The world of the human-capital management (HCM) leader is complex and dynamic and is often brimming with legal and ethical considerations. Below is a highlight of some key points relating to the federal Fair Labor Standards Act (FSLA) from Susan Alevas’ Columbia University School of Professional Studies M.S. in Human Capital Management Foundations of Labor and Employment Law class.
This course leverages both synchronistic classroom-learning opportunities with asynchronistic online-discussion forums. These online forums empower students to continue applying related legal and ethical principles and concepts to complex, real-world case-study scenarios that require additional reflective thought in order to transfer and apply that which they gleaned from their in-person classroom experience.
As students begin to formulate mitigation strategies and longer-term organizational solutions in the context of real-world case studies, these online forums also serve to supplement student insights around:
- the intersection of a multitude of employment and labor laws and nuanced ethical dimensions that can be implicated in a single workplace-related case scenario, and;
- the preparation HCM leaders must undertake before embarking on discussions about potential legal matters with a variety of audiences, including organizational counsel, senior leaders, line managers, employees, union leaders and external-agency investigators.
Please keep in mind this blog is offered in an academic context and should not be relied upon as a substitute for specific advice from employer’s counsel about any situations occurring within a particular organization.
THE MANY FACETS OF MINIMUM PAY AND OVERTIME REQUIREMENTS
- The federal Fair Labor Standards Act (FSLA) is an important starting point to understand minimum-wage requirements and classification rules for overtime purposes.
- Additionally, the FSLA informs employers about specific requirements governing the employment of youth workers.
- While the Supremacy Clause in the U.S. Constitution prohibits states and other local jurisdictions from enacting laws that restrict federal rights, these local jurisdictions are permitted to expand rights and protections beyond that included in federal statute.
- HCM leaders need to know what additional minimum-pay and overtime requirements are offered under any state and/or local laws in jurisdictions in which the business is operating. For global organizations, there may be statutory differences in other countries’ laws.
UNION CONTRACTS, INDIVIDUAL EMPLOYMENT CONTRACTS AND ORGANIZATIONAL PAY RATES
- In addition to applicable laws, HCM leaders need to assure the organization is adhering to any negotiated pay structures and overtime provisions incorporated into existing union contracts.
- Similarly, any higher pay provisions stipulated by individual employment contracts must be met.
- Lastly, an organization may choose to pay non-unionized employees above the minimum statutory rate. This is an acceptable practice so long as it does not violate any other applicable legal mandates such as those contained in the Equal Pay Act (unless exceptions for merit, seniority, productivity, and/or factor other than sex, for example, are met).
DOCUMENTATION
- Having clearly articulated policies that enable the employer and the employees to understand related rights and responsibilities in the context of pay rates, overtime classification and procedures governing overtime are critical to help mitigate legal liability.
- Concurrently, it is imperative that employers maintain detailed and accurate payroll records as this will assist the employer in defending its actions during any audits or other legal review.
- HCM leaders will need to implement processes that assure up-to-date job descriptions are available and related managerial practices align with job descriptions when assigning work to individual team members.
TRAINING AND DEVELOPMENT
- It is critical that supervisors understand and adhere to organizational procedures for managing overtime and the process by which employees must obtain prior approval.
- Moreover, supervisors must recognize the potential legal jeopardy that can accrue to the employer should they unilaterally modify employee job activities that could impact exempt/non-exempt status and/or overtime entitlement.
- From a labor-management perspective, supervisors also must understand the parameters within which they must operate vis-à-vis any related collective-bargaining agreement (CBA) provisions and the prohibition against negotiating individually with any union employee as a “work around” to such contractual requirements.
ETHICAL CONSIDERATIONS
- Given the fact the federal minimum wage has not been raised in nearly a dozen years (July 24, 2009), HCM leaders may wish to conduct an ethical examination of the organization’s current pay practices.
- When considering regional cost-of-living realities, HCM leaders have an opportunity to discuss with senior leaders whether it is ethical to “merely” comply with the minimum-wage laws or whether there is an opportunity to adjust pay rates higher (either through union negotiations or individual-contract reopeners or individually for non-unionized employees).
- Below are some questions that can drive this ethical inquiry the answers to which can help HCM leaders to deliver additional business value:
- How does “mere” legal compliance square with organizational values that likely underscore respect for and recognition of employee worth?
- Are organizational pay-rate decisions supporting or detracting from its stated values?
- What data is available to inform HCM leaders about the impact “mere” legal compliance is having on employee engagement, productivity, and retention?
PARTNERING WITH COUNSEL
The value of consulting with organizational counsel to assure all employer policies, procedures and actions are legally compliant continues to emerge as a common theme when considering labor and employment laws. HCM leaders carry a significant responsibility (and corresponding opportunity) to drive ethically and legally sound strategies to help reduce the employer’s legal and reputational risk. The timely and strategic consultation with organizational counsel is integral to how well HCM leaders will meet this important professional responsibility.
