Chapter 2 Employment Laws That Influence Compensation and Benefits

First Amendment

"Congress shall make no laws respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

Fifth Amendment

"No person shall...be deprived of life, liberty, or property without due process of law..."

Fourteenth Amendment, Section 1

"No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States, nor shall any State deprive any person of life, liberty, or property without due process of law; nor deny any person within its jurisdiction the equal protection of the law."

Article 1, Section 8

"The Congress shall have the power...to regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes..."

Pregnancy Discrimination Act of 1978

An amendment to Title VII of the Civil Rights Act of 1964; prohibits disparate impact discrimination against pregnant women for all employment practices. Employers must treat pregnancy/childbirth as a disability. Protects women's rights who take leave for pregnancy-related reasons (e.g., seniority, retirement benefits).

Age Discrimination In Employment Act of 1967

Covers private employers with 20 or more employees, labor unions with 25 or more members, and employment agencies. Protects older workers age 40 and over from illegal discrimination in employment, pay, and benefits. Sets limits on early retirement practices: offered to employees 55 or older; employee participation must be voluntary. Note: Does not protect federal government employees.

Administrative

Performing office or non manual work directly related to the management or general business operations of the employer or employer's customers.

Learned Professional

Performing office or non manual work requiring knowledge of an advanced type in a field of science or learning, customarily acquired by a prolonged course of specialized intellectual instruction.

Creative Professional

Performing work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

Federal Insurance Contributions Act

Taxes employees and employers to finance the Social Security Old-Age, Survivor, and Disability Insurance Program (OASDI).

Fair Labor Standards Act of 1938

Addresses three main issues: minimum wage, overtime pay, and child labor provisions.

Bennett Amendment

Allows employees to charge employers with Title VII violations regarding pay only when the employer has violated the Equal Pay Act of 1963.

Vietnam Era Veterans Readjustment Assistance Act

Applies the principles of the Rehabilitation Act to veterans with disabilities and veterans of the Vietnam War (401 FEP Manual 379).

Walsh-Healey Public Contracts Act of 1936

Applies to companies that sell to the federal government and have contracts worth at least $10,000. Requires these companies to meet guidelines regarding wages and work hours, child labor, convict labor, and hazardous working conditions. Contractors must observe the minimum wage and overtime provisions of FLSA. In addition, the act prohibits the employment of individuals younger than 16 and convicted criminals. Furthermore, it prohibits contractors from exposing workers to any conditions that violate the Occupations Safety and Health Act.

Fair Pay Rules

Changed FLSA exempt status: Under the FLSA overtime provision, employees were considered exempt if they earned more than minimum wage and exercised independent judgment when working. Under the Fair Pay Rules, employees earning less than $23,660 per year, or $455 per week, are guaranteed overtime protection.

Portal-to-portal Act of 1947

Defined "hours worked" that appears in the FLSA and established a list of compensable work activities.

Pension Protection Act of 2006

Designed to protect employees' retirement plans. For defined benefit plans, it strengthens the financial condition of the Pension Benefit Guaranty Corporation (PBGC) by requiring private sector companies that underfund their defined benefit plans to pay substantially higher premiums (the cost to provide insurance protection) to insure retirement benefits. ________ ___________ _____ enables employers to automatically enroll employees in defined contribution plans, such as 401(k) plans. Requires these companies to provide multiple investment options to allow employees to determine how much risk they are willing to bear.

Computer

Employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field.

Lilly Ledbetter Fair Pay Act

Enables a female employee to file a charge of illegal pay discrimination within 180 days following receipt of a paycheck in which she feels that she may have been discriminated against.

American Recovery and Reinvestment Act of 2009

Enacted in response to the Great Recession. Its primary goal was to save/create jobs quickly. It secondary objectives were: (1) provide temporary relief programs to those most negatively impacted by the recession and (2) invest in infrastructure, education, health, and renewable energy. Referred to as The Recovery Act or The Stimulus, it is estimated that it will cost taxpayers $831 billion dollars between 2009 and 2019.

Patient Protection Affordable Care Act

Enacted on March 23, 2010, the comprehensive law has been in implementation phase since its passage. All provisions are scheduled to be implemented by 2018. Projected to (a) reduce the number of uninsured U.S. residents by 32 million in 2016, (b) help more children get health coverage, (c) end lifetime and most annual limits on care, (d) allows young adults under age 26 to stay on their parents' health insurance, and (e) give patients access to recommended preventive services without costs.

Davis-Bacon Act of 1931

Established employment standards for construction contractors holding federal government contracts valued at more than $2,000. Requires contractors to pay laborers and mechanics at least the prevailing wage in their local area.

Executive Order 11141

Extends the Age Discrimination in Employment Act of 1967 (ADEA) coverage to federal contractors. (Pay Discrimination EO)

Family and Medical Leave Act of 1993

Grants civil service employees, U.S. Senate employees, and U.S. House of Representatives employees a maximum 12-week unpaid leave in any 12-month period to care for a newborn or a seriously ill family member (401 FEP Manual 891).

