Homework answers / question archive / Chapter 14: Labor Relations Chapter Learning Objectives: • Discuss the current status of unions in the US • Understand federal labor relations legislation • Examine the steps in the union organizing process • Discuss the collective bargaining process • Examine the contract administration process and typical labor contract clauses 1 Labor Relations Process Three primary Labor Relations Processes: • Organizing • Negotiating • Contract Administration Which one of these activities would you think the most time is spent on? 2 The Labor Organization Process Workers Seek Collective Representation Management Union Begins The Organizing Process Labor Representation Election is Held Collective Bargaining For A Contract Contract Administration 3 Current Status of Unions in the US • The U

Chapter 14: Labor Relations Chapter Learning Objectives: • Discuss the current status of unions in the US • Understand federal labor relations legislation • Examine the steps in the union organizing process • Discuss the collective bargaining process • Examine the contract administration process and typical labor contract clauses 1 Labor Relations Process Three primary Labor Relations Processes: • Organizing • Negotiating • Contract Administration Which one of these activities would you think the most time is spent on? 2 The Labor Organization Process Workers Seek Collective Representation Management Union Begins The Organizing Process Labor Representation Election is Held Collective Bargaining For A Contract Contract Administration 3 Current Status of Unions in the US • The U

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Chapter 14: Labor Relations Chapter Learning Objectives: • Discuss the current status of unions in the US • Understand federal labor relations legislation • Examine the steps in the union organizing process • Discuss the collective bargaining process • Examine the contract administration process and typical labor contract clauses 1 Labor Relations Process Three primary Labor Relations Processes: • Organizing • Negotiating • Contract Administration Which one of these activities would you think the most time is spent on? 2 The Labor Organization Process Workers Seek Collective Representation Management Union Begins The Organizing Process Labor Representation Election is Held Collective Bargaining For A Contract Contract Administration 3 Current Status of Unions in the US • The U.S. unionization level has been on steady decline • The highest level of unionization occurred in 1945 (36% of workforce unionized) • 2019 rates: 10.3% (14.6 million ees; 33.6% public sector, 6.2% private sector) 4 Reasons for the Decline in Unionization • Majority of new job creation is occurring in small organizations (100 or less employees – 3% of small ERs are unionized) • Change in workforce demographics • Increasing use of part time EEs (unionized at ½ the FT rate – 11.2% FT v. 5.5% PT) • Legislation which protects employee rights and benefits • Ability to use permanent replacement workers during strike • Shift from manufacturing to high tech/service jobs • Globalization/offshoring of jobs • Right-to-work laws (see later slides for this discussion) 5 Historical Perspective on Unions in US Pre-1935 – Unions had no rights or protections under law ? Unions were viewed as criminal conspiracies for going on strike (and were prosecuted as such) ? Jurors were business owners ? Businesses simply got injunctions against unions if they went out on strike (court would order them back to work) ? Businesses had employees sign “yellow dog contracts” and would sue the union for breach of contract ? During WWI & II, unions started to get more respect as they participated on governmental labor boards ? It also became clear that unions served an important role – being the voice for the employee ? Legislation was eventually passed to protect unions right to exist. 6 Government Regulation of Labor Relations • Railway Labor Act (RLA) of 1926 • Wagner Act (National Labor Relations Act; NLRA) of 1935 • Taft-Hartley Act (Labor-Management Relations Act) of 1947 • Landrum-Griffin Act (Labor-Management Disclosure Act) of 1959 7 Railway Labor Act (RLA) of 1926 • Purpose of the act was to avoid service interruptions resulting from disputes between railroads and their operating unions • First major piece of LR legislation • Covered employees in the railway industry (and now airlines) • Established mandatory mediation during labor disputes via the National Mediation Board • Instituted a 30 day cooling off period (ordered by the President of the US) during bargaining disputes • Established National Railway Adjustment Board as enforcement agency 8 Wagner Act (National Labor Relations Act) of 1935 • The most important piece of LR legislation • Covers most all private sector organizations (besides airlines and railway industries) • Protects employee rights to organize and bargain collectively through representatives of their choice • Created the National Labor Relations Board (NLRB) to govern labor relations in the United States and enforce labor law 9 National Labor Relations Board (NLRB) Enforcement agency for all labor law besides Railway Labor Act – (like the EEOC is to EEO law) Primary duties: 1. Investigate/remedy Unfair Labor Practice (ULP) charges 2. Conduct union certification elections 10 Wagner Act (NLRA) – Section 7 Rights • Wagner Act Section 7 of the Act guarantees these rights: • The right to form, join, or assist labor organizations and bargain collectively • The right to engage in collective bargaining activities (strikes, pickets, etc.) 11 Wagner Act (NLRA) – Section 8: Employer Unfair Labor Practices (ULPs) • Section 8: Employer ULPs This section of the Wagner Act outlawed employer practices as illegal: 1. Interference with employees’ rights to unionize 2. Supporting a particular union over another 3. Discrimination against union members 4. Discharge of union members because they file a ULP charge 5. Refusal to bargain in good faith with the union 12 Taft-Hartley Act (1947) • Amendment to Wagner (NLRA) twelve years after Wagner was passed • Problem: Wagner Act helped unions TOO much and caused them to be too powerful relative to ERs • Pro-Management legislation • Established Union ULPs (amended Section 8 of NLRA) • Once a year limit on certification elections • Closed shop illegal – (where it would be necessary to be a union member to be in the applicant pool to get a job) • Gave states permission to pass Right-to-Work Laws – (RTW essentially prohibits mandatory union membership in a state) • Amended Section 7 Rights of NLRA (see next slide) 13 Taft-Hartley Section 7 amendment • Taft-Hartley amendment to Section 7 guarantees: • The right to refrain from joining or participating in collective bargaining activities -- except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment (in some states it is ok to mandate union membership) – What is this state legislation called? 