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The Legal Context of the Management of Human Resources OP05CH07-Murphy ARI 9 December 2017 10:5 Annual Review of Organizational Psychology and Organizational Behavior The Legal Context of the Management of Human Resources Kevin R. Murphy Kemmy Business School, University of Limerick, Limerick V94 T9PX, Ireland; email:
[email protected] Annu. Rev. Organ. Psychol. Organ. Behav. 2018. 5:157–82 First published as a Review in Advance on December 4, 2017 The Annual Review of Organizational Psychology and Organizational Behavior is online at orgpsych.annualreviews.org https://doi.org/10.1146/annurev-orgpsych- 032117-104435 Copyright c© 2018 by Annual Reviews. All rights reserved Keywords common law, discrimination, adverse impact, validation, sexual harassment, enforcement agencies Abstract Laws designed to reduce employment discrimination and to regulate labor standards have a strong impact on the management of human resources in organizations. This article examines in detail the development and enforce- ment of antidiscrimination laws in the United States; it also considers com- parable laws and policies in the European Union (EU). A significant body of research focuses on the standards that are used to determine whether par- ticular policies or practices are discriminatory, and if so, whether they are sufficiently job-related to be legally permissible; here, I examine key themes in this research. This article also examines emerging issues, such as deter- mining who is an applicant and who is an employee, and it explores the role of the legal environment in impeding the application of scientific knowledge to advance the practice of human resource management (HRM). 157 Click here to view this article's online features: • Download figures as PPT slides • Navigate linked references • Download citations • Explore related articles • Search keywords ANNUAL REVIEWS Further A nn u. R ev . O rg an . P sy ch ol . O rg an . B eh av . 2 01 8. 5: 15 7- 18 2. D ow nl oa de d fr om w w w .a nn ua lr ev ie w s. or g A cc es s pr ov id ed b y B ar uc h C ol le ge o n 11 /0 7/ 21 . F or p er so na l u se o nl y. https://doi.org/10.1146/annurev-orgpsych-032117-104435 https://doi.org/10.1146/annurev-orgpsych-032117-104435 http://www.annualreviews.org/doi/full/10.1146/annurev-orgpsych-032117-104435 OP05CH07-Murphy ARI 9 December 2017 10:5 INTRODUCTION This article reviews the intersection between the law and the management of human resources (more specifically, human resource management or HRM) in organizations. It is concerned mainly with federal legislation and the enforcement of federal laws by agencies such as the Equal Employ- ment Opportunity Commission (EEOC), the Office of Federal Contract Compliance Programs (OFCCP), the Department of Justice, and the Department of Labor. It considers the impact of laws designed to protect equal employment opportunities on HRM policies and practices. It also considers laws regulating hours and wages, as well as laws bearing on the status of unions and on the classification of workers as employees versus independent contractors. I do not cover federal laws that may influence the workplace but that do not necessarily directly impact HRM, but I do consider legal structures in other nations, especially as they bear on discrimination in employment. Finally, this review focuses on works published since 2000 but includes numerous papers outside of this timeframe. There are several books and reference works that provide a good overview of the legal context of HRM. Landy (2005) examines the relationships between social science and employment litigation; in a related vein, Paludi et al. (2011) published a two-volume handbook dealing with understanding and preventing workplace discrimination that integrates scientific and practical concerns. Gutman et al. (2010) provide an in-depth review of laws dealing with equal employment opportunity, as well as relevant court cases (see also Zimmer et al. 2002), and provide useful advice to human resource managers. The Society for Human Resource Management provides a highly practical guide to federal employment law (Guerin & DelPo 2011). A recent edited volume (Hanvey & Sady 2015) provides a more wide-ranging discussion of legal issues, including issues pertaining to both discrimination and wage and hour litigation and compensation equity analyses. Taking a contrarian position, Epstein (1995) argues that employment discrimination laws should not exist at all, that these laws do more harm than good, and that removing these laws would restore individual freedom (including freedom to discriminate) to the workplace. King et al. (2013) review arguments and data relevant to three disparate perspectives on employment discrimination law: (a) that civil rights laws have accomplished their main goals, (b) that these laws are misguided and inappropriate, and (c) that civil rights legislation has not gone far enough. HISTORICAL CONTEXT Before examining current laws and the enforcement of these laws, it is useful to consider the broad history of legal regulation of HRM; for a detailed history going back to colonial times, see Pope (2009). Prior to the Progressive Era (∼1900–1920), the federal government’s involvement in workplace issues was usually limited to