11/18/08

 

 

Psy 4416 – Compensation & Benefits:  Legal Issues

(Very Short Version; See also Exhibit 17.1)

 

Wage and Hour Legislation (examples only)

 

 

Davis-Bacon Act (1931)

First national minimum wage legislation;  requires contractors/subcontractors on projects receiving federal funds (> $2,000) to pay minimum of “prevailing wages in region.”  Later amendments cover benefits and required payments for same by contractors/subcontractors.

 

 

National Labor Relations Act (1935)

Grants employees right to collectively bargain for wages, benefits, and working conditions. (See Psy 4415)

 

 

Fair Labor Standards Act (1938)

Enabled federal government to regulate minimum wages for all employees involved in interstate/foreign commerce, production of goods for such commerce, or all in certain other categories.

 

Established overtime wage requirements and specific exempt classifications.  Later amended to cover more occupations and increase minimum wage.  Sub-minimum wage allowed for certain categories.

 

Included child labor provisions governing minimum hiring ages and type of work performed by minors.

 

Employer Pension and Benefits Legislation  (examples only – covered in “Benefits” chapter)

 

 

 

Social Security Act (1935

Employee Retirement Income Security Act (1974))

Consolidated Omnibus Reconciliation Act (COBRA; 1985)

 

Tax Treatment Legislation  (example only)

 

 

Tax Reform Act (1986)

Established limits to 401(k)s for executives.  Others changes impacting retirement plans, vesting, ESOPs, employer-provided life insurance.

 

Anti-discrimination Legislation  (examples only)

 

 

Equal Pay Act (1963)

Requires “equal pay for equal work” based on skill, effort, responsibility, and working conditions.

 

 

Civil Rights Act (1964)

     

Leads to cases involving “disparate treatment” and “disparate (adverse) impact

Wage and Price Control Legislation  (examples only)

 

 

Wage Stabilization Act  (1942)

Froze wages during WW II based on rates as of 09/15/42.  Feds set “going rates” for key jobs.  Benefits could only be included if they were “customary” to area.  Stimulated use of paid holidays and vacations as part of compensation packages.

 

 

Economic Stabilization Act (1970)

Granted president power to impose wage and price controls similar to those used during WW II.  Used by Nixon in 1971.

 

Disclosure and Accounting Legislation  (examples only; see Exhibit 17.1 on p. 550)

 

 

Sarbanes – Oxley Act (2002)

Response to Enron, WorldCom, and Tyco scandals;  impacts gains made by executives if evidence that they misled public about health of company;

 

 

SEC Rule on Executive Compensation & Related-Party Disclosure (2006)

 

Created greater transparency regarding executive compensation at publicly traded companies.

References

 

 

 

 

Henderson, R. I. (1989).  Compensation management:  Rewarding performance (5th ed.).  Englewood Cliffs, NJ:  Prentice Hall.

 

Milkovich, G. T., & Newman, J. M. (2008).  Compensation (9th ed.).  New York:  McGraw-Hill/Irwin