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

Is a federal law that amended Employee Retirement Income Security Act of 1974 (ERISA) in1996. Contains four main provisions: (1) Guarantees employees and their dependents, who leave their employer's group health plan, will have ready access to coverage under a subsequent employer's health plan, regardless of their health or claims experience. (2) Sets limits on the length of time that health plans and health insurance issuers may impose preexisting health conditions and identify conditions to which no preexisting condition may apply. (3) Counts periods of continuous coverage under another form of comprehensive health coverage toward a preexisting condition limit - time covered under a previous health insurance plan reduces the preexisting condition requirement imposed by a new health insurance company. (4) Protects the transfer, disclosure, and use of health care information.

Work Hours and Safety Standards Act of 1962

Is a federal law that established standard hours of work and overtime pay for laborers and mechanics employed on work done under contract for, or with the financial aid of, the United States, for any territory, or for the District of Columbia, and for other purposes.

McNamara-O'Hara Services Contract Act of 1965

Is a federal law that requires general contractors and subcontractors, who hold federal government or District of Columbia contracts in excess of $2,500, to pay service employees in various classes no less than the monetary wage rates and fringe benefits found prevailing in the locality or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement. The locality is determined by the U.S. Department of Labor.

Internal Revenue Code (IRC)

Is a set of federal government regulations pertaining to taxation in the United States (e.g., sales tax, individual income tax, corporate income tax). Provides incentives for employers and employees: Employees can deduct costs of benefits from annual income. Employers' benefits programs qualify for tax deductibility when they meet rules set by Employee Retirement Income Security Act of 1974. Prevent employers from giving preferential treatment to highly compensated employees who earn more than $110,000 per year (e.g., employer contributing more to their retirement than to lower compensated employees).

Health Care and Education Reconciliation Act of 2010

Made several changes to the Patient Protection and Affordable Care Act of 20101: • increased tax credits to buy insurance1 • eliminated several special deals given to senators, such as Ben Nelson's "Cornhusker Kickback"1,2, 3 • covers 100% of the increased Medicaid costs of all states until 2016 and decreases each year thereafter1 (Note: Federal government pays all costs of expanding Medicaid under the reform until 2016, 95% in 2017, 94% in 2018, 93% in 2019, and 90% thereafter. Some states that already insure childless adults under Medicaid would receive more federal money for covering that group through 2018.1) • lowered the penalty for not buying health insurance from $750 to $650 ( per person in a family)1 • closes Medicare Part D "donut hole" and gives seniors a $250 rebate4,5 • delays implementation on taxing "Cadillac health-care plans" until 20181 (Note: This delay on tax for high-end insurance plans is result of a deal Democrats made with labor unions. It lowers the index at which plans will be taxed, increasing the likelihood that more plans will be affected over time.1) • requires doctors who treat Medicare patients to be reimbursed at the full rate1 • sets up a Medicare tax on the unearned incomes of families who earn more than $250,000 annually1 • offers more generous subsidies to lower income groups: o households below 150% of federal poverty level ($33,075 for a family of four) would pay 2% to 4% of their income on premiums; health plans would cover 94% of cost of benefits6 o households with incomes from 150% to 400% of the federal poverty level would pay on a sliding scale from 4% to 9.8% of their income on premiums, with the rest covered by government tax credits; health plans would cover 70% of the costs of the benefits • established penalty for a company with more than 50 workers not offering health care coverage after 2014, of $2,000 for each full-time worker above 30 employees. For example, an employer with 53 workers will pay the penalty for 23 workers, or $46,000.1 • increases Medicaid payment rates to primary care doctors to match Medicare payment rates, which are higher, in 2013 and 20141 • established a 50% discount on brand-name drugs for Medicare patients beginning in 20111 (Note: By 2020, the government would pay to provide up to 75% discount on brand-name and generic drugs, eventually closing the coverage gap.1) • extends the ban on lifetime limits and rescission of coverage to all existing health plans within six months after signing into Law.6 • Provides for student loan reform

Outside Sales

Making sales or obtaining orders or contracts for services of for future use of facilities for which a consideration will be paid by the client or customer. Customarily and regularly engaged a way from the employer's place or places of business.

Executive

Management of the enterprise or a recognized department or subdivision.

Federal Unemployment Tax Act

Mandates employer contributions to fund state unemployment insurance programs. FUTA also specifies two criteria used to determine whether employers must participate in state unemployment insurance programs: (1) the one-in-20 test and (2) the wage test.

The Rehabilitation Act

Mandates that federal government agencies take affirmative action in providing jobs for individuals with disabilities (401 FEP Manual 325).

Americans with Disabilities Act of 1990

Prohibits discrimination against qualified individuals with mental or physical disabilities within and outside employment settings, including public services and transportation, public accommodations, and employment. Applies to employers with 15 or more employees. "Qualified individual with a disability" must be able to perform the essential functions of a job; employer may make reasonable accommodations.

