Legal Structure

Legislation Protecting against Discrimination

Discrimination—treating specific groups of people unequally—is unethical behavior and is prohibited by several pieces of U.S. legislation.

Learning Objectives

Outline the legislative framework in the United States that actively protects employees against discrimination in the workplace

Key Takeaways

Key Points

  • The Civil Rights Act of 1964, in Titles VII and VIII, protects people from discrimination in regard to employment and housing, respectively.
  • The Violence Against Women Act strengthened both the ability to prosecute crimes committed against women and the degree of punishment for those crimes.
  • The Equal Pay Act attempts to abolish the practice of paying employees of one sex less than employees of the opposite sex.

Key Terms

  • discrimination: Distinct treatment of an individual or group to their disadvantage; treatment or consideration based on class or category rather than individual merit; partiality; prejudice; bigotry.

Discrimination is the prejudicial treatment of an individual based on his or her membership—or perceived membership—in a certain group or category. It can involve someone acting or behaving in a certain way toward a certain group of people, or it can involve a person or institution restricting members of one group from opportunities or privileges that are available to another group. Several pieces of legislation protect groups and individuals from discrimination in the United States.

Human resource professionals are actively tasked with ensuring adherence to these laws and with upholding ethical standards in the workplace. Human resources departments collaborate substantially with legal departments in larger organizations, as the contractual and legal components of the hiring and firing process are inherently complex.

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Protesting discrimination: Various laws protect people from discrimination.

The Civil Rights Act

The Civil Rights Act of 1964 is a piece of legislation in the United States that outlawed major forms of discrimination against women, as well as racial, ethnic, national, and religious minorities. It ended unequal application of voter-registration requirements and racial segregation in schools, at the workplace, and in facilities that served the general public.

Title VII

Title VII of the Civil Rights Act of 1964 prohibits discrimination by covered employers on the basis of race, color, religion, sex, or national origin. Title VII applies to and covers an employer “who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year.” Title VII does not apply to employers with fewer than 14 employees. Title VII also prohibits discrimination against an individual because of his or her association with another individual of a particular race, color, religion, sex, or national origin. An employer cannot discriminate against a person because of his interracial association with another, such as by an interracial marriage.

The Violence Against Women Act

The Violence Against Women Act of 1994 (VAWA) is a United States federal law that initially provided 1.6 billion dollars toward investigation and prosecution of violent crimes against women, imposed automatic and mandatory restitution on those convicted, and allowed civil redress in cases prosecutors chose to leave unprosecuted. VAWA also established the Office on Violence Against Women within the Department of Justice.

The Equal Pay Act

The Equal Pay Act of 1963 is a United States federal law amending the Fair Labor Standards Act; it is aimed at abolishing wage disparity based on sex. The law provides that no employer may discriminate between employees on the basis of sex by paying wages to employees of one sex lower than employees of the opposite sex for equal work, the performance of which requires equal skill, effort, and responsibility, and which is performed under similar working conditions. Exceptions are made where payment is aligned to:

  • A seniority system
  • A merit system
  • A system that measures earnings by quantity or quality of production
  • A differential based on any other factor other than sex

Labor Laws

Labor laws encompass various types of government mandates that define the relationship between an employee and employer.

Learning Objectives

Apply the complex legal requirements of labor laws to the employment contract and negotiation process.

Key Takeaways

Key Points

  • Labor laws are divided into those that concern unions (collective labor) and those that concern the contract between employee and employer (individual labor).
  • Labor laws define minimum acceptable employment standards and the function of the employment contract.
  • Labor laws arose from workers’ demands for better working conditions and the simultaneous demands of employers to restrict the powers of workers’ organizations and to keep labor costs low.
  • The basic feature of labor law is that the rights and obligations between the worker and the employer are mediated through the employment contract.

Key Terms

  • mediate: To resolve differences, or to bring about a settlement, between conflicting parties.
  • Fair Labor Standards Act: A federal statute of the United States that sets standards for wages and hours worked by employees.

