Legal Compliance I

MANA 4328

Dennis C. Veit

dveit@uta.edu

Staffing Laws

Classifying Employees FLSA and Internal Revenue Code

Equal Opportunity Civil Rights Acts (1964 and 1991) ADA and ADEA

Affirmative Action Executive Order 11246

Immigration Immigration Reform and Control Act

Wages and Benefits Equal Pay Act

What are the differences?

Diversity

Equal Employment Opportunity

Affirmative Action

Equal Opportunity vs. Affirmative Action

Equal Opportunity Employment practices must guarantee equal opportunity to

employees and applicants based on protected class differences. Composition of workforce depends on applicants as long as all groups

have equal opportunity.

Affirmative Action Employment practices should encourage a workforce that reflects the

gender and racial composition of the local population. Companies should seek applicants and provide opportunities for

underutilized minorities to guarantee representation in the workforce. No business is ever required to hire someone not qualified for a job.

Equal Opportunity vs. Affirmative Action

Equal Opportunity Applies to private employers with more than 15 employees. Defined by a number of laws and court cases Enforced by the EEOC EEOC responds to complaints

Affirmative Action Applies to government contractors and court-ordered

employers. NO affirmative action requirements for others. Defined by Executive Order 11246 Written document with targets for minority hiring. Enforced by the OFCCP OFCCP responds to complaints and conducts audits

Primary EEO Laws

Title VII of the Civil Rights Act 1964 Civil Rights Act of 1991

Age Discrimination in Employment Act of 1967 Americans with Disabilities Act of 1990 (ADA)

Protected Groups

Race Color Religion Sex National origin

Age Disability

Civil Rights Act of 1964 Title VII

(a) It shall be an unlawful employment practice for an employer –

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin.

Civil Rights Act of 1964 Title VII

(a) It shall be an unlawful employment practice for an employer –

DISPARATE TREATMENT(1) to fail or refuse to hire or to discharge any individual, or otherwise to

discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or

ADVERSE IMPACT(2) to limit, segregate, or classify his employees or applicants for

employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin.

Court Cases

Griggs v. Duke Power (1971) Adverse impacts must be job related Discriminatory intent not sufficient defense

McDonnell Douglas vs. Green (1972) To establish prima facie in disparate treatment cases

Presentation of Evidence

Must prove that rejection was discriminatory.Plaintiff

Provides a clear and specific job‑based explanation for actions.

Defendant

He or She demonstrates: a) Protected class b) Was qualified c) Was rejected d) The job remained open

“McDonnell-Douglas Test”

Plaintiff

Disparate TreatmentDisparate Treatment

Demonstrates Job Demonstrates Job relatedness (validity) and relatedness (validity) and business necessitybusiness necessity

Proves that an alternative Proves that an alternative practice is available that practice is available that has less adverse impacthas less adverse impact

Statistical Tests:Statistical Tests:

4/5’ths Rule4/5’ths Rule

Adverse ImpactAdverse Impact

4/5ths RULE4/5ths RULE The selection rate for any protected group should be The selection rate for any protected group should be no less than 4/5ths or 80% of the selection rate for the group with no less than 4/5ths or 80% of the selection rate for the group with the highest rate of selection. If SR1 *.8 > SR2, then Adverse the highest rate of selection. If SR1 *.8 > SR2, then Adverse Impact.Impact.

Number Hired Number Hired Selection Rate (SR) =Selection Rate (SR) =

Number of ApplicantsNumber of Applicants

Selection Rate Tests

4/5ths Rule

Assume 200 employees were selected from a pool of 500 applicants (200 black and 300 white). Of the employees selected 60 were black and 140 were white.

Selection Rates:

White = 140 / 300 = 46.7%

Black = 60 / 200 = 30%

4/5ths Rule: .467 X .8 = .374 = 37.4%

Since 30% (actual selection rate) is less than 37.4% (4/5ths

comparison selection rate) evidence of discrimination exists.

Defense of Discrimination

Merit Judged on an individual basis

Bona Fide Occupational Qualification Must be present for all who hold that job If is required for the job then it does not matter that it

has adverse impact Business necessity Seniority

Civil Rights Act of 1991

Followed Wards Cove Packing vs. Antonio (1989) Prohibits “race norming” of tests. Plaintiffs can sue for punitive damages in cases of

intentional discrimination. Adverse impact prohibited for each piece of a

selection system. Burden of proof on the employer. Prohibits quotas in selection.

Equal Opportunity Defined

Protected Classes Race, color, religion, sex and national origin Age and disability (added through ADA and ADEA)

Reverse discrimination

Disparate treatment vs. Adverse Impact

Private employers with more than 15 employees.EEO does NOT require preferential treatmentQuotas are illegal

http://www.eeoc.gov/abouteeo/overview_practices.html

EEO Applied

Organizations with more than 15 employees. Uniform Guidelines on Employee Selection Procedures EEO does NOT require preferential treatment - Quotas are illegal Must keep records of applicants for 6 months Employer must show practices are “job-related for the position in question

and consistent with business necessity”

Company Defenses Merit Bona Fide Occupational Qualification Business Necessity

An “alternative employment practice” must be accepted if shown to meet the business necessity and have less adverse impact.