Executive Order 11478

Prohibits employment discrimination on the basis of race, color, religion, sex, national origin, handicap, and age (401 FEP Manual 4061). (Pay Discrimination EO)

Executive Order 11935

Prohibits employment of nonresidents in U.S. civil service jobs (401 FEP Manual 4121).

Title VII of the Civil rights Act of 1964

Promotes equal employment opportunities for underrepresented minorities. Under Title VII, it is unlawful for an employer to: (1) fail or refuse to hire or to discharge individuals, or otherwise to discriminate against individuals with respect to their compensation, terms, conditions, or privileges of employment, based on their race, color, religion, sex, or national origin; or (2) limit, segregate, or classify employees or applicants for employment in any way that could deprive them of employment opportunities or otherwise adversely affect their status as employees, because of their race, color, religion, sex, or national origin. Applies to companies with 15 or more employees. Note: Does not protect federal government employees.

Government Employee Rights Act of 1991

Protects U.S. Senate employees from employment discrimination on the basis of race, color, age, and disability (401 FEP Manual 851).

Workers' Compensation

Provided income to workers who were unable to work due to injuries sustained on the job.

Social Security Act of 1935 (Title IX)

Provided temporary income to workers who became unemployed due to no fault of their own.

Consolidated Omnibus Budget Reconciliation Act of 1985

Provides employees and dependents the opportunity to continue receiving their employer-sponsored medical care insurance temporarily under their employer's plan if their coverage would otherwise cease due to termination, layoff, or other change in employment status. Individuals may continue coverage for up to 18 months or up to 36 months for special cases. Employers with fewer than 20 workers are exempt.

Old-Age, Survivor, and Disability Insurance Program (OASDI)

Provides government-mandated retirement income to employees who have made sufficient contributions through payroll taxes. Note: Commonly referred to as Social Security.

Employee Retirement Income Security Act of 1974

Regulates the establishment and implementation of various fringe compensation programs. These include medical, life, disability insurance programs, and pension programs. Companies must provide employees with program description and any updates. Companies must ensure having sufficient funds in pension fund. The essence of __________ is the protection of employee benefits. Two criteria for eligibility under _____: (1) Employees must be allowed to participate in a pension plan at age 21. (2) Employees must have completed 1 year service with at least 1,000 hours.

Executive Order 11246

Requires companies (employing 50 or more employees) that hold federal government contracts worth more than $50,000 to develop written affirmative action plans each year. (Pay Discrimination EO)

Family and Medical Leave Act of 1993

Requires employers to provide employees 12 weeks of unpaid leave per year in case of family emergency; guarantees unpaid leave and the right to return to either the same position or a similar position with the same pay, conditions, and benefits; legally required benefit.

Equal Pay Act of 1963

Requires that men and women should receive equal pay for performing equal work. Applies to jobs of substantially equal worth based on compensable factors: skill levels, effort, responsibilities, and similar working conditions. Enforced by Equal Employment Opportunity Commission (EECO). Note: Does not protect federal government employees.

ADA Amendments Act of 2008

Retains the basic definition of "disability" under the ADA. However, it expands the definition of "major life activities" by including two lists of activities: The first list includes Equal Employment Opportunity Commission (EEOC) recognized activities such as walking and some not-specifically recognized EEOC activities such as bending, communicating, and reading. The second list includes major bodily functions. In short, this Act stresses that the definition of disability should be interpreted in favor of broad coverage of individuals to maximum extent permitted by the terms of the ADA.

Civil Rights Act of 1991

Shifted the burden of proof of disparate impact from employees to employers, overturning several U.S. Supreme Court rulings: Antonio v. Wards Cove Packing Co., Lorance v. AT&T Technologies, and Boureslan V. Aramco.

Paycheck Fairness Act

Strengthens Equal Pay Act of 1963 by strengthening the remedies available to put sex-based pay discrimination on par with race-based pay discrimination. Employers are now required to justify unequal pay by showing that the pay disparity is not sex based, but, rather, job related. Prohibits employers from retaliating against employees who share salary information with their coworkers.

Older Workers Benefit Protection Act

The 1990 amendment to the Age Discrimination in Employment Act of 1967 (ADEA) codifies the EEOC's "equal cost principal", requiring employers to provide benefits to older workers that are at least equal to those provided to younger workers, unless the cost of their provision to older workers greatly exceeds the cost of provisions to younger workers. Therefore, an employer may only offer different benefits to older and younger workers if it costs a significant amount more to provide those benefits to older workers. The OWBPA indicates that employers can require older employees to pay more than younger employees for health care insurance coverage. This practice is permissible when older workers collectively do not make proportionately larger contributions than younger workers. Companies can make across-the-board cuts in benefits to save costs.

Federal Government Employees are Not Protected by:

• Title VII of the Civil Rights Act • Age Discrimination in Employment Act of 1967 (ADEA) • Equal Pay Act of 1963 Note: Federal Workers Include: (a) Civilian military service employees, (b) Executive agency employees, (c) U.S. Postal Service employees, (d) Library of Congress employees, and (e) Federal Judicial and Legislative Branch employees