Context of Labor Laws

Labor law is the body of laws, administrative rulings, and precedents that address the legal rights and restrictions pertaining to workers and employers. It mediates many aspects of the relationship between trade unions, employers, and employees. Labor laws will differ substantially from country to country (and from state to state domestically), so human-resources professionals must be region-specific in their consideration of specific cases.

Categories of Labor Law

There are two broad categories of labor law:

  1. Collective labor law concerns the relationship between employee, employer, and union.
  2. Individual labor law concerns the relationship between employee and employer, as defined through the contract for work.

Employment Standards

Both types of labor law define employment standards. Employment standards are social norms (and in some cases also technical standards) for the minimum socially acceptable conditions under which employees or contractors will work. Government agencies enforce employment standards codified by labor law. These standards include concepts like minimum wage, health and safety regulations, equality, and other protections against abuse.

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Federal minimum wage in the U.S.: Though there is a minimum hourly wage in the U.S., the value of that minimum wage has decreased over time as the wage fails to adjust with inflation. In the 1960s and 1970s the federal minimum wage was equivalent to about 9 dollars in 2013, while the 2013 federal minimum wage was 7 dollars.

Laws Shaped by Different Interests

Labor laws arose from workers’ demands for better working conditions and the right to organize (or, alternatively, the right to work without joining a labor union) and the simultaneous demands of employers to restrict the powers of workers’ organizations and to keep labor costs low. Employers’ costs can increase due to workers organizing to achieve higher wages, or as a result of laws imposing costly requirements (such as health and safety) or restrictions on their free choice of whom to hire. Workers’ organizations, such as labor unions, can also transcend purely industrial disputes and gain political power.

The state of labor law at any one time is therefore both a product and a component of struggles between different interests in society. As both parties (i.e., employees and employers) are motivated by their own best interests (in a capitalistic view), labor laws are there to define the rules of engagement.

The Employment Contract

The basic feature of labor law is that the rights and obligations between the worker and the employer are mediated through the employment contract. This has been the case since the collapse of feudalism and is the core reality of modern economic relations. Many terms and conditions of the contract are implied by legislation or common law to protect employees and facilitate a fluid labor market.

For instance, in the U.S. a majority of state laws allow for employment to be “at will,” meaning the employer can terminate an employee from a position for any reason, barring one that violates the law, such as discrimination. This provision allows fluidity in the labor market, because it allows firms to hire an employee without the concern that they may then be unable to terminate the employment if it later becomes apparent that the employee is not a good fit.

Key Pieces of Legislation

  • The Fair Labor Standards Act of 1938 set the maximum standard work week to 44 hours. In 1950, this was reduced to 40 hours.
  • The National Labor Relations Act, enacted in 1935 as part of the New Deal legislation, guarantees workers the right to form unions and engage in collective bargaining.
  • The Age Discrimination in Employment Act of 1967 prohibits employment discrimination based on age with respect to employees 40 years of age or older.
  • Title VII of the Civil Rights Act is the principal federal statute with regard to employment discrimination. It prohibits employment discrimination on the basis of race or color, religion, sex, and national origin, by public and private employers, labor organizations, training programs, and employment agencies. Title VII also prohibits retaliation against any person for opposing any practice forbidden by the law, or for making a charge, testifying, assisting, or participating in a proceeding under the law.
  • The Civil Rights Act of 1991 expanded the damages available to Title VII cases and granted Title VII plaintiffs the right to jury trial.

Unions

Unionization is the process of workers forming a union, which is an organization to further the workers’ shared interests.

Learning Objectives

Describe the function of a labor union in the larger legal perspective of human resource management

Key Takeaways

Key Points

  • Workers form a union by getting 30% of employees to sign petition cards, then submitting the request to the National Labor Relations Board.
  • The labor union acts as the employees’ representative in collective bargaining with the employer.
  • Unions undertake other activities as well, such as political lobbying, providing benefits to members, and organizing industrial action.
  • Unions may organize a particular section of skilled workers, a cross-section of workers from various trades, or all workers within a particular industry.