14 Taft-Hartley - Unfair Union Labor Practices (ULPs) • Section 8: Union ULPs This section outlawed the following UNION practices as illegal: 1. Coercion of ees to join unions 2. Asking employers to discriminate against ees based on union status 3. Charging excessive or discriminatory fees 4. Specified prohibited activities on the part of unions – e.g., secondary boycotts, featherbedding 5. Refusing to bargain in good faith with the employer 15 Landrum-Griffin Act of 1959 Amendment to Wagner (NLRA) twelve years after Taft-Hartley amendment was passed in response to union corruption of the 1950s Govt. stepped in and started to regulate union business/internal union affairs 1. Mandated that unions must file yearly financial statements with the Department of Labor (as an external auditor) 2. Established “Bill of Rights of Union Members” - Members may... 1. participate in union business 2. vote in union elections 3. run for union offices 4. Sue the union 16 Differences Between RLA and Wagner (NLRA) 1. Coverage RLA - railway & airlines NLRA - all other private employers 2. Certification elections RLA - Union must win majority of eligible voters NLRA - Union needs majority of those who voted Scenario: 500 eligible ees, 300 voted - 240 for union, 60 against unionization. Under RLA was the union certified? Under NLRA was the union certified? 3. Strike/Lockout RLA - Union can’t strike and ER can’t lock out until all impasse resolution procedures have been expended (mediation, presidential 30 day cooling off period) NLRA - once contract expires everything is fair game 17 Steps in the Organizing Process Union/Employee Contact Steps in the Organizing Process Initial Organizational Meeting Formation of In-House Committee Election Petition and Voting Preparation Representational Election 18 Steps in the Organizing Process 1. Union/employee contact – - Who typically initiates contact? 2. Initial Organizational Meeting - meeting to determine fit with union - assess interest level of employees 3. Formation of In-house Organizing Committee - Solicit employees to take on leadership role in the organization process - Main goal: getting authorization cards signed Authorization card – card signed by ees indicating their interest in being represented by a union 19 United Food And Commercial Workers International Union Authorization Card 20 Example Teamsters Authorization Card 21 Steps in the Organizing Process 4. Election Petition and Voting Preparation - Need 30% employees targeted for representation (called the “bargaining unit”) to sign the cards in order to petition NLRB to hold a certification election - No certification election for same group of EEs has taken place in the past 12 months 5. Certification Election - Once the NLRB approves the petition to hold an election, a secret ballot election on the ER’s property at the earliest available date - Simple majority determines the outcome (50% + 1 vote) under Wagner Act (NLRA) 22 Bargaining Unit • Group of two or more jobs whose employees share common employment interests and may reasonably be grouped together for purposes of collective bargaining • ER and Union don’t usually agree on which employees should be included in the bargaining unit • To get a collective bargaining agreement (contract) passed, what should the employees look like? 23 Sample Certification Election Results Certification Election (under NLRA) Sample voting results: Union A 40 Union B 32 No Union 28 Who won?? Once a union wins, it has exclusive bargaining agent status for one year – what does that mean? 24 Duty of Fair Representation • If Union wins, it becomes the exclusive bargaining agent of all ees in the bargaining unit via the Duty of Fair Representation: • The union has the legal right and responsibility to represent ALL bargaining unit members equally, regardless of whether employees in the bargaining unit join the union or not. 25 Ways a Union can be Recognized • Win a certification election • Voluntary recognition • NLRB grants the union recognition 26 Employer Tactics During Organizing • NOTE that the union will attempt to stir up support for the union without the ER’s knowledge – ideally for the union, the ER will be the last to know • ERs are more aggressively engaging in union avoidance • ER can stress the favorable employer-employee relationship experienced without a union. • ER can emphasize current advantages in wages, benefits, or working conditions the employees may enjoy • ER can emphasize unfavorable aspects of unionism: strikes, union dues • ER can initiate legal action when union members and leaders engage in ULPs 27 Inappropriate ER Tactics During Organizing • ER cannot promise new benefits, wage increases, etc. to encourage employees not to vote for the union • ER cannot threaten/fire employees for being prounion • ER should not question an EE as to his or her opinion on unionization • ER cannot forbid employees engaging in organizing activities on-site during down time (lunch hour, breaks, etc.) • Can an ER forbid union organizers (non-employees) from engaging in organizing on-site? 28 Collective Bargaining Process • The process of negotiating a labor agreement, including the use of economic pressures (strikes, pickets, boycotts, lockouts) by both parties. • Process starts approximately 60 days before contract expires • Good Faith Bargaining – mandated by NLRA • Both parties must agree to meet at a reasonable time and place, • Submit realistic proposals, • Offer realistic counterproposals • Both parties must bargain over MANDATORY issues (wages, hours, and working conditions) • GFB – does not mean you have to give concessions nor that you come to an agreement • “Inability to Pay” argument → MGT must show its books 29 Bargaining Subjects • Mandatory subjects – subjects that if one party wants to bring up in negotiations, the other party must negotiate over it • Subjects dealing with wages, hours, and working conditions • Permissive subjects – subjects that either side is free to bring up, but the other side is not mandated to negotiate over it (both sides must agree to let the subject come on to the table) • Anything other than wages, hours, and working conditions • Illegal subjects – subjects that violate law and would be a ULP to try to get onto the negotiation table • Asking ER to discriminate against women, asking for a closed shop provision in the CBA, featherbedding, etc. 30 Mandatory v. Permissive Distinction Two questions to ask: 1. Does the issue effect the terms and conditions of employment of current BU members? Current BU members → mandatory Anyone else → permissive Bargaining subject: Medical benefits for retirees → Mandatory or Permissive? 