51-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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11• Administrative Law

• The Federal Trade Commission Act and Consumer Protection Laws

• Antitrust: The Sherman Act• The Clayton Act,

The Robinson-Patman Act, and Antitrust Exemptions and Immunities

• Employment Law• Environmental Regulation

Regulation of Business

PART

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Employment Law

PA ET RHC 51

Take care of those who work for you and you’ll float to greatness on their achievements.

H.S.M. Burns, quoted inMen at the Top (Elliott, 1959)

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Learning Objectives

• Identify and describe legislation protecting worker safety, health, and well-being; regulating wages and hours, pensions and benefits, and income security; and that governs unionized workforces

• Explain employment-at-will doctrine and its major exceptions

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• Workers’ compensation protects only employees (not independent contractors)– Some state laws exempt certain

categories of employees or employers

• Recover only for work-related injuries • Workers’ compensation is an employee’s

exclusive remedy against an employer for covered injuries– Unless employer acted intentionally

Workers’ Compensation

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• In general, a state agency administers workers’ compensation systems to handle and adjudicate workers’ claims

• States fund workers’ compensation by requiring covered employers to purchase private insurance, make payments into a state fund, or self-insure with a contingency fund

Agency Administration

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• Imposes a duty on employers to provide employees with a workplace and jobs free from recognized hazards that may cause death or serious physical harm

• Occupational Safety and Health Administration (OSHA) issues and enforces supporting regulations

– OSHA is authorized to inspect a workplace and issue citations for violations of the act and regulations

Occupational Safety and Health Act

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• Covers those employed for > 12 months (>1,250 hours) by an employer employing 50 or more employees

• Covered employees may take a total of 12 workweeks of leave during any 12-month period for one of several reasons: – Birth of a child– Adoption of a child– Need to care for a spouse, child, or parent with a

serious health condition– Employee’s own serious health condition

Family & Medical Leave Act

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• Federal social security system is funded by the Federal Insurance Contributions Act (FICA), which imposes a flat percentage tax on employee income below a base figure and requires matching amounts by employers to support programs:– Social security– Disability– Medicare

Social Security

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• Covering discharged workers, each state administers a system of unemployment compensation under federal guidelines– Funded by federal and state unemployment

compensation taxes paid by employers– Workers who voluntarily leave without good

cause, are fired for misconduct, fail to actively seek new work, or refuse other work generally are ineligible for benefits

Unemployment Compensation

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• Employers often contribute voluntarily to employee retirement income through pension plans

• Employee Retirement Income Security Act of 1974 (ERISA) imposes:– Guaranteed employee participation– Record-keeping, reporting, and disclosure

requirements– Pension fund managers have fiduciary duties

ERISA

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• FLSA regulates wages and hours by entitling covered employees to 1. Specified minimum wage whose

amount changes over time, and 2. Time-and-a-half rate for work

exceeding 40 hours per week

• Exemptions: executive, administrative, and professional personnel

Fair Labor Standards Act

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• NLRA gave employees the right to organize by enabling them to form, join, and assist labor organizations and to bargain collectively through their own representatives

• The Act also prohibited employers from engaging in certain unfair labor practices and established the National Labor Relations Board (NLRB)

Union Activity

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• The Equal Employment Opportunity Commission is an independent federal agency authorized to enforce employment discrimination laws, investigate allegations of discrimination, and interpret statutes by issuing rules, regulations, and guidelines– See the EEOC website

The EEOC

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• Act forbids pay discrimination based on gender: employee may not be paid a lesser rate than employees of opposite sex for equal work– Equal work defined as substantially equal in terms

of effort, skill, responsibility, and working conditions

• Employer defenses: pay disparity based on seniority, merit, quality or quantity of production (e.g., a piecework system), or any factor other than gender

Equal Pay Act of 1963 (EPA)

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Title VII of 1964 Civil Rights Act

• Prohibits employers from discriminating on basis of race, color, religion, gender, or national origin

• Prohibits sexual harassment and discrimination because of pregnancy

• Covers all employers employing 15 or more employees and engaging in an industry affecting interstate commerce

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Title VII Procedure

• If an employer’s act violates Title VII, the aggrieved person must file a charge or complaint with EEOC for investigation and allow agency to either file a lawsuit or obtain resolution– See EEOC website regarding procedure

• If, after six months, EEOC fails to file suit or resolve the claim, plaintiff may obtain a right to sue letter and file a civil lawsuit

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Title VII Remedies

• If private plaintiff or EEOC wins a Title VII suit, several remedies exist: compensatory damages, reasonable attorney’s fees, equitable relief, and punitive damages

