Chapter 12 - CCBC Faculty Web

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Dealing With
EmployeeManagement
Issues and
Relationships
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12
Nickels
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McGraw-Hill/Irwin
Understanding Business, 8e
McHugh
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McHugh
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12-1
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
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U.S. Workers Unionized
25.0%
20.1%
20.0%
18.0%
16.0% 14.9%
15.0%
13.5%13.2%
12.5%
10.0%
5.0%
0.0%
1983 1985 1990 1995 2000 2002 2005
Source: Bureau of Labor Statistics News, January 20, 2006
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I. EMPLOYEE-MANAGEMENT ISSUES
II. LABOR UNIONS FROM DIFFERENT PERSPECTIVES
Learning goal 1
Trace the history of organized labor in the United States.
A. The Early History of Organized Labor
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III. LABOR LEGISLATION AND COLLECTIVE
BARGAINING
Learning goal 2
Discuss the major legislation affecting labor unions.
A. Objectives of Organized Labor
Learning goal 3
Outline the objectives of labor unions.
B. Resolving Labor-Management Disagreements
C. Mediation and Arbitration
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IV. TACTICS USED IN LABOR-MANAGEMENT
CONFLICTS
Learning goal 4
Describe the tactics used by labor and management during
conflicts, and discuss the role of unions in the future.
A. Union Tactics
B. Management Tactics
C. The Future of Unions and Labor-Management
Relations
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V.
CONTROVERSIAL EMPLOYEE-MANAGEMENT ISSUES
VI. Learning goal 5
Explain some of today’s controversial employee–management issues,
such as executive compensation, pay equity, child care and elder care,
drug testing, and violence in the workplace.
A. Executive Compensation
B. Pay Equity
C. Sexual Harassment
D. Child Care
E. Elder Care
F. Drug Testing
G. Violence in the Workplace
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V. CONTROVERSIAL EMPLOYEE-MANAGEMENT
ISSUES
Learning goal 5
Explain some of today’s controversial employee–
management issues, such as executive compensation, pay
equity, child care and elder care, drug testing, and violence in
the workplace.
A. Executive Compensation
B. Pay Equity
C. Sexual Harassment
D.
Child Care
E. Elder Care
F. Drug Testing
G. Violence in the Workplace
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I. EMPLOYEE-MANAGEMENT ISSUES
The relationship of employees and their managers has
always been affected by certain issues.
The text presents several of the
KEY EMPLOYEE-MANAGEMENT ISSUES:
executive compensation, pay equity, child care and elder
care, ESOPs, and other employee-management issues.
These issues must be worked out through open
discussion, goodwill, and compromise.
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A UNION
is an employee organization that has the main goal of
representing members in employee-management
bargaining over job-related issues.
Workers originally formed unions to protect themselves
from intolerable working conditions and unfair treatment.
Labor unions are largely responsible for minimum wage
laws, child-labor laws, and other significant worker
benefits.
However, in the 1990s and early 2000s, unions failed to
regain their previous power, and membership declined.
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Workers originally formed unions to protect themselves from
intolerable working conditions and unfair treatment.
Labor unions are largely responsible for minimum wage
laws, child-labor laws, and other significant worker
benefits.
However, in the 1990s and early 2000s, unions failed to
regain their previous power, and membership declined.
REASONS FOR UNION DECLINE:
Some suggest that global competition, the shift to a service
economy, and changes in management philosophy have
caused the decline.
The decline may be due to the successful achievement of
objectives.
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LABOR UNIONS FROM DIFFERENT PERSPECTIVES
Learning goal 1
Trace the history of organized labor in the United States.
Your opinion about unions usually depends upon which side
of the management fence you are on.
Most historians generally do agree on the reason unions were
started in the first place.
The INDUSTRIAL REVOLUTION moved workers out of the
field and into the factories.
Workers learned that STRENGTH THROUGH UNITY
(unions) could lead to improved job conditions, better wages,
and job security.
But some argue that organized labor has become a large
industrial entity in itself and the real issue of protecting
workers has become secondary.
