issue; and
4. Cooperation and close working relationships need common language.
The common thread in the jobs mentioned is that the employees perform critical, life-saving jobs or engage in work that could be life threatening if they do not act quickly and smoothly. There are also customer service issues. The hostile environment arises when the policies are universal – nothing but English without need and not allowing for breaks and non-critical functions.
The types of jobs would include emergency situations, health care teams, more than one employee working on a task (need for communication), and customer safety.
SUPPLEMENTAL READINGS (Not Required)
Alger, Jonathan and Marvin Krislov, “You’ve Got to Have Friends: Lessons Learned From the Role of Amici in the University of Michigan Cases,” 30 J.C. & U.L. 503 (2004).
“Articles in Brief,” 14 STAN. L. & POL’Y REV. 238 (2003).
Backmeyer, E. Renee, “Lack of Insurance Coverage for Prescription Contraception By an Otherwise Comprehensive Plan as a Violation of Title VII as Amended By the Pregnancy Discrimination Act –Stretching the Statute Too Far,” 37 IND. L. REV. 437 (2004).
“Be Careful What You Ask: Ground Rules for Foreign Employers Conducting Job Interviews in the US: A Case Study,” 23 No. 2 EMP. & INDUS. REL. L. 62 (October, 2013).
Bernstein, Anita, “Civil Rights Violations = Broken Windows: De Minimis Curet Lex,” 62 FLA. L. REV. 895 (September 2010).
Bloomekatz, Rachel, “Rethinking Immigration Status Discrimination and Exploitation in the Low-Wage Workplace,” 54 UCLA L. REV. 1963 (2007).
Bohren, Jan, “Six Myths of Sexual Harassment,” MANAGEMENT REVIEW 61 (1993).
Bowen, Deirdre M., “Brilliant Disguise: An Empirical Analysis of a Social Experiment Banning Affirmative Action,” 85 IND. L.J. 1197 (Fall 2010).
Brennen, David A., “Race-Conscious Affirmative Action By Tax-Exempt 501(C)(3) Corporations After Grutter and Gratz,” 77 ST. JOHN’S L. REV. 711 (Fall 2003).
Brown, Jennifer Gozdowski, “Mitigating Measures and the ADA After Sutton: Can Employers Limit Our Ability to Care for Ourselves in the Workplace?,” 7 J. SMALL & EMERGING BUS. L. 113 (Spring 2003).
Bruzina, Julia, “Erickson v. Bartell: The ‘Common Sense’ Approach to Employer-Based Insurance for Women,” 47 ST. LOUIS U. L.J. 463 (Spring 2003).
Buchakjian, Tamar, “Old vs. Older: Creating a Cause of Action for Reverse Age Discrimination Under the ADEA in Cline v. General Dynamics Land Systems, Inc.,” 36 LOY. L.A. L. REV. 1627 (Summer 2003).
Burks, Courtney L., “Improving Access to Commercial Websites Under the Americans With Disabilities Act and the Twenty-First Century Communications and Video Accessibility Act,” 99 IOWA L. REV. 363 (November, 2013).
“Case Law Developments,” 31 MENTAL & PHYSICAL DISABILITY L. REP. 684 (2007).
Colker, Ruth, “Homophobia, AIDS Hysteria, and the Americans With Disabilities Act,” 8 J. GENDER RACE & JUST. 33 (Spring 2004).
Colker, Ruth, “The Mythic 43 Million Americans With Disabilities,” 49 WM. & MARY L. REV. 1 (2007).
Coluccio, Megan, “Fait Accompli?: Where the Supreme Court and Equal Pay Meet a Narrow Legislative Override Under the Lilly Ledbetter Fair Pay Act,” 34 SEATTLE U. L. REV. 235 (Fall 2010).
Corbin, Caroline Mala, “Ceremonial Deism and the Reasonable Religious Outsider,” 57 UCLA L. REV. 1545 (August 2010).
Crump, David, “The Narrow Tailoring Issue in the Affirmative Action Cases: Reconsidering the Supreme Court’s Approval in Gratz and Grutter of Race-Based Decision-Making By Individualized Discretion,” 56 FLA. L. REV. 483 (July 2004).
Cullen, Tracey A., “Reverse Age Discrimination Suits and the Age Discrimination in Employment Act,” 18 ST. JOHN’S J. LEGAL COMMENT. 271 (Fall 2003).
Eichhorn, Lisa, “The Chevron Two-Step and the Toyota Sidestep: Dancing Around the EEOC’s ‘Disability’ Regulations Under the ADA,” 39 WAKE FOREST L. REV. 177 (Spring 2004).
Eisenstadt, Leora, “Separation of Church and Hospital: Strategies to Protect Pro-Choice Physicians in Religiously Affiliated Hospitals,” 15 YALE J.L. & FEMINISM 135 (2003).
