The Legal Framework Human Resource Development Overview, Mandates, Strictures, AndFinancial

Human Resource Development Review
http://hrd.sagepub.com The Legal Framework of Human Resource Development: Overview, Mandates, Strictures, and Financial Implications
Alan Clardy Human Resource Development Review 2003; 2; 26 DOI: 10.1177/1534484303251236 The online version of this article can be found at: http://hrd.sagepub.com/cgi/content/abstract/2/1/26
Published by:
http://www.sagepublications.com
On behalf of:
Academy of Human Resource Development
Additional services and information for Human Resource Development Review can be found at: Email Alerts: http://hrd.sagepub.com/cgi/alerts Subscriptions: http://hrd.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav
Downloaded from http://hrd.sagepub.com by Asef Zaman on November 22, 2007 2003 SAGE Publications. All rights reserved. Not for commercial use or unauthorized distribution.
Integrative Literature Reviews

10.1177/1534484303251236 Human Clardy /Resource HRD LEGAL Development FRAMEWORK Review / March 2003
ARTICLE
The Legal Framework of Human Resource Development: Overview, Mandates, Strictures, and Financial Implications
ALAN CLARDY Towson University
The legal framework governing human resource development in organizations can be as important as other human resources laws, but it is seldom fully reviewed. Factors defining this framework are presented, followed by a model for identifying the domains of HRD for which laws and regulations can apply. Legal mandates for training, particularly in the areas of drugs, safety, and for certain occupational training, are examined. Rules governing apprenticeship programs are reviewed in this context, too. The features of intellectual property law, ethics, and privacy as they relate to the practice of human resource development are presented. Tax laws and regulations also impact human resource development; those rules are reviewed. Laws covering employee compensation are then examined. Finally, the regulations that govern training in employee benefits are discussed. Keywords: HRD laws; training mandates; tax laws training; training laws compensation; benefits
To both practitioners and the public alike, virtually all of the traditional functions of human resourcesfrom staffing, recruiting and selection, compensation and benefits, to labor relations, safety, and, to a lesser degree, performance management and appraisaloften seem to be defined in terms of laws and regulations. These laws and regulations serve almost as a checklist of what must be done or avoided when it comes to such fundamental practices as employment ads, hiring interviews, wage payments, benefit program eligibility, or collective bargaining. Conspicuous by its absence in this list of human resources activities is the training or human resource development (HRD) function. This seeming oversight is not because training is free of legal regulation; indeed, as these reports will show, there are a
The author wishes to thank Manuel Korn, Esq., Gregory Valenza, Esq., Dr. Judith Lombard, the editors, and an anonymous reviewer for their helpful commentary on prior drafts of these articles. Human Resource Development Review Vol. 2, No. 1 March 2003 26-53 DOI: 10.1177/1534484303251236 2003 Sage Publications
Clardy / HRD LEGAL FRAMEWORK
27
number of legal and regulatory standards with direct and indirect implications for the practice of training and development. It is more likely that this oversight of the legal aspects of training is due to the fragmented and obscure nature of the issues. For professionals operating in the HRD field, though, ignorance of HRDs laws and practices carries risk; training and development professionals as well as line managers should be knowledgeable of the legal framework surrounding HRD practice. Likewise, HRD scholars and educators need to be versed in this aspect of practice. This article will provide a comprehensive and systematic review of the legal framework governing the HRD function, beginning with a review of the building blocks of a legal framework, followed by a general model of how this legal framework applies to HRD. The next sections elaborate the details and specifications of this legal framework. First, legal training mandates are considered, followed by more specific practice requirements in the areas of intellectual property, privacy, and ethics. This section concludes by looking at the legal groundings of various financial aspects of HRD practice. This includes a review of relevant tax code stipulations, followed by an examination of compensation and benefits laws and regulations that relate to HRD practice. Part II of this series looks at HRD in light of the more mainstream human resources management issue of fair employment practices. Part II also examines the legal issues relating to negligence in HRD, beginning with workers compensation and moving into a more general review of negligence and malpractice in training. This is followed by a consideration of HRDs role in due diligence analysis deriving from mergers or acquisitions. Part II concludes with a discussion of the implications of the legal HRD framework for practitioners and for scholars. These articles will not consider, however, other areas of HRD that have a legislative or adjudicative connection, such as contracts for training products or services as might be created between an employer and a consultant, labor union, or school or university; public policies, such as the Workforce Reinvestment Act (Pantazis, 1999), that encourage HRD among private employers; and educational standards or licensing credentials that individuals (such as physicians or accountants) must obtain prior to beginning practice or employment. These topics are better covered either in other disciplines (such as contract law) or because the implications for the HRD practice are more of an incentive than constraint or directive nature (Workforce Reinvestment) or because the legal requirements apply to individuals prior to employment. The principal focus will be on how various laws, regulations, and judgments direct and channel organizations in training their employees. Efforts to review the legal aspects of HRD can be traced to the late 1970s. The early work at that time tended to focus on unfair employment and discrimination matters (Bartlett, 1978; Holt, 1977; Russell, 1984). More comprehensive treatments, though, date from the early 1990s on. Typically, these reviews apply legal principles (such as discrimination or negligence)
