LEGAL CONTEXT OF HR DECISIONS:Doing the Right Thing, Affirmative Action, Unintended Consequences

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Human Resource Management (MGT501)

Lesson 11

LEGAL CONTEXT OF HR DECISIONS

After studying this chapter, students should be able to understand the following concepts:

A. Legal context of HR decisions

LESSON OVERVIEW

This chapter examines the aspects of HR law and regulations. The goal is to identify and discuss the

laws themselves and how best to comply with them and do what is best for the organization. The

chapter unveils why understanding the legal environment is important and the context in which HR

regulation occurs. The chapter further explores the challenges to legal compliance. It ends with ways

for the effective manager to avoid the pitfalls in the EEO legal environment.

A. Legal context of HR decisions

Legal considerations are significant external force

affecting human resource management relates to

federal, state, and local legislation and the many court

decisions interpreting this legislation. In addition,

L egal

C o m p e titiv e

many presidential executive orders have had a major

impact on human resource management. If company is C o m p l i a n c e

A d v a n ta g e

having compliance with the legal considerations it will

be contribution towards enhancement of good will

reputation as well as fair operations of the organization

that will be leading towards attaining competitive

advantage.

Keeping in view the importance of legal considerations mangers must understand the legal issues that

affect the practices of HRM Like Which employee to hire?

How to compensate employees?

What benefits to offer?

How to handle conflicts?

How and when to fire employees? etc.

Why Understanding the Legal Environment is Important?

Understanding and complying with HR law is important for three reasons. It helps the company to do

the right thing, to realize the limitations of the HR and legal departments, and it limits potential liability.

Doing the Right Thing

Compliance with the law is the right thing to do. The primary requirement of these laws is to mandate

good management practice. Operating within these laws has benefits beyond simple legal compliance.

Discriminatory practices not only create potential legal liability, but also lead to poor employee morale

and low job satisfaction, which can lead to poor job performance.

Realizing the Limitations of the HR and Legal Departments

If managers make poor decisions, the HR department neither always be able to resolve the situation nor

can a firm's legal department solve problems created by managers. The function of the legal

department is to try to limit damage after it has already occurred.

Limiting Potential Liability

Considerable financial liabilities can occur when HR laws are broken or perceived to be broken.

Legal regulation of HRM

Legal environment and considerations can influence potential and prospective as well as current

employees of the organization to Prospective Employees. It provides Protection from discrimination in

selection, initial job placement, and initial compensation

While to Current Employees Protection from discrimination in all dimensions of work in the

Human Resource Management (MGT501)

organization

Employment discrimination

To make an employment decision, not on the basis of legitimate job-related factors...Any employment

decision: hiring, promotions, pay, discipline, etc fail to use job-related factors (e.g., essential job

qualifications, job performance, etc.), and for employment decisions Instead, of legitimate factors

employer uses false stereotypes and prejudices. Law Prohibits Discrimination in Hiring, Compensation,

terms, conditions or privileges of employment based on Race, religion, color, sex, national origin and

Physical Disability.

Fair employment

A situation in which employment decisions are not affected by discrimination.

Laws affecting HRM:

The laws affecting HRM can be divided into two broad categories: equal employment opportunity

(EEO) laws and other laws. The major EEO laws cut across nearly every aspect of managing human

resources.

Equal Employment Opportunity (EEO)

The concept of equal employment opportunity has undergone much modification and fine-tuning since

the passage of the Civil Rights Act in 1964. Congress has passed numerous amendments to that act and

has passed other legislation, as oversights in the initial act surfaced. Major Supreme Court decisions

interpreting the provisions of the act have also been handed down. Executive orders were signed into

law that further strengthened equal employment opportunity. EEO is a combination of legislative and

judicial policy set forth by federal, state, and local governments that ensures fair and equal treatment of

all persons. Job applicants may not be rejected based on discriminatory practices

Affirmative action

A strategy intended to achieve fair employment by urging employers to hire certain groups of people

who were discriminated against in the past Steps that are taken for the purpose of eliminating the

present effects of past discrimination

Major Federal Laws (USA)

There have been many laws passed and court decisions rendered that affect the everyday actions of

human resource management. Human resource decisions that were made in the past may no longer be

feasible. Human resource managers have a responsibility to ensure that actions affecting human

resource management adhere to both the letter and intent of the law. Unfortunately, not everyone may

share this view, and that is when problems occur.

Equal Pay Act of 1963

This law requires the same pay for men and women who do the same job in the same organization.

Basically this law provides protection against discrimination based upon sex.

