Chapter 19 Management of Employee Welfare

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning

Chapter 19Management of

Employee Welfare

Its Legal, Ethical, and Global Environment

MARIANNE M. JENNINGS

7th Ed.

2 Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning

• Fair Labor Standards Act (FLSA).– Often called “the minimum wage law.”– All covered employees must be paid

minimum wage.– 1 1/2 time pay for overtime.– Overtime pay for anything over 40

hours/week.

Wages and Hours Wages and Hours ProtectionProtection


• FLSA: All businesses covered that affect Interstate Commerce.

• Exemptions:– Independent contractors.– Agriculture, fishing, and domestic service.– White-collar management.– Executive, administrative, and professional

people.– State employees? See Alden v. Maine 98-436

(1999).

FLSAFLSA


FLSAFLSA• Enforcement of FLSA.

– Can begin by complaint filed with U.S. Labor Department.

– Employer can seek interpretation from Department of Labor.

– Labor Department can initiate its own investigation.


FLSAFLSA• Violations of FLSA.

– Corporation is liable.– Officers can be held individually liable.– Fines - $10,000 first conviction.– $10,000 and or six months for second

violation.– Employees cannot be fired for reporting

violations.


• Child labor protections– Age 18 and over—any jobs.– 16-17—any non-hazardous job, unlimited

hours (hazardous—mining, logging, roofing, excavation).

– 14-15—any non-hazardous, non-manufacturing, and non-mining job during non-school hours; limits on hours.

– Record keeping.• Employers must keep records of hours and wages• Fines for not doing so.

FLSAFLSA


• Illegal to pay different wages to men and women doing the same jobs.

• Equal Pay Act is not a comparable worth statute. – Comparable worth requires equal pay for jobs

that require equal skill, effort, and responsibility.– Comparable worth changes the free marketplace

concept that we as a society have adopted.• Merit and seniority systems are exceptions.

Equal Pay ActEqual Pay Act


• Occupational Health and Safety Act (OSHA):– Passed to ensure workplace safety precautions.– OSHA was agency created to enforce it.– Employers covered—all with one or more

employees.– Also created Occupational Safety and Health

Review Commission (OSHRC) and the National Institute for Occupational Health and Safety (NIOSH).

OSHAOSHA


• OSHA coverage and duties:– Familiarize themselves with OSHA’s

requirements.– Post employee rights.– Require protective gear.– Keep records of injuries.– Report fatalities and hazards causing them.– Post OSHA citations.

OSHAOSHA


• OSHA responsibilities: – Promulgate workplace safety

regulations.– Can award variances for certain

employers. – Inspections.

OSHAOSHA


• Case 19.1 Whirlpool Corp. v. Marshall (1980).– What type of remedy does the secretary

of labor want?– Does the decision allow employees to

walk off the job when there is a workplace hazard?

OSHAOSHA


• OSHA penalties: – Fine and imprisonment escalate with

seriousness of violation.– Many employers negotiate a consent decree

after a citation.– If no consent decree, there is a hearing

before an administrative law judge (ALJ)– ALJ makes recommendations and OSHRC

decides.– Can then be appealed to a court.

OSHAOSHA


• Employee rights under OSHA:– Can accompany an OSHA inspector.– Can file complaints.– Right to notice if employer applies for

variance.

OSHAOSHA


• OSHA and ongoing controversy:– Businesses tend to be vocal about OSHA

because of numerous and complex regulations.– Consumers and others tend to be vocal for

OSHA’s lack of quick response to safety concerns in the workplace.

– Chemical hazards warning for long-term exposure of employees.

– Controversial proposals for AIDS health care workers.

OSHAOSHA


• State OSHA programs:– States share responsibility for safety with Feds.– Secretary of Labor must approve state’s plan.

• Employment Impairment and Testing Issues:– If safety is an issue, U.S. Supreme Court has

authorized testing by government employer without warrant and without probable cause

– Private employers generally free to require drug testing.