28
Human Resource Development Review / March 2003
to specific HRD applications, such as safety training, adventure programs, or violence prevention (Eyres, 1996; Eyres & Moreland, 1994; Mansfield, 1987; Sample, 1997). Often, these reviews include prescriptive guidelines for practitioners (Eyres, 1990). These same kinds of discussions also occurred in chapters on training that were part of a larger compendium of laws and regulations covering all aspects of human resources management (Kahn, Brown, & Lanzarone, 1996). Occasionally, reviews in nonmainstream sources looked at specific issues, such as negligence (Mathiason & Pierce, 1996) or religious discrimination (Pile, 1993). HRD textbooks have either not addressed legal matters (Gilley, Eggland, & Gilley, 2002; Goldstein & Ford, 2002) or have provided only cursory coverage (Noe, 1999). Two conclusions can be drawn about this literature. First, although there are certain core issues (such as discrimination and safety) that are usually addressed, coverage of the complete domain of the legal framework affecting HRD has in general been uneven. Some topics are rarely covered, some not at all. Second, in spite of the risks that faulty compliance poses, there has been remarkably little coverage. A key weakness in this field is a lack of a systematic framework for identifying the complete range of legal issues affecting HRD that can guide both scholars and practitioners alike.
Defining the Legal Framework

The legal framework governing HRD can be defined in terms of the types of legal strictures involved, their impact, jurisdiction, and coverage. First, there are five potential types or levels of laws that may apply, beginning with Constitutional protections, found at both national and state levels that guarantee certain rights and procedures to all citizens. Second, the president of the United States may issue executive orders that can create standards for practice for certain kinds of employers, for example. A third class includes the various laws or statutes enacted by elected legislative bodies, either at the federal, state and/or municipal levels (where statutes are typically called ordinances). Fourth, one possible outcome of a public law is the creation of an administrative agency. These agencies may produce regulations that can carry the force of law. Finally, there is the common law that emerges from the cumulative history of judicial decisions.1 Compared to the enacted laws and statutes of legislative bodies and the regulatory standards issued by appointed agencies, case law evolves over time through the interpretations and rulings of the judicial process in specific cases. These various sources of laws and regulations interact, as seen in the example of the legal history of sexual harassment. The foundation for sexual harassment was established by statute in 1964 with the Civil Rights Act, which outlawed employment discrimination based on sex. More than a decade later, the Equal Employment Opportunity Commission (EEOC) produced regulations under which sexual harassment was defined as a form of sexual discrimination. With this
29
basis, a series of court cases dealing with sexual harassment soon emerged, resulting in a clarification and specification on the law on sexual harassment. It is this dynamic tension between these various sources that adds to the complexity in understanding the law over time. The second defining factor for the legal environment is called impact, or how clearly and specifically the various legal laws, regulations, and rulings affect HRD. For example, some laws and regulations directly require employee training or mandate minimum levels of training. Other laws and regulations, such as those dealing with fair employment, have a more indirect effect on HRD. Finally, as in the case of negligence, the impact is potential and derivative, only possibly coming into play after training events have occurred under certain conditions. The third major factor useful in defining the legal framework for HRD is jurisdiction (Bland & Walsh, 2000). Each governmental authority in the United States is capable of making rules for its domain. Trial court districts may subdivide state and local governments, whereas circuit or appeal court systems can span them. The result is a patchwork of jurisdiction in which, for example, laws or judicial rulings made in one state (say, California) may not apply to others (such as New York). The fourth major factor is called coverage. Some laws only apply to organizations of a certain size or that are involved in certain kinds of operations. The various civil rights laws generally apply to employers with 15 or more employees; the Fair Labor Standards Act applies to businesses involved in interstate commerce. Furthermore, some laws and regulations apply differently to public and private employers. This is especially true in the case of federal employees, where there is a rather extensive set of legally mandated statutes and procedures for HRD.2 Coverage is also a factor that exists independently of whether an organization has a full-time, formally designated trainer or HRD department. That is, coverage applies to an HRD function regardless of whether a specific training department, office, or trainer position exists. For legal purposes, the HRD function is often defined in educational terms. Some situations, for example, laws or regulations, require that some kinds of knowledge and skills be formally and systematically communicated to employees in what can only be described as a training venue. For this review, HRD will be treated here as a process for providing knowledge to and building skills among employees through learning experiences that are typically formally planned, organized, and delivered. In short, the legal framework for HRD is far from a universal, all-inclusive monolith. Rather, any particular organization may or may not be subject to specific laws, regulations, or judicial rulings, depending on their location, size, or nature of operations. In some matters, laws may directly mandate what kinds of training are to be provided and/or how. Otherwise, legal implications may not be so obvious or direct. When legal matters do arise, they apply regardless of whether the organization has a full-time trainer or not. In practice, then, the specific and complete legal framework for any organiza-
30
tion will be relatively unique, depending on where it is located, the kind of business it is in, and the size and scope of its operations.