Civil Rights Act of 1964 (CRA) Title VII

Amended by Civil Rights Act of 1991(Title VII of Civil Rights Act)

This act prohibits discrimination based on race, color, sex, religion, or national origin. The Civil Rights

Act of 1991 amended the Civil Rights Act of 1964 and had the following purposes:

To provide appropriate remedies for intentional discrimination and unlawful harassment in the

workplace.

To codify the concepts of business necessity and job related pronounced by the Supreme Court.

To confirm statutory authority and provide statutory guidelines for the adjudication of disparate

impacts under Title VII of the Civil Rights Act of 1964.

To respond to recent decisions of the Supreme Court by expanding the scope of relevant civil rights

Human Resource Management (MGT501)

statutes in order to provide adequate protection to victims of discrimination.

Age Discrimination in Employment Act of 1967 (ADEA)

The Age Discrimination in Employment Act (ADEA) (amended 1978, 1986) prohibits employers from

discriminating against individuals who are over 40 years of age. The latest amendment not only gives

older employees the option to continue working past age 70, but the health care provision of the

amendment also provides them with an additional incentive to continue to do so. The ADA has three

major sections. Title I contains the employment provisions. Titles II and III concern the operation of

state and local governments and places of public accommodation such as hotels, restaurants, and

grocery stores.

Individuals with disabilities

Essential Functions

Reasonable accommodation

The Vocational Rehabilitation Act of 1973

THE AMERICANS WITH DISABILITIES ACT (ADA)

The Americans with Disabilities Act (ADA), passed in 1990, prohibits discrimination against qualified

individuals with disabilities. Persons discriminated against because they have a known association or

relationship with a disabled individual also is protected.

EXECUTIVE ORDER 11246, AS AMENDED BY EO 11375

An executive order (EO) is a directive issued by the president and has the force and effect of laws

enacted by Congress. A major provision of EO 11246 is that every executive department and agency

that administers a program involving federal financial assistance will require adherence to a policy of

nondiscrimination in employment as a condition for the approval of a grant, contract, loan, insurance,

or guarantee. Affirmative action, stipulated by EO 11246, requires employers to take positive steps to

ensure employment of applicants and treatment of employees during employment without regard to

race, creed, color, or national origin

Affirmative Action

An approach that an organization with government contracts develops to demonstrate that women or

minorities are employed in proportion to their representation in the firm's relevant labor market

Executive Orders 11246 & 11375 require companies with federal contracts to develop affirmative

action plans (AAPs) it provides preferential treatment to minority group members in functions like

Recruiting and Hiring

The three steps involved in developing an affirmative action program are (1) conducting a utilization

analysis, (2) establishing goals and timetables, and (3) determining action options. In the first phase,

organizations need to consider different pieces of information, which constitute an availability analysis

after they have conducted a utilization analysis. Rather, the employer should take into consideration the

size of the underutilization, how fast the work force turns over, and whether the work force is growing

or contracting. In the third phase, the companies recruit protected-class members, redesign jobs,

provide specialized training, and remove unnecessary employment barriers.

Challenges to Legal Compliance

HRM practices may be challenged by anyone of stakeholders like society, community, customers,

employees and shareholders so management for every decision should have legal backing in order to

defend and explain its decisions. A firm's HR department has considerable responsibilities with respect

to human resource law. However, if managers make poor decisions, the HR department will not always

be able to resolve the situation. The manager's job is to prevent the damage from happening in the first

place. Thus, understanding and complying with HR law helps the manager to do the right thing, realize

the limitations of the HR and legal departments, and minimize potential liability.A dynamic legal

landscape, complex laws, conflicting strategies for fair employment, and unintended consequences are

Human Resource Management (MGT501)

among the challenges confronting managers attempting to comply with HR law.

A Dynamic Legal Landscape

In addition to the many HR related laws that have been passed, there have been a myriad of opinions

handed down in court cases that have affected the HR legal environment. The legal landscape is

changing quickly.

The Complexity of Laws

Each individual law is accompanied by a set of regulations that can be quite lengthy. Nonetheless, the

gist of most HR law is fairly straightforward. Managers should be able to understand the basic

intention of all such laws without too much difficulty.

Conflicting Strategies for Fair Employment

Society at large, political representatives, government employees, and judges all has different views

regarding the best ways to achieve equitable HR laws.

Unintended Consequences

It is very common for a law, government program, or an organizational policy to have numerous

unanticipated consequences, some of which turn out to be quite negative. The challenge to managers is

to anticipate and deal with both the intended and unintended consequences of law.

Key Terms

Affirmative Action: An approach that an organization with government contracts develops to

demonstrate that women or minorities are employed in proportion to their representation in the firm's

relevant labor market

Employment discrimination: To make an employment decision, not on the basis of legitimate job-

related factors

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