Chapter 16
Selected Employment
Benefits and
Protections
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
 List the matters regulated by the Fair Labor
Standards Act
 Discuss the requirements of the minimum wage
laws and to whom they apply
 Explain the Family Medical Leave Act, including
to whom it applies and under what
circumstances
16-2
Learning Objectives
 Explain contributory negligence, assumption of
risk, and the fellow servant rule, and their roles
in the regulation of safety in the workplace, and
determine how OSHA impacted this regulatory
environment
 Set forth what OSHA requires of employers to
create a safer workplace and how it is enforced
16-3
Learning Objectives
 Describe the reporting responsibilities of
employers under the OSHA Act
 Explain the purposes of ERISA and identify who
and what type of entities are covered
 Describe the minimum ERISA standards for
employee benefit plans
16-4
Show me the Money!
 Fair Labor Standards Act (FLSA)
 Law to regulate pay and hours worked passed in
1938
 Set standards for minimum wage
 Prohibits pay differentials based solely on gender
 Regulates child labor, wages and hours
 Requires records on wages and hours
 Violations
16-5
Show me the Money!
 FLSA is administered by the U.S. Department of
Labor’s Wage and Hour Division
 States also have wage and hour provisions
administered by comparable state agencies
16-6
Covered Employees
 Two types of coverage in FLSA
 Individual coverage
 Enterprise coverage
 The law applies to both part-time and full-time
employees
 Federal, state and local employees are covered
 The law also covers domestic service workers
 There are exemptions
16-7
Minimum Wages
 The minimum wage law was established after
Wall Street Crash of 1929
 FLSA – employers must pay employees a
certain minimum hourly wage
 State wage laws may have higher minimums than the
federal law
 Fair Minimum Wage Act of 2007
 Tipped employees – piece-rate vs. hourly rate
16-8
Minimum Wages
 Not everyone is covered under the statute
 Primary exemptions
 New FLSA overtime regulations
 Businesses required to review their pay levels and
jobs
 Employees earning up to $23,660 per year
($455/week) are automatically entitled to overtime
pay
16-9
Minimum Wages
 Executive employees are exempt if they
 Manage two or more employees
 Have firing, hiring and promotion authority
 Employees who earn at least $100,000 per year
and perform some executive, professional, or
administrative job duties are automatically
exempt from overtime provisions
 Back wages
16-10
Overtime Provisions
 The FLSA
 Sets standards for the hours constituting a normal
workweek for wage purposes
 Sets wage rates for hours worked over and above the
normal week
 If an employee works over 40 hours, he or she
must be paid time and a half for the time worked
in excess of 40 hours
16-11
Retaliation and Child Labor Laws
 Retaliation is prohibited
 FLSA sets minimum age standards for allowing
children to work
 Most cannot work before age 16
 Age 18 the minimum for hazardous jobs
 Certain jobs allowed for children 14-16 that do not
interfere with their health, education, or well-being
 State child labor laws override federal law
16-12
Family and Medical Leave Act
 Enacted primarily in response to job retention
after having a child
 General provisions
 Guarantee job after leave for a birth, an adoption, or care of
sick children, spouses, or parents
 Applies to employers with 50 or more employees within a 75mile radius
 Employers can require medical confirmation of an illness
 Leave is unpaid
16-13
Occupational Safety and Health Act:
Safety at Work
 Each year
 5,700 Americans die from workplace injuries
 50,000 die from illnesses caused by workplace
exposure
 4.7 million suffer nonfatal workplace injuries
 According to OSHA
 OSH Act has helped cut workplace fatalities by more
than 60 percent and injury/illness by 40 percent since
its enactment
16-14
General Provisions
 OSHA requires that an employer provide a safe
workplace
Employer’s defense
Explanation
Contributory negligence
Negligence action based on the injured party’s
failure to exercise reasonable care for her or his
own safety
Assumption of risk
Injured party voluntarily exposed herself or
himself to a known danger created by the other
party’s negligence
Fellow servant rule
Injury occurred on the job and was caused by
the negligence of another employee
16-15
General Provisions
 No-Fault: Workers injured on the job are entitled