Modeling the Legal Framework for HRD

Because the literature describing the legal issues surrounding HRD in the workplace is somewhat unsystematic, and because the governmental framework is fragmented, both HRD practitioners and scholars alike are disadvantaged in understanding and informing their practices. These handicaps are reinforced by several other conditions. For example, developments in the common law are driven by case decisions that are embedded in court reports, a literature typically not monitored by HRD professionals. News reports in the popular and technical press tend to highlight unusual or extreme situations but without providing sufficient perspective for explaining what that situation means for practice. More scholarly oriented reviews often either lack a comprehensive framework for isolating all the possible areas of concern or tend to be written from a purely legalistic point of view. Greater coherence to the legal HRD framework will assist scholars in enriching the knowledge base of the discipline, will aide educators in better preparing students, and will help practitioners in avoiding unnecessary risk to their organizations. To move toward these objectives, what is needed is a model that systematically spotlights the legal issues affecting HRD, that identifies the relevant legal standards for practice, and that specifies attendant risks and liabilities. Table 1 summarizes the major components that make up the legal framework for HRD. Figure 1 translates these components into the underlying model of the legal framework for HRD. Although not necessarily final and complete, this model suggests the comprehensive sets of issues with which scholars, educators, and practitioners should be aware. By statute, regulation, and/or ruling, enforceable obligations may be placed on the HRD function; failure to comply with those obligations can create risk of legal action against the organization. As shown in Figure 1, HRDs legal obligations and attendant risks may be grouped into the following three main sets: the treatment of participants, the various elements of the training production function, and the administration of the HRD function. The model of the HRD framework presented here serves as an orientation and organizing device for both scholars and practitioners. Scholars should be better able to locate the legal issues that need to be considered when theorizing about HRD, whereas practitioners should be advantaged in identifying what kinds of legal matters they should attend to in managing and providing HRD services. In this model, the HRD function is treated as an open system that interacts with an organizations larger management systems, both human resources and otherwise. The primary input is people (primarily as trainees but also as job applicants, customers, suppliers, and so on) who flow through training
TABLE 1:
The Components of the Legal Framework of HRD Risk Practice Guidelines
Legal Component
I. Mandatory training: Federal, state Occupational, industry II. Minimum Operating conditions: phones, privacy III. Minimum organization and structure: Apprenticeship training Vocational schools IV. Training for legal credit: sexual harassment, ethics V. Budgeting and funding: In-house HRD Educational assistance VI. Training materials: A. Instructional and learning materials and supports B. Ownership 31
Failure to provide required training invites punishments in fines, penalties, losses, and so forth. Overhearing private communications. Comments made during training used against employer. Apprenticeship program not certified. Trainees are really employees and must be paid accordingly.
Know of all required training and make sure it is provided as required. Provide adequate notifications about privacy. Structure programs to meet minimum requirements.
Absence of meaningful training eliminates potential defense.
Provide meaningful training in sexual harassment and ethics.
Expenditures on training are disallowed and carry tax Rules and procedures should comply implications for organization or employees. with tax code. Violating intellectual property rights. Not securing appropriate ownership of produced materials. Obtain permissions to use copyrighted materials. Make sure development contracts are properly worded.