Ennis, Rebecca I., “General Dynamics Land Systems, Inc. v. Cline: Shrinking the Realm of Possibility for Reverse Age Discrimination Suits,” 39 U. RICH. L. REV. 753 (January, 2005).
Esposito, Mark, “Massachusetts Pay Equity and Its Limits,” 87 B.U. L. REV. 911 (2007).
Garner, Bryan, “Enforcing Civil Rights Against the States: An Analysis of the Pregnancy Discrimination Act of 1978 Under the Court’s Section 5 Jurisprudence,” 22 REV. LITIG. 711 (Summer 2003).
Gonzalez v. El Dia, Inc., 304 F.3d 63 (1st Cir. 2002).
Goodman, Elissa Aaronson, “Breastfeeding or Bust: The Need for Legislation to Protect a Mother’s Right to Express Breast Milk at Work,” 10 CARDOZO WOMEN’S L.J. 146 (Fall 2003).
Green, Jeramy R., “Affirmative Action: Challenges and Opportunities,” 2004 B.Y.U. EDUC. & L.J. 139 (2004).
Greene, Linda S., “The Constitution and Racial Equality After Gratz and Grutter,” 43 WASHBURN L.J. 253 (Winter 2004).
Grossman, Joanna L., “The Culture of Compliance: The Final Triumph of Form Over Substance in Sexual Harassment Law,” 26 HARV. WOMEN’S L.J. 3 (Spring 2003).
Hart, Melissa, “Litigation Narratives: Why Jenson v. Eveleth Didn’t Change Sexual Harassment Law, But Still Has a Story Worth Telling,” 18 BERKELEY WOMEN’S L.J. 282 (2003).
Hogshead-Makar, Nancy and Sheldon Elliot Steinbach, “Intercollegiate Athletics’ Unique Environments for Sexual Harassment Claims: Balancing the Realities of Athletics With Preventing Potential Claims,” 13 Marq. Sports L. Rev. 173 (Spring 2003).
Howard v. Steris Corp., 886 F.Supp.2d 1279 (M.D. Ala. 2012).
Huhta, Susan E., Elizabeth S. Westfall and Joan C. Williams, “Looking Forward and Back: Using the Pregnancy Discrimination Act and Discriminatory Gender/Pregnancy Stereotyping to Challenge Discrimination Against New Mothers,” 7 EMPLOYEE RTS. & EMP. POL’Y J. 303 (2003).
Johnson, Judith J., “License to Harass Women: Requiring Hostile Environment Sexual Harassment to Be ‘Severe or Pervasive’ Discriminates Among ‘Terms and Conditions’ of Employment,” 62 MD. L. REV. 85 (2003).
Kaiser, Eliza, “The Americans With Disabilities Act: An Unfulfilled Promise for Employment Discrimination Plaintiffs,” 6 U. PA. J. LAB. & EMP. L. 735 (Spring 2004).
Kelly, Eileen P. and Hugh Rowland, “Mental Disabilities Claims Under ADA,” 48 LABOR L. J. 556 (1997).
Leeser, Jaimie, “The Causal Role of Sex in Sexual Harassment,” 88 CORNELL L. REV. 1750 (September, 2003).
Levi, Jennifer, “The Cross-Dressing Case for Bathroom Equality,” 34 SEATTLE U. L. REV. 133 (Fall 2010).
Lidge, Ernest F., III, “An Employer’s Exclusion of Coverage for Contraceptive Drugs is Not Per Se Sex Discrimination,” 76 TEMP. L. REV. 533 (Fall 2003).
Long, Alex, “State Anti-Discrimination Law as a Model for Amending the Americans With Disabilities Act,” 65 U. PITT. L. REV. 597 (Spring 2004).
Lye, Linda Cheng Yee, “Title VII’s Tangled Tale,” 19 BERKELEY J. OF EMPLOYMENT AND LABOR LAW 315 (1998).
Magid, Julie Manning, “Contraception and Contractions: A Divergent Decade Following Johnson Controls,” 41 AM. BUS. L.J. 115 (Fall 2003).
Malone, Michael D., et al., “Religion in the Workplace: How Much Is Too Much?”, 49 LABOR L. J. 1074 (1998).
Mazza, Michael J., “May a Catholic University Have a Catholic Faculty?,” 6.78 NOTRE DAME L. REV. 1329 (May, 2003).
Meuti, Michael D., “Disabling Legislation: The Judicial Erosion of the ADA’s Protection for Employees With Psychiatric Disorders,” 14 STAN. L. & POL’Y REV. 445 (2003).
Minkin, Elena, “Flourishing Forties Against Flaming Fifties: Is Reverse Age Discrimination Actionable Under the Age Discrimination in Employment Act?,” 48 ST. LOUIS U. L.J. 225 (Fall 2003).