2. Does the issue relate to management’s decision making authority or to the impact of the decision on employees? Management’s authority → permissive Impact of decision on employees → mandatory Bargaining subject: Change in technology→ M or P? Layoffs due to technology change→ M or P? 31 Bad Faith Bargaining Factors that suggest Bad Faith Bargaining (BFB) is occurring: 1. Imposing conditions - can’t refuse to bargain until union stops striking, can’t refuse to bargain until the union drops a ULP charge… 2. Refusal to meet/delaying meeting 3. Surface bargaining - going thru the motions - not moving/not offering counter proposals - concessions that aren’t meaningful - moving from the completely ridiculous to the somewhat ridiculous in concessions 4. Withdrawal of previously accepted offers 5. Bypassing the union NLRB makes the call as to whether BFB has occurred looks at the “totality of circumstances” – examine negotiation in its entirety to determine if bad faith bargaining has occurred - one isolated incident will not usually end up as a GFB ULP 32 Management and Union Power in Collective Bargaining • Collective Bargaining Power • The power of labor and management to achieve their goals through economic, social, or political influence. • Union Bargaining Power • Strikes, pickets, and boycotts • Management Bargaining Power • Hiring replacement workers • Continuing operations staffed by management • Locking out employees 33 Union Power in Collective Bargaining Boycott Our Employer This Union On Strike Striking Boycotting Picketing 34 Strikes • Strikes have been on the decline since 1975 • 90-95% of CBAs (collective bargaining agreements) end without a work stoppage • We lose 10X as many work days to injuries/accidents than to strikes • 5 types of strikes 1. Economic strike 2. Wildcat strike 3. Unfair Labor Practice (ULP) strike 4. Secondary strike 5. Sympathy strike 35 Strikes • Economic Strike – Work stoppage to put pressure on management during negotiations once the contract expires - Employers may replace strikers on a permanent or temporary basis - Can’t fire striking employees but you can replace them - Strikers have “recall rights” to their jobs once their jobs come open if they were permanently replaced Scenario: 500 ees in the BU go on strike: 200 striking ees are permanently replaced 125 striking ees are temporarily replaced How many ees who went out on strike get their jobs back immediately upon the end of the strike? 36 Strikes • Wildcat Strike – Impromptu strike unauthorized by union during an active collective bargaining agreement (in defiance of union) • Typically there is a no-strike clause in the CBA (or a grievance procedure which is a de facto no-strike clause) • Management can fire employees who engage in a wildcat strike and may sue the union for damages • Example: American Airlines pilots staged a “sickout” in the early 2000’s to protest how recently acquired pilots from a small airline would be merged into the seniority system – ruled a wildcat “strike” and the union was fined $10 million for damages for AA lost business for the 3-4 days of flight cancellations (union subsequently went bankrupt and dissolved) 37 Strikes • ULP Strike – Work stoppage precipitated by an ER ULP or an economic strike that is extended because of an ER ULP • If ER committed a ULP, employees can only be temporarily replaced during ULP strike (they have immediate reinstatement rights) • Example 1: Union strikes because the employer is not bargaining in good faith – it is a ULP strike • Example 2: The contract has expired so the union goes out on an economic strike, while on strike the ER fires some of the strikers…Now it is labeled a ULP strike • What if management had hired permanent replacements?? 38 Strikes • Secondary Strike – Work stoppage by ees who have no dispute with their employer but are striking to support another union – Legal or Illegal? • Burger Flipper Union members are on strike because of a negotiation impasse with Burger King, if McDonald’s employees walked off the job to support their burger flipper brothers at BK, that would be a secondary strike • Sympathy Strike – Work stoppage by a group of ees in support of their co-workers who are currently in a negotiation impasse with their employer (both groups of employees work for the same ER) – Legal or illegal? • Pilots for American Airlines go on strike, flight attendants decide not to cross the picket line to support their coworkers 39 Pickets • Picketing is simply providing information to the public via signs or handbills • More restrictions on what can be on a sign than on a flyer • Picketing is generally legal as long as it is not done “en masse” – more than 3 people per door at every door • Can get an injunction if property damage or physical injury is caused by picketers 40 Boycotts • Primary Boycott – Direct appeal to consumers not to purchase “struck goods” – i.e., don’t do business with company the union is currently having a dispute with – Legal or illegal? • e.g., Dole Fruit Co and the Fruit Workers Union (FWU) are at an impasse in negotiations so the FWU asks consumers not to buy Dole fruit products • Secondary Boycott – Illegal (as noted by Taft Hartley) – Asking consumers not to buy goods/services from a neutral employer not involved in the labor dispute – Legal or illegal? • e.g., Dole Fruit Co and the Fruit Workers Union (FWU) are at an impasse in negotiations so the FWU asks consumers not to shop at Albertson’s because they sell Dole fruit 41 Employer Power in Collective Bargaining Management methods for applying economic pressure during bargaining: Outsourcing normal work Locking out workers Hiring replacement workers Demanding concessions 42 Management Collective Bargaining Tactics • Lockout – management’s primary weapon against union’s ability to strike • Locking out employees to put pressure on the union to make concessions in bargaining • Employers can hire temporary replacements only • Why only temporary and not permanent replacements? 43 Management Collective Bargaining Tactics • Hiring replacements – • NLRB gave management the right to hire replacement workers in an 1986 ruling • Clinton administration tried to resend this order arguing that this shifted power too much in favor of management (they were not successful in getting the ruling thrown out) • Is being able to hire replacements fair? 44 Management Collective Bargaining Tactics • Outsourcing work – • Employers can outsource work during a strike • If Green Giant veggie processing employees go out on strike, GG could get Dole to process their veggies and put a GG label on it • If Dole accepts GG’s outsourced work – Dole loses its neutrality via the “Ally Doctrine” (GG strikers could ask the public not to buy Dole products) 45 Resolving Bargaining Deadlocks • Mediation – third party neutral comes in and acts as a facilitator between the two parties • Very commonly used in labor disputes (Federal Mediation and Conciliation Service—govt agency that supplies mediators) • Interest Arbitration – having a third party neutral make the final decision for the two parties in contract negotiation • Primarily used in public sector labor disputes when striking is prohibited or restricted • Very powerful position to be the ultimate decision maker • Rights Arbitration - Another type of arbitration occurs during contract administration • Occurs when a third party neutral is asked to interpret the meaning of the contract and rule on employee grievances • Extremely common in both public and private sectors 46 Typical Labor Contract Clauses • Typical clauses will cover: • Wages • Grievance procedures • Vacations • Holidays • No strike/no lockout clause • Work schedules • Overtime • Management rights • Safety procedures • Union security • Severance pay • Transfers • Seniority • Discipline • Pensions and benefits • Outsourcing 47 Impact of Unionization on Managers • Challenges to Management