(continued)
32
TABLE 1 (continued) Legal Component Risk Practice Guidelines
VII. Fair employment A. Trainee flow in admissions, processing, and completion B. Curricular compliance with other laws (Dennys) C. Accommodating trainees D. Nontraditional curriculum
A. Illegal discriminatory treatment of participants B. Teaching violations of other laws C. Discriminatory treatment of individuals with disabilities D. Religious discrimination
Monitor trainee flow for adverse impact. Admission, continuance, and graduation standards should be job related. Validate training content and procedures (testing). Provide reasonable accommodation. Offer alternatives to potentially discriminatory training without prejudice. Pay nonexempts for required training time. Construct training cost recovery agreements carefully. Follow safe-harbor rules. Provide training to address risks in work or in terms of duty owed. Follow accepted procedures in design and development. Examine culture integration and HRD issues in proposed mergers.
VIII. Compensation A. Proper payment B. Recovery IX. Benefits X. Negligence A. Workers compensation B. Negligent training C. Malpractice D. Due diligence
Violating minimum wage and overtime rules. Restraint of trade. Providing improper pension investment advice. No or poorly conducted training is cause of injury to employees or others. Training does not meet accepted standards in development or delivery. HRD issues in merger or acquisition not addressed.
33
Administration of the HRD Function
Compliance with Mandatory Training (1, 4)
Minimum organizational & operating conditions (2, 3)
Budgeting & Funding (5)
Recordkeeping * Trainee flow analysis (7) Validation HRD assessments (10)
Treatment of Participants: Fair employment (7) Applicants, Trainees, Employees (7) HRD Program: Design and Delivery (2, 7, 9, 10) Compensation (5, 8) Working conditions (7, 10)
Job performance (7, 10)
Training Production Functions
Trainer (7,10)
Materials (6,10) Curriculum (6, 7, 10) Training Process (7, 10)
FIGURE 1: Modeling the Legal Framework of HRD NOTE: Although record keeping is not immediately required per se, clearly good records of HRD programs, policies, and practices are an implicit and derived element of compliance with the HRD legal framework. Likely attendant risks are identified in parentheses. 1 = failure to provide mandatory training. 2 = lack of minimum operating conditions. 3 = inadequate minimum organization and structure. 4 = not providing meaningful defensive training. 5 = faulty budgeting and funding procedures. 6 = violating intellectual property rights. 7 = illegal discrimination. 8 = improper payment. 9 = providing improper benefits training. 10 = negligence.
programs and planned developmental experiences in varying degrees, making the treatment of people a key element in the legal framework of HRD. For example, the processing of employees into, through, and from these programs and experiences creates the potential for unfair employment actions. Discriminatory effects in admissions to and graduation from HRD programs raise red flags, particularly if those actions are directly related to other personnel decisions, such as hiring, firing, or promotion. While in a training mode, all trainees should be given the same level and quality of training. In general, although there are some specified exceptions, employees qua trainees must be paid the same as if they are on the job. The training that is required by law, regulation, or ruling more often than not is intended to impact the working conditions of employees; mandated training is less often directed at job performance. Either way, both discrimination and negligence are potential risks. A second key element in HRDs legal framework focuses on the training production function, which includes such factors as the trainer(s), materials, the content or curriculum of what is taught, and the instructional and learning processes used. The most likely liabilities in these
34
areas arise from violations of intellectual property rights, fair employment standards, and negligence. The third element centers on the administration of the HRD function. In a relatively limited number of situations (illegal drug abuse and safety), many organizations are required by law or regulation to provide some training to their employees. That is, in these applicable areas, the legal framework establishes what kind of training should be provided. The actual nature and type of required training depends in part on the political or judicial jurisdiction in which the employer operates; it also depends in part on the type of industry in which the organization operates. Failure to provide any mandated training can create risk and liability to the employer in the following two ways: first, by violating legal or regulatory requirements, and second, by failing to provide training, there could be problems with negligence. More generally, laws and regulations define minimum training conditions (almost akin to a minimum wage) about how training should be provided. This can be seen most comprehensively in apprenticeship training, in which the minimums of what constitutes an acceptable apprenticeship program are detailed. Also involved here are privacy protections. Given the requirements for training whats and hows as well as the potential for unfair treatment, having effective administrative oversight to the HRD function becomes important. Administrative capability is necessary to plan and structure training and development activities in terms of compliance with training mandates. The administrative function should make sure trainers are appropriately qualified and tests meet minimum psychometric standards of validity and reliability. In addition, the administrative function should critically evaluate training plans and designs so as to avoid discriminatory or negligent practices. This means examining such things as whether there are any selection biases in admitting employees into training, or in the graduation rates of employees from training, as well as looking at what potential physical or psychological risks might arise in a training program and how well those risks are being managed. The administrative function should also be able to accurately advise on funding and budgeting options. Finally, the administrative function should monitor various training indicators, such as trainee flow, for adverse impact and maintain needed records and documents. In effect, training administration should operate as an auditing function (Clardy, 1997). The particulars of this model will be examined more fully in the remainder of these articles.