Critics also argue the current legal system and management
philosophy reduce the risk that sweatshops will reappear. 12-11
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History of Labor Unions
• Craft Union Organized
• Knights of Labor
• AFL Organized
• Industrial unions
• CIO Organized
• AFL/CIO
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C.THE EARLY HISTORY OF ORGANIZED LABOR
As early as 1792, CORDWAINERS (shoemakers)
met to discuss labor issues in Philadelphia.
The cordwainers were a
CRAFT UNION
that is, an organization of skilled workers in a particular craft
or trade.
A craft union usually met to achieve a specific goal and then
disbanded.
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Objectives of
Organized Labor
• 1970s- Pay/Benefits
• 1980s- Job Security &
Union Recognition
• 1990s-2000s- Job
Security/ Global
Competition
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The Industrial Revolution changed the economic structure of the U.S.
As the Industrial Revolution intensified, the problems were
NO LONGER SHORT-TERM.
Workers who failed to produce lost their jobs.
Wages were low, child labor existed, and unemployment benefits were
nonexistent.
There was a need for an organization that would attack LONG-TERM
PROBLEMS such as child labor and subsistence wages.
The first national labor organization was the KNIGHTS OF LABOR formed
by URIAH SMITH STEPHENS in 1869.
It included employers as well as workers, and promoted social, labor, and
economic causes.
After they were blamed for the Haymarket Square bombing in 1886, the
Knights of Labor fell from prominence.
The AMERICAN FEDERATION OF LABOR (AFL) was formed in 1886
under the leadership of SAMUEL GOMPERS.
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The AFL, a federation of MANY INDIVIDUAL CRAFT UNIONS,
championed fundamental labor issues.
An unauthorized committee in the AFL began to organize workers in
INDUSTRIAL UNIONS, organizations of unskilled and semiskilled
workers in mass-production industries such as automobiles and mining.
When the AFL rejected these unions, JOHN LEWIS, president of the
UNITED MINE WORKERS UNION, formed a new, rival organization.
The CONGRESS OF INDUSTRIAL ORGANIZATIONS (CIO), a union
organization of unskilled workers, broke off from the AFL in 1935.
Membership in the CIO soon rivaled that of the AFL.
The AFL and CIO struggled for power in the labor movement until the
TWO ORGANIZATIONS MERGED in 1955 under the leadership of
GEORGE MEANY.
The AFL-CIO now has affiliations with 53 labor unions and has 9 million
members.
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Union Involvement
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Why Employees Join
Unions
Pro-union attitudes
Poor management/
employee relations
Negative organizational
climate
Poor work conditions
Union’s reputation
Job security
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Why Employees Don’t
Join Unions
Anti-union attitude
Good management/
labor relations
Positive
organizational climate
Good work conditions
Union’s reputation
Peer pressure
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III.
LABOR LEGISLATION AND COLLECTIVE BARGAINING
Learning goal 2
Discuss the major legislation affecting labor unions.
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The growth and influence of organized labor in the U.S. has depended on
two major factors: the LAW and PUBLIC OPINION.
The NORRIS-LA GUARDIA ACT
paved the way for union growth.
It prohibited employees from using contracts that forbid union activities.
A YELLOW-DOG CONTRACT is a type of contract that requires
employees to agree as a condition of employment not to join a union.
The NATIONAL LABOR RELATIONS ACT (or WAGNER ACT) provided
legal justification for union activities.
COLLECTIVE BARGAINING is the process whereby union and
management representatives form a labor-management agreement, or
contract, for workers.
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The Wagner Act
expanded labor’s right to collectively bargain.
The Act also established the NATIONAL LABOR RELATIONS BOARD
(NLRB), to oversee labor-management relations.
CERTIFICATION is the formal process whereby a union is recognized by
the NLRB as the bargaining agent for a group of employees.
DECERTIFICATION is the process by which workers take away a union’s
right to represent them. The Wagner Act provided clear procedures for
both.
