Legal Issues In Reduction Of Force Simulation - Fastserve Inc.

Legal Issues in Reduction of Force Simulation - FastServe Inc.

FastServe Inc. is a $25 million, 350-person strong company involved in the direct marketing of branded sports apparel. To focus exclusively on America's sport-crazy Generation Y segment, FastServe opened up two online marketing and distribution channels: www.fastserve4boys.com and www.fastserve4girls.com for boys and girls respectively. Ten percent of the workforce was moved to manage the online distribution.

Soon after the Web sites went live, technology began to pose problems for FastServe. The 3-D 'drape-n-see' mannequins on the site did indeed attract the Generation Y market, but were so cumbersome to download that potential buyers weren't making enough transactions for such technological investments to be viable.

Eventually, FastServe decided to move out of online distribution. The fallout of this decision was inevitable. The online division had to be downsized. The only concession made was that a few people among the identified employees might be retained with mew job definitions, based on past performance and skill levels. The others would have to be released.

The senior manager in the Human Resources department of FastServe Inc., reporting to the Vice President - HR, needs to implement the decision of the top management in a way that translates into maximum benefits for FastServe. This manager will also need to consider the legal implication of their decisions on the company. They will need to decide and communicate the news to the chosen employees within a week.

It is up to the HR senior manager to layoff three employees based on an evaluation of five employees who are candidates for dismissal. The table below identifies key concepts of employment law for each of these five candidates that would affect his or her employment status.

Name Key Employment Law Concepts

Affecting Employment Status

Jenny Mills Pregnancy Discrimination Act

The Pregnancy Discrimination Act amended the Civil Rights Act in 1978. Under it, employers can no longer discriminate against women workers who become pregnant or give birth. Thus, employers with health or disability plans must cover pregnancy, childbirth, and related medical conditions in the same manner as other conditions are covered. The law covers unmarried as well as married pregnant women. It also states that an employer cannot force a pregnant woman to stop working until her baby is born, provided she is still capable of performing her duties properly. And the employer cannot specify how long a leave of absence must be taken after childbirth (Reed, p 455).

Sarah Boyd Age Discrimination in Employment Act (ADEA)

The Age Discrimination in Employment Act (ADEA) prohibits employment discrimination against employees ages 40 and older, and it prohibits the mandatory retirement of these employees. Only bona fide executives and high policymakers of private companies can be forced into early retirement. The ADEA also invalidates retirement plans and labor contracts that violate the act (Reed, p 462).

Nora Manson Civil Rights Act of 1964 (on the basis of race or color)

The provisions of Title VII of the Civil Rights Act of 1964 apply to employers with 15 or more employees. They also cover labor unions and certain others. The major purpose of these laws is to eliminate job discrimination based on race, color, religion, sex, or national origin. Discrimination for any of these reasons is a violation of the law, except that employers, employment agencies, and labor unions can discriminate on the basis of religion, sex, or national origin where these are bona fide occupational qualifications (BFOQs) reasonably necessary to normal business operations. Title VII also permits discrimination if it results unintentionally from a seniority or merit system (Reed, p446).

Title VII prohibits discriminatory employment practices based on race or color that involve recruiting, hiring, and promotion of employees. Of course, intentional discrimination in these matters is illegal, but as previously stated, policies with disparate impact are also forbidden. Such discrimination arises from an employer's policies or practices that apply equally to everyone but that discriminate in greater proportion against minorities and have no relation to job qualification. Often at issue in disparate impact cases is whether a discriminatory policy or practice relates to job qualification. Courts require proof, not mere assertion, of job relatedness before upholding an employer's discriminatory personnel test or other practice (Reed, p 449).

Brian Carter Americans with Disabilities Act (ADA)

According to a Harris poll, two-thirds of all disabled Americans between the ages of 16 and 64 are not working, even though most of them want to work. To help those with disabilities get work, Congress in 1990 passed the Americans with Disabilities Act (ADA). Major provisions of this act prohibit employment discrimination against the disabled. To prevent disability discrimination in general, the ADA prohibits employers from requiring a preemployment medical examination or asking questions about a job applicant's medical history. Only after a job offer has been given can the employer condition employment on an employee's passing a job-related medical exam or on the employee's responses to job-related medical questions. The ADA prohibits employer discrimination against job applicants or employees based on (1) their having a disability, (2) their having had a disability in the past, or (3) their being regarded as having a disability. Under the ADA disability is defined as "any physical or mental impairment that substantially limits one or

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