Campbell 5
INTRODUCTION
Labor laws arose due to workers’ demand for better conditions and employers’ demand to attempt to suppress the power of workers in order to keep labor costs low. Employers' costs can increase due to workers organizing to win higher wages, or by laws imposing costly requirements, such as health and safety or equal opportunities conditions.
This paper is going to analyze the case of TEAM FUN! with regards to its change to its pension plan. Analyses of other discriminatory issues will also be provided. Team Fun!, a sporting goods store that originated from a business plan for a business-entrepreneurship class, was founded by twin brothers, Kenny and Norton Bell. The company was very successful in its first year, acquiring more than $300,000 in revenues and has been expanding ever since its inception. It is in this context that recommendations will be provided to help protect TEAM FUN! from discrimination charges.
DISCRIMINATION IN EMPLOYMENT
Edna, the compensation and benefits manager for TEAM FUN!, reflected on the fact that Fred, an employee for TEAM FUN!, was moved from fitness demos to stock manager because he was unable to lift the “big weights” and “do the treadmill.” She states, “There was talk of an age discrimination case because he was 57, but that never went anywhere.” What Edna never stated was that someone talked to him in order to find a common ground to help with the problem, to see if the problem was temporary, or to see if his condition was due to a disability, which would not only put TEAM FUN! at risk for an age discrimination claim, but also for a disability claim consistent with the Americans with Disabilities Act.
The Age Discrimination in Employment Act of 1967 prohibits employment discrimination based on age with respect to employees 40 years of age or older. This Act was created to promote employment of older persons based on their ability rather than age and to prohibit illogical age discrimination in employment. It was also created to help employers and workers find ways of meeting problems arising from the impact of age on employment because in the face of rising productivity and prosperity, older workers find themselves disadvantaged in their efforts to retain employment, and especially to regain employment when displaced from jobs. The ADA is a wide-ranging civil rights law that prohibits, under certain circumstances, discrimination based on disability. It affords similar protections against discrimination to Americans with disabilities as the Civil Rights Act of 1964, which made discrimination based on race, religion, sex, national origin, and other characteristics illegal.
Discrimination can, in fact, be direct or indirect. It is direct when imperatives and ways openly prohibit or give partiality to a certain group of people based on their membership of a specific group. Because of the Age Discrimination in Employment Act, potential problems could arise for TEAM FUN! concerning its position on the pension plans. Tony, the new director of human resources, was conversing with Edna and inquired about her opinion on the pension plan changes stating that it may produce discrimination problems as it did in IBM. In the IBM case, the company would freeze both the pensions and retiree health-care benefits of many current employees and offer them larger matching contributions to 401(k)s instead effective January 2008.
The problems with IBM, as will be in TEAM FUN!, is that frequently, final pension benefits—paid out as a lump sum or as a per-year payment for life—are a percentage of the employee's average salary over his or her last several years of service. Continuing to accumulate benefits as you age and as your salary rises means you will have a richer pension. For employees whose plans are frozen, the payments that they will start to receive when they hit 65 will be calculated as a percentage of their salary at the time of the freeze. All the companies that are freezing pensions are replacing them with enhanced 401(k) plans. IBM claims its 401(k) is "one of the richest in U.S. business." But for people in their 50s, that is not much of a help. A 55-year-old manager only has 10 years to contribute, receive matching grants, and hope that investments grow. Furthermore, instead of being guaranteed, as pensions are, 401(k)s rise and fall at the whim of the market. Moreover, companies have been known to cut back or eliminate 401(k) contributions when they encounter a few tough quarters.
Another conversation between Tony and Edna (as they were posting EEOC information in the cafeteria) concerned the ratio of female workers to male workers in RETREAT, the company’s employee cafeteria, and in the company warehouse. Tony asks Edna, “Do you realize that all of the warehouse workers are males and all of the RETREAT workers are female?” Edna replies basically saying that everyone feels that this is the best job that he or she has ever had. This nonchalant attitude could backfire for Edna and the company, and could cause the company to be subjected to claims due to sex discrimination.
Under Title VII of the Civil Rights Act of 1964, discrimination in many more aspects of the employment relationship is prohibited. It applies to most employers engaged in interstate commerce with more than 15 employees, labor organizations, and employment agencies. Title VII prohibits discrimination based on race, color, religion, sex or national origin. It makes it illegal for employers to discriminate based upon protected characteristics regarding terms, conditions, and privileges of employment. Employment agencies may not discriminate when hiring or referring applicants and labor organizations are also prohibited from basing membership or union classifications on race, color, religion, sex, or national origin.
RECOMMENDATIONS
Unfortunately, because Fred’s claim did not go anywhere, TEAM FUN! is not liable for his attitude toward his new position. Furthermore, Fred was able to retain employment with TEAM FUN!, so his claim would be difficult to win. However, the human resources department at the company should remain conscious to laws concerning age discrimination and discrimination against people with disabilities. As far as the division of genders among RETREAT cafeteria workers and warehouse workers, until someone in either department makes a claim concerning sexism, there is no sex discrimination case. However, as stated, TEAM FUN! needs to remain aware of the sex discrimination laws, and possibly consider hiring a female or male in those areas that are lacking the particular gender. Concerning the new pension plans, there is no legal problem with companies independently freezing pension plans for nonunionized employees. When such pensions are frozen, workers do not lose benefits they have earned. Rather, they simply stop accumulating new benefits. This is the selling point when it comes to claims against their pension plans and its correlation with age. IBM said its moves "will result in worldwide retirement-related expense savings of $450 to $500 million for 2006, and $2.5 to $3 billion for the period 2006 through 2010." TEAM FUN! is essentially attempting to save money as well by doing what the bigger companies are doing.