Legal Compliance effecting the Staffing Area MANA 4328 Dennis C. Veit dveit@uta.edu 1

Sources of Laws and Regulations Source Example Common Law Employment at will, Workplace tort Constitutional Law Fifth Amendment/Fourteenth Amd Statutory law Civil Rights Act, Information Act, Age Discrimination, ADA, Rehabilitation a. Immigration Reform and Control act Fair Credit Reporting Act, Polygraph Protection act, Reemployment act State and local laws Civil Service laws Executive order 11246, EEOC, DOL, OFCCP, Department of Homeland Security State fair employment practice agencies

Major federal EEO/AA laws affecting the Staffing area Title VII of the Civil Rights Acts (1964, 1991) Age Discrimination in Employment Act (1967) Americans With Disabilities Act (1990, 2008) General Information Nondiscrimination Act (2008) Rehabilitation Act (1973) Executive Order 11246 (1965)

The Employment Relationship Employer-employee Most prevalent form of employment relationship Involves an agreement between employer and employee on terms and conditions of employment Results in an employment contract Independent contractors Are not considered employees, in a legal sense, of employer Temporary employees Do not have special legal stature

Laws and Regulations Need for laws and regulations Balance of power Protection of employees Protection of employers Sources of Laws and Regulations Common law Constitutional law Statutory law Executive order Agencies

Staffing Laws Classifying Employees Equal Opportunity FLSA and Internal Revenue Code Equal Opportunity Civil Rights Acts (1964 and 1991) ADA and ADEA Affirmative Action Executive Order 11246 Immigration Immigration Reform and Control Act Wages and Benefits Equal Pay Act

Exh. 2.3: Major Federal/AA Laws: General Provisions

Ex. 2.3: Major Federal/AA Laws 2-8

Civil Rights Act of 1964 Title VII (a) It shall be an unlawful employment practice for an employer – DISPARATE TREATMENT (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or ADVERSE IMPACT (2) to limit, segregate, or classify his employees or applicants for employment 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 race, color, religion, sex, or national origin.

Disparate Treatment Involves allegations of intentional discrimination where employer knowingly discriminated on basis of specific characteristics Evidence May be direct May consist of a mixed motive May be inferred from situational factors 1. Person belongs to a protected class 2. Person applied for, and was qualified for, a job employer was trying to fill 3. Person was rejected despite being qualified 4. Position remained open and employer continued to seek applicants as qualified as person rejected

Disparate / Adverse Impact Focuses on effect of employment practices, rather than on motive or intent underlying them As a result of a protected characteristic, people are adversely affected by an employment practice Evidence -- Involves use of statistics Exh. 2.5: Types of Disparate Impact Statistics Applicant flow statistics Four-fifth’s rule - An employment practice has disparate impact if hiring rate for minority group is less than four-fifths (or 80%) of hiring rate for majority group Stock statistics Concentration statistics

Litigation Process - EEOC Disparate treatment Disparate impact Show intent? Yes No Prima facie case Disparate treatment - intentional practice Disparate impact - effect of practice Employer’s rebuttal Nondiscriminatory reason(s) for practice or show BFOQ Practice job-related and consistent with business necessity Plaintiff’s rebuttal Reason is a pretext for discrimination Practice not job-related; employer does not adopt practice with less disparate impact Remedies Consent decree; compensatory and punitive damages Consent decree; equitable relief, i.e. back pay

Exh. 2.5: Types of Disparate Impact Statistics 2-13

Equal Opportunity vs. Affirmative Action Employment practices must guarantee equal opportunity to employees and applicants based on protected class differences. Composition of workforce depends on applicants as long as all groups have equal opportunity. Affirmative Action Employment practices should encourage a workforce that reflects the gender and racial composition of the local population. Companies should seek applicants and provide opportunities for underutilized minorities to guarantee representation in the workforce. No business is ever required to hire someone not qualified for a job.

Equal Opportunity vs. Affirmative Action Applies to private employers with more than 15 employees. Defined by a number of laws and court cases Enforced by the EEOC EEOC responds to complaints Affirmative Action Applies to government contractors and court-ordered employers. NO affirmative action requirements for others. Defined by Executive Order 11246 Written document with targets for minority hiring. Enforced by the OFCCP OFCCP responds to complaints and conducts audits

Enforcement by EEOC: Initial Charge and Conciliation Charge filed Investigation to determine “reasonable cause” If “reasonable cause” found, conciliation is pursued Voluntary settlement process Preferred method of settlement If EEOC decides not to pursue a claim, a “right to sue” letter is issued to complaining party Complementing conciliation is mediation Neutral, third-party mediates dispute to obtain agreement to resolve dispute

Exh. 2.7: Basic Litigation Process - EEOC

Protected Groups Race Color Religion Sex National origin Age Disability

EEO / AA Laws: Specific Staffing Provisions Civil Rights Act of 1964 Unlawful employment practices Establishment of disparate impact Disparate treatment Mixed motives Bona fide occupational qualification (BFOQ) Testing Test score adjustments Seniority or merit systems Employment advertising Pregnancy Preferential treatment and quotas