Morrison, Angela, “Duke-ing Out Pattern or Practice After Wal-Mart: The EEOC as Fist,” 63 AM. U. L. REV. 87 (October, 2013).
“On Grutter and Gratz: Examining ‘Diversity’ in Education,” 103 COLUM. L. REV. 1588 (October, 2003).
Parker, Kristin Berger and Ellen G. Sampson, “Defamation in Employment Investigations: Bahr v. Boise Cascade Corporation and O’Donnell v. City of Buffalo,” 4 WM. MITCHELL J. L. & PRAC. 1 (September, 2010).
Peak, Brandon L., “EEOC v. Waffle House, Inc.: Employers Beware – The EEOC is Now the ‘Master of Its Own Case’,” 54 MERCER L. REV. 1235 (Spring 2003).
Prall, Todd, “Why Can’t Discrimination Be Discrimination? Johnson v. K Mart Corp. and the Meaning of ‘Discrimination’ Under the Americans With Disabilities Act,” 2003 B.Y.U. L. REV. 1419 (2003).
Purnell, Jen, “Weighing in on Title VII: The Impact of the Borgata Casino’s Weight Requirement on Female Beverage Servers,” 4 RUTGERS J. L. & PUB. POL’Y 612 (2007).
Rogers, Aaron J., “Discrimination Against Younger Members of the ADEA’s Protected Class,” 89 IOWA L. REV. 313 (October 2003).
Rollini, Gigi, “Davis v. Monroe County Board Of Education: A Hollow Victory for Student Victims of Peer Sexual Harassment,” 30 FLA. ST. U. L. REV. 987 (Summer 2003).
Schuchman, Amy L., “The Special Problem of the ‘Younger Older Worker’: Reverse Age Discrimination and the ADEA,” 65 U. PITT. L. REV. 339 (Winter 2004).
Snider, Mark Andrew, “Viewpoint Discrimination By Public Universities: Student Religious Organizations and Violations of University Nondiscrimination Policies,” 61 WASH. & LEE L. REV. 841 (Spring 2004).
“Statute of Limitations,” 121 HARV. L. REV. 355 (2007).
Strickland, Megan Jordan, “The Impact of Interpretation: The Age Discrimination in Employment Act as Determined By the Sixth Circuit,” 28 SETON HALL LEGIS. J. 197 (2003).
Stromberg, Joanna, “Sexual Harassment: Discrimination or Tort?,” 12 UCLA WOMEN’S L.J. 317 (Spring 2003).
Suk, Julie C., “Discrimination at Will: Job Security Protections and Equal Employment Opportunity in Conflict,” 60 STAN. L. REV. 73 (2007).
“Title VII – Employer Liability for Supervisor Harassment – Vance v. Ball State University,” 127 HARV. L. REV. 398 (November, 2013).
Topputo, Tara-Ann, “Finding a Hole in the ADEA: Allowing a Cause of Action for Age Discrimination Among Employees Within the Age Protected Class,” 29 U. DAYTON L. REV. 169 (Fall 2003).
Vickers, Lucy, “Freedom of Religion and the Workplace: The Draft Employment Equality (Religion or Belief) Regulations 2003,” 32 INDUS. L.J. 23 (March 2003).
Wachuta, Amanda G., “The A Gets Even More Complicated: Analyzing Pregnancy With Complications as a Disability,” 52 DRAKE L. REV. 471 (Spring 2004).
Yung, David J., “Extraterritorial Application of Title VII to American Employees Abroad,” 17 J. OF CORP. L. 459 (1992).
412
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© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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381
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CHAPTER 19
MANAGEMENT OF EMPLOYEE WELFARE
For up-to-date legal and ethical news, go to mariannejennings.com.
LECTURE OUTLINE
Use opening CONSIDER 19.1 to pique students’ interest.
See Exhibit 19.1 and PowerPoint Slide 19-1 to summarize existing federal laws on employee welfare.
19-1 Wages and Hours Protection
19-1a The Fair Labor Standards Act (FLSA) (See PowerPoint Slides 19-2, 19-3, and 19-4)
• Often Called “The Minimum Wage Law”
• Coverage
▪ Businesses engaged in interstate commerce
▪ Businesses engaged in production of goods to be shipped in interstate commerce
▪ Businesses engaged in interstate shipping
▪ Expanded to cover business enterprises with gross income of $362,500 or more
▪ Exemptions
Independent contractors
Agriculture, fishing, and domestic service
White-collar management
Executive, administrative, and professional people
• FLSA minimum wage and overtime regulations
▪ Graduate increases in minimum wages
▪ Time-and-one-half pay for overtime (over 40 hours)
▪ White collar, professional, administrative employees are exempt
▪ New rules have created a great deal of ambiguity
▪ Under new Department of Labor regulations, applies to employees who work 40
hours/week and earns $47,476/year or less
FOR THE MANAGER’S DESK – HOW UBER, LYFT, HOME HEALTH CARE, AND NEW BUSINESS
MODELS ARE CHANGING EMPLOYMENT LAW: Discuss IRS standards and the types of factors that
influence independent contractor status and multiple-employer situations.