• If discrimination was intentional, an employee may obtain back pay for lost wages and compensatory damages for emotional distress, sickness, loss of reputation, or denial of credit

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Definition of Discrimination

• Discrimination is refusing to hire, failing to promote, firing, or otherwise reducing a person’s employment opportunities for a person in a protected class

• Two methods to prove discrimination:– Disparate treatment– Disparate impact

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• Plaintiff must show s/he was treated differently due to race, gender, color, religion, or ethnicity (prima facie case)

– Example: Gaskell v. University of Kentucky

• Once plaintiff proves prima facie case, the burden shifts to employer to show a legitimate and non-discriminatory reason for discrimination

– Plaintiff must then prove that employer’s reason is mere pretext to win the case

Proving Disparate Treatment

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• Disparate impact occurs if an employer has a rule or practice that, on its face, seems non-discriminatory or neutral, but the impact excludes too many people in a protected class– Example: height or weight limits, taking

a written test

• If plaintiff proves disparate impact, burden is on employer to show job-related reason

Proving Disparate Impact

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• An employer may prevail in a Title VII claim if it can prove a legitimate reason for the discriminatory act or practice based on:– Bona fide occupational qualification

(BFOQ)– Seniority– Merit

Title VII Employer Defenses

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Title VII and Religion

• Employers must make reasonable accommodation for a worker’s religious beliefs unless the request would cause undue hardship for the business– The term religion is broadly defined– Undue hardship exists if

accommodation imposes more than a minimal burden on an employer

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Title VII and Sexual Harassment

• Two major categories of sexual harassment are prohibited by Title VII:– Quid pro quo (this for that): when an

aspect of a job is made contingent on an employee’s sexual activity

– Hostile work environment: when sexual talk and innuendo are so pervasive that a hostile work environment is created for the employee

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Age Discrimination in Employment Act

• Prohibits age-based discrimination against employees or job applicants at least 40 years old

• Covers organizations that engage in an industry affecting interstate commerce, and employ at least 20 persons

• Remedial procedures, defenses, and remedies are similar to Title VII claims

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Americans with Disabilities Act

• Prohibits employers from disqualifying a job applicant or employee if employee can, with reasonable accommodation, perform the essential functions of the job

• Disability under the ADA is:– Physical or mental impairment that

substantially limits one or more of an individual’s major life activities

– A record of such an impairment, or – One’s being regarded as having such an

impairment

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Privacy

• Employer interests in surveillance of the workplace may conflict with employee privacy interests

• Unless otherwise specified by statute, U.S. Constitution does not apply to private employment– Federal privacy laws typically apply only

to federal employees and state law covers private sector employees

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Employee Polygraph Protection Act of 1988

• Applies to private employers and current or prospective employees

• Enforced by Department of Labor (DOL), an employer may not:– Require or request employees to take a

polygraph (lie detector) test– Use or inquire about polygraph results– Discriminate based on polygraph results

or an employee’s failure or refusal to take test

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Drug & Alcohol Testing

• Testing by public employers is legal under search and seizure provisions of Fourth Amendment if:– Reasonable basis for

suspecting employee drug or alcohol use on the job exists

– If such use could threaten public interest or public safety

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Employer Searches

• A public employee has a reasonable expectation of privacy in areas such as an office, desk, or files, but a search of those areas is constitutional if search is reasonable under circumstances

• Employers may monitor the workplace by closed-circuit television, video monitoring, telephone monitoring, computer workstation monitoring (keystroke counting), and using metal detectors

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Employment at Will Rule

• Traditional employment-at-will rule first appeared around 1870: either party can terminate an employment contract of indefinite duration for good cause or no cause

• Doctrine limited today by statutes and three common law exceptions:– Public policy– Implied covenant of good faith & fair dealing– Employment promises

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Public Policy Exception

• Terminated employee may claim discharge was unlawful (wrongful) because it violated state public policy in one of three ways:– Employee refused to commit unlawful act– Employee performed public obligation

such as military duty or whistle-blowing• A whistle-blower is an employee who

publicly discloses dangerous, illegal, or improper behavior by the employer

– Employee exercised legal right or privilege

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Breach of Good Faith

• In a wrongful discharge suit based on breach of the implied covenant of good faith and fair dealing, employee argues discharge was unlawful because it was not made in good faith or did not amount to fair dealing

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Thought Questions

• Employers may be able to monitor your work by video, audio, computer keystroke, or other methods of surveillance. Are you comfortable with this fact? Are broad allowances for employer surveillance good public policy?