EEO / AA Laws: Specific Staffing Provisions Age Discrimination in Employment Act (1967) Prohibited age discrimination BFOQ Factors other than age Seniority systems Employment advertising

EEO / AA Laws: Specific Staffing Provisions Americans with Disabilities Act (1990) Prohibited discrimination Definition of disability Physical and mental impairments substantially limiting a major life activity

EEO / AA Laws: Specific Staffing Provisions Americans with Disabilities Act (1990) EEOC clarifications Impairment - “A physiological disorder affecting one or more of a number of body systems or a mental or psychological disorder.” Expanded major life activities include “sitting, standing, lifting, and mental and emotional processes such as thinking, concentrating, and interacting with others.” Whether an impairment is substantially limiting depends on its nature and severity, duration or expected duration, and its permanency or long-term impact. To be substantially limiting, impairment must prevent/significantly restrict a person from performing a class or broad range of jobs in various classes.

EEO / AA Laws: Specific Staffing Provisions Americans with Disabilities Act (1990) Qualified individual with a disability Essential job functions Reasonable accommodation and undue hardship Selection of employees Medical exams for job applicants and employees Affirmative action

EEO / AA Laws: Specific Staffing Provisions Rehabilitation Act (1973) Prohibited discrimination Affirmative action Executive Order 11246 (1965)

Other Staffing Laws: Immigration Reform and Control Act (1986) Purpose To prohibit employment of unauthorized aliens To provide civil and criminal penalties for violations Prohibited discrimination Employment verification system -- I-9 form Employer must verify individual is not an unauthorized alien and is legally eligible for employment Individuals must offer proof of identity Temporary foreign workers Enforcement Enforced by Department of Justice Noncompliance may result in fines up to $10,000

Other Staffing Laws: Employee Polygraph Protection Act (1988) Purpose Prevent most private employers from using a polygraph on job applicants or employees Prohibited practices Requiring applicants or employees to take a polygraph Using results of a polygraph for employment decisions Discharging or disciplining individuals for refusal to take a polygraph Examples of instances where polygraph may be used Enforcement Enforced by Department of Labor Noncompliance may result in fines up to $10,000

Other Staffing Laws: Fair Credit Reporting Act (1970) Purpose Regulates organization’s acquisition and use of consumer reports on job applicants Required compliance Before obtaining a report, organization must Give applicant notice in writing a report may be obtained Obtain written authorization from applicant If an “adverse action” is taken, organization must Notify (written, oral, electronic) applicant of adverse action Provide information of consumer reporting agency to applicant Provide notice of applicant’s rights to applicant Enforcement Enforced by Federal Trade Commission Noncompliance may result in fines up to $1,000

Civil Rights Act of 1964 Title VII (a) It shall be an unlawful employment practice for an employer – (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or (2) to limit, segregate, or classify his employees or applicants for employment 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 race, color, religion, sex, or national origin.

Court Cases Griggs v. Duke Power (1971) Adverse impacts must be job related Discriminatory intent not sufficient defense McDonnell Douglas vs. Green (1972) To establish prima facie in disparate treatment cases

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” 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

Selection Rate Tests Number Hired 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 Selection Rate (SR) = Number of Applicants

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% 4/5ths 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.

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

Civil Rights Act of 1991 Followed Wards Cove Packing vs. Antonio (1989) Prohibits “race norming” of tests. Plaintiffs can sue for punitive damages in cases of intentional discrimination. Adverse impact prohibited for each piece of a selection system. Burden of proof on the employer. Prohibits quotas in selection.

Equal Opportunity Defined Protected Classes Race, color, religion, sex and national origin Age and disability (added through ADA and ADEA) Reverse discrimination Disparate treatment vs. Adverse Impact Private employers with more than 15 employees. EEO does NOT require preferential treatment Quotas are illegal http://www.eeoc.gov/abouteeo/overview_practices.html

EEO Applied Organizations with more than 15 employees. Uniform Guidelines on Employee Selection Procedures EEO does NOT require preferential treatment - Quotas are illegal Must keep records of applicants for 6 months Employer must show practices are “job-related for the position in question and consistent with business necessity” Company Defenses Merit Bona Fide Occupational Qualification Business Necessity An “alternative employment practice” must be accepted if shown to meet the business necessity and have less adverse impact.

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.

Enforcement Agencies 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.

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.

AAP Statistics Flow Statistics Availability and utilization analyses 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

Availability Analysis U.T. System determines minority availability by: The minority population in the surrounding labor market. The minority unemployment rate in the surrounding labor market. The percentage of the minority workforce as compared with the total workforce in the surrounding labor market and Texas. The availability of promotable and transferable minorities within U. T. System Administration. http://www.eeoc.gov/stats/jobpat/2000/pmsa/2800.html http://www.census.gov/hhes/www/eeoindex.html

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 Trainees Availability Non Minority Minority 90% 10% 70% 30%

Concentration Statistics

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 Adams vs. Florida Power Corp Dismissed by the Supreme Court 2002 Smith vs. City of Jackson Affirmed by the Supreme Court 2005

Americans with Disabilities Act (ADA) 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) 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

Undue Hardship “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

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.

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 as. 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.

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)?

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.