Linking Law and Business Management

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Affirmative action plans promote greater diversity in workplaces. Despite the controversial issues related to these programs, diversity itself can be advantageous to organizations. In your management class, you probably discussed some of the advantages of diversity. First, group decisions that include contributions from diverse employees are advantageous because a greater assortment of ideas for dealing with work issues may have gone into those decisions. Second, diversity may also enhance a firm’s credibility with its customers, in the sense that the firm is portrayed and perceived as more able to identify with customers of various backgrounds. Third, diversity can encourage greater creativity and innovation in organizations. Fourth, diversity also tends to promote a more flexible organizational structure that is beneficial when a firm is faced with a need to change. Therefore, diversity, if properly managed, could be beneficial to a firm.

Sources: S. Certo, Modern Management (Upper Saddle River, NJ: Prentice Hall, 2000), 529–30; S. Robbins, Organizational Behavior (Upper Saddle River, NJ: Prentice Hall, 2001), 14.

In determining whether a foreign corporation is controlled by a U.S. employer, the EEOC again looks at a broad range of factors. Some of these factors include the interrelation of operations, common management, centralized labor relations, and common ownership or financial control over the two entities. However, a corporation that is clearly a foreign corporation and is not controlled by a U.S. entity is not subject to U.S. equal employment laws. An employer may also violate the ADA and Title VII if compliance with either law would constitute an illegal action in the foreign country in which the corporation is operating.


During the early years of our nation’s history, the employment-at-will doctrine governed the employment relationship. Under this doctrine, an employee without a contract for a set period of time could be fired at any time for any reason. The doctrine has been gradually eroded, and most states today recognize at least one of three exceptions to the employment-at-will doctrine: the public policy exception, the implied contract exception, and the implied covenant of good faith and fair dealing exception.

Civil rights laws have also eroded the employer’s ability to hire and fire at will. This chapter examined those laws in the order in which they were enacted. The Civil Rights Act of 1866 prohibits employers from discriminating against individuals because of their race.

The Equal Pay Act of 1963 prohibits employers from paying male and female employees doing the same job different wages because of their sex.

Title VII prohibits employers from discriminating in terms and conditions of employment on the basis of race, color, national origin, religion, and sex. This act was amended by the PDA, which essentially requires employers not to discriminate against pregnant women and to treat pregnancy like any other temporary disability. Title VII was also amended by the Civil Rights Act of 1991, which expanded the remedies available under Title VII.

The ADEA prohibits discrimination based on age against persons aged 40 or over. Enforcement of the ADEA is similar to enforcement of Title VII.

The Rehabilitation Act requires federal agencies, employers that have contracts with the federal government, and parties who receive any type of federal funds not to discriminate against persons with handicaps. The ADA extended the basic protections of the Rehabilitation Act to private employers, requiring them to reasonably accommodate persons with disabilities.

Employers locating overseas must remember that they can no longer avoid Title VII and the ADEA simply by leaving the country. U.S. corporations operating in foreign nations, as well as foreign companies controlled by U.S. corporations, must follow the Title VII requirements.

Review Questions

  1. 21-1 Explain the employment-at-will doctrine. Discuss why some people prefer the complete abolition of this doctrine, whereas others feel saddened by its gradual demise.
  2. 21-2 Explain why each of the following sets of jobs would or would not be considered equal under the Equal Pay Act:
  3. Male stewards and female stewardesses on continental air flights
  4. Male checkers of narcotics and female checkers of nonnarcotic drugs at a pharmacy
  5. Male tailors and female seamstresses
  6. 21-3 Explain the following aspects of the Equal Pay Act:
  7. Its purpose
  8. The remedies available under the act
  9. The defenses available to employers
  10. 21-4 Explain the following aspects of Title VII:
  11. Its purpose
  12. The remedies available under the act
  13. The defenses available to employers
  14. 21-5 Explain two significant ways in which the Civil Rights Act of 1991 has changed the application of Title VII.
  15. 21-6 What constitutes “reasonable accommodation” under the Rehabilitation Act and the ADA?

Review Problems

The City of Los Angeles provided equal monthly retirement benefits for men and women of the same age, seniority, and salary. The benefits were partially paid for by employee contributions and partially by employer contributions. Because women, on average, live longer than men, the city required women to make contributions to the retirement fund that were 14.84 percent higher than those made by men. Was this a violation of the Civil Rights Act? Why or why not? 1. 21-7

JoAnn, Ann, and Bryon were all laboratory analysts, performing standardized chemical tests on various materials. JoAnn was hired first, with no previous experience, and was trained on the job by the supervisor. She later trained Ann. When Bryon was hired, he was trained by the supervisor with the assistance of the two women. All initially worked the same shift and received the same pay. Then Bryon received a 5-cent-per-hour raise and was to work a swing shift every other two weeks. Was his higher wage a violation of the Equal Pay Act? Explain. 2. 21-8

Administrators of an Ohio Christian school refused to renew a teacher’s contract after she became pregnant, on the basis of its belief that “a mother’s place is in the home.” When she filed sex discrimination charges under the state civil rights statute, she was fired. Was this termination unlawful? Explain. 3. 21-9

Ellen’s immediate supervisor repeatedly required her to have “closed door” meetings with him, in violation of company policy. As a consequence, rumors began to spread that the two were having an office romance, although the meetings in fact involved her boss’s attempt to convince Ellen to loan him money, again in violation of company policy. When Ellen asked her immediate supervisor to try to stop the rumors, he said that he found them somewhat amusing and refused to do anything to stop them. As a consequence of the rumors, she began to be treated as an “outcast” by her coworkers and received low evaluations from other superv  4. 21-10isors in the areas of “integrity” and “interpersonal relations.” She was passed over for two promotions for which she had applied. She filed an action against her employer on the grounds that her supervisor had created a hostile environment by his refusal to stop the rumors. Do you believe she has a valid claim under Title VII? Why or why not? Are there any other causes of action she might raise? Explain.

A U.S. citizen was working at a multinational company’s Zaire facility. The employer was incorporated in the state of Louisiana. When the employee was terminated, allegedly because of his age, he sought recovery under the federal ADEA as well as the Louisiana Age Discrimination in Employment law. The employer argued that its overseas operations were not subject to the federal ADEA. Was the employer correct? Explain. 5. 21-11

Davis, D’Elea, and Sims were former heroin or narcotics addicts. Davis and Sims were told by the city director that they could not be hired by the city because of their former habit. D’Elea was rejected from a city CETA program because of his former habit. The three sued the city, alleging that drug addiction was a handicap under the Rehabilitation Act of 1973 and that the city’s refusal to hire them was therefore unlawful under this act. Were they correct in their contention? Explain. 6. 21-12

Last Updated on March 29, 2020 by EssayPro