Ch02

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 2–2
Learning Objectives
After studying this chapter, you should be able to:
1. Describe the legal context of human resource
management
2. Identify key laws that prohibit discrimination in the
workplace and discuss equal employment opportunity
3. Discuss legal issues in compensation, labor relations,
and other areas in human resource management
4. Discuss the importance to an organization of evaluating
its legal compliance

The Regulatory Environment of HRM
• Regulation can come in the form of new
laws or statutes passed by national, state,
or local government bodies.
• Most regulations start at the national level.
• State and local regulations are more likely
to extend or modify national regulations
rather than create new ones.

Legal Regulation of Human Resource Management
Prospective employees
Protection from discrimination in selection, initial
job placement, and initial compensation
Current employees
Protection from discrimination in performance appraisal,
subsequent job placements, training and development
opportunities, career and promotion opportunities, and
all other dimensions of work in the organization

Types of
Discrimination
• Illegal Discrimination
Results from behaviors or actions by an
organization or managers that cause
protected class members to be unfairly
differentiated from others
• Disparate Treatment
When the differential treatment of individuals
is based race, color, religion, sex, national
origin, age, or disability status.

Forms of Illegal Discrimination
Disparate
impact
Retaliation
Disparate
treatment
Pattern or
practice
Forms of
illegal
discrimination

Title VII of the Civil Rights Act of 1964
• It is illegal for an employer to fail or refuse
to hire or to discharge any individual or to
discriminate in any other way against any
individual with respect to any aspect of the
employment relationship on the basis of
that individual’s race, color, religious
beliefs, sex, or national origin.

© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,
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 for classroom use. 2–8
Bona Fide Occupational Qualification (BFOQ)
• BFOQ
A condition (e.g., age, sex, or other personal
characteristic) that legitimately affects a
person’s ability to perform a job.
• Business Necessity
Is a practice that is important for the safe and
efficient operation of the business, thus is a
permissible BFOQ.
Indicates an employment practice shown to
be related to successful job performance.

Diaz v.
Pan American World Airways
• Cello Diaz was denied employment
because Pan Am had a hiring policy of
hiring only female flight attendants
Courts cited that Pan Am’s data on relative
effectiveness of male and female flight
attendants was not compelling
No evidence existed to prevent males from
being employed as flight attendants.

Disparate Impact
• Occurs when an apparently neutral employment
practice disproportionately excludes a protected
group from employment opportunities
• Griggs v. Duke Power case
• Four-fifths Rule
 Suggests that disparate impact exists if a selection
criterion results in a selection rate for a protected
class that is less than four-fifths (80 percent) of that
for the majority group

Disparate Impact
(cont’d)
• Ward’s Cove Packing v. Antonio case
 Statistical evidence alone is not sufficient to
establish a prima facie case for discrimination.
• Geographical Comparisons
 Compares the characteristics of the potential pool
of qualified applicants for a job (focusing on
characteristics such as race, ethnicity, and gender)
with those same characteristics of the present
employees in the job.

Disparate Impact
(cont’d)
• McDonnell-Douglas Test
A basis for establishing a prima facie case
of disparate impact discrimination
Four steps:
1. Applicant is a member of a protected class.
2. Applicant was qualified.
3. Applicant was turned down.
4. Firm continued to seek other applicants
with the same qualifications.

Disparate Impact
(cont’d)
• Pattern or Practice Discrimination
A form of disparate treatment that
occurs on a class-wide basis
• Protected Class
All individuals who share one or more
common personal characteristics (e.g.,
race) as indicated by a specific law

Affirmative Action
• Affirmative Action
Steps taken by an organization to seek
qualified applicants from groups
underrepresented in the workforce due
to past discrimination
• Utilization Analysis
A comparison of the race, sex, and ethnic
composition of the employer’s workforce
to that of the available labor supply

Reverse Discrimination
• Reverse Discrimination
A practice that has a disparate impact
on members of nonprotected classes.
• Cases
 Regents of the University of California v. Bakke
 United Steelworkers of America v. Weber
 Ricci v. Stefano

Sexual Harassment at Work
• Quid pro Quo
The harasser offers to exchange something
of value for sexual favors.
• Hostile Work Environment
The climate or culture of a firm is punitive
toward people of a different gender.

Corporate policy is that all employees have the right to work in an
environment free of discrimination, including sexual harassment.
Corporate policy concerning sexual harassment is as follows:
Any employee found engaging in sexual harassment will be
subject to:
Official reprimands that will be placed in the employee’s
permanent personnel file
Suspension from work without pay
Demotion to a lower-paying job assignment
Discharge from the company
Other appropriate action
(Continued on next slide)
Beyond the Book:
Policy of Acme Electronics Corporation

