Business Ethics
Chapter 19 Management of
Employee Welfare
Its Legal, Ethical, and Global Environment
Marianne M. Jennings
Business
11th Ed.
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19-1
Employee Welfare: The Federal Statutes
| Statute | Date | Provisions | |
| Worker’s Compensation Social Security Act 42 U.S.C. § 301 Fair Labor Standards Act 29 U.S.C. § 201 Equal Pay Act 29 U.S.C. § 206 Occupational Safety and Health Act 29 U.S.C. § 651 Employment Retirement Income Security Act; 29 U.S.C. § 441 Family and Medical Leave Act 29 U.S.C. § 2601 | 1900 1935 1938 1963 1970 1974 1993 | Absolute liability of employers for employee injury; no common law tort suits by employees against employers FICA contributions, unemployment compensation, retirement benefits Minimum wages, child labor restrictions, equal pay Amendment to FLSA; equal pay for equal work Safety in the workplace, employee rights, employer reporting, inspections Disclosure of contributions, investments, loans, employee vesting, employee statements Protection of job after family leave (for pregnancy, child care, adult illness, elderly care) |
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19-2
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 Protection
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19-3
FLSA: All Businesses Covered that Affect Interstate Commerce
Exemptions
Independent contractors
Agriculture, fishing, and domestic service
White-collar management
Executive, administrative, and professional people
Ongoing litigation RE: interns
FLSA
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Wages & Hours Protection
Overtime Threshold Regulations (2016)
Employees who earn up to $47,476 (salaried or hourly) are eligible for overtime pay over 40 hours per week
Wage threshold is also indexed – will increase every three years
Affects professionals such as academics and lab technicians
They will be required to track hours and lose flex time
19-4
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19-5
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
FLSA
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19-6
FLSA
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
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19-7
FLSA
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
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19-8
Liability for Wage Taxes
Case 19.1 Chao v. Hotel Oasis, Inc. (2007)
Who is responsible for the wage taxes?
Why is the corporate structure not relevant for purposes of wage tax liability?
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19-9
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 Act
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19-10
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)
OSHA: Workplace Safety
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19-11
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
OSHA
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19-12
OSHA Responsibilities
Promulgate workplace safety regulations
Can award variances for certain employers
Inspections
OSHA
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19-13
OSHA Penalties
| Type of Offense | Description | Penalty |
| Willful Serious Nonserious De minimis Failure to correct | Employer aware of danger or a repeat violator Violation is a threat to life or could cause serious injury No threat of serious injury Failure to post rights Citation not followed | Up to 10% above the maximum fine of $126,000 and/or six months imprisonment Sliding scale of $3,000-$12,600 Up to $12,500 per violation Up to $12,600 per violation Up to $12,600 per day |
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19-14
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
OSHA Penalties
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19-15
State OSHA Programs
States share responsibility for safety with Feds
Secretary of Labor must approve state’s plan
State OSHA
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19-16
Impairment and Employees
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
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19-17
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, and Social Security
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19-18
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, Retirement, and Social Security
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19-19
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
Pensions, Retirement, and Social Security
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19-20
Pension Protection Act
Passed in Response to a Number of Large Corporate Bankruptcies That Released Employers From Pension Obligations
Pension Plans Were Funded to Correct SEC Disclosure Levels, But Not According to Real Needs of Plan
Stricter Funding Requirements Imposed
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19-21
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
Unemployment Compensation
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19-22
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’ Compensation
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19-23
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
Workers’ Compensation
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19-24
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
Workers’ Compensation
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19-25
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
Workers’ Compensation
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19-26
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
Workers’ Compensation
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19-27
Case 19.2 Hopkins v. Uninsured Employers’ Fund (2011)
What are the issues related to whether Hopkins was a volunteer?
What impact does the use of drugs have on the court’s decision?
Workers’ Compensation
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19-28
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
Workers’ Compensation
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19-29
Labor 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
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19-30
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 Unions: Statutes
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19-31
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
Labor Unions: Statutes
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19-32
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
Labor Unions: Statutes
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32
Employers, Employees, and Cyberlaw
Employers are Held Accountable for Electronic Content
Criminal Cases are Built from E-mails
Harassment Cases are Built from E-mails
19-33
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Employers, Employees, and Cyberlaw
Electronic Communications Privacy Act
Applies to live communications
Stored Communications Act
Probably covers e-mail
May not cover live interactions – “Tweeting”
19-34
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Employers, Employees, and Cyberlaw
Case 19.3 City of Ontario v. Quon (2010)
What were the officers warned about?
Did the city use the last restrictive means for reviewing content of messages?