Key Terms

  • negotiate: To arrange or settle something by mutual agreement.

Human resource professionals deal with the employees of an organization and, therefore, the unions as well. Unions, as groups of employees interested in bargaining for specific rights and/or contractual benefits, are the responsibility of human resource professionals. Just as individual employees negotiate with human resources, so too do groups of employees.

Forming a Union

A labor union is an organization of workers who have banded together to achieve common goals. The current method for workers to form a union in a particular workplace in the United States is a sign-up followed by an election process. At least 30% of employees must sign petition cards requesting a union. The petition cards must then be submitted to the National Labor Relations Board (NLRB), which verifies them and orders a secret-ballot election to elect union representatives.

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Unionization: Unions mobilize workers to achieve shared goals.

Two exceptions exist. If over 50% of the employees sign an authorization card requesting a union, the employer can voluntarily choose to waive the secret-ballot election process and just recognize the union. The other exception is a last resort—it allows the NLRB to order an employer to recognize a union if over 50% have signed cards and the employer has engaged in unfair labor practices, making a fair election unlikely.

The Function of a Union

The labor union, through its leadership, bargains with the employer on behalf of union members and negotiates labor contracts (collective bargaining) with employers. The most common purpose of unions is to defend conditions of employment that benefit their members or negotiate for better conditions. This may include negotiating the terms of the following:

  • Wages
  • Work rules
  • Complaint procedures
  • Rules governing hiring
  • Firing and promotion of workers
  • Benefits
  • Workplace safety and policies

The agreements negotiated by the union leaders are binding on the union members and the employer, as well as, in some cases, non-member workers.

Union Activities

Aside from collective bargaining, union activities vary, but may include the following:

  • Provision of benefits to members—the provision of professional training, legal advice, and representation for members is a benefit of union membership.
  • Industrial action—unions may enforce strikes or resistance to lockouts to further members’ goals.
  • Political activity—unions may promote legislation favorable to their members or to workers as a whole. To this end they may pursue campaigns, undertake lobbying, and financially support individual candidates or parties for public office.

Organizational Structures of Unions

Unions may organize a particular section of skilled workers, a cross-section of workers from various trades, or all workers within a particular industry. These unions are often divided into locals and united in national federations. These federations themselves sometimes affiliate with internationals, such as the International Trade Union Confederation.

Collective Bargaining

Collective bargaining is negotiation between unions and employers to come to an agreement on the conditions of employment.

Learning Objectives

Outline the conditions and negotiation process between groups of employees (unions) and employers in the human resource frame

Key Takeaways

Key Points

  • Collective bargaining is used to win terms of pay, benefits, and hours beneficial to employees.
  • The negotiations result in a collective agreement, which must be approved by the employees. If it is, the agreement becomes the union contract.
  • Workers’ ability to collectively bargain is established by the National Labor Relations Act of 1953.

Key Terms

  • arbitration: A process in which two or more parties use an adjudicator in order to resolve a dispute.

In collective bargaining, the process of negotiation between employees and employers, employees attempt to achieve employment conditions that serve their shared interests. Employees are commonly represented by the union to which they belong. The collective agreements reached by these negotiations attempt to establish:

  • Wages
  • Working hours
  • Training
  • Health and safety
  • Overtime
  • Grievance mechanisms
  • Rights to participate in workplace or company affairs
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Reaching agreement through negotiation: Unions negotiate on behalf of employees.

Process of Negotiation

  1. At a workplace where a majority of workers have voted for union representation, a committee of employees and union representatives negotiate a contract with the management regarding wages, hours, benefits, and other terms and conditions of employment, such as protection from termination of employment without just cause. Individual negotiation is prohibited.
  2. Once the workers’ committee and management have agreed on a contract, it is then voted on by all workers at the workplace. If approved, the contract is usually in force for a fixed term of years, and when that term is up, it is renegotiated between employees and management.
  3. Sometimes there are disputes over the union contract; this often occurs in cases of workers being fired without just cause in a union workplace. These disputes then go to arbitration, which is similar to an informal court hearing. A neutral arbitrator makes a ruling as to whether the termination was unjust and whether other contract breaches occurred. If so, the arbitrator will order that the breach be corrected or remedied in some way.

