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Human Resource Management

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Human Resource Management (MGT501)
Lesson 11
After studying this chapter, students should be able to understand the following concepts:
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 organization. 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,
L egal
C o m p e titiv e
many presidential executive orders have had a major
impact on human resource management. If company is  C o m p l i a n c e
A d v a n ta g e
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 legal compliance.
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
Human Resource Management (MGT501)
Employment discrimination
To make an employment decision, not on the basis of legitimate job-related factors...Any employment
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
Physical Disability.
Fair employment
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 opportunity
(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 fine-tuning since
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
Affirmative action
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 affecting human
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 organization.
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 in the
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 of disparate
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
Human Resource Management (MGT501)
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 employers from
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, restaurants, and
grocery stores.
Individuals with disabilities
Essential Functions
Reasonable accommodation
The Vocational Rehabilitation Act of 1973
The Americans with Disabilities Act (ADA), passed in 1990, prohibits discrimination against qualified
individuals with disabilities. Persons discriminated against because they have a known association or
relationship with a disabled individual also is protected.
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 and agency
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, loan, insurance,
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
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
Executive Orders 11246 & 11375 require companies with federal contracts to develop affirmative
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, redesign jobs,
provide specialized training, and remove unnecessary employment barriers.
Challenges to Legal Compliance
HRM practices may be challenged by anyone of stakeholders like society, community, customers,
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 with respect
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 dynamic legal
landscape, complex laws, conflicting strategies for fair employment, and unintended consequences are
Human Resource Management (MGT501)
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 landscape is
changing quickly.
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 the basic
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.
Unintended Consequences
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 law.
Key Terms
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 job-
related factors
Table of Contents:
  1. INTRODUCTION TO HRM:Growing Importance of HRM, Road Map of the Course
  2. ESSENTIALS OF MANAGEMENT:Concepts and Essential of Management, Managerís Roles
  3. ORGANIZATION AND COMPONENTS OF ORGANIZATION:Open versus Closed Systems, The Hawthorne Studies
  4. PEOPLE AND THEIR BEHAVIOR:Why to work in organizations?, The Goals of Organizational Behavior
  5. INDIVIDUAL VS. GROUP BEHAVIOR:What Are Roles?, Problem solving Team
  6. PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT:Records and Administration, Competitive Advantage
  7. HRM IN A CHANGING ENVIRONMENT:Productivity, New Trends at Work Place
  8. How organization Cultivate a Diverse Workforce, STEPS TOWARD MANAGEMENT OF DIVERSITY
  9. FUNCTIONS AND ENVIRONMENT OF HRM:Compensation and Benefits, Safety And Health, Interrelationships of HRM Functions
  10. LINE AND STAFF ASPECTS OF HRM:Authority, Line versus Staff Authority, Staff Manager
  11. LEGAL CONTEXT OF HR DECISIONS:Doing the Right Thing, Affirmative Action, Unintended Consequences
  12. HUMAN RESOURCE PLANNING (HRP):Benefits of HR Planning, Forecasting Human Resource Availability
  13. STRATEGIC PLANNING AND HRIS:HRís Strategic Role, Human Resource Information System, Common HRIS Functions
  14. JOB ANALYSIS:Purposes of the job Analysis, Questions Job Analysis Should Answer
  15. JOB ANALYSIS:Methods of Collecting Job Analysis Information, Observation, Source of Data
  16. JOB ANALYSIS (CONTD.):SURPLUS OF EMPLOYEES FORECASTED, Diversity through Recruiting Efforts
  17. SOURCES OF RECRUITMENT:ALTERNATIVES TO RECRUITMENT, Quantity of the Applicants, Quality of the Applicants
  18. SELECTION:Initial Screening, Advantages of Successful Screening
  19. SELECTION TESTS:Characteristics of Properly Designed Selection Tests, Guidelines for Conducting an Interview
  20. SELECTION PROCESSÖ CONTD:Background Investigations, Physical Exam, Selecting Managers
  21. SOCIALIZATION:Compensation and Benefits, Team Membership, Stages in socialization Process, Training and Development Trends
  22. TRAINING AND DEVELOPMENT:Learning, Phases of Training, Why Transfer of Training Fails
  23. MAXIMIZING LEARNING:Following up on Training, Repetition, Feedback, Purposes of T & D
  24. CAREER MANAGEMENT:Individual career planning, Career Planning and Development Methods
  25. PERFORMANCE:Determinants of Job Performance, Why is performance measured?, Performance Management
  28. COMPENSATION SYSTEM:Pay, Job Pricing, Compensation: An Overview, Compensation Surveys
  29. BENEFITS:Total Compensation, Discretionary Benefits (Voluntary), Workplace Flexibility
  30. ROLE OF MONEY IN PERFORMANCE OF EMPLOYEES:Types of Pay-for-Performance Plans, Empower Employees
  31. MOTIVATION:The Motivation Process, Motivational Theories, Challenges of motivating employees
  32. OCCUPATION, HEALTH & SAFETY:Physical Conditions, Accident Investigation, Smoking in The work place
  33. STRESS MANAGEMENT:Symptoms of Stress, Managing Stress,
  34. COMMUNICATION IN ORGANIZATION:Burnout, Social Support at Work & Home, Communication in organization, Meetings
  35. TRADE UNIONS:Collective Bargaining, The HRM Department in a Nonunion Setting, Phases of Labor Relations
  36. CONFLICT AND NEGOTIATION:Transitions in Conflict Thought, Individual Conflict Management Styles
  37. POWER AND POLITICS:Sources of Power, Advantages and Disadvantages of PowerPower and Politics in Context
  38. EMPLOYEE RIGHTS AND DISCIPLINE:Contractual Rights, Management Rights, Disciplining Employees,
  39. DISCIPLINE (CONT...):Factors to Consider when Disciplining, Disciplinary Guidelines, Employee Separations
  40. LEADERSHIP:The Leaderís Behavior, Situational Theories of Leadership, Becoming a Leader
  41. REVISION (LESSON 12-21):Plans, Job Specification, Human resource planning, Selection Process, Corporate Culture
  42. REVISION (LESSON 22-26):Training, Case Study Method, Training, Performance
  43. REVISION (LESSON 27-35):Classification Method, Compensation, Empowerment, Mediation
  44. INTERNATIONAL DIMENSIONS OF HRM:Global Corporation, Type of staff members, Approaches to Global Staffing
  45. CONCLUSION & REVIEW:Strategies for Gaining Competitive Advantage, High-performance Work System