Decision Making • Management prerogatives versus union participation in decision-making in the work place • Loss of Supervisory Authority • Constraints on management in directing and disciplining the work force by terms of the collective bargaining agreement (CBA) 48 Management Rights Clauses • Clauses that formally state what rights are solely management’s (areas that are off limits to the union) • Reserved Rights (Short form) • Clause that states that MGT has full authority in all matters not covered in the CBA • “Employer retains all rights to manage, direct, and control its business except as such rights are expressly and specifically modified by the terms of this agreement.” • Defined Rights (Long form) • Clause that specifically lists out all of management’s rights – this is intended to make explicit what rights are management’s • Very long statement (given all rights are listed out) 49 Right-to-work (RTW) Laws Union security agreements (shop clauses) attempt to make membership in the union a condition of employment • A RTW law is a state law that prohibits any form of compulsory union membership • Typically located in the South and West • Currently 27 states are RTW states 50 Right-to-work states map 51 Right to Work Laws • Arguments for RTW: • Makes unions more responsive to its members by making membership voluntary • RTW laws encourage job creation in RTW states • Arguments against RTW: • “Free rider problem” caused by the Duty of Fair Representation • Lower average wages paid in RTW states 52 Union Security Agreements (98% of CBAs) Union security agreements (shop clauses) attempt to make membership in the union a condition of employment • Closed shop – must be in the union to be employed – Where is this legal? • Union shop – BU employee must join the union within 30 days of employment or be terminated – Where is this legal? • Agency shop – BU employees must pay membership dues to the union (usually a reduced rate) but are not required to join the union – Where is this legal? • CWA v. Beck (1988) - Limited the amount of fees that union can charge nonunion members (only costs of negotiation and grievance handling not costs assoc. with organizing new union members or political uses) • Janus v. AFSCME (2018) – Public sector unions cannot extract agency fees from nonconsenting employees 53 Union Security Agreements • Maintenance of Membership shop – Requires that ees who voluntarily join the union remain union members throughout the life of the collective bargaining agreement – Where is this legal? • Open Shop – Employees are not required to join a union as a condition of employment – Where is this legal? • Dues Checkoff – additional provision (not a shop clause but helps the union collect its dues) • Agreement that the employer will withhold union dues from the paychecks of union members who agree (in writing) to such a deduction 54 MGT 352 Student Learning Objectives • Describe trends in the labor force composition and how they impact HR practice • Discuss how to strategically plan for the human resources needed to meet organizational goals and objectives • Define the process of job analysis and discuss its importance as a foundation for HR practice • Explain how legislation impacts HR practice • Compare and contrast methods used for selection and placement of human resources • Describe the steps required to develop and evaluate an employee training program • Summarize the activities involved in evaluating and managing employee performance • Identify and explain the issues involved in establishing compensation systems 55 Congratulations! • Congratulations on nearly completing MGT 352 and the Fall 2020 semester! • Are you interested in HR? Next steps to prepare for an HR career: • Email your questions and stay in contact • Consider adding the HR specialization (if you are a General Management major) • Join the student SHRM chapter in the spring • Attend the SHRM Kick-off Event on Zoom on Tuesday, Feb 9th @ 4 p.m. • Alumni mentoring for members • Speed mentoring event in April • Assistance locating HR internships • Participate in an HR internship while you are in school 56 Chapter 13: Employee Rights and Discipline Chapter 13 Learning Objectives: • Understand employment rights and the employment at will doctrine • Discuss employee privacy rights on the job • Examine the role of HR and the supervisor in employee discipline • Discuss the basic standards of discipline • Contrast the progressive v. positive discipline approaches 1 Chapter 13: Employee Rights and Discipline • Employee Rights • Guarantees of fair treatment from employers • Employment and job protection rights • Privacy rights • Employee Discipline • Role of HR and immediate supervisor • Basic standards of discipline • Approaches to discipline • Progressive discipline • Positive discipline 2 Employment Rights • Employment Rights can be stated in three ways: • Employment contract • Executives, senior management, highly skilled/professional employees, athletes/coaches • terms of employment are specified (start/stop dates; compensation, severance) • Collective bargaining agreements • Just cause clause will specify reasons for termination • Employment-at-will (EAW) • EAW clause acts to limit employees’ rights to their jobs 3 Employment Rights • Employment-at-will (EAW) • The right of an employer to fire an employee without giving a reason and the right of an employee to quit when he or she chooses. • EAW is governed by state laws and varies by state • Wrongful discharge • Wrongful discharge – discharge for reasons that are either illegal or inappropriate • Wrongful discharge lawsuits challenge employer’s rights under EAW principle to unilaterally discharge employees 4 Exceptions to EAW • Violations of Public Policy • Wrongful discharge of an employee by an employer for refusal to commit an act that to violates the law. • Examples: whistle-blowing illegal conduct, refusing to engage in illegal activity on behalf of employer, attending jury duty • Implied Contract • Wrongful discharge contrary to an employer’s oral or written promises of continued employment. • Examples: verbal statements, employee handbooks • Implied Covenant/Lack of Good Faith & Fair Dealing • Wrongful discharge for a lack of fair dealing on part of employer/employer acted in bad faith. • Examples: discharging an employee the day before eligible for retirement benefits 5 Job Protection Rights • Constructive Discharge • An employee voluntarily terminating his or her employment due to harsh, unreasonable employment conditions placed on the individual by the employer • ERs covertly getting someone to quit to avoid having to pay unemployment benefits or severance • Courts have generally adopted a “reasonable person” standard for upholding constructive discharge claims 6 Job Protection Rights • Discharge as a Result of Retaliation • Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and other employment laws prohibit employers from retaliating against employees when exercising their rights under these statutes. • Proper handling of employees who file charges under these laws involves: • Taking no adverse employment action against employees when they file