Chapter 16Chapter 16Selected Employment Selected Employment
Benefits and Benefits and Protections
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
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Learning ObjectivesLearning Objectives List the matters regulated by the Fair Labor
Standards Act
Discuss the requirements of the minimum wage laws and to whom they apply
Explain the Family Medical Leave Act, including to whom it applies and under what circumstances
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Learning ObjectivesLearning Objectives Explain contributory negligence, assumption of
risk, and the fellow servant rule, and their roles in the regulation of safety in the workplace, and determine how OSHA impacted this regulatory environment
Set forth what OSHA requires of employers to create a safer workplace and how it is enforced
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Learning ObjectivesLearning Objectives Describe the reporting responsibilities of
employers under the OSHA Act
Explain the purposes of ERISA and identify who and what type of entities are covered
Describe the minimum ERISA standards for employee benefit plans
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Show me the Money!Show me the Money! Fair Labor Standards Act (FLSA)
Law to regulate pay and hours worked passed in 1938
Set standards for minimum wage
Prohibits pay differentials based solely on gender
Regulates child labor, wages and hours
Requires records on wages and hours
Violations
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Show me the Money!Show me the Money! FLSA is administered by the U.S. Department of
Labor’s Wage and Hour Division
States also have wage and hour provisions administered by comparable state agencies
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Covered EmployeesCovered Employees Two types of coverage in FLSA
Individual coverage
Enterprise coverage
The law applies to both part-time and full-time employees
Federal, state and local employees are covered
The law also covers domestic service workers
There are exemptions
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Minimum WagesMinimum Wages The minimum wage law was established after
Wall Street Crash of 1929
FLSA – employers must pay employees a certain minimum hourly wage
State wage laws may have higher minimums than the federal law
Fair Minimum Wage Act of 2007
Tipped employees – piece-rate vs. hourly rate
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Minimum WagesMinimum Wages Not everyone is covered under the statute
Primary exemptions
New FLSA overtime regulations
Businesses required to review their pay levels and jobs
Employees earning up to $23,660 per year ($455/week) are automatically entitled to overtime pay
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Minimum WagesMinimum Wages Executive employees are exempt if they
Manage two or more employees
Have firing, hiring and promotion authority
Employees who earn at least $100,000 per year and perform some executive, professional, or administrative job duties are automatically exempt from overtime provisions
Back wages
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Overtime ProvisionsOvertime Provisions The FLSA
Sets standards for the hours constituting a normal workweek for wage purposes
Sets wage rates for hours worked over and above the normal week
If an employee works over 40 hours, he or she must be paid time and a half for the time worked in excess of 40 hours
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Retaliation and Child Labor LawsRetaliation and Child Labor Laws Retaliation is prohibited
FLSA sets minimum age standards for allowing children to work
Most cannot work before age 16
Age 18 the minimum for hazardous jobs
Certain jobs allowed for children 14-16 that do not interfere with their health, education, or well-being
State child labor laws override federal law
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Family and Medical Leave ActFamily and Medical Leave Act Enacted primarily in response to job retention
after having a child
General provisions
Guarantee job after leave for a birth, an adoption, or care of sick children, spouses, or parents
Applies to employers with 50 or more employees within a 75-mile radius
Employers can require medical confirmation of an illness
Leave is unpaid
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Occupational Safety and Health Act: Occupational Safety and Health Act: Safety at WorkSafety at Work
Each year
5,700 Americans die from workplace injuries
50,000 die from illnesses caused by workplace exposure
4.7 million suffer nonfatal workplace injuries
According to OSHA
OSH Act has helped cut workplace fatalities by more than 60 percent and injury/illness by 40 percent since its enactment
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General ProvisionsGeneral Provisions OSHA requires that an employer provide a safe
workplace
Employer’s defense
Explanation
Contributory negligence
Negligence action based on the injured party’s failure to exercise reasonable care
for her or his own safety
Assumption of risk Injured party voluntarily exposed herself or himself to a known danger created by
the other party’s negligence
Fellow servant rule Injury occurred on the job and was caused by the negligence of another
employee
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General ProvisionsGeneral Provisions No-Fault: Workers injured on the job are entitled
