LEGAL CONTEXT OF HR DECISIONS
After studying this chapter, students should be able to understand the following
A. Legal context of HR decisions
This chapter examines the aspects of HR law and regulations. The goal is to identify
and discuss the
laws themselves and how best to comply with them and do what is best for the
chapter unveils why understanding the legal environment is important and the
context in which HR
regulation occurs. The chapter further explores the challenges to legal compliance.
It ends with ways
for the effective manager to avoid the pitfalls in the EEO legal environment.
A. Legal context of HR decisions
Legal considerations are significant external force
affecting human resource management relates to
federal, state, and local legislation and the many court
decisions interpreting this legislation. In addition,
many presidential executive orders have had a major
impact on human resource management. If company is
having compliance with the legal considerations it will
be contribution towards enhancement of good will
reputation as well as fair operations of the organization
that will be leading towards attaining competitive
Keeping in view the importance of legal considerations mangers must understand
the legal issues that
affect the practices of HRM Like Which employee to hire?
How to compensate employees?
What benefits to offer?
How to handle conflicts?
How and when to fire employees? etc.
Why Understanding the Legal Environment is Important?
Understanding and complying with HR law is important for three reasons. It helps
the company to do
the right thing, to realize the limitations of the HR and legal departments,
and it limits potential liability.
Doing the Right Thing
Compliance with the law is the right thing to do. The primary requirement of
these laws is to mandate
good management practice. Operating within these laws has benefits beyond simple
Discriminatory practices not only create potential legal liability, but also
lead to poor employee morale
and low job satisfaction, which can lead to poor job performance.
Realizing the Limitations of the HR and Legal Departments
If managers make poor decisions, the HR department neither always be able to
resolve the situation nor
can a firm’s legal department solve problems created by managers. The function
of the legal
department is to try to limit damage after it has already occurred.
Limiting Potential Liability
Considerable financial liabilities can occur when HR laws are broken or perceived
to be broken.
Legal regulation of HRM
Legal environment and considerations can influence potential and prospective
as well as current
employees of the organization to Prospective Employees. It provides Protection
from discrimination in
selection, initial job placement, and initial compensation
While to Current Employees Protection from discrimination in all dimensions of
work in the
To make an employment decision, not on the basis of legitimate job-related factors...Any
decision: hiring, promotions, pay, discipline, etc fail to use job-related factors
(e.g., essential job
qualifications, job performance, etc.), and for employment decisions Instead,
of legitimate factors
employer uses false stereotypes and prejudices. Law Prohibits Discrimination
in Hiring, Compensation,
terms, conditions or privileges of employment based on Race, religion, color,
sex, national origin and
A situation in which employment decisions are not affected by discrimination.
Laws affecting HRM:
The laws affecting HRM can be divided into two broad categories: equal employment
(EEO) laws and other laws. The major EEO laws cut across nearly every aspect
of managing human
Equal Employment Opportunity (EEO)
The concept of equal employment opportunity has undergone much modification and
the passage of the Civil Rights Act in 1964. Congress has passed numerous amendments
to that act and
has passed other legislation, as oversights in the initial act surfaced. Major
Supreme Court decisions
interpreting the provisions of the act have also been handed down. Executive
orders were signed into
law that further strengthened equal employment opportunity. EEO is a combination
of legislative and
judicial policy set forth by federal, state, and local governments that ensures
fair and equal treatment of
all persons. Job applicants may not be rejected based on discriminatory practices
A strategy intended to achieve fair employment by urging employers to hire certain
groups of people
who were discriminated against in the past Steps that are taken for the purpose
of eliminating the
present effects of past discrimination
Major Federal Laws (USA)
There have been many laws passed and court decisions rendered that affect the
everyday actions of
human resource management. Human resource decisions that were made in the past
may no longer be
feasible. Human resource managers have a responsibility to ensure that actions
resource management adhere to both the letter and intent of the law. Unfortunately,
not everyone may
share this view, and that is when problems occur.
Equal Pay Act of 1963
This law requires the same pay for men and women who do the same job in the same
Basically this law provides protection against discrimination based upon sex.
