Chapter 3 The Legal Context
How Can Legal Compliance Be Strategic?
· Avoid the expense of lawsuits
· Avoid the negative public relations that comes with litigation
· Allows companies to capitalize on the strengths of diversity and perform
· better because they focus more on performance and merit
· Be better able to hire quality people from all segments of the labor force
Why Do Employment Laws Exist?
· Because the employer typically has disproportionate power in the
· employment relationship
· Help to promote fairness and consistent treatment among different
· employees by prohibiting unfair discrimination in employment and
· providing equal employment opportunity for everyone
Complying With Employment Laws
· Enhances hiring quality
· Enhances the firm’s reputation and image as an employer
· Promotes fairness perceptions among job candidates
· Reduces spillover effects (for example, rejected applicants not becoming
· customers or discouraging others from applying for jobs)
· Reinforces an ethical culture
· Enhances organizational performance by ensuring that people are hired
· or not hired based on their qualifications, not biases
· Promotes diversity, which can enhance an organization’s ability to appeal
· to a broader customer base
Types of Employment Relationships
· Employee: someone hired by another person or business for a wage or
· fixed payment in exchange for personal services, and who does not
· provide the services as part of an independent business; employment
· contract can be explicit or implicit
· Independent contractor: performs services wherein the employer
· controls or directs only the result of the work
· Contingent workers: any job in which an individual does not have a
· contract for long-term employment
· Temporary workers
· Leased workers
· Part-time and seasonal workers
· Unionized workers (e.g., hiring electricians for a project from a union
· Outsourced work
Employment at Will
· Definition: either party can terminate the employment relationship at any
· time, for just cause, no cause, or any cause that is not illegal, with no
· liability as long as there is no contract for a definite term of employment
· Following formal discipline and termination procedures whenever
· possible is still advised to help avoid discrimination and wrongful
· termination claims
· Best used as a legal defense to keep the organization from being forced
· to follow its own policies inflexibly
· Signing an employment application or to acknowledge receipt of an
· employee handbook produces a written record that the policy has been
· read and understood
Exceptions to Employment at Will
· Retaliatory discharge (prohibited by EEO laws)
· Implied employment contract (when an employer’s personnel policies or
· handbooks indicate that an employee will not be fired except for good
· cause or specify a procedural process for firing)
· Implied covenant of good faith and fair dealing (e.g., firing an employee
· to prevent their vesting in the pension plan next month)
· Federal or state discrimination protection supersedes employment at will
· Legally representing workers, organizing employees and negotiating the
· terms and conditions of union members’ employment
· The conditions of employment are contained in a contract called a
· collective bargaining agreement or a collective employment agreement.
Four Union Models
· A closed shop exclusively employs people who are already union
· members. An example is a compulsory hiring hall, where the employer
· must recruit directly from the union.
· A union shop employs both union and non-union workers, but new
· employees must join the union within a specified time limit.
· An agency shop requires non-union workers to pay a fee to the union for
· its services in negotiating their contract.
· An open shop does not discriminate based on union membership in
· employing or keeping workers. Some workers benefit from a union or
· the collective bargaining process despite not contributing to the union.
Right to Work Law
· Guarantees that no person can be compelled, as a condition of
· employment, to join or not to join, nor to pay dues to a labor union.
· Section 14(b) of the Taft-Hartley Act affirms states the right to enact
· Right to Work laws
· “The Difference Between ‘Right to Work’ and ‘At Will
· Employment’” (2:26)
· Goal: identify, assess, and resolve risks to the organization before they
· become serious threats through risk assessment and risk control
· Poorly designed, documented, or executed staffing processes can lead
· to noncompliance with Section 409 of the Sarbanes-Oxley Act of 2002
· and increase both legal and financial risks
Laws and Regulations
See table 3-2 from your text
EEO, AA, and Quotas
· Equal employment opportunity: employment practices are designed and
· used in a “facially neutral” manner
· Affirmative action: the proactive effort to eliminate discrimination and its
· effects, and to ensure nondiscriminatory results in employment
· practices in the future
· An affirmative action plan describes in detail the actions to be taken,
· procedures to be followed, and standards to be adhered to, when it
· comes to establishing an affirmative action program.
