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Legal Compliance 2 MANA 4328 Dr. Jeanne Michalski

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1 Legal Compliance 2 MANA 4328 Dr. Jeanne Michalski

2 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 Treatment Demonstrates Job relatedness (validity) and business necessity Proves that an alternative practice is available that has less adverse impact Statistical Tests: 4/5’ths Rule Adverse Impact

3 4/5ths RULE The selection rate for any protected group should be 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 Impact. Number Hired Number Hired Selection Rate (SR) = Number of Applicants Number of Applicants Selection Rate Tests

4 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% 4/5 ths 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.

5 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

6 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

7  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)

8 Man fired for getting gassed on spilled ethanol at work… An Iowa judge has denied unemployment benefits to a man who claimed discrimination after being fired from an ethanol plant for drinking "automobile fuel" produced by the company. According to Neddermeyer, he showed up for work and saw that there had been a spill of 190-proof fuel alcohol…. “I am a recovering alcoholic, and I thought about the availability of this alcohol throughout the day. Curious about the taste and its effects, I dipped into this lake of liquor ….” Neddermeyer argued that his employer shared in the responsibility for the incident because the spill at the plant provided an “opportunity” for him to drink. He also argued that Amaizing Energy was discriminating against him due to his “disease of alcoholism.” He asked the judge whether the protections afforded him under the Americans with Disabilities Act could be applied to his request for unemployment benefits. He was denied the request for benefits. "The employer has a right to expect employees not to drink the fuel" Des Moines Register 7.9.06

9  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)

10  “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

11 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.

12 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.  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.


14 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.

15 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

16 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.

17 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

18 Availability Analysis Two Factor Analysis  Percentage of minorities and women with requisite skills in the reasonable recruitment area.  Percentage of minorities and women among those promotable or transferable within the establishment.

19 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 TraineesAvailability Non Minority MinorityNon Minority Minority 90%10%70%30%

20 Concentration Statistics

21 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)?

22 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.

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