Home/ CPCU/ 530/ Assignment 13/ Part 2

Part 2: Workplace Safety & Benefits

Assignment 13 — Employment Law

Start Here: 5 Things You MUST Know

1

OSHA's general duty clause requires employers to keep workplaces free from recognized hazards — even without a specific standard

2

FMLA: 12 weeks unpaid leave for employers with 50+ employees — job protection, not wage replacement

3

ERISA does NOT require employers to provide benefits — it only regulates plans that already exist

4

COBRA: 18 months health coverage continuation after termination. Employee pays full premium. Employers with 20+ employees

5

FLSA overtime: 1.5x regular rate for hours over 40 per week. Exempt employees do NOT get overtime

1. Occupational Safety & Health Act (OSH Act)

Purpose

Ensure safe and healthy working conditions for all employees. Works alongside workers' compensation — OSHA prevents injuries; workers' comp compensates after injuries occur.

The General Duty Clause (Critical for Exam)

Even if there is no specific OSHA standard covering a particular hazard, employers must STILL keep the workplace free from recognized hazards that could cause death or serious harm. This is the catch-all provision.

Employer Duties

  • Comply with all OSHA safety and health standards
  • Keep workplaces free from recognized hazards
  • Maintain records of employee injuries and illnesses

Employee Duties

  • Comply with all OSHA standards, regulations, and orders
  • Follow workplace safety rules

Enforcement: OSHA conducts workplace inspections without advance notice. Penalties range from fines to criminal prosecution for willful violations causing death.

Real-World Scenario: General Duty Clause

The Setup: A garment factory stores flammable materials near work areas and has no fire exits on upper floors.

What Happens: An employee reports the conditions to OSHA and requests an inspection.

The Result: Even if there is no specific OSHA standard for this exact configuration, the general duty clause requires the employer to eliminate recognized fire hazards. OSHA can issue citations and fines. The employees cannot be punished for reporting.

2. Labor-Management Relations

Key Federal Labor Laws (Know the Evolution)

Norris-LaGuardia Act (1932)

Limited courts' power to issue injunctions in labor disputes. Outlawed yellow dog contracts (agreements where employees promise not to join unions).

Wagner Act / NLRA (1935)

Established the right to organize and bargain collectively. Created the National Labor Relations Board (NLRB).

Taft-Hartley Act (1947)

Balanced power by also restricting union practices. Listed unfair labor practices by unions (not just employers).

Landrum-Griffin Act (1959)

Regulated internal union affairs. Required financial transparency from unions.

Collective Bargaining Process

1. Authorization Cards

Workers sign cards

2. Request to Bargain

Or file NLRB petition

3. NLRB Election

Majority vote certifies

4. Negotiate Agreement

Wages, hours, conditions

Mandatory Subjects (MUST Discuss)

  • Wages, hours, conditions of employment
  • Merit wage increases
  • Pensions and seniority rights
  • Grievance procedures
  • Management function clauses

Nonmandatory Subjects (Optional)

  • Right to subcontract work (outsourcing)
  • Ballot clause requiring secret employee vote before strike

Economic Pressure Tools

Employee Weapons

  • Strikes — refuse to work (most powerful tool)
  • Boycotts — encourage public not to buy employer's products
  • Picketing — march outside business with signs

Sit-down strike (occupying workplace) = generally ILLEGAL

Employer Weapons

  • Replacement workers — hire temporary or permanent replacements during strike
  • Lockouts — shut down operations, prevent workers from working

3. Regulation of Wages & Hours (FLSA)

Fair Labor Standards Act (FLSA)

Establishes three major requirements: minimum wage, overtime compensation (1.5x regular rate for hours over 40/week), and equal pay for men and women.

Nonexempt Employee

IS covered by FLSA minimum wage and overtime rules. Typically hourly workers. MUST receive overtime pay for hours over 40/week.

Exempt Employee

NOT covered by overtime rules. Typically salaried professionals, executives, and administrators who meet specific duties tests AND salary thresholds.

Real-World Scenario: FLSA Violations

The Setup: A garment company pays employees $4.50/hour after mandatory fee deductions. Workers put in 10-12 hour days with only a half-hour lunch and two 10-minute breaks.

What Happens: Employees report to the Department of Labor.

The Result: Multiple FLSA violations. The $4.50/hour after deductions is below minimum wage ($7.25 federal). Hours over 40/week must be paid at 1.5x the regular rate. Mandatory deductions that push wages below minimum wage are illegal.

Other Federal Wage Acts

Davis-Bacon Act

Requires prevailing wages on federal construction projects

Walsh-Healey Act

Sets wage/hour standards for federal supply contracts

4. Family and Medical Leave Act (FMLA)

FMLA at a Glance

Provides up to 12 weeks of UNPAID leave per year for qualifying reasons. Key benefit is job protection, NOT wage compensation. Applies to employers with 50+ employees within 75 miles.