· Staffing Quotas: establish specific requirements that certain percentages
· of disadvantaged groups be hired to equalize their proportional
· representation of underrepresented groups in the company’s workforce
· with their proportions in the organization’s relevant labor market
Affirmative Action Plans Involving Preferential Treatment
· Should be remedial in nature
· Should not exclude all nonminorities
· Should be temporary and discontinued after meeting the AA goals
· Should be formalized; those lacking formal goals or a formal statement
· of intended actions have been found to be discriminatory
Equal Employment Opportunity Commission (EEOC)
· Enforces the following federal statutes:
· Title VII of the Civil Rights Act of 1964
· The Age Discrimination in Employment Act of 1967 (ADEA)
· Pregnancy Discrimination Act of 1978
· Title I and V of The Americans with Disabilities Act (ADA) of 1990
· Sections 501 and 503 of the Rehabilitation Act of 1973
· Sections 102 and 103 of The Civil Rights Act of 1991
· The Equal Pay Act of 1963
· The Genetic Information Nondiscrimination Act of 2008 (GINA)
· The EEOC receives over 90,000 charges each year. Even companies with
· large, sophisticated staffing functions are vulnerable.
· The EEOC encourages and facilitates voluntary compliance through
· tailored programs to meet the needs of employers and through
· programs to educate the public on EEO laws.
The Office of Federal Contract Compliance Programs (OFCCP)
· Part of the U.S. Department of Labor’s Employment Standards
· Mission: to ensure non-discrimination, to expand opportunities, and to
· make sure that all employment decisions are inclusive and supportive of
· Administers and enforces 3 EEO programs that apply to federal
· contractors and subcontractors:
· Executive Order 11246 (later expanded by Executive Order 11375)
· Section 503 of the Rehabilitation Act of 1973
· The AA provisions of the 1974 Vietnam Era Veteran’s Readjustment
· Assistance Act
· Ensures that federal contractors with at least 50 employees and who
· receive $50,000 or more in grants, goods, and services take affirmative
· action to promote equal employment opportunity and annually file
· appropriate affirmative action plans.
· Primarily relies on compliance reviews and complaint investigations.
· Although the OFCCP does enforce affirmative action compliance, it
· focuses to a greater extent on class action discrimination.
· Conducts systemic reviews of employers’ employment practices to find
Strategic Staffing 4th edition © 2020 Chicago Business Press. All Rights
Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part
Who is an “Applicant?”
· The legal definition of an applicant is particularly important with regard
· to two employment law issues:
1. Only “applicants” may establish a prima facie case of unlawful
2. discrimination regarding hiring decisions under state and federal
3. discrimination statutes.
4. Employers must determine who qualifies as an “applicant” in order to
5. identify the gender and race of all applicants to evaluate whether its
6. hiring practices have an adverse impact on men, women, or
· The question of who is an applicant is critical to establishing the
· proportions of the applicant pool belonging to different legally protected
· groups (e.g., sex, race, national origin, etc.).
· Understanding the definition of an applicant can help employers
· minimize risk and protect themselves from costly audit defense.
How the OFCCP Defines “Applicant”
The OFCCP considers a person applying via the Internet and related
technologies to be an applicant if all four of the following criteria are
1. The individual submits an expression of interest in employment
2. through the Internet or related electronic data technologies;
3. The contractor considers the individual for employment in a particular
5. The individual’s expression of interest indicates the individual
6. possesses the basic qualifications for the position; and
7. The individual at no point in the contractor’s selection process prior to
8. receiving an offer of employment from the contractor, removes himself
9. or herself from further consideration or otherwise indicates that he or
10. she is no longer interested in the position.
· The intentional discrimination based on a person’s protected
· Can be direct, for example resulting from a company’s policy to not hire
· older workers
· Can be inferred from situational factors or result from a combination of
· permissible and prohibited factors
Inferring Disparate Treatment
· To establish this type of case of discrimination under the theory of
· disparate treatment, the plaintiff must show:
· That he or she belongs to a group protected from discrimination (race,
· gender, etc.).
· That he or she applied for the job and was qualified for the job for
· which the employer was seeking applicants.
· That despite being qualified he or she was rejected. (The plaintiff does
· not need to prove that he or she was rejected because of his protected
· status, only that despite his or her qualifications, he or she was
· That after being rejected, the position remained open and the
· employer continued to seek applicants whose qualifications were
· similar to those of the plaintiff.
· The burden then shifts to the employer to show that the discrimination is
· the result of a bona fide occupational qualification that is reasonably
· necessary for the normal operation of the business or the plaintiff wins
· the case.
· If the employer shows that the discrimination is based on a business
· necessity, the plaintiff then has the opportunity to present evidence
· showing that the employer’s stated reason for the rejection was false
· and merely a pretext.
· To establish a case allowed to go to court, the plaintiff need not prove
· that discrimination was the motivating factor in the hiring or promotion
· decision, only raise an inference that such misconduct occurred.
Mixed Motive Case of Disparate Treatment
· Employer is accused of having both a legitimate and an illegitimate
· reason for making the employment decision.
