Transcript Chapter 16
Chapter 16
Selected Employment
Benefits and
Protections
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning 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 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 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
16-4
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!
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 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 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 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 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 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 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 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 75mile radius
Employers can require medical confirmation of an illness
Leave is unpaid
16-13
Occupational Safety and Health Act:
Safety 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 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 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 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 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 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 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 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 Provisions
Intentional Acts
Compensatory and punitive damages
Violence in the workplace
“Zero tolerance” policy
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Other Provisions
Bullying
Legal liability and higher worker compensation costs if
left uncontrolled
Retaliation
OSH Act – Prohibits retaliation against whistleblowers
16-23
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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ERISA
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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ERISA
Key Terms
Explanation
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 Duty
Fiduciary: Someone who has discretionary
authority over the investment or management of
plan assets on behalf of others
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Fiduciary Duty
Fiduciary
requirements
Loyalty
Exclusive purpose
Prudence
Diversification
Compliance with plan documents
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Reporting 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
16-29
Funding Requirements for Defined
Benefit 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 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
16-31
Enforcement 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)
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