19-35
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Employers, Employees, and Cyberlaw
Employer’s Right of Access to E-mails
Disclosure to employees
Sign-off by employees
Privacy disclaimers do not apply
19-36
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E-Mails and Organizing
NLRB Memo Explains When Employees are Protected in Their E-mail and Online Communications
Actual Court Decisions on Protections and What Constitutes Organizing are Varied
19-37
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19-38
Union Organizing Efforts
Selecting a union
Petition for union representation filed
Election
Certified union
Once selected, union represents all employees
Labor Unions: Organizing
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Labor Unions: Organizing
Case 19.4 United Food and Commercial Workers Union Local 24 v. NLRB (2007)
Evaluate the statements made by management
Explain what the court decides in terms of management statements
19-39
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19-40
Union Certification
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19-41
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
Labor Unions: Good Faith
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19-42
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
Labor Unions: Subject Matter for Negotiations
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19-43
Mandatory Topics
Recognition of the Union
Wages
Work Hours
Vacations
Sick Leave
Seniority
Insurance
Pension/Retirement Plans
Employee Grievances
Length of Agreement/Expiration Date
Incentive Plans
Union Announcements (Bulletin Board Rights)
Definition of Terms
Leaves of Absence
Drug Testing
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19-44
Union “Concerted Activities” − Economic Pressure
NLRA gives union right to engage in concerted activities
Picketing − legal
Strike − legal economic weapon
Advertising
The Shareholders
Unions have contacted shareholders for clout
Allowed shareholders to bring public attention to the issues
Labor Unions’ Activities
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19-45
Unfair Employee Practices
Slowdown
Not a strike or stoppage
Employees refuse to do certain work or use certain equipment
Featherbedding
Payment for work not actually done
Unfair labor practice
Labor Unions’ Activities
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19-46
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
Labor Unions and Employer Rights
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19-47
Management Do’s and Don’ts in Unionization
DO:
Tell employees about current wages and benefits and how they compare to other firms.
Tell employees you will use all legal means to oppose unionization.
Tell employees the disadvantages of having a union (especially cost of dues, assessments, and requirements of membership).
Show employees articles about unions and negative experiences others have had elsewhere.
Explain the unionization process to your employees accurately.
Forbid distribution of union literature during work hours in work areas.
Enforce in a consistent and fair manner disciplinary policies and rules.
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19-48
Management Do’s and Don’ts in Unionization
DON’T:
Promise employees pay increases or promotions if they vote against the union.
Threaten employees with termination or discriminate when disciplining employees.
Threaten to close down or move the company if a union is voted in.
Spy or have someone spy on union meetings.
Make a speech to employees or groups at work within twenty-four hours of the election (before that, it is allowed).
Ask employees how they plan to vote or if they have signed authorization cards.
Urge local employees to persuade others to vote against the union (such a vote must be initiated solely by the employee).
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19-49
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 Weapons
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19-50
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 Weapons
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19-51
Economic Rights and Weapons − Employer
| Economic Weapons | Rights | Unfair Labor Practices |
| Business closing; plant closing Lockouts Right to confer benefits (timing) | Freedom of speech Demand election (30%) | Refusal to bargain in good faith Refusal to bargain on a mandatory issue Yellow-dog contracts Violation of collective bargaining agreement Interference with joining union Timing of benefits Observation of union activities Domination of labor union Discrimination in promotion of union members Blacklisting |
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19-52
Economic Rights and Weapons − Employee
| Economic Weapons | Rights | Unfair Labor Practices |
| Strike Slowdown, refusals to work overtime Picketing | Freedom of speech Right to union representation upon investigation Right to join union Right of members to adequate representation Right to union office | Violation of collective bargaining agreement Secondary boycotts Payment for union cards Coercion or discrimination in union membership Causing an employer to pay excessive wages – featherbedding Hot cargo agreements |
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19-53
Federal Immigration Laws Require Employers to Verify Employee is a U.S. Citizen or Has the Right to Work in the U.S.
Must Have I-9
Immigration Reform Requires Greater Employer Diligence
“Highly Skilled” Workers (H-1B Professional) Can Come and Work in High-Tech Industries
Labor Management Cooperation Act Provides Mediation as an Alternative
International Issues
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19-54
National Security Issues
USA Patriot Act of 2002
Verification requirements
Homeland Security Act of 2002
Background checks
Security checks
American Competitiveness in the Twenty-First Century Act of 2000
Preservation of U.S. workers’ jobs
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19-55
The Examples of International Labor Issues
Sweatshop conditions affect consumer perception
International and domestic pressures
Stock value drops
Safety Issues Have Emerged With Collapses of Factories
Creation of Teams by Companies has Effect of Mixing Labor and Management
International Issues
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