· It is sufficient to show that a protected characteristic (race, sex, etc.) was
· a motivating factor in an employment decision, even if other legitimate
· factors (such as absences) also motivated the decision.
· A plaintiff only needs to prove that the protected characteristic was a
· motivating factor – one of the reasons for the decision – no matter how
· small a role it played.
· If a plaintiff satisfies the burden of proof that discrimination was a
· motivating factor in the employer’s adverse employment action, the
· employer is found liable.
· The burden of proof then shifts to the employer to eliminate or reduce a
· plaintiff’s monetary damages by proving to the jury that it would have
· made the same employment decision in the absence of the
· discriminatory motive.
Disparate Treatment and
Mixed Motive Cases
· Under the mixed motive analysis, the burden of proof is on the
· defendant to show that the decision would have been the same despite
· plaintiff’s race or sex.
· Under the disparate treatment method, the burden of proof is on the
· plaintiff to disprove the same thing.
Adverse (Disparate) Impact
· Definition: When an action has a disproportionate effect on a protected
· group, regardless of the employer’s intent
· The only defense for adverse impact is when the adverse impact is
· justified by business necessity or job relatedness (a bona fide
· occupational qualification or BFOQ)
· Assessment scores cannot be altered or changed to reduce the adverse
· impact on protected groups
· Assessment test results cannot be ignored simply because they have an
· adverse impact on a protected group
· Stock statistics: compare the percentage of men, women, or minorities
· employed in a job category with their availability in the relevant
· population of qualified people interested in the position
· Flow statistics: compare the percentage of applicants hired from
· different subgroups to determine if they are significantly different from
· each other
· The Uniform Guidelines on Employee Selection Procedures states that
· organizations must keep records of applicant flow statistics and
· applicant selection rates must be calculated:
· For each job category,
· For both internal and external selection decisions,
· For each step in the selection process, and
· By applicant race and sex.
The 4/5 (or 80%) Rule
· The 80% rule: a selection rate for any race, sex, or ethnic group which is
· less than 4/5 (or 80%) of the rate for the group with the highest rate will
· generally be regarded as evidence of adverse impact
· Only a guideline; provides for exceptions based on issues surrounding
· statistical and practical significance of the differences in selection rates
· (such as small sample sizes)
Online statistical tools at HR-Software.net
· Concentration statistics: compare the percentages of men, women, or
· minorities in various job categories to see if men, women, or minorities
· are concentrated in certain workforce categories
If half of an organization’s employees are female but women tend to
comprise 90% of the clerical workforce and men tend to comprise 90% of
the managerial workforce women may be underutilized in managerial
positions and men underutilized in clerical positions
Establishing an Adverse Impact Case
· The plaintiff must prove, generally through statistical comparisons, that
· the challenged practice or selection device has a substantial adverse
· impact on a protected group.
· The defendant can then criticize the statistical analysis or offer
· different statistics.
· If the plaintiff establishes disparate impact, the employer must prove
· that the challenged practice is “job-related for the position in question
· and consistent with business necessity.”
· Even if the employer proves business necessity, the plaintiff may still
· prevail by showing that the employer has refused to adopt an alternative
· employment practice that would satisfy the employer’s legitimate
· interests without having a disparate impact on a protected class.
Defending Failure-to-Hire Lawsuits
· Failure-to-hire lawsuits can be difficult to defend because of the lack of
· work history with the plaintiff to rely on.
· Providing all recruits an accurate job description and using a
· standardized and well-documented recruitment and screening process
· are the foundation of the employer’s defense.
· Screening candidates using objective, job-relevant criteria with an
· established ability to predict job performance, and archiving all recruiter
· and interviewer notes, test and interview scores, etc. for each applicant
· can help defend the employer’s employment decisions in court.
· Reduce people’s desire to file a lawsuit by proactively and genuinely
· trying to generate applicants from diverse groups and treating all
· recruits fairly and respectfully.
· Based on the common law concept that an employer has a general
· obligation not to hire an applicant that they knew or should have known
· poses a risk of harm to third parties
· In order for a customer, employee, or other third party to win a negligent
· hiring suit against an employer, the following must generally be shown:
1. The existence of an employment relationship between the employer
2. and the worker,
3. The employee’s unfitness,
4. The employer’s actual or constructive knowledge of the employee’s
5. unfitness (failure to investigate an employee’s background can lead to
6. a finding of constructive knowledge),
7. The employee’s act or omission causing the third party’s injuries, and
8. The employer’s negligence in hiring the employee as the most likely
9. cause of the plaintiff’s injuries.
· Negligent retention is similar to negligent hiring, but it focuses on
· situations in which a company knowingly retains employees who have a
· high risk of injuring themselves or others
· Definition: misrepresenting or failing to disclose complete and accurate
· information about a former employee.