• FLSA and Child Labor Provisions (See PowerPoint Slide 19-5)
382 Part IV Business Management and Governance
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▪ Age 18 and over – any jobs
▪ 16-17 – any nonhazardous job (hazardous – mining, logging, roofing, excavation)
▪ 14-15 – any nonhazardous, nonmanufacturing, and nonmining job during nonschool
hours; limits on hours
▪ Recordkeeping – employers must keep records of hours and wages; fines for not doing
so
▪ Child actors are subject to strict Screen Actors Guild rules
FOR THE MANAGER’S DESK – MANAGING AND PAYING INTERNS: Discuss with the students the
various holdings and combine the discussion with the ethical issues. Some questions to ask on these two
features:
Why do internships exist?
What are the benefits for the company?
For the students?
What about internships for academic credit?
What about the long hours?
What effect will the litigation have on internships going forward?
• Enforcement of FLSA (See PowerPoint Slide 19-6)
▪ Can begin by complaint filed with U.S. Labor Department
▪ Employer can seek interpretation from Department of Labor
▪ Labor Department can initiate its own investigation
• Penalties for FLSA Violation (See PowerPoint Slide 19-7)
▪ Fines – $10,000 first conviction
▪ $10,000 and/or six months for second violation
▪ Employees can’t be fired for reporting violations
• Liability for FLSA Violation
▪ Corporation is liable
▪ Officers can be held individually liable
See PowerPoint Slide 19-8.
CASE BRIEF 19.1
Chao v. Hotel Oasis, Inc.
493 F.3d 26 (1st Cir. 2007)
FACTS: Hotel Oasis, Inc. operates a hotel and restaurant in southwestern Puerto Rico. Dr. Lionel Lugo-
Rodríguez (Lugo) is the president of the corporation, runs the hotel, and manages its employees. Oasis’s
records show that between October 3, 1990 and June 30, 1993, employees were paid less than minimum wage,
were not paid for training time or meetings held during non-working hours, were paid in cash “off the books,”
and were not paid correctly for overtime. Oasis also maintained two sets of payroll records for the same
Chapter 19 Management of Employee Welfare 383
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employees, covering the same time periods, one showing fewer hours at a higher rate, and the other showing
more hours at a sub-minimum wage rate. Lugo maintains that the two sets of books were necessary, one for
temporary employees and one for permanent
employees.
On April 5, 1994, the Secretary of Labor (the “Secretary”) filed a complaint in the United States District Court
for the District of Puerto Rico against Oasis and Lugo (“Defendants”), alleging violations of the minimum
wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act (“FLSA”). The Secretary also
sought liquidated damages.
After years of litigation, On June 21, 2005, the district court ordered Oasis to pay $141,270.64 in back wages
and an equal amount in liquidated damages to 282 current and former employees. The court also found Lugo
personally liable for the back wages and penalties. Lugo and Oasis appealed.
ISSUE ON APPEAL: Was a finding of an FLAS violation correct? Can an officer be held liable for such
violations?
DECISION: Yes. Oasis and Lugo are both liable. The violation was willful, as evidenced by the two sets of
books. Also, Lugo was in a position of control. He was an owner and did much of the managing. Under those
circumstances he would be personally liable. Under the FLSA, an “employer” is “any person acting directly or
indirectly in the interest of an employer in relation to an employee.” The First Circuit has followed the
Supreme Court’s lead in interpreting this definition pursuant to an “economic reality” analysis. Accordingly,
there may be multiple “employers” who are simultaneously liable for compliance with the FLSA.