to recover for their injuries without having to
prove who is at fault
 injured workers are limited in their financial recovery
16-16
General Provisions
 Section 5(a)
 The employer must comply with all the safety and
health standards dictated by the Department of Labor
 The employer must furnish a workplace fee of
hazards
 OSHA creates certain specific regulatory
standards of safety
16-17
General Provisions
 OSHA conducts routine inspections in certain
high-risk industries
 Penalties and “abatement orders” are assessed
in connection with an inspection officer’s report
 Employers covered by the Act must maintain
records for OSHA compliance
 Employees must be informed of their OSHA
rights by their employer
16-18
Procedure for Enforcement
 Responsibility for enforcing the acts rests with
OSHA under the auspices of the Department of
Labor
 Occupational Safety and Health Review
Commission
 Willful violation
 Increase in fines
 Definition of “willful”
16-19
Specific Regulations
 Physical layout of the worksite
 Training
 Medical examinations
 Setting standards
 Voluntary compliance programs
 Emergency temporary standards
 Continual-training requirement
16-20
General Duty Clause
 Employer requirement – A place of employment
free from recognized hazards that cause or are
likely to cause death or serious physical harm to
the employee
 Instances when employer is not held responsible
 Recklessness
 Safety requirement is not economically feasible
 Greater hazard defense
16-21
Other Provisions
 Intentional Acts
 Compensatory and punitive damages
 Violence in the workplace
 “Zero tolerance” policy
16-22
Other Provisions
 Bullying
 Legal liability and higher worker compensation costs if
left uncontrolled
 Retaliation
 OSH Act – Prohibits retaliation against whistleblowers
16-23
Will It Be There When I Retire?
 Many firms offer employees retirement plans,
health care, and other employee benefits
 Employee Retirement Income Security Act
(ERISA)
 Protects pension benefits of workers
 Government entities, churches, non U.S. residents, or
independent contractors not covered
16-24
ERISA
 Covers welfare plans and retirement or pension
plans
 Applies to employee benefit plans
 Welfare plan
 Retirement or pension plans
 Establishes requirements for managing and
administering pension and welfare plans
16-25
ERISA
Key Terms
Explanation
Employee
benefit plan
Contractual obligation by which an employer or an
employee organization agrees to provide retirement benefits
or welfare benefits to employees and their dependents and
beneficiaries
Retirement or
pension plan
Provides for compensation at retirement or deferral of
income to periods beyond termination of employment
Defined
contribution
Retirement plan where the benefit payable to a participant
are based on the amount of contributions and earnings on
such contributions
Defined
benefit
Retirement plan where the benefit payable to a participant is
defined up front by a formula, the funding of which is
determined actuarially
16-26
Fiduciary Duty
 Fiduciary: Someone who has discretionary
authority over the investment or management of
plan assets on behalf of others
16-27
Fiduciary Duty
Fiduciary
requirements
Loyalty
Exclusive purpose
Prudence
Diversification
Compliance with plan documents
16-28
Reporting and Disclosure
 Required information
 Summary plan description (SPD)
 Annual report with the DOL
 ERISA was amended by the Pension Protection
Act (PPA) of 2006
 Eligibility and Vesting Rules
 Benefit plans – 100 percent non-forfeitable after three
years of employment
16-29
Funding Requirements for Defined
Benefit Plans
 Minimum standards
 Accruals of benefits based on service in each year
 Amortization of any prior service or actuarial gains or
losses on investment over a set period of years
 Pension Benefit Guarantee Corporation (PBGC)
 ERISA litigation
 Fiduciary liability
 The Worker, Retiree, and Employer Recovery Act
16-30
COBRA and HIPAA
 Consolidated Omnibus Budget Reconciliation
Act (COBRA)
 Applies to group health plan (20≥ employees)
 Health Insurance Portability and Accountability
Act (HIPAA)
 promote standardization and efficiency in the health
care industry
 HIPAA privacy rules
 General obligations of covered entities
16-31
Enforcement of ERISA
 Employers have the right to reduce or modify
employee benefits
 Unless it is prohibited by contractual obligations
 Similarly situated participants must be treated alike
 ERISA claims - asserted under the Age
Discrimination in Employment Act (ADEA)
16-32