No supervisor shall explicitly or implicitly threaten that a subordinate’s refusal to
submit to sexual advances will result in adverse effects on the worker’s
employment, pay promotions, assigned duties, or any other condition of
employment. Employees are prohibited from engaging in behavior of a sexual
nature that creates an offensive, unpleasant, or otherwise hostile work
environment, e.g., telling jokes of a sexual nature, offensive flirtations, sexual
advances or propositions, comments concerning the bodies of members of the
opposite sex, or using sexually explicit words considered to be offensive.
Acme Corporation encourages any employee who feels he/she has been the
victim of sexual harassment to report the incident to his/her supervisor or to
Bob Farrow, chair of the EEO Compliance Committee (456-2534, Room 423 in
the Personnel office). The incident will be investigated, and corrective action
will be taken if appropriate. Acme management is committed to eliminating this
type of behavior from our company and will take every step necessary to
protect individuals from it.
Beyond the Book:
Policy of Acme Electronics Corporation

Legislation
• The Lilly Ledbetter Fair Pay Act of 2009
• Equal Pay Act of 1963
• Age Discrimination and Employment Act (ADEA)
• Pregnancy Discrimination Act of 1979
• Civil Rights Act of 1991
• Americans with Disabilities Act of 1990
• Vietnam Era Veteran’s Readjustment Act
• Vocational Rehabilitation Act

Legislation (cont’d)
• Civil Rights Act of 1991
Makes it easier for individuals who feel they
have been discriminated against to take
legal action against organizations
Provides for punitive damages
in cases of discrimination
under Title VII

• Americans with Disabilities Act of 1990
Prohibits discrimination based on disability in
all aspects of the employment relationship
such as job application procedures, hiring,
firing, promotion, compensation, and training,
as well as other employment activities such
as advertising, recruiting, tenure, layoffs,
leave, and fringe benefits
• ADA Amendments Act of 2008

 Individuals attempting to prove disability status cannot
merely submit a medical diagnosis of an impairment.
 The act does not cover:
 Homosexuality or bisexuality
 Gender Identity disorders not resulting from physical
impairment or other sexual behavior disorders
 Compulsive gambling, kleptomania, or pyromania
 Psychoactive substance use disorders resulting from
current illegal use of drugs
 Current illegal use of drugs
Beyond the Book:
ADA of 1990

• Family and Medical Leave Act of 1993
 Requires employers with more than fifty employees
to provide up to twelve weeks of unpaid leave for
employees:
 to provide care after the birth or adoption of a child
 to care for a seriously ill child, spouse, or parent
 to recover from a personal serious illness

• Executive Order 11246
 Prohibits discrimination against protected groups by
federal contractors; requires written affirmative action
plans from those with contracts greater than $50,000
• Executive Order 11478
 Required federal government to be nondiscriminatory
in its employment practices.
 Extends to all employers with federal contracts worth
$10,000 or more.

Investigating and Resolving
a Discrimination Complaint
MARY SMITH believes she has been
discriminated against at work. She was
passed over for a promotion to
supervisor, and believes it was because
she was a woman, rather than because
she was unqualified. Specifically, all
candidates for promotion must be
approved by their immediate supervisor,
and most of these supervisors are older
white men who have been heard to say
that women should not be promoted. In
fact, almost no women have been
promoted to supervisor in this
organization. What can Mary do?
STEP 1: Mary files a complaint with her
local or state EEO agency.
STEP 2: Local/state EEO agency
agrees to investigate Mary’s
claim on behalf of EEOC, and
the agency contacts Mary’s
employer to determine whether
the claim has any merit.

Investigating and Resolving
a Discrimination Complaint
Once the case goes to court, and
assuming that Mary and EEOC believe
they have a case of disparate impact,
the process goes through several more
crucial steps.
STEP 1: Mary tries to establish a prima
facie case of discrimination.
(cont’d)

Legal Issues in Employment
• Compensation
Fair Labor Standards Act (FLSA)
Employee Retirement Income Security Act of
1974 (ERISA)
Mandated health care
• Labor Relations
National Labor Relations Act or Wagner Act
Taft-Hartley Act
Landrum-Griffin Act

Minimum
Wage History
Effective Date Minimum Wage ($)
1938 0.25
1939 0.30
1945 0.40
1950 0.75
1956 1.00
1961 1.15
1963 1.25
1967 1.40
1968 1.60
1974 2.00
1975 2.10
1976 2.30
1978 2.65
1979 2.90
1980 3.10
1981 3.35
1990 3.80
1991 4.25
1996 4.75
1997 5.15
2007 5.85
2008 6.55
2009 7.25

Legal Issues in Employment
• Employee Rights
Occupational Safety and Health Act of 1970
(OSHA)
Drug-Free Workplace Act of 1988
Worker Adjustment and Retraining
Notification (WARN) Act of 1988

 An employer can not terminate an employee for:
 Refusing to commit perjury in court on the
employer’s behalf.
 Cooperating with a government agency in the
investigation of a charge or giving testimony.
 Refusing to violate a professional code of conduct.
 Reporting OSHA infractions.
 Refusing to support a law or a political candidate
favored by the employer.
 Complying with a summons to jury duty.
Beyond the Book:
Employee Termination

Privacy Issues at Work
• The Privacy Act of 1974
• The PATRIOT Act
• Genetic Information
Nondiscrimination Act
(GINA) of 2009

Privacy Issues at Work
• Evaluating Legal Compliance:
Ensure that managers clearly understand
the laws that govern all aspects of HRM.
Have the organization’s legal and HR staff
answer questions.
Engage in periodic external legal audits of
the organization’s HRM procedures.

Ch02

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Ch02