19-1b The Equal Pay Act of 1963 (See PowerPoint Slide 19-9)
• Illegal to pay different wages to men and women doing the same jobs
• Equal Pay Act is not a comparable worth statute
▪ Comparable worth requires equal pay for jobs that require equal skill, effort, and
responsibility
▪ Test case came from Washington when a licensed practical nurse discovered she
earned less than the groundskeeper at a state hospital and less than men doing similar
jobs in the prisons; trial judge found discrimination and ordered back pay but
decision was later reversed
▪ Presently, federal standards do not require comparable worth
• Merit and seniority systems are exceptions
19-2 Workplace Safety
19-2a The Occupational Safety and Health Act (See PowerPoint Slide 19-10)
• Passed to ensure workplace safety precautions
• OSHA was agency created to enforce it
• OSHA coverage and duties (See PowerPoint Slide 19-11)
▪ Employers covered – all with one or more employees
▪ Basic responsibilities
Know and follow OSHA’s rules
Inspect for hazards and correct them
Post employee rights
384 Part IV Business Management and Governance
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Keep records of injuries
Post OSHA citations
19-2b OSHA Responsibilities (See PowerPoint Slide 19-12)
• Promulgating rules and safety standards
• Can award variances for certain employers
• Inspections
▪ Have targeted industries (roofing, lumber)
▪ Also have random inspections
▪ Cannot retaliate against employee who notifies OSHA and requests an inspection
• OSHA search warrant requirement
▪ Either voluntary or require warrant
▪ Surprise element still preserved even with warrant
▪ Employees can accompany an OSHA inspector
▪ Employees can file complaints
▪ Right to notice if employer applies for variance
• OSHA penalties
▪ See Exhibit 19.2 and PowerPoint Slides 19-13 and 19-14 – fine and imprisonment
escalate with seriousness of violation
▪ Citation is first step
▪ Many employers negotiate a consent decree after a citation
▪ If no consent decree, there is a hearing before an administrative law judge (ALJ)
▪ ALJ makes recommendations and OSHRC decides
▪ Can then appeal to a court
• State OSHA programs (See PowerPoint Slide 19-15)
▪ States share responsibility for safety with feds
▪ Secretary of Labor must approve state’s plan
19-2c Employment Impairment and Testing Issues (See PowerPoint Slide 19-16)
If safety is an issue, U.S. Supreme Court has authorized testing
19-3 Employee Pensions, Retirement, and Social Security
19-3a Social Security
• Social Security Act of 1935 (See PowerPoint Slide 19-17)
• Every employee, who is not an independent contractor, contributes to Federal Insurance
Contributions Act (FICA)
• Benefits under Social Security depend on work and salary range
FOR THE MANAGER’S DESK – THE GIG ECONOMY START-UPS: PUMPING THE BRAKES ON
INDEPENDENT CONTRACTORS AND MOVING TO EMPLOYEES: Discuss the trade-offs in the piece –
Chapter 19 Management of Employee Welfare 385
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higher compensation, but no benefits and no FICA paid in. Less regulation, more control over your income;
deductibility of expenses – less stability; termination is easier. Flexibility for employees is higher. It is
difficult to impose the old business regulatory model on what has become a very different business and
economic structure.
19-3b Private Retirement Plans (See PowerPoint Slides 19-18 and 19-19)
• Employment Retirement Income Security Act (ERISA)
• Coverage of ERISA: applies to employers in interstate commerce
• Applies to medical, retirement, or deferred income plan
• Requirements under ERISA
▪ Must give employees an annual report
▪ Must disclose loans made from the fund
▪ ERISA does not require pension plans; it only regulates employers who offer them;
levels of responsibility have caused some employers to drop the plans
• Employee rights under ERISA: get vesting rights in their pensions
• FASB 106, Retirees and Pensions – Requires corporation to expense cost of benefits for
retired employees
• Pension Protection Act of 2006 (See PowerPoint Slide 19-20)
▪ Imposes new funding requirements
▪ New disclosure requirements
19-3c Unemployment Compensation (See PowerPoint Slide 19-21)
• Benefits provided
▪ States determine amount
▪ States’ rules on minimum and maximum
▪ States’ rule on length
• Qualifying for benefits
▪ Must have been involuntarily terminated
▪ Must be able and available for work
▪ Must be seeking employment
19-4 Workers’ Compensation Laws
✓ Compensation for Work-Related Injuries
✓ Principles of Workers’ Compensation (See PowerPoint Slides 19-22 and 19-23)
➢ Employees injured in scope of employment are covered
➢ Fault is immaterial
➢ Independent contractors are not covered
➢ Benefits include expenses, lost wages, and injury compensation
➢ Employees do not have right of common law suit
➢ Third parties can be sued to indemnify employers
➢ Administrative agency handles program
386 Part IV Business Management and Governance
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➢ Every employer must carry insurance or be self-insured
19-4a Employee Injuries (See PowerPoint Slide 19-24)
• Primarily accidental injuries covered
• Definition has been expanded
▪ Back problems from lifting
▪ Medical problems – heart attacks and nervous breakdowns
▪ Stress
• Co-worker injury
▪ Covered if arises in scope of employment
▪ Issue of rape is a problem; employer can be sued for the failure to screen employees
adequately
19-4b Causation and Worker’s Compensation
19-4c Fault is Immaterial
In workers’ comp fault is immaterial (employee can even disobey instructions and be
compensated)
19-4d Employees versus Independent Contractors
Independent contractors are not covered
19-4e Benefits (See PowerPoint Slide 19-25)
• Lost wages
• Medical expenses
• Disability benefits
▪ Partial disability – listed on schedule by rate
Example: 50 percent of wages
▪ Total disability – generally 2/3 of salary
▪ Unscheduled injuries are determined by board
▪ Death benefits paid to family
19-4f Forfeiture of the Right to Suit
Benefits in lieu of suing employer
19-4g Third-Party Suits (See PowerPoint Slide 19-26)
Can sue product manufacturers, other third parties, but recovery must first go to reimburse
employer
19-4h Administrative Agency
Each state has an administrative agency for administration of benefits and insurance
Chapter 19 Management of Employee Welfare 387
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19-4i Insurance
• Employers must have some form
• Self-insurance
• Private insurance
• State fund insurance
See PowerPoint Slide 19-27.