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Legislation &
Collective Bargaining
• Norris-La Guardia Act
• National Labor Relations Act
• Fair Labor Standards Act
• Labor-Management
Relations Act
• Labor-Management
Reporting and Disclosure
Act
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OBJECTIVES OF ORGANIZED LABOR
Learning goal 3
Outline the objectives of labor unions. Union objectives change over time
due to shifts in social and economic trends.
In the 1970s, the primary objective of labor unions was
ADDITIONAL PAY AND BENEFITS.
Throughout the 1980s, objectives shifted to
JOB SECURITY and UNION RECOGNITION.
The 1990s and early 2000s also focused on job security, but the biggest
issue is GLOBAL COMPETITION.
The AFL-CIO opposed the North Atlantic Free Trade Association
(NAFTA) in 1994 and the Central American Free Trade Agreement
(CAFTA) fearing union workers would lose jobs to nations with LOWER
LABOR COSTS.
Both agreements passed and were signed by the President.
The NEGOTIATED LABOR-MANAGEMENT AGREEMENT (the labor
contract) sets the tone and clarifies the terms under which management
and labor agree to function over a period of time.
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Organized Labor Issues
• Union Security Clauses
• Closed Shop
• Union Shop
• Agency Shop
• Right-To-Work Laws & Open Shop
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COMMON ISSUES IN LABOR-MANAGEMENT AGREEMENTS:
A UNION SECURITY CLAUSE
is a provision in a negotiated labor-management agreement that
stipulates that employees who benefit from a union must either join or
pay dues to the union.
A CLOSED-SHOP AGREEMENT
is a clause that specified workers had to be members of a union before
being hired. (This was outlawed by the Taft-Hartley Act in 1947).
Under the
UNION SHOP AGREEMENT
, workers do not have to be members of a union to be hired, but must
agree to join the union within a prescribed time.
Under the
AGENCY SHOP AGREEMENT
employers may hire nonunion workers; employees are not required to
join the union but must pay a union fee.
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The TAFT-HARTLEY ACT
gave states the right to pass right-to-work laws.
Twenty-two states have passed RIGHT-TO-WORK LAWS
that give workers the right, under an open shop, to join or
not join a union if it is present.
An OPEN SHOP AGREEMENT
is an agreement in right-to-work states that gives workers
the option to join or not join a union, if one exists in their
workplace.
Future labor negotiations will include issues such as child
and elder care and immigration policies.
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RESOLVING LABOR-MANAGEMENT DISAGREEMENTS
The negotiated agreement becomes the basis for union-management
relations.
Labor and management do not always agree on the interpretation of the
labor-management agreement.
If such a disagreement cannot be resolved, a grievance may be filed.
A GRIEVANCE
is a charge by employees that management is not abiding by the terms of
the negotiated labor agreement.
The vast majority of grievances are resolved by shop stewards.
SHOP STEWARDS
are union officials who work permanently in an organization and represent
employee interests on a daily basis.
MEDIATION AND ARBITRATION
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RESOLVING LABOR-MANAGEMENT DISAGREEMENTS
MEDIATION AND ARBITRATION
The BARGAINING ZONE
is the range of options between the initial and final offers that each party
will consider before negotiations dissolve or reach an impasse.
If negotiations don’t result in an alternative within this bargaining zone,
mediation may be necessary.
MEDIATION
is the use of a third party, called a mediator, who encourages both sides
to continue
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negotiating and often makes suggestions for resolving the dispute.
The mediator
makes SUGGESTIONS
not DECISIONS
, for settling the dispute.
The National Mediation Board provides federal mediators when requested
by both sides.
ARBITRATION
is the agreement to bring in an impartial third party (a single arbitrator or a
panel of arbitrators) to render a binding decision in a labor dispute.
Many negotiated labor-management agreements call for the use of an
arbitrator in disputes.
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Union Tactics
• Strike
• Cooling-off Period
• Boycott
• Primary
• Secondary
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IV. TACTICS USED IN LABOR-MANAGEMENT CONFLICTS
Learning goal 4
Describe the tactics used by labor and management during conflicts and
discuss the role of unions in the future.
