Term Paper: Laws Affecting the Human Resources Industry

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¶ … Laws Affecting the Human Resources Industry

In today's hypercompetitive, globalized economy, businesses must operate as efficiently and effectively as possible. Even the slightest inefficiency can harm an organization's competitiveness and be detrimental to their profitability. For this reason, each facet of the organization is now typically underneath the microscope to see what improvements can be made, including Human Resources.

In the beginning of Human Resources, the human resource role was merely seen as a secretarial type role. Human resource personnel were charged with merely keeping records of the employees within an organization and had little to no say in the direction or strategies the organization was undertaking. Today, that role has changed.

As organizations began to realize the importance of not only retaining their employees, but also the importance of satisfied employees, on productivity, Human Resource professionals began to be recognized as a valuable asset to organizations. Add to this, the ever-changing world of employment law, and the field of Human Resources has become a critical piece in the organizational puzzle. Today, HR personnel no longer simply maintain employment records; their duties go much farther.

Human Resource profession in today's organization wears many hats. They must, of course, be experts at selecting and attracting potential candidates for hire. They must also be creative in helping develop benefit packages. They must be expert record keepers, and often counselors. In addition to this and more, Human Resource professionals must also be well versed in employment law.

Only by fully understanding the employment laws and regulations put into place can Human Resource personnel hope to utilize them efficiently and effectively. One misstep in the employment process can lead to the utter demise of the company. As such, this paper will discuss some of the current employment laws that Human Resource professionals must be well-versed in including: compensation, discrimination, and employee and labor relations.

Compensation:

The Fair Labor Standards Act was created in 1938. It was during the Great Depression, when unemployment was in the double digits and employers saw the exploitation possibilities in those searching for a job, that the FLSA was developed. New employment guidelines were set, with this piece of important legislation. A 40-hour workweek, minimum wages, child labor standards, and overtime pay were established with the FLSA (Crampton, Hodge, & Mishra 2003, 331).

The FLSA is commonly referred to as the Wage and Hour Act, and since its inception in 1938, has been amended many times. One such amendment, the Equal Pay Act, was added in 1963. The FLSA is considered the starting point for many other pieces of legislation that has stemmed from it. These include: the Occupational Safety and Health Act, the Employee Retirement Income Security Act, and the Age discrimination in Employment Act (Crampton, Hodge, & Mishra 2003, 331).

The predecessor of the FLSA was the National Industrial Recovery Act (NIRA) of 1933. Like the FLSA, the NIRA focused on minimum wages, maximum hours to be worked, and child labor restrictions, however in 1935, the Supreme Court found that it was an unconstitutional delegation of congressional power. Although stating that there was a need for employee protection, the Court found that the NIRA was impeding upon the free market to prevail. As a result, Congress passed the Walsh-Healy Act in 1936 and eventually the FLSA (Crampton, Hodge, & Mishra 2003, 332).

The FLSA does not restrict the amount of time an individual can work, like its predecessor, but instead instituted mandatory overtime pay to compensate those who worked more than the 40-hour workweek, in addition to the regulations on minimum wage and child labor. There are three bases of coverage of the FLSA, for businesses with two or more employees. These include: employees who are involved with interstate commerce, whether it be export or import, employees who are in the production of goods for interstate or foreign commerce, and employees involved in an organization that is an engaged in interstate commerce. In 1966, the FLSA was expanded to include federal employees, state and local hospitals, and educational institutions. In 1985, coverage was extended to state and local employees. and, in 1995, coverage was again extended to Congress members, the Capitol Police, and an assortment of other government employee groups. Most organizations that do not fall into these categories are regulated by state laws regulating work hours and wages (Crampton, Hodge, & Mishra 2003, 332).

The FLSA is enforced by the Department of Labor. Their Wage and Hour Division has the right to examine an organization's records, and also has the right to issue rules and regulations as they see fit. The Secretary of Labor files suits, on behalf of employees. These suits cover attainment of wages or overtime pay, liquidated damages, and can include injunctions to prevent future infractions. The Justice Department may also get involved to instigate criminal proceedings against offending employers. and, lastly, wage and hour compliance officers oversee the recovery and payment of any due back wages (Crampton, Hodge, & Mishra 2003, 333).

Employees have a two-year statute of limitation to file suits seeking back wages, overtime pay, liquidated damages, or reinstatement and legal fees, or three years if it is found that there were 'willful' violations from the employer. In addition, an employee cannot waive his or her right to the compensation guaranteed them under the FLSA, or release their employer from the amount owed them. This includes any agreements that only 8 hours of a day, or 40 hours of a week, will actually be counted as work time (Crampton, Hodge, & Mishra 2003, 334).

Some employers try to skirt the issue of overtime pay by putting policies and procedures into place. Notifying employees that no overtime work is permitted, or that overtime work is only allowed if pre-authorized, does not waive an employee's right to overtime pay. Despite these policies, if an employee has actually worked overtime, whether it is in compliance with organizational policies or not, the organization is still responsible for payment of overtime pay to the employee. This misunderstanding of the law is part of the reason why employers currently are liable for approximately $39 billion in back overtime pay to employees (Crampton, Hodge, & Mishra 2003, 336). This misunderstanding is compounded by employers inadvertently misclassifying workers as exempt from overtime regulations (Goldberg 1997, S1).

The minimum wage regulation of the FLSA was originally created to help reduce poverty, and help preserve the buying power of workers during the Great Depression. Yet, many workers are still below the official poverty threshold. In 1990, 5.5% of the American workforce earned less than $13,359 per year, for a family of four, the official poverty threshold. (Crampton, Hodge, & Mishra 2003, 337).

This is in part due to the varied ways in which people are compensated. Hourly, weekly, or monthly pay is common, while others are paid some or all of their earnings as tips, commissions or piece-rate. For this reason, the Wage and Hourd Division of the Department of Labor has mandated that an employee's earnings for the week must average out to at least the minimum wage amount (Crampton, Hodge, & Mishra 2003, 338).

The FLSA mandates that time-and-a-half be paid for any hours worked over 40 by an employee, in a single week, or 8 hours in a single day. Employers are not allowed to average hours over a period of two or more weeks. The only exception to this rule is hospitals and residential care facilities and public agencies, which may pay overtime over an average of a 28-day period. A workweek is defined as any consecutive seven-day period, and may start on any day of the week. The employer may change this starting day, however, they may not change it to avoid paying overtime wages to their employees. Certain executives, administrative, professional, and outside sales people are exempt from overtime pay (Crampton, Hodge, & Mishra 2003, 338).

In addition, a common misconception by employers is that if an employee is paid on a salary basis they are not entitled to overtime pay. Yet, some employers dock their salaried employees for days they do not work. If this is done, they are then deemed to be hourly employees and must be compensated for any and all overtime pay due to them (Crampton, Hodge, & Mishra 2003, 341).

The contract and contingent workforce adds to the confusion of compensation responsibilities for employers. Many companies, such a Microsoft, had entered into 'independent contractor' agreements with a variety of temporary workers. Although these temporary contractors agree to the fact that they are not actual company employees, the Court has found otherwise. In a decision by the U.S. Court of Appeals for the 9th Circuit, it was found that just such contractors that Microsoft had hired, were indeed employees, and as such entitled to all company benefits available to other employees. Other cases have been ruled in this manner as well. As such, employers need to be very cautious in how contract and contingent workers are treated (Goldberg 1997,… [END OF PREVIEW]

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