to recover for their injuries without having to prove who is at fault
injured workers are limited in their financial recovery
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General ProvisionsGeneral Provisions Section 5(a)
The employer must comply with all the safety and health standards dictated by the Department of Labor
The employer must furnish a workplace fee of hazards
OSHA creates certain specific regulatory standards of safety
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General ProvisionsGeneral Provisions OSHA conducts routine inspections in certain
high-risk industries
Penalties and “abatement orders” are assessed in connection with an inspection officer’s report
Employers covered by the Act must maintain records for OSHA compliance
Employees must be informed of their OSHA rights by their employer
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Procedure for EnforcementProcedure for Enforcement Responsibility for enforcing the acts rests with
OSHA under the auspices of the Department of Labor
Occupational Safety and Health Review Commission
Willful violation
Increase in fines
Definition of “willful”
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Specific RegulationsSpecific Regulations Physical layout of the worksite
Training
Medical examinations
Setting standards
Voluntary compliance programs
Emergency temporary standards
Continual-training requirement
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General Duty ClauseGeneral Duty Clause Employer requirement – A place of employment
free from recognized hazards that cause or are likely to cause death or serious physical harm to the employee
Instances when employer is not held responsible
Recklessness
Safety requirement is not economically feasible
Greater hazard defense
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Other ProvisionsOther Provisions Intentional Acts
Compensatory and punitive damages
Violence in the workplace
“Zero tolerance” policy
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Other ProvisionsOther Provisions Bullying
Legal liability and higher worker compensation costs if left uncontrolled
Retaliation
OSH Act – Prohibits retaliation against whistleblowers
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Will It Be There When I Retire?Will It Be There When I Retire? Many firms offer employees retirement plans,
health care, and other employee benefits
Employee Retirement Income Security Act (ERISA)
Protects pension benefits of workers
Government entities, churches, non U.S. residents, or independent contractors not covered
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ERISAERISA Covers welfare plans and retirement or pension
plans
Applies to employee benefit plans
Welfare plan
Retirement or pension plans
Establishes requirements for managing and administering pension and welfare plans
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ERISAERISAKey
TermsExplanation
Employee benefit plan
Contractual obligation by which an employer or an employee organization agrees to provide retirement benefits or welfare benefits to employees and their
dependents and beneficiaries
Retirement or pension
plan
Provides for compensation at retirement or deferral of income to periods beyond termination of
employment
Defined contribution
Retirement plan where the benefit payable to a participant are based on the amount of contributions
and earnings on such contributions
Defined benefit
Retirement plan where the benefit payable to a participant is defined up front by a formula, the
funding of which is determined actuarially
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Fiduciary DutyFiduciary Duty Fiduciary: Someone who has discretionary
authority over the investment or management of plan assets on behalf of others
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Fiduciary DutyFiduciary Duty
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Reporting and DisclosureReporting and Disclosure Required information
Summary plan description (SPD)
Annual report with the DOL
ERISA was amended by the Pension Protection Act (PPA) of 2006
Eligibility and Vesting Rules
Benefit plans – 100 percent non-forfeitable after three years of employment
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Funding Requirements for Defined Funding Requirements for Defined Benefit PlansBenefit Plans
Minimum standards
Accruals of benefits based on service in each year
Amortization of any prior service or actuarial gains or losses on investment over a set period of years
Pension Benefit Guarantee Corporation (PBGC)
ERISA litigation
Fiduciary liability
The Worker, Retiree, and Employer Recovery Act
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COBRA and HIPAACOBRA and HIPAA Consolidated Omnibus Budget Reconciliation
Act (COBRA)
Applies to group health plan (20≥ employees)
Health Insurance Portability and Accountability Act (HIPAA)
promote standardization and efficiency in the health care industry
HIPAA privacy rules
General obligations of covered entities
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Enforcement of ERISAEnforcement of ERISA Employers have the right to reduce or modify
employee benefits
Unless it is prohibited by contractual obligations
Similarly situated participants must be treated alike
ERISA claims - asserted under the Age Discrimination in Employment Act (ADEA)