Training Mandated Directly by Statute or Regulation

For private employers, federal law or regulation may require employers to provide some training to its employees. The most direct obligation for specific training is created through the Drug-Free Workplace Act, and
35
relatedly, by Department of Transportation regulations for substance abuse. A more extensive framework for specialized training rests on various Occupational Safety and Health Administration (OSHA) standards for safety training. More generalized occupational training requirements for employees also exist, for example, for airline crew members. Laws governing apprenticeship training programs apply here, too. Each state may also create specific training obligations for employers in their jurisdiction. This additional level of direct influence on the employee development function can be illustrated in the area of sexual harassment. In short, employee training may be mandated in specific skills for employees in selected industries and/or occupations. The Drug-Free Workplace Act (enacted in 1988) covers primary contractors who do $25,000 or more in business with the federal government. Such contractors must certify that they maintain a drug-free workplace by, in part, providing education to their employees that warns about the dangers of drug abuse as well as indicates the availability of counseling and rehabilitation services (Kahn et al., 1996; Ledvinka & Scarpello, 1992). In this same domain are the Department of Transportation antidrug program regulations. These regulations apply to any employer who provides mass transportation services (as defined by the statute). In addition to other enforcement stipulations, the Federal Motor Carrier Safety Regulation (Prevention of Prohibited Drug Use, 1998) also requires that employees in safety-sensitive functions (such as vehicle operators, dispatchers, certain maintenance personnel, and security personnel who carry firearms) must receive at least 1 hour of training on substance-abuse effects and consequences. In addition, supervisors must receive up to 2 hours of training in spotting substance abuse and in working with troubled employees. Records of the training must be kept. The general duty clause of the Occupational Safety and Health Act of 1970 obligates employers to provide a safe and healthy workplace. Even though the statute itself does not establish specific training requirements, it does require employers to comply with standards and regulations developed to implement the provisions of this act. And according to OSHA (1992), more than 100 safety standards have been established that have training requirements. Some of these standards, covering topics such as fire and disaster plans, personal protective gear (such as for hearing protection), first aid, and hazardous waste, apply to most any employer. Perhaps the best known safety training requirement occurs through the Hazardous Chemicals Communications (HazCom) standards. Under HazCom, employers are obligated to inform employees about any hazardous chemicals in the workplace and to train and prepare them in how to protect themselves. Furthermore, the trainers who conduct the training should be qualified to do the training based on adequate preparation and/or possessing appropriate cre-
36
dentials. In addition to training requirements that apply to industry in general, there are also more specific standards that apply to maritime, construction, and agricultural segments of the economy. Safety training may be mandated not only by federal law and regulation but also at the state level. California requires employers to establish and provide an injury prevention program (Workplace Safety, 1999). This applies most fully to employers with 20 or more employees in high hazard industries. As part of this requirement, employers should include an occupational health and safety training program. Employers should provide the training to all employees when the program is established, then to new employees hired or promoted into applicable positions, as well as whenever there are significant new materials or equipment introduced into the work. State-level laws and regulations mandating training can also be seen in the area of sexual harassment. Even though training in sexual harassment is not required either by federal law or regulation, several states have enacted laws that do require some form of sexual harassment training. For example, state agencies in Illinois are required to carry out training programs on sexual harassment; this includes providing training on the agencys sexual harassment policy as part of new employee training (Employment, 1999). Similar laws can be found that apply to private employers. Maine is a leading example (Sexual Harassment, 2001). That states code requires that employees be notified in writing annually with specific information about sexual harassment, including its illegality, definitions and examples of such harassment, the internal complaint procedures available to the employee, and instructions on the complaint procedures available through public agencies and channels, as well as what kind of protections there are against retaliation. In addition, the law requires that employers with 15 or more employees conduct an educational and training program for all new employees within one year of commencement of employment (Sexual Harassment, 2001, Title 26, chap. 7, subchap. IV-B). This training is to include much of the same information provided in the annual dissemination. Furthermore, management and supervisory personnel must also be given training in their specific obligations in preventing sexual harassment within 1 year of appointment. Legally enforceable obligations for employer-provided training may arise not by statute or regulation but also from settlements of lawsuits. For example, in 2001, the EEOC settled a lawsuit with the Georgia-Pacific company over racial harassment (EEOC Settles Racial Harassment, 2001). At its Butner, North Carolina, facility, four African American employees were subjected to repeated and pervasive racial slurs, comments, and graffiti by the White manager of the fabrication shop in which they worked. One employee was then fired for complaining. Part of the $200,000 settlement
