Advanced Business
Law (BPP433/85)
LABOR
2007 Winter Quarter
Week 4
Instructor: David Oliveiri
Advanced Business Law BPP 433
Learning Objectives
Just What is Labor?
What Legal Rules Apply to the Employment of
Labor Resources?
Managerial Implications -- Constraints, Risks,
Opportunities
Advanced Business Law BPP 433
SALLY SMITH
“AskSimon”
• Assembles
Capital
• Opens
Accounts
TOM
• Borrows
ANN
• Spreadsheets
• Customers
• Phone
• Suppliers
• Sales Force
Consulting
• Manual
• Creditors
• % New Business
• Hourly Wage
• “Bystanders”
• “Colleagues”
Advanced Business Law BPP 433
Common Labor
“Issues”
Hiring / Not Hiring
Managing
Firing
Buying / Selling Businesses
Advanced Business Law BPP 433
Some Basic Economic
Considerations of
Labor Resources
Notion of Control Pervasive
Joint Economic Enterprise
(Association) vs. Hired Inputs
 Relationships
 Bargaining, Dealing
 Public Policy Perspectives
Advanced Business Law BPP 433
Bargaining Elements
in Adding Others
Deal Points of Sally, Tom, Ann
Risk of Loss – Who Bears?
Return – What?
Control – How Much?
Duration – How Long?
COST (INCLUDING LIABILITY) IMPACTS
Advanced Business Law BPP 433
The Question of
Structured Labor
Relationships
Structured Relationships – Intended and By
Default
Pros – Greater Definition/Predictability
Cons – Transactions Costs/Compliance Costs
Advanced Business Law BPP 433
The Sources of Structured
Employment Relationships
Contracts, Statutes, Regulations
Examples –
– Negotiated Contracts (Including Collective Union
Contracts)
– Implied Contracts (Employee Manuals,
Employment-at-Will Erosion, …)
ST – Q4
– Federal Employment Statutes, Regulations
(Discrimination Laws, …)
– State Employment Statutes, Regulations, Court
Decisions (Workers Compensation, Employment of
Minors, …)
Advanced Business Law BPP 433
Statutes, Regulations Adding
Structure to Relationships –
Categories
Specific Terms of Employment
Relationship
Employer Discrimination
Protection of Employees in Workplace
Employee Privacy
Advanced Business Law BPP 433
Employment Relationship Terms –
Unions and Collective Contracts
National Labor Relations Act Established Right to
Unionize and Bargain Collectively – Federally Protected
Right!
Prohibits “Closed Shops” (Agreements Requiring
Employers to Hire Only Union Members
Allows “Union Shops” (Nonunion New Hires Allowed, But
Employee Must Join Union)
National Labor Relations Board – Administers
In 2005 – 12.5% of Wage and Salary Workers Unionized – 36.5% of Government
Workers, 7.8% of Private Industry Workers. Source: US Department of Labor
Advanced Business Law BPP 433
Unfair Labor Practices –
Inhibit Free Labor Market
Unfair Employer Practices
Unfair Union Practices
•
Interfering with right to unionize
•
Coercing an employee to join the union
•
Refusing to bargain in good faith
•
Refusing to bargain in good faith
•
Discriminating against union members
•
Causing an employer to discriminate
against a nonunion employee
•
Dominating the union
•
Featherbedding
Discriminating against an employee
•
Picketing an employer to require
recognition of an uncertified union
•
•
Engaging in secondary activity
•
Advanced Business Law BPP 433
Levying excessive or discriminatory
dues
ST-Q2 S&R43 (P6,7)
Further Federal Regulation
of Terms of Employment
Relationships
Fair Labor Standards Act - Regulates Child Labor
Outside Agriculture
Worker Adjustment and Retraining
Notification Act - Requires 60 Days' Advance Notice of
Plant Closing or Mass Layoff
Family and Medical Leave Act of 1993 - Grants
Employee Leave for Serious Health Conditions/ Certain
Other Events
Minimum Wage Laws
Advanced Business Law BPP 433
State Regulation of
Employment-at-Will
Relationship
General Common Law Rule – Employment for
Other than Definite Term is Terminable-at-Will by
Either Party
Judicial Limitations - Based on:
– Contract Law (E.G. Employee Manuals)
– Tort Law (E.G. Wrongful Termination)
– Public Policy (E.G. “Good Will” Termination)
Advanced Business Law BPP 433
Federal Employment
Discrimination Laws
Protected
Characteristics
Equal Pay
Act
Title VII of the
Civil Rights
(15+
Employees)
Prohibited
Conduct
Defenses
Sex
Wages
Seniority
Merit
Quality or quantity
measures
Any factor other
than sex
Race
Color
Sex
Religion
National origin
Terms, conditions,
or privileges of
Employment,
Including Sexual
Harassment
(Hostile Work
Environment)
Seniority
Ability test
BFOQ (except for
race)
Business necessity
(disparate
impact only)
Remedies
Back pay
Injunction
Liquidated damages
Attorney’s fees
Back pay
Injunction
Reinstatement
Compensatory and Punitive
damages for intentional
discrimination
• Unlimited for race
• Limited for all others
Attorney’s fees
Advanced Business Law BPP 433
Federal Employment
Discrimination Laws (cont.)