EEO vs. Affirmative Action

Equal Employment Opportunity Collection of laws that apply to all organizations Aimed at ending discrimination

Affirmative Action Executive Order 11246 Applies only to (1) government and contractors (2) court

orders and (3) voluntary programs. NO affirmative action requirements for others. Written document with targets for minority hiring.

Equal Employment Opportunity Commission (EEOC) All private employers with more than 15 employees EEO – 1 for more than 100 employees

Office Of Federal Contract Compliance Programs (OFCCP)

Government contractors or sub-contractors.

Covers approximately 26 million or nearly 22% of the total civilian workforce.

OFCCP requires a contractor to engage in a self-analysis for the purpose of discovering any barriers to equal employment opportunity.

Investigates complaints of discrimination.

Enforcement Agencies

Affirmative Action Program (AAP)

Develop a written program for each establishment

Identify potential problems in the participation and utilization of women and minorities.

Gives the specific procedures and the good faith efforts to provide equal employment opportunity.

If there is underutilization, provides gives targets (not hard quotas) and timetables.

Expanded efforts in outreach, recruitment and training.

AAP Statistics

Flow Statistics Examines selection rates by group 4/5 th’s rule / Std. Deviation Rule

Availability and utilization analyses Employee distribution compared with local population “Stock Statistics”

Concentration Statistics Examining placement of women and minorities by job

category

Availability Analysis

U.T. System determines minority availability by: The minority population in the surrounding labor market. The minority unemployment rate in the surrounding labor market. The percentage of the minority workforce as compared with the

total workforce in the surrounding labor market and Texas. The availability of promotable and transferable minorities within U.

T. System Administration.

http://www.eeoc.gov/stats/jobpat/2000/pmsa/2800.html

http://www.census.gov/hhes/www/eeoindex.html

Utilization Analysis

Compares the % percentage of minorities and women in each Job Group with the calculated % availability of minorities and women.

"Underutilized" is defined as having fewer than would reasonably be expected by their availability.

Job Category:

Management Trainee

Current Trainees Availability

Non Minority

Minority Non Minority

Minority

90% 10% 70% 30%

Concentration Statistics

0%10%20%30%40%50%60%70%80%90%

100%

Men Women

Executives

Managers

Supervisors

Technicians

Staff

Admin Asst.

How to Proceed?

What can companies do to navigate the differences between targets and preferences (which are legal) vs. quotas and reverse discrimination (which are illegal)?

ADEA (1967) and Age Discrimination

Age Discrimination in Employment Act of 1967 Protects employees 70 million workers over 40 Nearly 50% of workers

Cases most often arise from layoff or dismissal It is legitimate to consider salary in layoffs No standard of “reverse discrimination” for age suits

Disparate impact rules apply Adams vs. Florida Power Corp

Dismissed by the Supreme Court 2002 Smith vs. City of Jackson

Affirmed by the Supreme Court 2005

Discrimination is prohibited against individuals with disabilities who can perform essential job functions with reasonable accommodation unless it would cause undue hardship.

Employers not required to change work rules if they are business necessity.

OFCCP vs. Ozark Airlines (1986) – employers must prove applicant could not perform the job safely.

Americans with Disabilities Act (ADA)

Disability is a physical or mental impairment that affects a major life activity.

Essential vs. marginal job functions

Categories of "reasonable accommodations": changes to a job application process changes to the work environment changes to the way a job is usually done employee training

Americans with Disabilities Act (ADA)

“Undue hardship” means significant difficulty or expense. Not only financial difficulty Those that would fundamentally alter the nature or operation of

the business.

Every request for reasonable accommodation should be evaluated separately taking into account: Nature and cost of the accommodation needed Overall financial resources of the business Number of persons employed by the business Impact of the accommodation on the business

Undue Hardship

Record Keeping

EEOC requires that employers keep all personnel records for one year after termination.

Written descriptions of benefits plans (such as pensions) and any seniority or merit system.

Fair Labor Standards Act (FLSA) and the Equal Pay Act, require employers to keep payroll records for at least three years.

All records relevant to wages including wage rates, job evaluations, and seniority and merit systems.

Employment Information Report (EEO-1)

EEO-1 survey is authorized by Title VII and the Equal Employment Opportunity Act of 1972.

All employers with 15 or more employees are required to keep employment records as.

Employers are required to file an EEO-1 report on an annual basis if they: Employ 100 or more employees Employ 50 or more employees and have Federal

contracts totaling $50,000 or more.

This all means….

Make sure that selection criteria are fair. Use validated selection tests. Use the same procedure for all applicants. Collect data and keep records. Only ask job-related questions. No medical exams before making job offers. No business is ever required to hire someone not

qualified for a job.