Both sides use specific tactics if labor and management reach an impasse
in collective bargaining.
UNION TACTICS
The strike has always been the most powerful tactic unions use to achieve
their objectives.
A STRIKE
is a union strategy in which workers refuse to go to work; the purpose is to
further workers’ objectives after an impasse in collective bargaining.
Strikes can slow down or stop operations in a company.
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Strikers may also PICKET, or walk around outside the firm carrying
signs and talking with the public about the issues in the labor dispute.
Strikes have lead to resolution of labor disputes, but have also generated
violence and RESIDUAL BITTERNESS, such as happened after the
United Auto Workers strike against Caterpillar in the 1990s.
The public often realizes how important a worker is when he or she goes
on strike.
Many states PROHIBIT JOB ACTIONS by state workers even though
they can unionize.
Often police, teachers, or others engage in SICKOUTS (or the BLUE
FLU) when union members don’t strike but refuse to come to work on the
pretext of illness.
Employees of the federal government can organize unions but cannot
strike.
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Under the provisions of the Taft-Hartley Act, the President can request a
COOLING-OFF PERIOD
to prevent a strike in a critical industry.
In a COOLING-OFF PERIOD
workers in a critical industry return to their jobs while the union and
management continue negotiations.
Cooling-off periods, which can last up to 80 days, have been ordered for
American Airlines pilots in 1997 and West-coast dockworkers in 2002
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Very FEW LABOR DISPUTES LEAD TO A STRIKE
but it still remains a powerful weapon.
SOCIAL ATTITUDES also affect the likelihood of a strike.
After President Reagan fired striking air traffic controllers in 1981, other
unions became hesitant to strike.
The strike by the Major League Players Association in 1994 was
unpopular.
UPS workers, however, had public support for their strike in 1997,
encouraging other unions to use the strike option.
PRIMARY AND SECONDARY BOYCOTTS.
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PRIMARY AND SECONDARY BOYCOTTS.
A PRIMARY BOYCOTT
is when a union encourages both its membership and the general public
not to buy the products of a firm involved in a labor dispute.
A SECONDARY BOYCOTT
is an attempt by labor to convince others to stop doing business with a firm
that is the subject of the primary boycott.
Labor unions can legally authorize PRIMARY boycotts, but the Taft-Hartley
Act prohibits the use of SECONDARY boycotts.
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MANAGEMENT TACTICS
A LOCKOUT (rarely used today) is an attempt by management to pressure
on unions by temporarily closing the business.
However, lockouts have been used against West-coast dockworkers and
NBA players.
Management most often uses injunctions and strikebreakers to defeat
labor demands.
An INJUNCTION
is a court order directing someone to do something or refrain from doing
something.
Management can seek injunctions to order striking workers back to work or
limit the number of pickets.
To get an injunction, management must show “just cause.”
1945 (35.5%) to 12.5% today
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MANAGEMENT TACTICS
The use of STRIKEBREAKERS
workers who are hired to do the jobs of striking workers until the labor
dispute is resolved, has been a source of hostility in labor relations.
THE FUTURE OF LABOR-MANAGEMENT RELATIONS
New labor-management issues have emerged.
Many unions have even granted concessions or
GIVEBACKS
concessions made by union members to management; gains from labor
negotiations are given back to management to help employers remain
competitive and thereby save jobs.
The unionized share of the workforce has DECLINED from its peak in
1945 (35.5%) to 12.5% today
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The largest labor union in the U.S. is the
NATIONAL EDUCATION ASSOCIATION (NEA)
with 2.7 million members.
To grow, unions will have to expand BROADEN THE TYPE OF
WORKERS they represent.
Unions are targeting women in relatively low-paying fields.
In order for U.S. firms to remain competitive with foreign firms, unions are
likely to assume a role in maintaining competitiveness in the face of
increased global competition.
Unions have taken on NEW ROLES helping management in training
workers and redesigning jobs.
In exchange for cooperating with management, unions may receive
improved job security, profit sharing, or higher wages.