OSHAOSHA


• Social Security Act of 1935.– Every employee contributes to Federal

Insurance Contributions Act (FICA).

– Benefits under Social Security depend on work and salary range.

Pensions, Retirement, & Pensions, Retirement, & Social SecuritySocial Security


• Private Retirement Plans: Employment Retirement Income Security Act (ERISA).– Applies to employers in interstate commerce.– Applies to medical, retirement, or deferred

income plan.– Requirements:

• Must give employees an annual report.• Must disclose loans made from the fund.

– ERISA does not require pension plans, only regulates employers who offer them.

Pensions, RetirementPensions, Retirement,, & & Social SecuritySocial Security


• Private Retirement Plans: Employment Retirement Income Security Act (ERISA).– ERISA Employee Rights: Employees get

vesting rights in their pensions.– FASB 106 Retirees and Pensions: Requires

corporation to expense cost of benefits for retired employees.



• Unemployment Compensation.– State-administered program.– Employers pay FUTA taxes and states.

administer programs.– Amount is controlled by wages and time

working.– Requirements:

• Must have been involuntarily terminated.• Must be able and available for work.• Must be seeking employment.



• Case 19.2 Wimberly v. Labor and Industrial Relations Commission of Missouri (1987)– Is the Missouri statute valid?– What implications does the decision

carry for maternity leaves?



• Principles:– Employees injured in scope of

employment are covered.– Fault is immaterial.– Independent contractors are not covered.– Benefits include expenses, lost wages,

and injury compensation.

Workers’ Workers’ CompensationCompensation


• Principles: – Employees do not have right of common

law suit.– Third parties can be sued to indemnify

employers.– Administrative agency handles program.– Every employer must carry insurance or

be self-insured.



• Types of Employee Injuries.– Primarily accidental.– Definition has been expanded.

• Back problems from lifting.• Medical problems—heart attacks and nervous

breakdowns.• Stress.

– Co-worker injury: • Covered if arises within scope of employment.• Issue of rape is a problem; employer can be sued

for the failure to screen employees adequately.



• Case 19.3 Gacioch v. Stroh Brewery Co. (1990).– In this case, was alcoholism a disease

that originated in the workplace?– What additional factual information is

needed to resolve the case?



• Disability Benefits:– Partial disability—listed on schedule by rate.– Example: 50 percent of wages.– Total disability—generally 2/3 of salary.– Unscheduled injuries are determined by board.– Death benefits paid to family.

• Forfeiture of Right to Suit:– The majority of states require employees to

forfeit all other lawsuit rights in exchange for workers' compensation benefits.



• Third-Party Suits:– Can sue product manufacturers, other third

parties, but recovery must first go to reimburse employer.

• Administrative Agency.– Each state has an agency for administration of

benefits and insurance.• Insurance: Employers must be financially

responsible.



• Problems in Workers’ Compensation Systems:– Extent of injuries covered.– Fraud.– Nature of injuries changing from

manufacturing injuries to stress, heart disease, and repetitive motion.

– Long-term hazards.– Relationship between Americans with

Disability Act and workers’ compensation.



Labor UnionsLabor Unions• History and Development of Labor

Legislation.– Courts were very harsh at common law.

• Treated unions as conspiracies and allowed them to be prosecuted for such action.

• Strikes were perceived as intimidation techniques.– Railway Labor Act of 1926.

• First federal legislation, but limited to railroad industry.

• Allowed railroad employees to unionize.• Still in effect today with addition of airline employees.


• Norris-LaGuardia Act of 1932 (Anti-Injunction Act).– Stopped federal courts from issuing injunctions to

stop union strikes.

• Wagner Act—National Labor Relations Act (NLRA) of 1935.– Gave employees the right to unionize.– Prohibited employers from firing or discriminating

against union members.– Established NLRB.