discrimination charges • Treating the employees consistently and objectively • Harboring no animosity toward employees when they file discrimination charges 7 Job Protection Rights • Discharge as a Result of Retaliation (cont.) • Most frequent EEO complaint • Minor EE complaints blow up into costly lawsuits when firms make the mistake of retaliating • Unfavorable job transfers • Denying pay increases or promotions 8 Job Protection Rights • Workers’ Adjustment Retraining and Notification Act (WARN); California WARN Act • Requires ERs with 100+ EEs to give EEs and the community (including unions, local officials) 60 days notice of any closure or layoff affecting 50+ EEs • Federal - exemption – unforeseeable circumstances • CA – no exemption – however Gov. Newsom suspended notice requirements for COVID19 • CA – penalties of $500 per day for up to 60 days and liable for 60 days of affected employees back pay 9 Privacy Rights: Social Media Employer Use of Social Media Law (California) • Also referred to as the “Password Protection Law” • Went into effect in 2013 Employers cannot request or require: • 1. Disclosure of social media log-on credentials • 2. Access of personal social media in the employer’s presence • 3. Divulging of any personal media content 10 Privacy Rights: Drug Testing • Drug testing is most prevalent in sensitive positions within the public sector, federal contractors, and transportation organizations • Drug-Free Workplace Act (1988); California (1990) • Permits drug testing of EE and applicants of federal/CA state contractors as a condition of continued employment • State laws • Tend to restrict drug testing to very specific circumstances (reasonable suspicion or probable cause) • Mandatory or random testing of employees is generally prohibited for non-safety sensitive jobs • CA is one of 7 states whose constitutions guarantee the right to privacy which puts additional restrictions on drug testing; Cities of Berkeley and San Francisco have additional limitations on drug testing 11 Privacy Rights: Employee Monitoring • Electronic surveillance • Permitted when done for legitimate business purpose (e.g., EE theft investigation, safety) and EEs are aware • Phone calls/texts • ERs may monitor any calls/texts on ER equipment • Email and Internet • ERs have right to monitor all materials created, received, or sent via email and EE internet usage on work equipment • Some courts have ruled that email sent via outside email systems (Gmail, Yahoo, etc.) are private (even sent using work computer) • ERs can block Internet sites on company equipment • ER can ban USB drive use 12 Privacy Rights • Off-Duty Employee Conduct • Only four states have laws that prohibit ERs disciplining or firing EEs for off-site activities • California prohibits firing EEs bases on lawful outside activities • Even illegal off-site activities may not be justification for discipline/termination • Exceptions: • Off duty criminal misconduct (e.g., child molestation) which creates a disruptive impact on the workplace • Public nature of the job (e.g., police officer) which creates an image problem (i.e., having people who are charged with upholding the law breaking the law…not a good look) 13 Privacy Rights • Off-duty Employee Speech • Some ERs have social networking/blogging policies that prohibit speech that casts ER in a bad light • If in state where off-duty conduct is protected (e.g., CA), you may be able to disparage your ER online • If talking about illegal work practices, you are protected by whistleblower laws • NLRB (2011) case (EE fired for a negative remark about boss on Facebook) – under NLRA you have the right to talk to other EEs about working conditions • ER agreed to revise its rules to ensure that they do not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while not at work, and that they would not discipline or discharge employees for engaging in such discussions. 14 Employee Discipline • Role of HR in Employee Discipline - To develop (with top mgt approval) disciplinary policies and procedures - To ensure that policies and action taken comply with labor agreements and current law • Role of Supervisor in Employee Discipline - To prevent and correct disciplinary problems - To observe and document employee behavior and performance - To apply disciplinary action and monitor performance improvement 15 Employee Discipline Basic Standards of Discipline 1. Due Process - EEs right to be heard, fair investigation - If no due process, then discipline can be overturned 2. Communication of rules - Publish widely, remind, signed statements - Unenforced rules cannot be enforced without notification 3. Documentation of facts - Proper documentation of misconduct prior to disciplining EE 4. Right to appeal disciplinary action 5. Consistent response to rule violation - Doesn’t need to be identical responses, circumstances may justify different responses to same misconduct 16 Approaches to Discipline • Progressive Discipline • Example: Verbal warning, written warning, suspension (without pay), termination • When applying corrective measures by increasing degrees, always be sure that employees: • Know where they stand regarding offenses • Know what improvement is expected of ee • Understand what happens next if improvement is not made • Positive Discipline • Example: 1st conference, 2nd conference, decision making (paid) leave, termination • Discipline that focuses employee taking responsibility for correcting the problem 17 Discharging Employees • Discharge is the last resort—all other avenues have been explored • Rehearse what you will say to the EE with HR • Recommendations for meeting to terminate: • Be straightforward • List reason(s) for termination in the first 2-3 minutes • Be firm and don’t sugarcoat • Give severance pay and other benefits info and explain how you will handle references for this person • Hold meeting in neutral location • Have security personnel ready if EE is hostile 18 Chapter 9: Compensation Chapter 9 Learning Objectives: • Examine the goals of compensation • Explain equity theory’s application to compensation • Determine internal equity via job evaluation • Determine external equity via wage and salary surveys • Examine issues in establishing a compensation structure • Understand federal and state compensation legislation Course Learning Objective: • Identify and explain the issues involved in establishing compensation systems 1 Chapter 9: Compensation Total Compensation = Salary + Benefits + Incentives + Nonmonetary rewards What % on average do benefits make up in terms of total compensation? 2 Primary Goals of Compensation 1. To motivate people to join the organization (attraction) 2. To motivate people to stay with the organization (retention) 3. To motivate people to perform at high levels (motivation) Which one of these goals do you think organizations do the best at achieving? 