CASE BRIEF 19.2
Hopkins v. Uninsured Employers’ Fund
251 P.3d 118 (Mont. 2011)
FACTS: Great Bear Adventures (the Park), is located near West Glacier, Montana. Visitors to the Park enjoy a
drive-thru experience of bears in their natural habitat. Russell Kilpatrick owns the Park and lives on adjacent
property. Brock Hopkins began working there in 2002, doing various tasks, including maintenance and feeding
the bears. In the past, some workers have been known to smoke marijuana on the premises. Although
Kilpatrick professed to not condone marijuana use by workers, testimony established that he had smoked
marijuana at the Park in the past, and on occasion had done so with Hopkins.
On November 2, 2007, Hopkins smoked marijuana on his way into work. When he arrived, Kilpatrick told
Hopkins to raise the boards on the Park’s front gates so they would not freeze to the ground. Hopkins asked
Kilpatrick if he should feed the bears as well. Testimony regarding Kilpatrick’s answer conflicted. However,
the Workers’ Compensation Commission (WCC) ultimately found that Kilpatrick never told Hopkins not to
feed the bears.
After completing work on the gates, Hopkins returned to Kilpatrick’s house. Kilpatrick was asleep inside.
Hopkins mixed food for the bears and used Kilpatrick’s truck to drive into the Park. He entered the bears’ pen
and began to place food out. At some point while Hopkins was working, the largest bear, Red, attacked him.
The bear knocked Hopkins to the ground, sat on him, and bit his leg, knee and rear-end. While this was
occurring, another bear, Brodie, came up from behind, and bit Red. In response, Red moved off of Hopkins
momentarily, and Hopkins escaped by crawling under one of the electrified wires surrounding the pen.
Kilpatrick eventually found Hopkins, and he was transported to the hospital by helicopter. He suffered severe
injuries.
Kilpatrick did not carry workers’ compensation insurance. Hopkins petitioned the WCC for workers’
compensation benefits from the Uninsured Employers’ Fund. Both the Uninsured Employers’ Fund and
Kilpatrick opposed Hopkins’ petition.
DECISION BELOW: The WCC found for Hopkins, concluding that (1) Hopkins was employed by Kilpatrick
at the time of Hopkins’ injuries, (2) Hopkins was in the course and scope of his employment at the time of his
injuries, (3) marijuana use was not the major contributing cause of Hopkins’ injuries, and (4) Hopkins was not
performing services in return for aid or sustenance only. Kilpatrick appealed.
ISSUES ON APPEAL: (1) Whether Hopkins was employed by Kilpatrick at the time of Hopkins’ injuries, (2)
whether Hopkins was in the course and scope of his employment at the time of his injuries, (3) whether
marijuana use was not the major contributing cause of Hopkins’ injuries, and (4) whether Hopkins was not
performing services in return for aid or sustenance only. Affirmed.
388 Part IV Business Management and Governance
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as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
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19-4j Problems in Workers’ Compensation Systems (See PowerPoint Slide 19-28)
• Extent of injuries covered
• Fraud
• Nature of injuries changing from manufacturing injuries to stress, heart disease, and
repetitive motion
• Long-term hazards
• Relationship between Americans with Disability Act and workers’ compensation
19-5 Statutory Protections of Employees Through Labor Unions
History and Development of Labor Legislation (See PowerPoint Slide 19-29)
19-5a Norris-LaGuardia Act of 1932 (Anti-Injunction Act) (See PowerPoint Slide 19-30)
• Stopped federal courts from issuing injunctions to stop union strikes
• Some exceptions:
▪ Violence
▪ Lack of control – harm to public
19-5b The Wagner Act
• National Labor Relations Act (NLRA) of 1935
• Gave employees the right to unionize
• Prohibited employers from firing or discriminating against union members
• Established NLRB
▪ Created to conduct union election
▪ Created to remedy unfair labor practices
19-5c The Taft-Hartley Act: The Labor-Management Relations Act of 1947 (See PowerPoint Slide
19-31)
• Lists unfair labor practices for unions
• Addresses secondary boycotts
• Provides president with authority to have prestrike cooling-off period when public health
and safety are at issue; has been used in coal and transportation strikes
19-5d The Landrum-Griffin Act: The Labor Management Reporting and Disclosure Act of 1959 (See
PowerPoint Slide 19-32)
• Regulates union officials
• Gives union members a bill of rights
• Establishes penalties for misconduct
19-5e Union Organizing Efforts and Social Media
19-5f Employers are Accountable for Employee Electronic Content (See PowerPoint Slide 19-33)
Chapter 19 Management of Employee Welfare 389
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• Employers are responsible for what employees post – privacy and harassment issues arise
• What employees write can be used to build a case against the company on issues – as with
Standard & Poor’s problems with analysts and ratings
19-5g Employer Monitoring: What is Legal?
