Legal Issues

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Legal Issues
4/1/05
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• 4 million in overtime awarded to VPs at Bank of
  America in Seattle
• Starbucks settles 18 million managers suit on
  overtime in California
• Farmers claim adjusters award 90 for overtime
• RadioShack pays 30 million to settle store
  managers

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Fair Labor Standards Act

• Primarily covers firms which are engaged in
  interstate commerce in the handling, moving or
  selling of goods
• Provides for minimum wage (5.15)
• 25 cents in 1938
• 1.68 in 1968
• 2.65 in 1978
• 5.15 in 1997
• Defines overtime for nonexempt jobs
• All workers earning less than 22,100 must
  receive overtime
• Delineates protection for child labor.

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Federal Minimum Wage

• 17 states and the District of Columbia covering
  45 of the U.S. population have set minimums
  above the federal rate of 5.15.
• About half of minimum-wage earners work at
  restaurants.

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State of Washington

• Provides for minimum wage (7.63)
• Highest in the nation
• Alaska is 7.15
• Connecticut is 7.10
• Oregon is 7.05
• 14- and 15-year-olds may be paid 85 percent of
  the adult minimum wage, or 6.49 an hour
• Adjusted to keep up with inflation (Washington,
  Oregon, Vermont, Florida)
• Tied to consumer price index.

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FLSA Overtime Provisions

• Must be paid at least 1.5 times their regular
  rate of pay for all hours worked over 40 during a
  single week.
• Work week week is any period of seven consecutive
  days.
• Paid for overtime whether it was worked at home
  or in the office.
• Paid overtime even if you did not ask the person
  to work it and, in fact, even if you asked him
  or her not work it.
• There are some exceptions for certain medical
  jobs (doctors, veterinarians), firefighters where
  it is on a two week average.

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FLSA Overtime Provisions

• Exemptions include
• Executives
• Administrative
• Learned Professionals
• Creative Professionals
• Any worker making 65,000 or more in one of the
  above categories is automatically exempt
• Computer employees and outside sales workers
  generally are exempt

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FLSA Exemptions

• Executives
• Manage operations
• Direct 2 or more workers
• Authority to hire and fire
• Administrative
• Office or nonmanual work related to general
  business operations
• Hold a position of responsibility defined as work
  of substantial importance or high level of skill
  or training
• Learned professionals
• Office or nonmanual work requiring knowledge of
  an advance degree in a field of science or
  learning but also gained through the military
• Creative professionals
• Invention, imagination, originality or talen in
  recognized artistic field.

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Provisions of FLSA

• Various minimum wage exceptions apply under
  specific circumstances to
• Disabled workers,
• Fulltime students,
• youth under the age of 20 in their first 90 days
  of employment,
• Tipped employees
• Student learners
• Special rules apply to state and logcal
  government which allow compensatory time off
  instead of cash overtime payment
• Must maintain records of hours worked

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Exemption Learned Professional

• Advanced Training Or
• Creative, Original Work
• Exercise of Discretion
• Intellectual
• Nonstandardized
• gt20 of work hours spent on other tasks

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Exemption Learned Professional

• Certain physicians and practitioners are example
  if the are paid on a salary basis
• Veterinarians
• Clark vs United Emergency Animal Clinic, 2004

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Exemption Managerial

• Key function is management of the enterprise or a
  customarily recognized department or subdivision.
• Supervises 2 or more employees (80 hours)
• Has authority or can recommend hiring and firing
• Customarily and regularly exercise discretion
  powers.
• Devotes no more than 20 percent (40
  percent if employed in a retail or service
  establishment) to other activities

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Exemption Administrator

• Responsible office or non manual work directly
  related to management policies or general
  business operations.
• Administer academic or training programs for
  educational establishment.
• Exercise discretion and independent judgment as
  distinguished from using skills and following
  procedures.
• Must have authority to make important decisions.

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Executives

• Executives
• Manage operations
• Direct 2 or more workers
• Authority to hire and fire

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Overtime Is NOT Due When

• Paid on a commission basis as long AND as pay at
  least 1.5 times minimum wage
• Time spent traveling from their homes or changing
  clothes and washing before or after work unless
  it requires special clothing for work (e.g.
  sanitary clothing for clean rooms)
• Travels during normal working hours
• When an employee works an extra shift for another
  employees at their own option
• Up to 10 hours per week for remedial education
  classes (like reading).
• Engaged to wait versus waiting to be engaged
  is problematic.

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Child Labor Standards

• Dictates the hours and conditions under
  which children may work.
• Age 18 and over any job whether hazardous or not.
  Unlimited hours.
• Age 16 -17 non hazardous, unlimited hour
• Age 14-15 non school hours 3 hours on school
  days, 18 hours/ week, 8 hours/non school
  daybegin no earlier than 7 a.m. nor later than 7
  p.m. except in the summer.
• Age 12-13 outside school hours. Parents
  permission.
• Age 12 and under. Farm work, outside of school
  hours, parents permission.