Collective Agreement

The union may negotiate a specific agreement with a single employer, or it may negotiate with a group of businesses to reach an industry-wide agreement. A collective agreement functions as a labor contract between an employer and one or more unions. Collective bargaining consists of the process of negotiation between representatives of a union and employers (generally represented by management) in respect to the terms and conditions of employment, such as wages, hours of work, working conditions, grievance procedures, and the rights and responsibilities of trade unions. The parties often refer to the result of the negotiation as a collective bargaining agreement (CBA) or as a collective employment agreement (CEA).

Legislation Regulating Collective Bargaining

In the United States, the National Labor Relations Act of 1953 covers most collective agreements in the private sector. This act makes it illegal for employers to discriminate, spy on, harass, or terminate the employment of workers because of their union membership. It also makes it illegal for employers to retaliate against employees who engage in organizing campaigns or form company unions or to refuse to engage in collective bargaining with the union that represents their employees. It is also illegal to require any employee to join a union as a condition of employment. Unions are also exempt from antitrust law, in the hope that members may collectively fix a higher price for their labor.

Employee Compensation and Benefits

Compensation and benefits is the subdiscipline of human resources that deals with employees’ remuneration.

Learning Objectives

Outline the strategies employed by human resources to compensate employees with pay and benefits

Key Takeaways

Key Points

  • Compensation and benefits (C&B) encompass the rewards an organization gives to employees in exchange for the work they do.
  • There are four types of C&B: guaranteed pay, variable pay, benefits, and equity-based compensation.
  • Many factors external to the organization affect employees’ remuneration. These include union influence, the state of the economy, and business competition.

Key Terms

  • remuneration: Something given in exchange for goods or services rendered.

Compensation and benefits (C&B) is a subdiscipline of human resources that is focused on policy making for employee compensation and benefits. As part of any employment agreement, employees are compensated for services rendered in a predetermined and equitable fashion.

Compensation and Benefit Types

Employee compensation and benefits can be divided into four general categories:

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Cash reward: The ability to reward employees with cash and other incentives is a source of organizational power.

  1. Guaranteed pay—Monetary compensation paid by an employer to an employee based on employee/employer agreements. The most common form of guaranteed pay is the basic salary.
  2. Variable pay—Monetary compensation paid by an employer to an employee on a discretionary basis. It is often contingent on performance or results achieved. The most common forms are bonuses and sales incentives.
  3. Benefits—Programs an employer uses to supplement employees’ compensation, such as paid time off, medical insurance, and a company car.
  4. Equity-based compensation—A plan that uses the company’s shares as compensation. The most common example is stock options.

Guaranteed Pay

The basic element of guaranteed pay is the base salary, paid based on an hourly, daily, weekly, biweekly, or monthly rate. The base salary is typically used by employees for ongoing consumption.

Many countries dictate the minimum base salary by stipulating a minimum wage. Individual skills and the level of experience of employees give rise to differentiation in income levels within the job-based pay structure. In addition to base salary, there are other pay elements that are paid based solely on employee/employer relations.

Variable Pay

Variable pay is contingent on discretion, employee performance, or results achieved. There are different types of variable-pay plans, such as bonus schemes, sales incentives (commission), and overtime pay.

For example, a variable-pay plan might be that a salesperson receives 50% of every dollar they bring in up to a certain amount of revenue. Beyond this amount, they then bump up to a higher percentage for every dollar they bring. Typically, this type of plan is based on an annual period of time requiring a “resetting” each year back to the starting point of 50%. Sometimes this type of plan is administered so that the sales person never resets and never falls down to a lower level.