• Electronic Communications Privacy Act of 1986 (See PowerPoint Slide 19-34)
▪ Prohibits unauthorized access of “live”
communications
▪ Question is whether e-mail would be stored communication and not live
communications
• Stored Communication Act
▪ Prohibits the unauthorized interception of electronic communications – generally
means stored information
▪ Does not cover ongoing communication – Tweeting, etc.
• Courts have consistently held that employees give consent to monitoring by their employers
See PowerPoint Slide 19-35.
BUSINESS PLANNING TIP (Social Media Policies): Go over the tips on what employers should know
about social media policies.
19-5h Employers’ Right of Access to Employee E-Mails (See PowerPoint Slides 19-36 and 19-37)
• Employers can monitor
• Generally employees are required to sign a statement acknowledging employer right of
access
• Covers e-mails marked private, etc.
• Covers use of personal devices for work e-mail
19-5i E-Mail and NLRA Issues
19-5j The Unionization Process
• Right to unionize
• Selecting a union (See PowerPoint Slide 19-38)
▪ Once selected, union represents all employees
▪ Collective bargaining unit determined
Can be a plant
Can be workers doing same job in a company
NLRB decides based on:
390 Part IV Business Management and Governance
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as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use..
• Type of union
• Duties, wages, and skills of employees
• Relationship to employer
• Wishes of employees
• Petition, cards, and vote
▪ Petition for union representation filed
Must be supported by signed, dated authorization cards from 30 percent of unit
Cards must be signed willingly
▪ Election: NLRB monitors
Restrictions on what employer can do just prior to election and during campaign
Unions are subject to reasonable employer rules
See PowerPoint Slide 19-39.
CASE BRIEF 19.4
United Food and Commercial Workers Union Local 24 v. NLRB
506 F.3d 1078 (D.C. Cir. 2007)
FACTS: In March, 1999, United Food and Commercial Workers’ Union (UFCW) attempted to organize a
Smithfield Foods meatpacking plant in Wilson, North Carolina. After a three-month campaign, the union lost
the election.
The union filed a series of unfair labor practice charges against Smithfield, alleging that the company’s
antiunion campaign had tainted the election. An administrative law judge (ALJ) found that Smithfield
executives violated NLRA section 8(a)(1) by threatening to close the company’s Wilson plant if workers
unionized.
DECISION BELOW: On review, the NLRB found for Smithfield on the issues of threatened plant closure. The
union appealed the NLRB’s dismissal of the unfair labor practice charges.
ISSUE: Were the statements made by Smithfield an unfair labor practice?
DECISION: The court held that the statements were not untrue or unfair and were within the scope of
management’s ability to respond to proposed unionization.
Chapter 19 Management of Employee Welfare 391
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as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use.
19-5k Union Contract Negotiations (See PowerPoint Slides 19-41 and 19-42)
• Try to get employer contract – collective bargaining agreement
• Good faith bargaining required – 8(d) of NLRA
• Subject matter of good-faith bargaining
▪ Mandatory or compulsory subject matters
Wages
Hours
Overtime
Vacation
Leaves
Pay days
Insurance
Pensions
Seniority
Two-tier wage structure has been an issue in sports and air pilots’ negotiations
See Exhibit 19.3 and PowerPoint Slide 19-43 for list of usual topics in collective bargaining.
