8.9 Legal Environment of Human Resources and Labor Relations

8.9 Legal Environment of Human Resources and Labor Relations

9. What are the key laws and federal agencies affecting human resource management and labor relations?

Federal laws help ensure that job applicants and employees are treated fairly and not discriminated against. Hiring, training, and job placement must be unbiased. Promotion and compensation decisions must be based on performance. These laws help all Americans who have talent, training, and the desire to get ahead. The key laws that currently impact human resource management and labor relations are listed in Table 8.6.

Several laws govern wages, pensions, and unemployment compensation. For instance, the Fair Labor Standards Act sets the federal minimum wage, which is periodically raised by Congress. Minimum-wage jobs are found in many industries including service firms such as fast-food and retail stores. The 2025 Social Security Fairness Act protects the retirement income of employees and retirees who receive public pensions. Federal tax laws also affect compensation, including employee profit-sharing and stock purchase plans. To prohibit sex-based wage discrimination, John F. Kennedy signed the Equal Pay Act into law in 1963. The Act mandated that jobs requiring the same skill level and responsibility will be paid the same regardless of the employee's gender. At the time, women with full-time jobs earned between 59 and 64 cents for every dollar their men counterparts earned in the same jobs. Although this law has been in place for several decades, progress has been slow. During his tenure as President, Barack Obama established a National Equal Pay Day. In 2024, women earned 85 cents for every dollar their men counterparts made.¹⁷

Employers must also be aware of changes to laws concerning employee safety, health, and privacy. The Occupational Safety and Health Act requires employers to provide a workplace free of health and safety hazards. For instance, manufacturers must require their employees working on loading docks to wear steel-toed shoes so their feet won’t be injured if materials are dropped. Employees working with chemicals are required to wear eye protection and other safety equipment such as gloves to protect their skin.

Another employee law that continues to affect the workplace is the Americans with Disabilities Act. To be considered disabled, a person must have a physical or mental impairment that greatly limits one or more major life activities. In 2021, there were about 42 million Americans with disabilities, or about 13 percent of the population, according to the U.S. Census Bureau.¹⁸ Employers may not discriminate against people with disabilities. They must make “reasonable accommodations” so that qualified employees can perform the job, unless doing so would cause “undue hardship” for the business. Altering work schedules, modifying equipment so that individuals who have mobility issues can use it, and making buildings accessible by ramps and elevators are considered reasonable. Two companies often praised for their efforts to hire individuals with challenges are John Deere and PepsiCo.

The Family and Medical Leave Act went into effect in 1993. The law guarantees continuation of paid health benefits, plus a return to the same or equivalent job, and applies to employers with 50 or more employees. It requires these employers to provide unpaid leave of up to 12 weeks during any 12-month period to workers who have been employed for at least a year and worked at least 1,250 hours during the past year. The reasons for the leave include the birth or adoption of a child; the serious illness of a child, spouse, or parent; or a serious illness that prevents the worker from doing the job.

According to the Bureau of Labor Statistics, only 27 percent of all private industry workers have access to paid family leave. Only 6 percent of low wage earners get any paid parental leave, and nearly half will not take time off because they cannot afford to go without income. The United States is the most prominent nation globally that does not have guaranteed paid parental leave.¹⁹

The Wagner and Taft-Hartley Acts govern the relationship between an employer and union. Employees have the right to unionize and bargain collectively with the company. The employer must deal with the union fairly, bargain in good faith, and not discriminate against an employee who belongs to the union. The union must also represent all employees covered by a labor agreement fairly and deal with the employer in good faith.

Several federal agencies oversee employment, safety, compensation, and related areas. The Occupational Safety and Health Administration (OSHA) sets workplace safety and health standards, provides safety training, and inspects places of work (assembly plants, construction sites, and warehouse facilities, for example) to determine employer compliance with safety regulations.

The Wage and Hour division of the Department of Labor enforces the federal minimum-wage law and overtime provisions of the Fair Labor Standards Act. Employers are required to pay most hourly workers at least 1.5 times their rate of pay for each hour worked over 40 hours in one week.

The Equal Employment Opportunity Commission (EEOC) was created by the 1964 Civil Rights Act. It is one of the most influential agencies responsible for enforcing employment laws. The EEOC has three basic functions: processing discrimination complaints, issuing written regulations, and gathering and disseminating information. An employment discrimination complaint can be filed by an individual or a group of employees who work for a company. The group may comprise a protected class, that is, a group that is shielded from employment discrimination based on certain characteristics. There are several classes protected by the EEC and those include: race, national origin, disability, and religion, as a few examples. The protected group may pursue a class-action complaint that may eventually become a lawsuit. As a measure to prevent employment discrimination, many employers set up affirmative action programs to expand job opportunities for women and minorities.

In 2024, the EEOC received over 85,000 complaints from current or former employees. The monetary benefits that the EEOC wins for employees has grown over the last several years, despite the number of complaints declining since 2018. Large monetary settlements often occur when the EEOC files a class-action suit against an employer. For example, Diversified Maintenance Systems, LLC (a janitorial services provider) was ordered to pay $750,000 to several former employees for race discrimination and racial harassment in 2019. Also in 2019, Dollar General was ordered to pay $6 million for discriminatory practices in the way they conducted background checks for prospective employees.²⁰

The NLRB was established to enforce the Wagner Act. Its five members are appointed by the president; the agency’s main office is in Washington, DC, and regional and field offices are scattered throughout the United States. NLRB field agents investigate charges of employer and union wrongdoing (or unfair labor practices) and supervise elections held to decide union representation. Judges conduct hearings to determine whether employers and unions have violated the law.

The Federal Mediation and Conciliation Service helps unions and employers negotiate labor agreements. Agency specialists, who serve as impartial third parties between the union and company, use two processes: conciliation and mediation, both of which require expert communication and persuasion. In conciliation, the specialist assists management and the union with focusing on the issues in dispute and acts as a go-between, or communication channel through which the union and employer send messages and share information with each other. The specialist takes a stronger role in mediation by suggesting compromises to the disputing organizations.