Civil Rights Act of 1964 (CRA) Title VII
Amended by Civil Rights Act of 1991(Title VII of Civil Rights Act)
This act prohibits discrimination based on race, color, sex, religion, or national
origin. The Civil Rights
Act of 1991 amended the Civil Rights Act of 1964 and had the following purposes:
To provide appropriate remedies for intentional discrimination and unlawful harassment
To codify the concepts of business
necessity and job related
pronounced by the Supreme Court.
To confirm statutory authority and provide statutory guidelines for the adjudication
impacts under Title VII of the Civil Rights Act of 1964.
To respond to recent decisions of the Supreme Court by expanding the scope of
relevant civil rights
statutes in order to provide adequate protection to victims of discrimination.
Age Discrimination in Employment Act of 1967 (ADEA)
The Age Discrimination in Employment Act (ADEA) (amended 1978, 1986) prohibits
discriminating against individuals who are over 40 years of age. The latest amendment
not only gives
older employees the option to continue working past age 70, but the health care
provision of the
amendment also provides them with an additional incentive to continue to do so.
The ADA has three
major sections. Title I contains the employment provisions. Titles II and III
concern the operation of
state and local governments and places of public accommodation such as hotels,
1. Individuals with disabilities
2. Essential Functions
3. Reasonable accommodation
4. The Vocational Rehabilitation Act of 1973
THE AMERICANS WITH DISABILITIES ACT (ADA)
The Americans with Disabilities Act (ADA), passed in 1990, prohibits discrimination
individuals with disabilities. Persons discriminated against because they have
a known association or
relationship with a disabled individual also is protected.
EXECUTIVE ORDER 11246, AS AMENDED BY EO 11375
An executive order (EO) is a directive issued by the president and has the force
and effect of laws
enacted by Congress. A major provision of EO 11246 is that every executive department
that administers a program involving federal financial assistance will require
adherence to a policy of
nondiscrimination in employment as a condition for the approval of a grant, contract,
or guarantee. Affirmative action, stipulated by EO 11246, requires employers
to take positive steps to
ensure employment of applicants and treatment of employees during employment
without regard to
race, creed, color, or national origin
An approach that an organization with government contracts develops to demonstrate
that women or
minorities are employed in proportion to their representation in the firm’s relevant
Executive Orders 11246 & 11375 require companies with federal contracts to develop
action plans (AAPs) it provides preferential treatment to minority group members
in functions like
Recruiting and Hiring
The three steps involved in developing an affirmative action program are (1)
conducting a utilization
analysis, (2) establishing goals and timetables, and (3) determining action options.
In the first phase,
organizations need to consider different pieces of information, which constitute
an availability analysis
after they have conducted a utilization analysis. Rather, the employer should
take into consideration the
size of the underutilization, how fast the work force turns over, and whether
the work force is growing
or contracting. In the third phase, the companies recruit protected-class members,
provide specialized training, and remove unnecessary employment barriers.
Challenges to Legal Compliance
HRM practices may be challenged by anyone of stakeholders like society, community,
employees and shareholders so management for every decision should have legal
backing in order to
defend and explain its decisions. A firm's HR department has considerable responsibilities
to human resource law. However, if managers make poor decisions, the HR department
will not always
be able to resolve the situation. The manager's job is to prevent the damage
from happening in the first
place. Thus, understanding and complying with HR law helps the manager to do
the right thing, realize
the limitations of the HR and legal departments, and minimize potential liability.A
landscape, complex laws, conflicting strategies for fair employment, and unintended
among the challenges confronting managers attempting to comply with HR law.
A Dynamic Legal Landscape
In addition to the many HR related laws that have been passed, there have been
a myriad of opinions
handed down in court cases that have affected the HR legal environment. The legal
The Complexity of Laws
Each individual law is accompanied by a set of regulations that can be quite
lengthy. Nonetheless, the
gist of most HR law is fairly straightforward. Managers should be able to understand
intention of all such laws without too much difficulty.
Conflicting Strategies for Fair Employment
Society at large, political representatives, government employees, and judges
all has different views
regarding the best ways to achieve equitable HR laws.
It is very common for a law, government program, or an organizational policy
to have numerous
unanticipated consequences, some of which turn out to be quite negative. The
challenge to managers is
to anticipate and deal with both the intended and unintended consequences of
Affirmative Action: An approach that an organization with government
contracts develops to
demonstrate that women or minorities are employed in proportion to their representation
in the firm’s
relevant labor market
Employment discrimination: To make an employment decision, not on
the basis of legitimate jobrelated