THE LEGAL ENVIRONMENT
OF BUSINESS
A Critical Thinking Approach
Fourth Edition
Nancy K. Kubasek
Bartley A. Brennan
M. Neil Browne
© 2006 Prentice Hall
Ch. 20-1
THE LEGAL ENVIRONMENT OF BUSINESS
CHAPTER 20
Employment Discrimination
© 2006 Prentice Hall
Ch. 20-2
THE LEGAL ENVIRONMENT OF BUSINESS
Employment-at-Will
Doctrine rooted in industrial, capitalist
economy
Employer’s right to terminate
At any time
For any reason
For no reason
Even for a ‘bad’ reason
© 2006 Prentice Hall
Ch. 20-3
THE LEGAL ENVIRONMENT OF BUSINESS
Employment-at-Will
Employee’s right to terminate provides a
nominal ‘balance’
Realistically, however, the doctrine favors
employers
Nonstatutory limitations on employer:
Contract: express or implied
Public policy
Implied covenant of good faith and fair dealing
© 2006 Prentice Hall
Ch. 20-4
THE LEGAL ENVIRONMENT OF BUSINESS
Employment-at-Will
A common law doctrine
Varies considerably from state to state
NOTE: Employment-at-will is the ‘default’
starting point for analysis of any U.S. case
© 2006 Prentice Hall
Ch. 20-5
THE LEGAL ENVIRONMENT OF BUSINESS
Constitutional Provisions
Antidiscrimination:
Fifth, Thirteenth, Fourteenth, Amendments
Inadequate to prevent unequal
treatment under variable state laws
© 2006 Prentice Hall
Ch. 20-6
THE LEGAL ENVIRONMENT OF BUSINESS
Civil Rights Acts of 1866 and 1871
Effectuates Thirteenth Amendment
Applied to race
Court free to craft damages
No administrative procedures
© 2006 Prentice Hall
Ch. 20-7
THE LEGAL ENVIRONMENT OF BUSINESS
Equal Pay Act of 1963
Amended the FLSA
Establishes ‘equal pay for equal work’
Equal work: skill, effort, responsibility,
conditions
Establishment: one or more
Defenses: seniority, merit, output, other
Remedies: back pay, attorney fees
© 2006 Prentice Hall
Ch. 20-8
THE LEGAL ENVIRONMENT OF BUSINESS
Title VII of the Civil Rights Act of 1964
and the Civil Rights Act of 1991
Prohibits discrimination in terms and
conditions of employment
Protected classes:
Race, color, religion, sex, or national
origin
© 2006 Prentice Hall
Ch. 20-9
THE LEGAL ENVIRONMENT OF BUSINESS
Application of Title VII
15 or more
employees
20 weeks
© 2006 Prentice Hall
Interstate commerce
Employer broadly
defined
Ch. 20-10
THE LEGAL ENVIRONMENT OF BUSINESS
Employment Discrimination Cases
Disparate Treatment
Defendant discriminates overtly
against all members of protected
class
Disparate Impact
Defendant’s apparently
nondiscriminatory practices result in
a disproportionately heavy impact on
protected class
© 2006 Prentice Hall
Ch. 20-11
THE LEGAL ENVIRONMENT OF BUSINESS
Employment Discrimination Cases
Harassment cases
Quid pro quo: sexual favors
demanded by superior in exchange
for job benefits
Hostile environment: conduct that
creates an abusive work environment
for member of protected class
Test: ‘reasonable person’ test
© 2006 Prentice Hall
Ch. 20-12
THE LEGAL ENVIRONMENT OF BUSINESS
Settled Issues
Company may be liable for discriminatory acts
of employee
Defendant not liable for every comment or act
of minimal nature and degree
Plaintiff need not show severe psychological
harm
Plaintiff may recover even when no detrimental
job consequences are present
Same sex harassment is actionable
© 2006 Prentice Hall
Ch. 20-13
THE LEGAL ENVIRONMENT OF BUSINESS
Defenses
Bona fide occupational qualification
Merit
Seniority systems
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Ch. 20-14
THE LEGAL ENVIRONMENT OF BUSINESS
Protected Classes
Race and color
National origin
Religion
Sex
Pregnancy Discrimination Act
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Ch. 20-15
THE LEGAL ENVIRONMENT OF BUSINESS
Remedies
Back pay for up to two years
Remedial seniority
Compensatory and punitive damages
Attorneys’ fees
© 2006 Prentice Hall
Ch. 20-16
THE LEGAL ENVIRONMENT OF BUSINESS
Age Discrimination in Employment Act of
1967
Applies to workers age 40 or older
Firm of 20 or more employees
Otherwise qualified for job
Termination raises interference of
discrimination
© 2006 Prentice Hall
Ch. 20-17
THE LEGAL ENVIRONMENT OF BUSINESS
ADEA Defenses
Legitimate, nondiscriminatory basis for
termination
Burden of proof is on plaintiff to show
evidence by preponderance
BFOQ defense
Executive exemption
After-acquired evidence
© 2006 Prentice Hall
Ch. 20-18
THE LEGAL ENVIRONMENT OF BUSINESS
ADEA Enforcement and Remedies
File charges with EEOC or state agency
Private action
Liquidated damages: back pay for two years
Compensatory, punitive damages may be
available
© 2006 Prentice Hall
Ch. 20-19
THE LEGAL ENVIRONMENT OF BUSINESS
Rehabilitation Act of 1973
Protects handicapped workers
against employment discrimination
Handicap is defined term: “major
life activities” standard
Applies only to federal government
and employers with federal
contracts
© 2006 Prentice Hall
Ch. 20-20
THE LEGAL ENVIRONMENT OF BUSINESS
Americans with Disabilities Act of 1991
Applies to employers with 15 or more
workers
Requires “reasonable
accommodation”
“Otherwise qualified” workers
protected
Current drug or alcohol abusers not
protected
Mental disabilities especially difficult
area
© 2006 Prentice Hall
Ch. 20-21
THE LEGAL ENVIRONMENT OF BUSINESS
ADA Enforcement and Remedies
Follows Title VII and EEOC approach
Remedies include: reinstatement; back
pay; injunction; compensatory and
punitive damages in some cases
Fines up to $100,000
© 2006 Prentice Hall
Ch. 20-22
THE LEGAL ENVIRONMENT OF BUSINESS
Affirmative Action
Intended to correct effects of past
discrimination
Recently attacked on the theory of reverse
discrimination
Challenged in major lawsuits in the areas of
school admissions, employment,
contracting
EEOC guidelines provide help for employers
© 2006 Prentice Hall
Ch. 20-23
THE LEGAL ENVIRONMENT OF BUSINESS
Global Dimensions
Extraterritorial application of U.S. laws
limited
U.S. citizens, working overseas for U.S.
corporations are covered by Title VII, ADA,
ADEA
Issue: What is a U.S. company?
EEOC: several factors to be considered
© 2006 Prentice Hall
Ch. 20-24