Protected
Characteristics
Age Discrim. in
Employment
Act
(40-Local; 20Interstate)
Americans
with
Disabilities Act
(15+
Employees)
Prohibited
Conduct
Terms, conditions,
or privileges of
employment
Age
Disability
Terms, conditions,
or privileges of
employment
Defenses
Seniority
BFOQ
Any other
reasonable act
Undue hardship
Job-related criteria
and business
necessity
Risk to public health
and safety
Remedies
Back pay
Injunction
Reinstatement
Liquidated damages for
willful violation
Attorney’s fees
Back pay
Injunction
Reinstatement
Compensatory and punitive
damages for intentional
discrimination (limited)
Attorney’s fees
Back Problems, Drug/Alcohol Addiction, Mental Disabilities,
Obesity, HIV, …
Advanced Business Law BPP 433
Discrimination Charges
Filed in 2004 with EEOC
Category
Number of Charges
Race
27,696
Sex
National Origin
Religion
Retaliation
Age
24,249
8,361
2,466
22,740
17,837
Disability
Equal Pay
15,346
1,011
Advanced Business Law BPP 433
Source: EEOC National Database, Jan. 2005
Equal Employment
Opportunity Commission –
EEOC
Violation Formula: Protected Class + Employment
Action + Qualified + Denied Something + Discrimination
Intent
Intent Supported By:
– Disparate Treatment
ST – Q1 (S&R43—
P14, 2)
– Disparate Impact of Neutral Practice
Defenses: Valid Test, Seniority, BFOQ, Statistical
Evidence (Regression/Dummy Variable = Protected
Characteristic)
Physical Exams, Genetic Testing?
Advanced Business Law BPP 433
State and Federal
Regulation of Employee
Protection
FEDERAL:
– Occupational Safety and Health Act – Mandates Safe and Healthful
Work Environment
– Social Security - Economic Assistance to Disabled/Retired
Employees and Dependents
STATE:
– Workers' Compensation - Awarded to Employees Injured During
Employment
– Unemployment Compensation - Awarded to Workers Who Lost
Their Jobs and Cannot Find Employment
Temporary Workers Pressing Gillette For Benefits at
Massachusetts Packaging Plants – New York Times 11/8/05
Advanced Business Law BPP 433
State and Federal Regulation
of Employee Privacy
Drug and Alcohol Testing - Some States
Prohibit Tests or Prescribe Scientific and
Procedural Safeguards
ST – Q5
Lie Detector Tests - Federal Statute Limiting
Tests to Narrow Circumstances
ST – Q6
Employee Surveillance
Advanced Business Law BPP 433
ST – Q7
Management
Perspectives
Decisions in Hiring – Type of Relationship (Control,
Risk, Structure)
Post-Hiring Management – Environment, Training,
Developing, Promoting, Firing, …
Buying or Selling Businesses
TEMPS, CONTRACTORS,
AGENTS/EMPLOYEES,
MANAGERS, OFFICERS, …
Advanced Business Law BPP 433
Law and Competitive
Advantage*
Understand the Law – BPP 432, 433, Counsel; When do I
have a legal issue?
React to Specific Legal Problems (Flight or Fight) – 20%
of CEO time!
Prevent Similar Legal Problems
Redefine Legal Concerns as Business Concerns
Current Prevalent Litigation Areas – Workers’
Compensation, Wrongful Discharge, Sexual
Harassment
Source: Siedel, Using the Law for Competitive Advantage (2002, Jossey-Bass)
Advanced Business Law BPP 433
Law and Competitive
Advantage – Workers’
Compensation
Direct Costs – Insurance Premiums ($5B (1970’s) to
$21B (1980’s) to $70B (1990’s)
Indirect Costs – Lost Productivity (5.9 Million
Workplace Injuries and Illnesses in 1998).
Source: Siedel, Using the Law for Competitive Advantage (2002, Jossey-Bass)
Advanced Business Law BPP 433
Law and Competitive
Advantage – Wrongful
Discharge
Direct Costs – Most Companies Sued by >= 1 Employee in Every 12
Month Period
Indirect Costs – Limitation on Staffing Flexibility
Source: Siedel, Using the Law for Competitive Advantage (2002, Jossey-Bass)
Advanced Business Law BPP 433
Ambiguous
Performance Reviews
For someone who has engaged in criminal activity:
“He’s a man of many convictions.”
For someone who is untrustworthy:
“Her true ability is deceiving.”
For someone who is unqualified:
“I most enthusiastically recommend this person with no qualification
whatsoever.”
For someone who is lazy:
“In my opinion, you will be very fortunate to get this person to work for
you.”
Source: “Art of Lying,” Wall Street Journal, 3/22/94, p.1, quoting Robert J.
Thornton, The Lexicon of Intentionally Ambiguous Recommendations (LIAR).
Advanced Business Law BPP 433
Law and Competitive
Advantage –
Sexual Harassment
Direct Costs – Most Companies Sued by >= 1 Employee in Every 12
Month Period
Indirect Costs – Limitation on Staffing Flexibility, Morale
Harassment Law In US Is Strict, Foreigners Find
“A sexual harassment lawsuit against Toyota Motor Corp….
American laws and customs relating to workplace sexual
harassment are in many cases stricter than those abroad…”
Wall Street Journal, 5/15/06
Source: Siedel, Using the Law for Competitive Advantage (2002, Jossey-Bass)
Advanced Business Law BPP 433
Bottom Lines; Q&A
Labor => Relationships
Labor Relationships = f ( Bargaining, Public Policy) =
Increasingly “Structured”
Sources of Structure = Contracts, Statutes, Regulations,
Court Decisions
Management Perspectives – Hiring Decisions, Management
of Labor Relationships, Termination of Relationships,
Buying and Selling Businesses
Management Opportunity – Comparative Advantage
Advanced Business Law BPP 433