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CONTROVERSIAL EMPLOYEE-MANAGEMENT ISSUES
Learning goal 5
Explain some of today’s controversial employee-management issues
such as executive compensation, pay equity, child care and elder
care, AIDS testing, and violence in the workplace, and employee
stock ownership plans (ESOPs).
EXECUTIVE COMPENSATION
The U.S. free market system was built using incentives such as large
salaries for performance.
However, today government, boards of directors, stockholders,
unions, and employees have argued that executive compensation is
GETTING OUT OF LINE.
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Equal Pay Act Based On…
• Skill
• Effort
• Responsibility
• Working Conditions
• Establishment
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In 2004, the average total compensation for a CEO was $36 million.
Even after adjustments for inflation, this is an enormous increase
over time.
In the past, an executive’s compensation and bonuses were determined
by the
FIRM’S PROFITABILITY or INCREASE IN STOCK PRICE.
The assumption is that the CEO will improve the performance of the
company and raise the price of the firm’s stock.
Today, many executives receive STOCK OPTIONS (the ability to buy the
company stock at a set price at a later date) or RESTRICTED STOCK
(issued directly to the CEO.)
Stock options account for 57% of CEO compensation.
Restricted stock adds 22%
The problems arise when executives are handsomely compensated,
even when the company doesn’t do well.
Poor executives can often leave the company yet still receive huge
monetary benefits.
The late management consultant Peter Drucker suggested that CEOs
should not earn much more than 20 TIMES as much as the company’s
lowest-paid employee.
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Some companies (such as the firm of Herman Miller) followed his advice,
but many have not.
Today, the average chief executive of a major corporation makes
160 TIMES THE PAY OF AN AVERAGE HOURLY WORKER.
Global comparisons:
American CEOs earn two to three times as much as executives in Europe
and Canada.
In Europe, workers account for 50% of the seats on the board of directors
according to a process called CO-DETERMINATION.
The U.S. public is now pressing for full disclosure concerning executive
compensation.
However, most U.S. executives are responsible for multibillion-dollar
corporations and work 70+ hours a week.
Many executives guide their companies to prosperity.
Good CEOs are a scarce commodity.
equal pay.
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Grievance Resolution
Process
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Executive $
• In 2005, CEOs of 500 biggest companies
received an aggregate 6% pay raise.
• Average paycheck in 2005: $10.9 million
• Top 3 earners in 2005:
• Richard Fairbanks, Capital One Financial,
$249.3 million
• Terry Semel, Yahoo!, $231 million
• Henry Silverman, Cendant,
$140 million
Source: Forbes, April 20, 2006
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PAY EQUITY
The EQUAL PAY ACT OF 1963
requires companies to pay equal pay to women and men who do the
same job.
PAY EQUITY is the concept that people in jobs that require similar levels
of education, training, or skills should receive equal pay.
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This goes beyond
EQUAL PAY FOR EQUAL WORK.
The issue of pay equity centers on comparing the
VALUE OF JOBS
which shows that “women’s” jobs tend to pay less.
Women earn approximately 80% of what men earn.
Once this difference could be explained because women only worked
50 to 60% of their available years.
Today, such extended leaves by women are rarer.
One reason for the disparity is that many women devote more time to
their families and accept lower paying jobs with flexible hours.
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In the 1980s pay critics proposed instituting a concept called
COMPARABLE WORTH
that required people in jobs that require similar levels of education,
training, or skills should receive equal pay.
The concept later fell out of favor.
It is difficult to determine whether comparable worth creates greater
equality or simply chaos.
There is evidence that EDUCATION and knowledge-based skills are
reducing women’s inequality.
In many fields women now earn as much as men.
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SEXUAL HARASSMENT
refers to unwelcome sexual advances, requests for sexual favors, and
other conduct of a sexual nature (verbal or physical) of a sexual nature that
create a hostile work environment.
SEXUAL HARASSMENT becomes ILLEGAL when:
An employee’s submission to such conduct is made either explicitly
or implicitly a term or CONDITION OF EMPLOYMENT or an employee’s
submission to or rejection of such conduct is used as the BASIS FOR
EMPLOYMENT DECISIONS affecting the worker’s status.