37
required the company to train its Butner-based managers and employees in antidiscrimination laws. Occupational or Industry-Specific Training Requirements Federal statutes may also require training for personnel in certain occupations. A prototypical example is found in federal laws governing transportation. To illustrate, the authorizing legislation (Transportation Aviation Programs Air Commerce, 2002) requires the Federal Aviation Administration (FAA) to establish employment standards for various air carrier personnel. Part of these standards include both minimum training and retraining requirements. FAA regulations (Air Carriers Operating Requirements, 2000) detail training requirements for flight instructors, pilots, flight engineers, and flight attendants, among others. For example, under these regulations, initial training for flight attendants must cover such topics as how to handle passengers, a review of the aircraft, using the public address system, and proper use of the electrical galley equipment. There must be an assessment of the trainees ability to perform assigned duties. Depending on the type of aircraft, the training must be a minimum of 8 or 16 hours. Furthermore, based on research in the area of pilot crew interactions during in-flight emergencies, there are regulations that also require crew resource management (CRM) training. CRM training teaches members of the flight and attendant crew to work together effectively in sharing information and making decisions (Driskell & Adams, 1992). In effect, in this case, regulations mandate the training of teams over and above the skills training required to do their individual jobs. Underground mine operators are required to produce plans for training new miners and refresher training for existing miners. Details about what the plan should include (such as who will provide the training, teaching methods, and course materials) are provided, and the plan must be approved (Training and retraining of underground miners, 1978).3 Other examples of HRD mandates by state or local statutes include occupational training requirements for police, firefighters, and school personnel. For example, the state of New Jersey requires that persons may be hired for 1 year on a probationary basis as police officers, but they must complete approved police training before becoming a permanent employee (Police Training Commission, 1998). Similar requirements exist for individuals in special law enforcement positions, such as correctional officers or human services police officers. Maryland requires that public officials (as defined in the statute) complete a 2-hour training course on the states Public Ethics Law. In addition, regulated lobbyists are required to attend a similar training program at least once every 2 years (Public Ethics, 2001).
38
Apprenticeship Training Apprenticeship is a time-honored means for imparting the skills of a craft to a young understudy. Historically, the young apprentice worked as an indentured servant under the total supervision of the craftsman and his family, and even though the contract for indentured servitude did define the terms and conditions of working and learning as an apprentice, it was also a relationship easily fraught with the potential for abuse and mistreatment (Bridenbaugh, 1961; Jacoby, 1991; Steinfeld, 1991). This traditional form of occupational training was already in decline by the time of the Civil War. In part, decline was triggered by the repudiation of indentured servitude. In part, decline was hastened by industrialization. For industrial managers operating in the wildly fluctuating economy after the Civil War, apprenticeship contracts limited employer staffing flexibility during economic downtimes. Indeed, by the late 1800s, employers stopped using apprenticeship programs in favor of the then-emergent trade schools (either independent institutions or their own internal training programs) as a way to maintain flexibility and still meet their needs for skilled employees. For employers, an added benefit was that trade schools transferred training costs to the student-employee. Trade schools were not without their abuses, though. Too often, being in an employer-based trade school meant paying for poor instruction as students were not so much taught a trade as used as cheap labor (Jacoby, 1991). Given the ongoing need for workers trained in various trades, apprenticeship programs continued, and first came under legislative coverage in 1911 in Wisconsin (Employment and Training Administration, 1987). In 1937, apprenticeship programs were brought under federal law through the Fitzgerald Act (National Apprenticeship Act). The act created the Bureau of Apprenticeship and Training (BAT) for administering its provisions. The law governs several aspects of apprenticeship training, which is defined as a combination of a minimum of 2,000 hours of supervised, structured on-thejob work and training with a minimum of 144 hours formalized, theoretical instruction. The learner must be paid a progressively increasing wage while working as an apprentice. Apprenticeships cannot begin before age 16 and must be open to all on a nondiscriminatory basis. On completion of the program, the learner is awarded a certificate of completion. The law also establishes a state-based governing structure. In addition, sponsoring employers are to register their program with either the state agency or the BAT to ensure its compliance with the standards set for apprenticeship programs. For example, if a program is registered, nonwork time spent in formal instruction does not have to be counted as compensable work time, and the apprentice does not have to be paid for that time. (See the discussion on compensation and training for elaboration.)