3 Pay Equity (Fairness) • Pay Equity • An employee’s perception that compensation received is equal to the value of the work performed • Fairness is a relative concept • Equity Theory - motivation theory that explains how people respond to situations in which they feel they have received less (or more) than they deserve • Individuals form a ratio of their outcomes to inputs in their job and then compare the value of that ratio with the value of the ratio for other individuals (referent others) My outcomes/input $2,000 wk / 50 hrs/wk $40/hr < $2,000 wk / 40 hrs/wk $50/hr Other’s outcomes/input $2,000 wk / 40 hrs/wk $50/hr $2,500 wk / 50 hrs/wk = $50/hr 4 Pay Equity (Fairness) What might a person do who feels under-rewarded? What might a person do who feels over-rewarded? Theory doesn’t apply to everyone—some people are ok with under reward inequity (benevolents) and some are ok with over reward inequity (entitleds) 5 Pay Equity (Fairness) Three components of pay equity: 1. Internal equity – Pay comparisons with others inside the organization in other jobs 2. Individual equity – Comparisons with others inside the organization in the same job 3. External equity – Pay comparisons with others outside the organization 6 Pay Equity (Fairness) How can an organization cause external equity perception problems? How can an organization cause individual equity perception problems? How can an organization cause internal equity perception problems? 7 Pay Equity (Fairness) Example internal equity problems: Wage compression – a lower skill/level job is paid at a rate similar to a higher skill/level job Junior Accountant - $45,000 Senior Accountant - $46,000 • Ways to reduce wage compression: • Reward high performance and merit-worthy employees with larger pay increases • Prepare high-performing employees for promotions to jobs with higher salary levels (fast track these employees) • Provide equity adjustments for employees hardest hit by pay compression 8 Pay Equity (Fairness) Example internal equity problems (cont.): More extreme compensation problem: Wage inversion – a higher skill job is paid less than a lower skill job Junior Accountant - $50,000 Senior Accountant - $48,000 Organization’s typical solution: Pay secrecy -- Can create employee misperceptions and distrust of compensation fairness - helps organization not to have to explain the decisions that they make regarding compensation - illegal in California to forbid employees from discussing pay 9 Management Tools Internal equity → job evaluation - formal evaluation to determine the relative worth of jobs in an organization External equity → wage and salary surveys - monitoring what other organizations pay for similar jobs Individual equity → performance-based pay - tying some or all of pay to level of output 10 Equity Perceptions and Compensation Goals Which equity perceptions would be most critical for attraction, retention and motivation? Internal equity → ?? External equity → ?? Individual equity → ?? 11 Factors Affecting the Wage Mix (Compensation Rate) 12 The Wage Mix—Internal Factors • Compensation Strategy • Overall organization compensation policy (lead, lag, or match market wages?) • Worth of a Job • Establishing the internal wage relationship among jobs and skill levels (job evaluation considerations) • Relative Worth of an Employee • Rewarding individual employee performance • Ability to Pay • Having the resources and profits to pay employees 13 The Wage Mix—External Factors • Labor Market Conditions • Availability and quality of potential employees (supply and demand) • Product Market Competitors’ Wage Rates • How much are our direct competitors paying for their labor? • Area Wage Rates • Wage rates of local area employers for comparable jobs 14 The Wage Mix—External Factors • Legal Requirements • Laws pertaining to compensation and benefits administration must be considered • Cost of Living • Local housing and environmental conditions can cause wide variations in the cost of living for employees • Inflation can require that compensation rates be adjusted upward periodically to help employees maintain their purchasing power 15 Consumer Price Index (CPI) • A measure of the average change in prices over time in a fixed “market basket” of goods and services 16 The Wage Mix—External Factors • Collective Bargaining • Where a union is in place, the organization must negotiate the wage rates with the union (cannot unilaterally decide compensation issues on own). • Unions bargain for real wage increases that raise the standard of living for their members. • “Real wages” are increases larger than rises in the consumer price index; that is, the real earning power of wages. • If employer offers union a wage increase of 4% but inflation has increased 2% since last wage increase, what is the real wage increase in this scenario? 17 The Wage Mix • Which factor will most likely be used to set the “floor” for wages? • Which factor is most likely to be used to set the “ceiling” for the maximum wages an employer is willing to pay? 18 Determining Internal Equity: Job Evaluation • Job Evaluation • The systematic process of determining the relative worth of jobs in order to establish which jobs should be paid more than others within an organization. • Job Analysis – job content • Job Evaluation – job value 19 Job Evaluation • Job Evaluation • Determines the contribution of a job to an organization’s strategic goals (i.e., value to the org) • Note that the same job can be valued quite differently depending on the organization it is in Job = Compensation specialist Organizations: 1) manufacturing plant v. 2) HR consulting firm • Would this job be “worth” the same to these organizations? 20 Job Evaluation Methods • Three primary job evaluation methods: • 1. Job ranking – rank the value of jobs from highest to lowest • 2. Job classification – Classifying jobs into categories so they can be benchmarked internally and externally • 3. Point method – awarding points to each job based on the job’s contribution to organizational objectives (i.e., the more value the job has, the more points it is awarded) 21 1. Job Ranking • Oldest system of job evaluation by which jobs are arrayed on the basis of their relative worth. • Disadvantages • Does not provide a precise measure of each job’s worth • Final job rankings indicate the relative importance of jobs, not extent of differences between jobs. (#2 v. #5?) • Method can used to consider only a reasonably small number of jobs (1…On average, ees within the range a paid above the midpoint 39 Compa-ratio Examples 40 Compa-ratio • Compa-ratio < 1 • Managers paying less than the intended pay policy. Valid reasons may be… • Majority of ees are new or recent hires • Most ees are poor performers • Ees are promoted so rapidly that few are in a range long enough to get to the high end • Compa-ratio > 1 • Managers paying more than the intended pay policy. Valid reasons may be… • Majority of ees with high seniority, high performance, low turnover, few new hires, low promotion rates 41 Legal Issues • Two primary federal laws legislating compensation: • Fair Labor Standards Act (FLSA; 1938) • Enforced by the Department of Labor • Equal Pay Act (EPA; 1963) • EPA is a part of FLSA • Enforced by Equal Employment Opportunity Commission • State compensation law: • California Equal Pay Act 42 Fair Labor Standards Act (FLSA; 1938) • Law is enforced by the Dept of Labor (DOL) • Four primary provisions: • 1. Minimum wage provision • Mandated a federal minimum wage • Current federal minimum wage $7.25/hr • Federal minimum wage was most recently increased in July 2009 • Why did Congress enact this provision? 