Benefits

There is a wide variety of employee benefits, such as paid time off, different types of insurance (life insurance, medical/dental insurance, and work disability insurance), pension plans, and a company car. A benefit plan is designed to address a specific need and is often not offered in the form of cash. Many countries dictate different minimum benefits, such as minimum paid time off, employer’s pension contribution, and sick pay.

Equity-Based Compensation

Equity-based compensation is a compensation plan that uses the employer’s shares as employee compensation. The most common form is stock options. Employers use additional vehicles such as restricted stock, restricted-stock units, employee stock-purchase plan, and stock-appreciation rights. The classic objectives of equity-based compensation plans are retention, attraction of new hires, and aligning employees’ and shareholders ‘ interests. Simply put, ownership of the company drives better performance through personal value creation.

Affecting Factors

Many internal and external factors affect C&B, including:

  • Business objectives
  • Labor unions
  • Internal equity (the idea of compensating employees in similar jobs, and for similar performance, in a similar way)
  • Organizational culture and organizational structure
  • State of the economy
  • The relevant labor market and/or industry
  • Labor and tax laws

Occupational Health and Safety

Occupational safety and health (OSH) is used to protect people in the workplace and create human resource policies that adhere to the law.

Learning Objectives

Apply the concepts of occupational health and safety (OSH) to the legal structure within human resource management

Key Takeaways

Key Points

  • Occupational safety and health is an interdisciplinary practice that is justified on moral, legal, and financial grounds.
  • Its main objectives include keeping workers safe, making workplaces safe, and cultivating corporate cultures that value health, safety, and employee well-being.
  • The government agencies that study and regulate health and safety are the National Institute for Occupational Safety and Health (NIOSH) and the Occupational Safety and Health Administration (OSHA).

Key Terms

  • interdisciplinary: Relating to one or more fields of study; of a field that crosses traditional boundaries between academic disciplines or schools of thought as new needs and professions emerge.

Occupational safety and health (OSH) is an interdisciplinary area concerned with protecting the safety, health, and welfare of people engaged in work. The goal of occupational safety and health programs is to foster a safe and healthy work environment. OSH may also protect coworkers, family members, employers, customers, and any other individuals who might be affected by the workplace environment. While OSH is generally inward looking, there are also significant concerns regarding the safety of, and/or environmental impact on, surrounding communities as well.

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Health and safety warnings: Workers should be aware of workplace hazards. Image from: www.complianceandsafety.com.

Importance and Objectives

Occupational safety and health can be important for moral, legal, and financial reasons. Moral obligations involve the protection of an employee’s life and health. There is also a legal aspect in that there are laws that protect workers’ safety and health and that can help them be compensated for violations. In financial terms, OSH can reduce employee injury- and illness-related costs, including medical care, sick leave, and disability-benefit costs. High levels of corporate responsibility also lead to employees, customers, and other stakeholders trusting the company more, improving job satisfaction, brand image, and community relationships.

The main focus of OSH is on three different objectives:

  • Maintenance and promotion of workers’ health and working capacity
  • Improvement of the working environment to make it safer and healthier
  • Development of work organizations and cultures that support health and safety at the workplace

Interdisciplinary Connections

OSH may involve interactions among many subject areas, including:

  • Occupational medicine
  • Occupational hygiene
  • Public health
  • Safety engineering
  • Industrial engineering
  • Chemistry
  • Health physics
  • Ergonomics
  • Occupational health psychology

The basic premise behind these interactions is ensuring the health and safety of all employees. While physical health is usually the focus here, it is important to note that mental, emotional, and environmental health are relevant to this field as well.

Government Agencies

In the United States, the Occupational Safety and Health Act of 1970 created both the National Institute for Occupational Safety and Health (NIOSH) and the Occupational Safety and Health Administration (OSHA). OSHA, part of the U.S. Department of Labor, is responsible for developing and enforcing workplace safety and health regulations. NIOSH, part of the U.S. Department of Health and Human Services, is focused on research, information, education, and training in occupational safety and health.