39
Copyright and Intellectual Property

The copyright law of the United States (Copyright Act, 1976) gives protections and controls to authors over the use of their original works by others. In short, copyrighted works cannot be reproduced or distributed without the authors permission. Original works of authorship not only include written materials but also musical, artistic, or other intellectual works. If someone, such as a trainer, infringes on a copyright (by the unauthorized reproduction of materials, for example), that person may be liable (as well as create a liability for their organization) for not only actual damages and profits but also for attorney fees and other statutory damages, depending on the nature of the copyright protection claimed. Copyright and intellectual property rights can apply to HRD practitioners in several ways. First, a trainer might desire to use the copyrighted materials produced by others, such as copies of articles, chapters, worksheets, tests, and the like. In general, copyright law requires that written permission be obtained from the author prior to using the material. The limited exception to this rule is the so-called fair-use doctrine. Here, copyright strictures may be exempted when small amounts of a copyrighted work are used for teaching purposes, particularly by nonprofit educational institutions. Four criteria, considered in their totality, determine whether the fair-use exemption applies: the purpose of the use (whether it is used in a nonprofit educational or a commercial context); the nature of the work used (facts or imaginative creations); how much of the total work was reproduced (a little or a lot); and the effect of the reproduction on the potential market value of the work (Copyright Act, 1976). In the first three criteria, a small amount of factual material copied from an original work used in a noncommercial venue would suggest fair use. The fourth criterion is decisive: if there is an active market for the materials (be they chapters from texts, journal articles, tests, packaged exercises, and so on), the fair-use exception is weakened (Fair Use of Copyrighted Materials, 1998). The fair-use exception to the reproduction and use of materials would generally not be available to trainers working in a private, commercial setting. Copyright rules apply not only to the more traditional textual materials but also to such other kinds of copyrighted materials as cartoons, comic strips (Raugust, 1998), and musical recordings. Like other materials, cartoons, comics, and musical recordings are copyrighted, and permission should be secured for their use. With the advent of so-called accelerated learning techniques (Rose & Nicholl, 1997), trainers may play musical recordings as part of a training program to induce brain wave states presumably more receptive to learning and retention. Copyright protections covering the playing of music prohibit the unauthorized use of a recorded musical
40
work if the work is used as part of a program intended to produce financial gain. A second major effect of copyright laws on HRD practice occurs when an employer commissions the production of materials, such as training manuals or instructional software, that could be copyrighted. The operative legal principle is the so-called works for hire, and at issue here is the ownership of the resulting product. If either of the two following conditions applies, ownership of the product belongs to the employer. First, an employee may create a document within the scope of his or her regular employment duties. An employee, working as a trainer, may create and produce training manuals or other materials for that employer as part of his or her normal job duties. Second, employer ownership of training materials may also occur when a person, working in the capacity of an independent contractor, creates specially commissioned works. For this second rule to apply, the work produced must fit one of several categories (such as instructional texts, tests, or answer sheets), and there must be a written agreement between the parties indicating the work is a work for hire. Third, there is the question of how to acquire copyright protection for a work as when an HRD professional creates new materials. According to the law, to be eligible for copyright, the work must be produced in some tangible form of expression, such as text, pictures, drawings, sound recordings, and the like. Both commercially published and unpublished works may be copyrighted. Copyright protection is established automatically when the work is created (that is, fixed in some format). Unpublished works do not have to be filed or deposited at the Copyright Office, although there are obvious reasons to do so. However, works published in the United States that are offered for sale, lending, or lease must be deposited within 3 months of publication, however. An emerging copyright issue concerns the extent to which copyright protections extend into digital and distance learning in the context of the fair-use exception. Under the fair-use doctrine, if a work qualifies for the exception, the copyright law allows the work to be displayed and used for educational purposes in the classroom setting. But does that allowance for full display apply when the classroom is really a network of personal computers conceivably located anywhere on the planet? If the work is not eligible under the fair-use doctrine, it would have to be considered an unallowable reproduction. For trainers in private settings working in a for-profit kind of organization, this debate is moot because the fair-use exemption would probably not be available anyway. A recent conference on fair use was unable to resolve this issue (Fair Use of Copyrighted Materials, 1998). Trainers who may have fair-use materials should be cautious about using such materials in electronic venues and should be attentive to emerging resolutions on the matter.