indirect support for business and industry (e.g., infra- structure development, tariffs designed to support particular industries), with occasional use of law enforcement and even the military to intervene in labor disputes (almost always in support of management). Starting in the early 1900s, and continuing throughout Franklin Roosevelt’s New Deal (1932–1938), there was an increasing emphasis on federal government intervention to mitigate the most glaring abuses of the industrial age, reducing the use of child labor, regulating labor hours, and providing more opportunities for workers to organize into unions. Starting in the 1960s, there was an increasing emphasis on federal legislation designed to reduce discrimination on the basis of race, sex, nationality, and religion [the Civil Rights Act (CRA) of 1964 (updated in 1991), Equal Pay Act of 1963], age [the Age Discrimination in Employment Act (ADEA) of 1967], disability [the Rehabilitation Act of 1973 and the Americans with Disabilities Act (ADA) of 1990] and, most recently, genetic information (the Genetic Information Nondiscrimination Act 158 Murphy A nn u. R ev . O rg an . P sy ch ol . O rg an . B eh av . 2 01 8. 5: 15 7- 18 2. D ow nl oa de d fr om w w w .a nn ua lr ev ie w s. or g A cc es s pr ov id ed b y B ar uc h C ol le ge o n 11 /0 7/ 21 . F or p er so na l u se o nl y. OP05CH07-Murphy ARI 9 December 2017 10:5 Table 1 Federal antidiscrimination laws Major US anti-discrimination laws Bases for discrimination Civil Rights Acts of 1964 and 1991, Title VII Race, color, sex, national origin, religion Age Discrimination in Employment Act of 1967 Age (40 and over) Americans with Disabilities Act of 1990, Rehabilitation Act of 1973 (updated in 2011) Physical and mental disabilities Equal Pay Act of 1963 Unequal pay for equal work on jobs the that require equal skill, effort, and responsibility, and which are performed under similar working conditions of 2008). Aiken et al. (2013) discuss the historical context of this period and its bearing on the structure and enforcement of civil rights law. In recent years, several issues have emerged as increasingly important. First, an increasing number of states have enacted so-called right-to-work laws, which limit the extent to which membership in a union or the payment of union dues or fees can be enforced as a precondition for employment. Second, there are ongoing legal controversies over whether individuals carrying out various job functions (e.g., delivery drivers) should be classified as employees or as independent contractors. Third, as the technology used to apply to jobs changes from small-scale local activities (e.g., completing a job application and submitting it to an organization) to large-scale activities that cross organizational borders (e.g., posting resumes electronically on sites such as Monster.com), critical questions about who should be considered as a job applicant have become more pressing and more complicated. Anti-Discrimination Laws Federal laws dealing directly or indirectly with workplace discrimination can be traced back more than 150 years (e.g., CRA of 1866), but the laws having the largest impact on HRM policies and practices were within the past 60 years. Table 1 lists the most important federal antidiscrimination laws, noting the types of discrimination they cover. In general, these laws forbid discrimination in hiring, firing, training, compensation, promotion, transfers, and conditions of work on the basis of race, color, national origin, religion, sex, age, or disability. Individual acts can differ in important ways, and research related to the scope, enforcement, and implications of these various laws has brought to light important questions. (For example, should applicants or employees whose disabilities are not visible, such as depression, disclose their disabled status? Or, what constitutes sexual harassment?) Other laws such as the Family and Medical Leave Act of 1993, which allows up to 12 weeks of unpaid leave for the birth of a child, adoption, and certain health-related conditions, can have implications for HRM, but uptake for such leaves is relatively rare, in part because they are unpaid (Han & Waldfogel 2003). Fair Labor Standards Act Although it received less attention in the organizational psychology and management literatures than antidiscrimination law, the Fair Labor Standards Act (FLSA) of 1938 is an important piece of legislation that can have a substantial impact on HRM policies and practices. Introduced as part of the New Deal, the FLSA impacts millions of workers (Nordlund 1988, Perez 2015). This law introduced the forty-hour week, a federal minimum wage (initially 25 cents per hour), time and a half for overtime in certain jobs, and a reduction in child labor. www.annualreviews.org • The Legal Context of the Management 159 A nn u. R ev . O rg an . P sy ch ol . O rg an . B eh av . 2 01 8. 5: 15 7- 18 2. D ow nl oa de d fr om w w w .a nn ua lr ev ie w s. or g A cc es s pr ov id ed b y B ar uc h C ol le ge o n 11 /0 7/ 21 . F or p er so na l u se o nl y. OP05CH07-Murphy ARI 9 December 2017 10:5 A critical issue in applying FLSA in the current workplace is a determination of whether employees in a particular job are exempt from overtime pay requirements (Crampton et al. 2003). In general, jobs in