1. Legal Compliance effecting the Staffing Area
MANA 4328
Dennis C. Veit 1

2. 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

3. 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 (1965)

4. 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

5. 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

6. 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

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

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

9. 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.

10. 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

11. 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

12. 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

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

14. 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.

15. 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

16. 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

17. Exh. 2.7: Basic Litigation Process - EEOC

18. Protected Groups Race Color Religion Sex National origin Age
Disability

19. 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

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

21. 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

22. 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.

23. 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

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

25. 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

26. 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

27. 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

28. 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.

29. 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

30. 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

31. 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

32. 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: X .8 = .374 = 37.4%
Since 30% (actual selection rate) is less than 37.4% (4/5ths
comparison selection rate) evidence of discrimination exists.

33. 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

34. 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.

35. 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

36. 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.

37. 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.

38. 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.

39. 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.

40. 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

41. 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.

42. 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%

43. Concentration Statistics

44. 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

45. 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.

46. 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

47. 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

48. 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.

49. 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.

50. 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)?

51. 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.