· A former employer can be sued for negligent referral if the employee is
· involved in some incident at the new workplace that might have been
· predicted based on prior behavior.
· Defamation (an unprivileged publication of false statements to third
· parties that tends to harm the reputation of the plaintiff in the
· community) is currently the most common cause of action used by
· former employees to challenge a former employer’s reference.
· To avoid the risk of a defamation charge it may be best to say as little as
· possible except in those situations where the employee’s behaviors
· could endanger others in the new workplace.
EEOC Best Practices Definition
· A best practice in staffing:
· Complies with the law,
· Promotes equal employment opportunity,
· Addresses one or more barriers that adversely affect equal
· employment opportunity,
· Manifests management commitment and accountability,
· Ensures management and employee communication,
· Produces noteworthy results, and
· Does not cause or result in unfairness.
Key Elements That Support Successful EEO Programs
· Study – know the laws and standards, remove EEO barriers, and seek
· assistance from the EEOC, professional consultants, associations or
· groups, etc.
· Plan – know the relevant workforce and demographics, define the
· problem(s), propose solutions, and develop strategies for achieving
· Lead – have all levels of management champion the cause and provide
· leadership for EEO implementation at all organizational levels
· Encourage – link pay and performance for how employees interact,
· support and respect each other.
· Notice – monitor the impact of EEO practices; ensure that unfairness
· does not occur as a result of a corrective strategy.
· Discuss – communicate and reinforce the message that diversity is a
· business asset.
· Include – bring all employees and groups into the analysis, planning,
· and implementation process.
· Dedicate – assign needed resources and stay persistent; investment in
· EEO may take a little while to pay off.
General Barriers to Legally Defensible Staffing
· The “like me” bias
· Perception of loss by persons threatened by EEO practices
· Hiring managers
Specific Barriers to EEO
· Barriers to recruiting:
· Failing to advertise widely in order to attract diverse applicants
· Recruitment practices that overlook or fail to seek all qualified
· An over-reliance on informal networks for recruitment
· A lack of no formal systems for recruitment
· Barriers to advancement and promotion:
· Deficient feedback, performance evaluation, and promotion processes
· of employees
· Little or no access to informal networks of communication by
· employees of protected classes
· Different standards of performance used for different classes of
· Lack of equal access to assignments that provide key career
· experiences, visibility, and interaction with senior managers
· EEO HR personnel not included in the recruitment process for higher
· job levels
· Barriers in terms and conditions:
· Unequal pay
· Counterproductive behavior and harassment in the workplace
· Employer policies that are not family-friendly
· Inflexible working hours and working conditions
· Failing to provide reasonable accommodation to qualified individuals
· with disabilities
· Barriers in termination and downsizing:
· Unfairness of standards used in making layoff decisions; differences in
· benefits given to different types of employees
· Inadequate planning for the layoff
· Lack of adequate incentives to encourage voluntary separations
· Lack of communication between employers and employees
· Failure to provide counseling, job placement assistance, and training
· to laid-off employees
Ethical Theories Relevant to Staffing
When ethical theories suggest different actions:
· Explore the nature of the conflict to see if a previously unconsidered
· action can resolve the conflict
· Decide which ethical theories should take precedence
· Examine the organization’s values and code of ethics
· Professional code of ethics
· The key to ethical decision making is to:
· Always consider the impact our decisions will have on others
· Actively reflect on different ethical theories
· Consult stakeholders when possible
· Make a conscious effort to understand and manage the effects of
· your actions
· Balance what is best with the organization with what is best for its
· numerous stakeholders.
Barriers to Ethical Staffing
· Fear of retaliation or punishment
· Motivated blindness: we tend to see what we want to see
· Lowered thresholds: the first unethical decision makes the next one
· even easier
· Groupthink: ingroup pressures lead to a deterioration of a group’s
· moral judgment
· Overvaluing money
· Lack of moral courage: the willingness to stand up for and act
· according to our ethical beliefs when our moral principles are
· threatened, regardless of the risks of doing so
· Can be developed
· Increasing reliance on artificial intelligence, data analytics, and machine
· learning to create algorithms to make decisions
· Algorithmic bias occurs when the data used reflects and continues
· previous biases, creating “discrimination by algorithm”
· Algorithms should not include protected characteristics or factors
· correlated with protected characteristics that then lead to disparate
· Algorithms should be one of multiple hurdles in the hiring process, not
· the sole method used in decision making
· Regularly review algorithms for evidence of disparate impact
· Numerous websites now provide online tools to facilitate the calculation
· of disparate impact statistics such as applying the 4/5 rule and providing
· information interpreting the results
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