The conduct UNREASONABLY INTERFERES with a worker’s job
performance or creates an INTIMIDATING, HOSTILE, OR OFFENSIVE
WORKING ENVIRONMENT
Both men and women are covered under the CIVIL RIGHTS ACT of 1991
that governs sexual harassment.
The Supreme Court ruled that SAME-SEX HARASSMENT should be
treated the same.
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Women still file the majority of sexual harassment cases.
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Sexual Harassment
Charges
18000
16000
14000
Charges
12000
10000
Amount
Filed By
Males
8000
6000
4000
2000
0
1995 1999 2003
Source: The U.S. Equal Employment Opportunity Commission Stats
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In 1996, the U.S. Supreme Court broadened the scope of what can be
considered a hostile work environment.
Recent cases have introduced the concept of a HOSTILE WORKPLACE,
which is any workplace where a particular behavior that is unwelcome, or
that would offend a reasonable person.
The number of complaints filed with the EEOC has leveled off.
Ninety percent of sexual harassment cases are settled out of court.
Now, small companies are seeing more lawsuits.
Managers and workers are now much more sensitive to comments and
behavior of a sexual nature.
One of the major problems is that workers and managers often know a
policy concerning sexual harassment exists, but they HAVE NO IDEA
WHAT IT SAYS.
One expert suggests that companies should REQUIRE SEXUAL
HARASSMENT WORKSHOPS for all employees.
Many companies have set up rapid effective grievance procedures and
promptly react to an employee's allegations of harassment.
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2005 Union Membership
by Industry
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
Manufacturing
Construction
Information
Transportation
Government
5.0%
0.0%
Source: Bureau of Labor Statistics News, January 20, 2006
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Mediation/Arbitration
• Bargaining Zone
• Mediation/Mediatorsuggestions
• Arbitration- binding decision
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Controversial Employee Management Issues
• Executive
Compensation
• Pay Equity
• Sexual
Harassment
• Child Care
• Elder Care
• Drug Testing
• Violence in
Workplace
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Most Unionized States
New York
Hawaii
Alaska
Michigan
New Jersey
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Source: Investor’s Business Daily, January 24, 2006
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Least Unionized States
S. Carolina
N. Carolina
Arkansas
Virginia
Utah
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Source: Investor’s Business Daily, January 24, 2006
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CEO Pensions
CEO
Company Name
Pension Value
Lee R. Raymond
Exxon Mobil Corp.
$8.1M
Henry A. McKinnell
Pfizer Inc.
$6.5M
Edward E. Whitacre
Jr.
AT&T Inc.
$5.4M
William W. McGuire
UnitedHealth Group
Inc.
$5.0M
Robert L. Nardelli
Home Depot Inc.
$4.6M
Source: www.aflcio.org
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Earnings Gap
(What women of various races earn, compared
with a dollar earned by a white male)
Hispanic
Native-American
African-American
White
Asian-American
0.00
0.20
0.40
0.60
0.80
Source: Business Week, June 7, 2004
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You Make the Call
1. Two colleagues walk by you as one delivers
the punch line to a very dirty joke. You feel
the joke is inappropriate. Is this sexual
harassment under the law?
2. An employee meets with you and tells you
that, five years ago, a then-supervisor was
sexually harassing him. What do you do?
3. An employee thinks she may have been
sexually harassed. She explains the
circumstances to you and asks, “Wouldn’t
you be upset?” What should be your
response?
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You Make the Call
4. You’re investigating a sexual harassment
claim, and all five of the witnesses you’ve
interviewed so far have backed up the claim
of sexual harassment. Should you continue
to interview others?
5. After conducting a thorough investigation,
you conclude that sexual harassment has not
taken place. What’s next?
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Amount Injured Per
Every 1000 Workers
Police Officers
Privat Security
Guards
Taxi Drivers
Prison Guards
Bartender
0
50
100
150
200
250
300
350
Source: Crimeprevention.rutgers.edu
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