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Equal Pay Act
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Equal Pay Act
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Equal Pay Act

• Prohibits discrimination between employees on the
  basis of sex for employees performing
  substantially equal work.
• Skill
• Effort
• Responsibility
• Working Conditions
• Determined through Job Analysis and Job Evaluation

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Equal Pay Act

• Exemptions
• Seniority systems
• Merit Pay Systems
• Systems that measure earnings or quality of work
• Factors Other than Sex

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WomensPayComparedTo Men
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Civil Rights Act of 1964

• To fail or refuse to hire or discharge any
  individual with respect to compensation, terms,
  conditions or privileges or employment due to the
  individual's race, color, religion, sex or
  national origin or
• To limit, segregate or classify employees or
  applicants in any way which would deprive the
  individual of employment opportunities.

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Shifting Burden Of Proof Model
How Do You Prove Discrimination?

• Burden On Plaintiff Disparate Impact
• Disparate Treatment

Burden on Defendant Valid Selection
Device BFOQ Business Necessity Affirmative Action
Burden on Plaintiff Is There a Better,
Less Discriminatory Selection Device?
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Disparate Treatment

• He or She Belongs to a Protected Group
• He or she was rejected but was qualified
• The position remained open to applicants
• Employee must prove reasons for treatment was
  pretext for discrimination
• Prove differential Treatment
• Prove Intentional Discrimination
• Employer Tries to articulate a sufficient Reason
  for Differential Treatment

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Disparate Impact

• Employee Must Prove
• Prima facie discrimination
• Show Selection Ratios Different
• If Proven, Burden Shifts to Employer

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Defenses Against Disparate Impact

• Bona Fide Occupation Qualification. (BFOQ)
  rejects applicants on the basis of a particular
  characteristic.
• Seniority System. If intent and outcome is not
  necessarily discriminatory
• Business Necessity. When the essence of the
  business operation is undermined by not hiring
  members of a protected group.
• Job Relatedness Criteria. Validity is
  established through proving there is a
  relationship between the criterion (test) and
  actual job performance.
• Affirmative Action Program. Used to rectify past
  discrimination may used as a defense.

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Age Discrimination in Employment Act of 1967

• Purpose
• To promote employment of older persons based on
  their ability rather than age
• To prohibit arbitrary age discrimination in
  employment
• To employers and workers find ways of meeting
  problems arising from the impact of age on
  employment.
• Older workers find themselves disadvantaged in
  their efforts to retain and to regain employment
  when displaced from jobs
• The setting of arbitrary age limits regardless of
  potential for job performance has become a common
  practice
• Incidence of unemployment
• Existence in industries affecting commerce, of
  arbitrary discrimination in employment because of
  age, burdens commerce and the free flow of goods
  in commerce. (b) It is therefore the purpose of
  this

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Age Discrimination in Employment Act of 1967

• It Shall Be Unlawful
• To fail or refuse to hire or to discharge any
  individual or otherwise discriminate against any
  individual with respect to his compensation,
  terms, conditions, or privileges of employment,
  because of such individual's age
• To limit, segregate, or classify his employees 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 age or
• To reduce the wage rate of any employee in order
  to comply with law

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Family Medical Leave Act of 1993 Covers

• FMLA covers any firm engaged in commerce or in
  any industry or activity affecting commerce, who
  employs 50 or more employees for each working day
  during each of 20 or more calendar workweeks in
  the current or preceding calendar year.

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Family Medical Leave Act of 1993

• Covered employees must grant an eligible
  employees up to a total of 12 work weeks of
  unpaid leave during any 12-month period for one
  or more of the following reasons
• Birth of newborn child of employee
• Placement with the employee of a son or daughter
  for adoption or foster care
• Care for an immediate family member with a
  serious health condition or
• Take medical leave for a serious health
  condition.

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Legal DefendabiltyAppraisals
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Wade vs Mississippi Cooperative Extension (1974)

• Supervisory ratings of general attributes were
  utilized
• Leadership,
• Attitude towards people,
• Ethical habits,
• Resourcefulness,
• Capacity for growth
• Personal conduct
• Appearance

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Court Ruling

• These are traits which are susceptible to
  partiality and to the personal taste, whim, or
  fancy of the evaluator
• We must then view these factors to be patently
  subjective in form and obviously susceptible to
  completely subjective treatment.

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Albermarle Paper Company vs. Moody (1974)

• There was no way of knowing precisely what
  criteria of job performance the supervisors were
  considering, whether each supervisor was
  considering the same criteria -- or whether
  indeed any of the supervisors actually applied a
  focused and stable body of criteria of any kind.

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EEOC v. Sandia Corporation (1980)

• Reduction in Force Exercise
• Engineering Firm
• The evaluations were based on best judgments and
  opinion of evaluators but were not based on any
  definitive specific criteria based on quality or
  quantity of work of specific performance that
  were supported by some kind of record.

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Legally Defendable PMS

• Job Analysis to determine key functions
• Criterion linked to organizational goals
• Criterion/Metrics must tap Key Functions
• Criterion communicated to employee in advance
  and understood by employee
• Criterion applied consistently
• Managers trained with consistent frame of
  Reference