This paper examines the body of federal employment law that governs human resources practice in the United States, with particular focus on the Civil Rights Act of 1964 (Title VII), subsequent anti-discrimination statutes, and landmark Supreme Court rulings. It analyzes how decisions such as University of Texas Southwestern Medical Center v. Nassar and Vance v. Ball State University have reshaped employer liability for discrimination and retaliation. The paper also explores the role of arbitration under the Federal Arbitration Act, the economics of employment equity legislation, and the theoretical benefits these laws provide to both employers and consumers through greater labor-market efficiency.
Several different laws affect business operations, pertaining to employment, health and safety, unions, discrimination, privacy, and job security. These laws guide how businesses should conduct themselves in the human resources function, setting constraints on employer behavior. This paper outlines a number of these laws with respect to how they affect the employer.
Several laws fall into the category of civil rights legislation. The foundational statute is the Civil Rights Act of 1964, in particular Title VII. This provision established the Equal Employment Opportunity Commission (EEOC) and set out guidelines for equality in employment, providing protections on the basis of race, ethnicity, gender, color, religion, and national origin (EEOC, 2013). Following the passage of the Civil Rights Act, the 1970s saw the enactment of additional statutes that extended its protections — covering the disabled under the Americans with Disabilities Act, older workers under the Age Discrimination in Employment Act, and individuals on the basis of genetic information under the Genetic Information Nondiscrimination Act (EEOC, 2013).
There are other considerations for employers as well. For example, there are ethical issues and insurance costs associated with the legal environment. The recent Supreme Court cases that weakened Title VII illustrate a situation of real hazard. While employers have been granted greater protections by these decisions, they must consider the ethical dimensions of such cases. The ability to sidestep legal responsibility for discrimination on a technicality may be enshrined in law, but it remains morally problematic. For an employer, there is inherent risk in walking anywhere near the line — not least because the lines are so fine that crossing them is easy. Ethically, an employer may prefer to base policies on a much stricter interpretation of Title VII protections than the law strictly requires, especially because litigation is expensive.
Schooler (2013) notes that employers can acquire employment practices liability insurance (EPLI), which protects the company against a broad range of discrimination and harassment claims. While it is useful to know that such insurance exists, companies can lower the cost of insuring against employment litigation by having strong policies, procedures, and training programs in place to reduce the likelihood of legal action in the first place. Working with the insurance company to lower premiums will also guide the company toward best practices in its human resources functions.
Title VII has been the subject of numerous court cases that have refined its application in the workplace. One such case was University of Texas Southwestern Medical Center v. Nassar, in which the Supreme Court found that the motivating-factor test — under which discrimination is found to be a motivating factor in an adverse employment action — applies only to status-based discrimination and not to retaliation claims. This ruling effectively grants employers an exclusion from the Civil Rights Act, since they can retaliate against an employee with relative impunity. Another significant decision was Vance v. Ball State University, in which the Supreme Court specified a narrow definition of "supervisor." Under that definition, a supervisor must be someone whose authority "primarily consists of the power to hire, fire, demote, promote, transfer, or discipline an employee" — not someone who merely oversees day-to-day work. This again opens the door for employers to circumvent Civil Rights Act protections by using a technically non-supervisory employee to carry out discriminatory conduct (Brill, Fant & Baddish, 2013).
The court did affirm, however, that employers will be liable for the actions of non-supervisory employees if the employer is on notice and negligent in failing to take corrective steps. Employers therefore need to ensure they have sufficient documentation and response protocols in place (Brill, Fant & Baddish, 2013).
New judgments are handed down every year on matters related to human resources, so it is important for HR departments to follow these developments closely. Larger companies are advised to retain a full-time human resources attorney to ensure that the company incorporates not only current statutes but also the latest court rulings — particularly Supreme Court decisions, which are essentially final. Lower court rulings are also worth monitoring. It should be noted that smaller companies not engaged in interstate commerce are more likely to be subject to state law; the body of federal employment law generally applies only when a company has more than 15 employees and engages in interstate commerce.
"Arbitration clauses and Circuit City v. Adams ruling"
"Economic rationale for employment equity compliance"
"Theoretical consumer benefits of employment equity law"
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