▪ Permissive subjects for collective bargaining
Strike roles
Not unfair to refuse to bargain it
• Cannot bargain away statutory rights
Example: Cannot agree to have a closed shop (refusing to hire nonunion people)
• Failure to bargain in good faith
▪ Constitutes an unfair labor practice
▪ Can be the basis of a charge and complaint
• Cover e-commerce and the use of e-mail for organizing
19-5l Protected Concerted Activities (See PowerPoint Slide 19-44)
• Union Economic Pressure
• NLRA gives union right to engage in concerted activities
• Public advertisements – permitted
• Picketing – legal
• The strike – legal economic weapon
• The shareholders
▪ Unions have contacted shareholders for clout
392 Part IV Business Management and Governance
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▪ Allowed shareholders to bring public attention to the issues
19-5m Unfair Employee Practices (See PowerPoint Slide 19-45)
• Slowdown
▪ Not a strike or stoppage
▪ Employees refuse to do certain work or use certain equipment
• Featherbedding
▪ Payment for work not actually done
▪ Unfair labor practice
19-5n Employer Rights (See PowerPoint Slide 19-46)
Freedom of speech: can explain their position to employees (See Exhibit 19.4 and PowerPoint
Slides 19-47 and 19-48, “Management Do’s and Don’ts”, to explain what can and cannot be
done)
19-5o Right-to-Work Laws
• Prohibit closed shops
• Shops requiring union membership
19-5p Economic Weapons of Employers (See PowerPoint Slides 19-49 and 19-50)
• Plant and business closings
▪ Congress has passed a plant closing law
▪ Many state and local governments have them as well
▪ Laws require notice and time frame before plant is closed
▪ Designed to eliminate shock to local economy
▪ Federal law is the Worker Adjustment and Retraining Notification Act of 1988
Applies to employers with 100 or more workers
Must give 60 days advance notice of closing that will affect 50 or more workers
Must give 60 days notice of layoff that will affect 1/3 or more of work force for six
months or more
Some exceptions such as unforeseeable circumstances and seasonal businesses and
construction
Penalties include back pay and benefits and fines of $500 per day for each day
notice not given
• Cannot use temporary closing or send work away (runaway shops)
• Plant flight – legal if there are economic reasons for transferring work
• Lockout – legal for economic reasons; legal to prevent strike but not to prevent union
certification
• Conferring benefits – a violation if done temporarily
• Bankruptcy – legal
Chapter 19 Management of Employee Welfare 393
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as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use.
See Exhibit 19.5 and PowerPoint Slides 19-51 and 19-52 to summarize weapons and rights of employers and
employees.
19-6 International Issues in Labor
19-6a Immigration Laws (See PowerPoint Slide 19-53)
• Immigration and Naturalization Act
• Immigration Reform and Control Act of 1986
• Illegal Immigration Reform and Immigrant Responsibility Act of 1996
• Antiterrorism and Effective Death Penalty Act
▪ Increased types and numbers of crimes that were grounds for deportation
▪ Decreased defense to deportation
▪ Department of Homeland Security has reported an increase in deportation
• Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act) (See PowerPoint Slide 19-54)
• Homeland Security Act of 2002
▪ Created Department of Homeland Security
▪ Immigration controlled here
▪ Toughened security checks
▪ Require more employer vigilance on I-9s and hiring immigrants
• American Competitiveness in the Twenty-First Century Act of 2000
▪ Restrictions on laying off U.S. workers
▪ 90-days after hiring immigrants
FOR THE MANAGER’S DESK − THE HIGH COST OF THE FAILURE TO COMPLY WITH U.S.
IMMIGRATION LAWS: Discuss with the students the costs to the company of not following immigration
law and taking action to make sure their employees’ documentation was in order. Discuss the economic issues
behind the managers’ decisions and actions. Discuss how criminal liability for the managers is possible.
• American Competitive and Workforce Investment Act of 1998
• American Competitiveness in the Twenty-First Century Act of 2000
19-6b Working Conditions and International Labor Law (See PowerPoint Slide 19-55)
• Moving to arbitration – Labor Management Cooperation Act – mediation as an alternative
• Moving to international plants to avoid labor problems
• Teams approach by companies has effect of mixing labor and management; breaks down
union segregation
• Foreign wage competition has moved jobs to Mexico
19-6c Sample International Standards
• International Covenant on Economic, Social, and Cultural Rights
• International Labour Organization (ILO)
394 Part IV Business Management and Governance
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as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use..
• National Labor Committee (NLC)
19-6d The Risks of International Suppliers
• Quality of goods produced
• Safety issues in production plants
• Wage issues in production plants
19-6e New Trends in Managing International Wage and Safety Standards
• The issues of sweatshops, Nike, and the new code of labor standards
▪ Discuss with students the imposition of ethical standards of retailers onto sellers
through pressure from customers (who perhaps don’t want to pay more). The image-
sensitive retailers are held captive to an agenda and forced to change.
▪ Discuss the proposed code
▪ Discuss U.S. Department of Labor standards
BIOGRAPHY: KILLER WHALES, WORKPLACE SAFETY, AND UNENDING LITIGATION
Have the students make a list of all the types of suits SeaWorld has faced and have them think about the costs
of those suits. Discuss their views on whales in captivity. Discuss the issue of the release of the video tape
that showed the death of the trainer. Did public pressure cause SeaWorld to change its business model?
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Chapter 19 Management of Employee Welfare 395
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
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