43 Fair Labor Standards Act (FLSA; 1938) • 2. Overtime (OT) provision • Requires that employers pay their employees time and a half their regular pay for hours worked in excess of 40 per week • Labeled employees as being either “exempt” or “nonexempt” in terms of who is eligible for overtime pay • Exempt employee – NOT covered by the OT provision and therefore not eligible for being paid OT (generally all managers, supervisors, and white-collar professional employees) • Non-exempt employee – IS covered by the OT provision and must be paid 1 ½ for all hours worked over 40 in a week • Why did Congress enact this provision? 44 Fair Labor Standards Act • 3. Child labor provision • Forbids children under 16 to work except for parent among other issues • Why did Congress enact this provision? • 4. Equal Rights provision • Equal Pay Act (1963) 45 Equal Pay Act (1963) • Amendment to the FLSA • This law is enforced by the EEOC • Law states that it is illegal to discriminate in terms of compensation based on gender for “equal work” where equal work is defined as work requiring the same skill, effort, responsibility, and working conditions 46 California Equal Pay Act • Adds prohibition of race or ethnicity-based wage differences in addition to gender • Changes language of “equal” work to “substantially similar” work • Comparison job does not need to be located at same organization • Retaliation against employees who seek to enforce the law is illegal • Employers may not prohibit employees from discussing wages with co-workers (pay secrecy policies illegal) 47 Aging the data – Updated slide 34 • This is a second example using the most recent available CPI for early April 2021 (February 2021 CPI). • Most survey data is going to be old by the time you get your hands on it. • You can “age” the data into today’s dollars by adjusting it for the impact of inflation using the CPI. The most recent CPI available is 263.01 for February 2021. • Let’s say that you were able to find an average salary for a job of $50,000 but this salary information was collected in July 2017 (the CPI for July 2017 was 244.79): Time 1 (July 2017) $50,000 = 244.79 Time 2 (today) __X__ 263.01 X = $53,721 So $50,000 in 2017 dollars is $53,721 in today’s dollars (adjusted for inflation) Slide 34 (extra example) Chapter 11 – Employee Benefits Chapter 11 Learning Objectives: • Understand the role of benefits in achieving compensation goals • Discuss the history of benefits costs • Examine benefits strategy in terms of the benefits mix and amount • Discuss federal legally mandated benefits • Examine voluntary benefits of retirement plans and payment for time not worked 1 Goals of Compensation • To attract • To retain • To motivate Which of these goals can benefits address? 2 Benefits costs • 1929 – average benefits cost = 3% of payroll costs • Today – average benefits cost = 40% of total labor costs Why the increase?? • WWI – It wasn’t standard practice to pay benefits until WWI when employers were put under wage/price freezes and could not increase employees pay (to control inflation during the war) • Employers got around this by giving employees more benefits (as a substitute for a wage increase) • 1935-present – union influence • 1960s-present – increase in benefits legislation 3 Benefits strategy • Need to ask the question “why are we offering XYZ benefit?” • Benefits mix – What should the overall benefits package look like? Look at the labor market to determine the mix • What do the employees look like that we are competing for? • High tech firms → young computer geeks, low average tenure – what benefits would interest this group?? • How diverse is the workforce? Different benefits will be attractive to different groups • Benefits amount – What percentage of total compensation will benefits make up? Look at product market to determine the amount (we don’t want to pay more for our benefits than our direct competitors) 4 Providing for Flexibility • Flexible Benefits Plans (Cafeteria Plans) • Benefit plans that enable individual employees to choose the benefits that are best suited to their particular needs. • A basic, or “core,” benefits package of life and health insurance, sick leave, and vacation ensures that employees have a minimum level of coverage. • Employees use “credits” to “buy” whatever other benefits they need/want. 5 Flexible Benefits Plans: Advantages • Employee advantages: • Benefits are better matched to their individual needs (important in a diversified workforce). • Employees gain a greater understanding of the benefits offered to them and the costs incurred. • Employer advantages: • Maximize the psychological value of their benefits program by paying only for highly desired benefits. • Use benefits as a competitive advantage in the recruiting and retention of employees. 6 Flexible Benefits Plans: Disadvantages • For employees: • Poor employee benefits selection results in unwanted financial costs • For employers: • There are added costs to establishing and maintaining the flexible plan. • Employees pick only the benefits they use which increases the cost to the employer 7 Legally Mandated Benefits 1. Social Security Insurance 2. Unemployment Insurance 3. Workers Compensation Insurance 4. Family and Medical Leave 5. Health Insurance* * For employers with 50+ employees 8 Social Security Insurance Provides long-term disability benefits 9 Social Security Insurance • Social security is funded by contributions by both the ER and the EE • • 6.20% tax of annual earnings on first $137,700 – provides income for retirees • 1997 max annual earnings taxed = $65,400 • 2020 max annual earnings taxed = $137,700 1.45% tax on income up to $200,000, anything above that gets taxed at 2.35% – which provides Medicare (health care coverage) for retirees EE A’s 2020 income = $137,700 EE B’s 2020 income = $1,000,000 A’s SS contribution = $8,537 B’s SS contribution = $8,537 (ER contribution = $8,537) (ER contribution = $8,537) A’s Medicare contribution = $1,862 B’s Medicare contribution = $21,700 (ER contribution = $1,862) (ER contribution = $21,700) Self-employed: SS tax rate = 12.4% (6.2% + 6.2%) on income up to $137,700 Medicare tax rate = 2.9% (1.45% + 1.45%) up to $200K, 4.7% (2.35% + 2.35%) for income above $200K 10 Social Security (continued) • In order to be eligible to collect retirement income, you must have worked 40 quarters (10 years) • Increasing age requirement for collecting SS retirement: • Born before 1950, full benefits start at age 65 (62-64 – 80% benefits) • Born after 1950, full benefits start at age 66 • Born after 1960, full benefits start at age 67 • SS retirement income (on average) will provide about 30% of one’s earnings in your final year of retirement -- What does this suggest? • Concern for the future of SS – baby boomers will be retiring at high numbers for the next decade 11 Social Security (continued) • In the year 2000 = 3.4 working employees putting in to SS for every 1 retiree receiving benefits Currently, it is closer to a 1 to 1 relationship How is Congress addressing this issue? - increasing age requirements - increasing salary cap for SS tax - some discussion (in the past) of having employees put SS money into their own personal account Why was the Social Security Act passed in the first place? 