Labor UnionsLabor Unions


• Taft-Hartley Act—Labor Management Relations Act of 1947.– Lists unfair labor practices for unions.– Addresses secondary boycotts.– Provides president with authority to

have pre-strike cooling-off period when public health and safety are at issue; has been used in coal and transportation strikes.



• Landrum-Griffin Act—Labor Management Reporting and Disclosure Act of 1959.– Regulates union officials.– Gives union members a bill of rights.– Establishes penalties for misconduct.



• Union Organizing Efforts.– Selecting a union:

• Petition for union representation filed.• Election.• Certified union.• Once selected, union represents all

employees.



Union CertificationUnion Certification


• Case 19.4 Pattern Makers’ League of North America, AFL-CIO v. NLRB (1985).– What union rule was at issue?– Must a union worker strike if she wants

to work?– Does the rule affect union membership?



• Union Contract Negotiations:– Must bargain in good faith—8(d) of NLRA.– Try to get employer contract—collective

bargaining agreement.– Mandatory or compulsory subject matters:

“wage hours and other terms and conditions of employment”.

• Wages • Pay days• Hours • Insurance• Overtime • Pensions• Vacation • Seniority• Leaves • Two-tier wage structure



• Union Contract Negotiations:– Permissive subjects for collective bargaining

• Strike roles.• Not unfair to refuse to bargain it.

– Cannot bargain away statutory rights.• Example: Cannot agree to have a closed shop

(refusing to hire nonunion people).– Failure to bargain in good faith.

• Constitutes an unfair labor practice.• Can be the basis of a charge and complaint.



• Union “Concerted Activities”—Economic Pressure.– NLRA gives union right to engage in

concerted activities.– Picketing—legal.– Boycotts:

• Primary—legal.• Secondary—some restrictions.

– Advertising.



• Unfair Employee Practices:– Hot cargo agreements.

• Generally prohibited.• Restriction on handling products of nonunion

employers.• Legal in clothing/construction industry.

– Slowdown.• Not a strike or stoppage.• Employees refuse to do certain work or use certain

equipment.



• Union “Concerted Activities”—Economic Pressure.– The strike—legal economic weapon.

• The shareholders.– Unions have contacted shareholders for clout.– Allowed shareholders to bring public

attention to the issues.



• Case 19.5 Aroostook County Regional Ophthalmology Center v. NLRB (1996).– Are the employees engaged in concerted

activity as they discuss their schedule issues in the medical office?

– Were the conditions for rehiring valid?



• Union “Concerted Activities”—Economic Pressure.– Secondary boycotts:

• Illegal when coercion involved.• Third party involved.

– Featherbedding:• Payment for work not actually done.• Unfair labor practice.



• Employer Rights:– Freedom of Speech.– So long as speech is accurate and not

an unfair labor practice.– Right-to-work laws; Prohibit closed

shops.– Right to an enforceable collective

bargaining agreement.



• Plant Closings.– Congress has passed a plant closing law

and many states have same laws.– Laws require notice and time frame

before plant is closed.– Designed to eliminate shock to local

economy.– Federal law is the Worker Adjustment

and Retraining Notification Act of 1988.

Employer WeaponsEmployer Weapons


• Cannot use temporary closing or send work away (runaway shops)

• Plant Flight: management closes plants and outsources work to foreign countries.

• Lockout Employer refuses to allow employees to work.

• Conferring Benefits OK if not done too close to union election.

• Bankruptcy may be used to reject Collective Bargaining Agreement.

Employer WeaponsEmployer Weapons


• Federal immigration laws require employers to verify employee is a U.S. citizen or has the right to work in the U.S.

• “Highly skilled” workers (H-1B Professional) can come and work in high-tech industries.

• Labor Management Cooperation Act provides mediation as an alternative.

International IssuesInternational Issues


• The examples of NIKE and Kathie Lee Gifford:– Sweatshop conditions affect consumer

perception.– International and domestic pressures.– Stock value drops.

• Creation of teams by companies has effect of mixing labor and management.

International IssuesInternational Issues

Chapter 19 Management of Employee Welfare

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