Qualifying Reasons for FMLA Leave

New Child

Birth, adoption, or foster care placement

Family Care

Care for spouse, child, or parent with serious health condition

Own Health

Employee's own serious health condition

Key FMLA Rules

  • Leave is UNPAID (employer can require use of accrued paid leave)
  • Employee must be restored to the same or equivalent position
  • Employer must continue group health insurance during leave

Real-World Scenario: FMLA Leave

The Setup: Sarah works for a company with 200 employees. She just had a baby.

What Happens: Sarah requests 12 weeks off to care for her newborn.

The Result: The employer MUST grant the leave. Sarah's job (or equivalent) must be waiting when she returns, and her health insurance continues. The leave is unpaid unless she has accrued PTO to use.

5. Employee Benefits: ERISA & COBRA

ERISA (Employee Retirement Income Security Act)

Critical point: ERISA does NOT require employers to provide benefits. It only regulates benefits IF the employer chooses to offer them.

Fiduciary Duty

Plan managers must act solely in participants' interest

Reporting & Disclosure

Regular reports to participants and government

Vesting Requirements

Employees gain ownership rights over time

Funding Standards

Pension plans must be adequately funded

COBRA (Consolidated Omnibus Budget Reconciliation Act)

Allows employees and dependents to continue group health insurance after losing their job. Applies to employers with 20+ employees.

18

Months standard continuation

36

Months for some events (divorce, death)

20+

Employees for COBRA to apply

102%

Max premium (full cost + 2% admin)

COBRA Key Terms

Qualified Beneficiary

Employee, spouse, or dependent child who was covered under the plan

Qualifying Event

Event causing loss of coverage: termination, death, divorce, dependent aging out

Real-World Scenario: COBRA Continuation

The Setup: Ed is fired from a plumbing company with 25 employees that provides group health insurance.

What Happens: Ed loses his job and wants to keep his health coverage.

The Result: Under COBRA, Ed can remain on the group health policy for 18 months after termination — but he must pay the full premium himself (up to 102% of cost). The company has 25 employees, meeting the 20+ threshold for COBRA.

Cheat Sheet

Print this page for quick reference

OSHA / Safety

  • General duty clause = catch-all for recognized hazards
  • Inspections without advance notice
  • OSHA prevents; workers' comp compensates

Wages & Leave

  • FLSA: minimum wage + overtime (1.5x over 40 hrs)
  • Exempt = no overtime; Nonexempt = gets overtime
  • FMLA: 12 weeks unpaid, 50+ employees

Benefits

  • ERISA: regulates, does NOT mandate benefits
  • COBRA: 18 months, 20+ employees, employee pays full
  • Yellow dog contracts = ILLEGAL
  • Sit-down strikes = ILLEGAL

Exam Trap Alerts

1. ERISA Does NOT Mandate Benefits

ERISA only regulates plans that already exist. An employer is NOT required to offer a pension or health plan. This is a favorite exam trick.

2. COBRA Duration Is 18 Months, Not 12 or 24

Standard COBRA continuation after termination = 18 months. Some qualifying events (death, divorce) extend to 36 months. Do NOT confuse with 12 months (FMLA leave length).

3. FMLA Is UNPAID Leave

FMLA provides job protection, NOT wage compensation. The employee may use accrued PTO concurrently, but FMLA itself is unpaid.

4. Salary Does NOT Automatically Mean Exempt

Being paid a salary does NOT automatically make an employee exempt from overtime. They must meet specific duties tests AND salary thresholds.

5. Sit-Down Strikes Are ILLEGAL

Regular strikes are legal. Sit-down strikes (workers occupy the workplace but refuse to work) are generally illegal because they involve trespass on employer property.

6. FMLA Threshold Is 50 Employees

Much larger than Title VII (15) or COBRA (20). The exam tests these different thresholds.

Key Numbers to Memorize

12

Weeks FMLA leave

18

Months COBRA (standard)

36

Months COBRA (extended)

40

Hours/week overtime threshold

1.5x

Overtime pay rate

Quick Reference Summary

OSH Act

General duty clause. OSHA prevents injuries; workers' comp compensates.

FLSA

Minimum wage, overtime (1.5x over 40 hrs), exempt vs. nonexempt.

FMLA

12 weeks unpaid leave. 50+ employees. Job protection + health insurance.

ERISA

Regulates but does NOT mandate benefits. Fiduciary duty, vesting, funding.

COBRA

18 months health continuation. 20+ employees. Employee pays full premium.

Labor Laws

Wagner Act = right to organize. Yellow dog contracts = ILLEGAL. Sit-down strikes = ILLEGAL.