12 2. Unemployment Insurance • Established by the SSA of 1935 • Tax paid by employer only (based on the employer’s “experience rating”) • Provides temp income for people involuntarily unemployed • Benefit is based on an employee’s recent earnings. • Involuntarily unemployed workers are eligible for up to 26 weeks of unemployment benefits. • Unemployed workers are required to seek “suitable employment.” 13 Unemployment Insurance (cont.) • Employers need to watch turnover rates and need to layoff as these will increase the premium the er will pay into the ins fund • Individuals who may NOT collect unemployment: • • • • • 1. individuals who quit voluntarily 2. individuals discharged for “gross misconduct” 3. those who have refused an offer of suitable work 4. employees on strike 5. self-employed individuals 14 Unemployment Insurance • Amended temporarily by Coronavirus Aid, Response, and Economic Security Act (CARES Act) • Creates Pandemic Unemployment Assistance Program (through Dec 31, 2020*) to help those who traditionally are not covered: • Self-employed • Independent contractors • Provides an additional 13 weeks of unemployment benefits (39 weeks total) *American Rescue Plan Act (ARPA; 2021) – extends the 13 additional weeks of unemployment benefits + additional $300/week of supplemental benefits through Sept. 6, 2021 15 3. Workers’ Compensation Insurance • Federal- or state-mandated insurance (funded by an employer payroll tax) • Insurance defrays the loss of income and cost of treatment due to work-related injuries or illness. • Employer paid premium (ee doesn’t contribute) • Insurance rate the employer pays based on: • The risk of injury or illness for an occupation • Each state’s level of benefits for injuries sustained by employees varies. • The company’s frequency and severity of employee injuries (the company’s experience rating). 16 Why did we need WC Insurance? • Injury is a cost of doing business • Early employers – Master/apprentice relationship • Industrial revolution – many workers under one roof, less personal concern for individual employees When ees would sustain injuries at work – ers were not helping ees pay for cost of injury Courts at the time were pro-business – example doctrines used by courts in the past: • 1. Contributory negligence – if it could be proven that ee contributed 1% to his/her own injuries, ER not liable • 2. Fellow-servant rule – if co-worker was a fault, ER not liable 17 4. Family and Medical Leave (FMLA; 1994) 1. An employer must grant an eligible employee up to 12 workweeks of unpaid leave in a 12-month period for the following reasons: • What four situations are covered for taking this leave?? 2. Benefits continuation - employees on leave retain their benefits 3. Job restoration – employees have the right to return to their job or an “equivalent job.” 18 Employer FMLA Policies • Eligibility for leave: must have 12 months employment with ER (need not be consecutive) and 1,250 hours during 12 months prior to leave • Leave may be taken intermittently • Determining employees requirements to use accrued paid leave as part of FMLA – what leaves must be taken at same time? • 12 weeks leave; 4 weeks vacation – differential in time off? • Payment of insurance premiums while on leave • Defining the 12 month period – ERs have 4 options 19 Determining the FMLA 12-month period • Recall that employees are entitled to 12 weeks leave every 12 month period…How do you define 12 months? 1. calendar year (Jan 1 – Dec 31) 2. fixed year (either fiscal year or employee anniversary date) 3. 12 months forward from date of first FMLA leave 4. Rolling 12 month period – measured from today back 12 months • Which of these options prevents “leave stacking”? • Leave stacking = taking 24 consecutive weeks off (the last 12 weeks of the previous 12 month period and the first 12 weeks of the next 12 month period) 20 Determining the FMLA 12-month period • Rolling 12 month = each time an ee takes FMLA leave, the remaining leave entitlement is any balance of the 12 weeks that has not been used in during the preceding 12 months • Example: • An employee requests FMLA leave for a serious health condition in January 2020. The employee has taken 8 weeks of FMLA leave during the 12 months prior to this request (OCT, NOV, DEC 2019). 1. How much FLMA leave is the employee entitled to if the 12 month period is determined by the calendar year? 2. How much leave is the employee entitled to under the rolling 12 month method? 21 12-month Calculation Method Notification • Employees who do not receive clear notice of calculation method can use whatever method provides them with the most leave • America West handbook stated “employees are entitled to up to twelve calendar weeks of unpaid FMLA leave within any 12 month period” • Courts ruled that this did not sufficiently communicate that AW used the rolling 12 month method 22 Families First Coronavirus Response Act (FFCRA) Allows 80 hours (2 weeks) paid leave for eligible EES for: • 1. Quarantine or isolation order related to COVID19 • 2. Advised by health professional to self-quarantine • 3. Currently experiencing symptoms and seeking diagnosis • 4. Caring for someone subject to #1 or 2 above • 5. Caring for a minor who’s school or childcare service is closed due to COVID19 Reasons #1 – 3 = Full pay (cap of $511/day; total cap $5,110) Reasons #4 – 5 = 2/3 rate of pay (cap of $200; total cap $2,000) - Set to expire Dec. 31, 2020* * With the recent passage of the American Rescue Plan Act (ARPA) 2021, employers may opt to provide FFCRA paid leave voluntarily (and receive tax credit reimbursements for doing so) through September 30, 2021 23 California Family Rights Act (2004) • Both provide 12 weeks leave for the 4 reasons we discussed under FMLA • Grants 6 weeks (of the 12 FMLA) as paid • 100% employee funded (.6% of wages up to $83,389) • Partial pay – receive up to 55% of pay for 6 weeks (with a maximum cap) • FMLA/CFRA leaves run concurrently • CFRA gives rights to domestic partners (FMLA does not) 24 5. Health Insurance • In 2020, average premium for ER sponsored health plans (Kaiser Family Foundation study) • Single ee coverage: • Average premium: $7,470 • ER contribution: $6,227 • EE contribution: $1,243 • Family coverage: • Average premium: $21,342 • ER contribution: $15,754 • EE contribution: $5,588 25 Patient Protection and Affordable Care Act (2010) • Employers with 50+ employees will pay a “shared responsibility fee” (i.e., a penalty) if they do not offer their employees (who work 30+ hours per week) health care • Health plans offered must cover EEs’ children up to age 26 • No copays or deductibles for preventive care • No lifetime dollar limits • Insurance companies can't refuse to cover someone or charge more because of a “pre-existing condition” • Exempts all businesses that have fewer than 50 employees – 96% of all businesses in the U.S. • Tax credits for small businesses