41
Eavesdropping and Privacy

Organizations may provide training to employees in how to use phone systems when dealing with customers and others. In these programs, trainees might use phones either in controlled classroom or live, on-the-job training conditions while trainers would observe their performances for development and assessment purposes by listening to conversations. Under the Electronic Communications Privacy Act (2001), such monitoring may be against the law, especially if the employee believes those communications are private (that is, not being observed by the employer). To avoid this liability, employers should make sure trainees in such situations are notified in advance that their communications may be monitored. Such notice would act to reduce the trainees presumption of privacy in phone communications. The implications of this law can be seen in a 1987 case with the Milwaukee Police Department. A short time before, the department installed a new phone system that included the capability for supervisors to listen to phone conversations using a so-called silent monitor feature. Employees were notified that this feature could be used for the purposes of supervision, evaluation, and training. Sometime thereafter, a dispatcher sued, charging a violation of her privacy. The court rejected her claim because of the notification that had been previously provided (Griffin v. City of Milwaukee, et al., 1996). Recently implemented regulations to the 1996 Health Insurance Portability and Accountability Act (HIPAA) extended certain privacy training requirements to various health plans and health care providers. The intention is to provide protections for the privacy of patient medical information. Under the regulations, covered entities must adopt written procedures for safeguarding the privacy of patient information, including details about who will have access to the information and when information may be disclosed. Covered entities are required to train their employees in these policies and procedures (Protecting the Privacy, 2001). Otherwise, there are few other laws specifically providing privacy protections for employees in private employment settings (Hubbartt, 1998). Nonetheless, privacy issues can emerge from training. Lucky Stores was a chain of grocery stores located in California. In 1992, a class action suit was brought on behalf of women employees alleging discrimination in various aspects of job assignments (placement, promotion, allocation of work hours, and movement to full-time positions). Each store operated relatively autonomously in terms of its employment practices and without significant oversight from a centralized personnel department in regards to hiring, promotions, or training. In 1988, Lucky Stores conducted two training programs for managers that covered issues in affirmative action and sexual harassment. In the training sessions, participants were encouraged to mention stereotypes they had heard about women and minorities; notes of these
42
comments were made. Although other evidence about staffing patterns and practices were also included at trial, the stereotypical comments made by the managers during the training were used as evidence indicating biased attitudes of management toward women. Lucky Stores was found guilty of sex discrimination (Stender et al. v. Lucky Stores, Inc., 1992). In short, comments elicited as part of a training program intended to support public policies of nondiscrimination were turned against the very company for whom the training was provided. Self-critical remarks were made in a setting presumed secure from outside observation or accountability. In this context, Conways (1995) discussion of the methods by which a corporation can protect self-critical information from discovery and use by opposing counsel is relevant. Corporations have an incentive to proactively audit their programs and practices for legal compliance (as suggested in the Stender case), yet one result of such compliance audits may be damning information about organizational practices or conditions. Were this information to become known by adversaries, the corporation could effectively hang itself. Efforts to comply with environmental protections requirements are frequently used to illustrate this dilemma, but, as also suggested by the Stender case, the extension of these concerns to HRD programs intended to identify and correct other compliance requirements might not be that much of a stretch. HRD programs that address legally sanctioned employment standards (such as safety, equal employment [Webb et al. v. Westinghouse Electric Corp., 1978], or harassment) may use various procedures, such as self-report assessments or open discussions, to identify potential compliance problems and needs. Three methods for protecting such information from discovery are the attorney-client privilege, the work product doctrine, and the privilege of critical self-evaluation. According to Conway, none of these are very suitable options for compliance audits. In the first two options, an attorney must be intimately involved in the proceedings that are clearly within the scope of providing legal advice; for the latter option, courts have been reluctant to grant the privilege. In short, this is an area of HRD practice in which stakes could be high with little protective recourse. Absent some kind of legal protection for information gathered in training contexts made under supposed conditions of privacy or confidentiality, both trainers and trainees should be on notice as to the potential for their remarks to resurface in other settings.
Ethics Training
In 1984, the U.S. Congress passed the Crime Control Act, part of which led to the formation of the U.S. Sentencing Commission (USSC) as an independent agency within the judicial branch of the government. One charge of the USSC is to recommend sentencing procedures that automatically take
43
effect 180 days after submission unless a law is enacted to the contrary (An Overview of the United States Sentencing Commission, n.d.). The guidelines are intended to provide federal judges across the nation with a consistent framework for meting out punishment. Like individuals, organizations can also be convicted of criminal conduct. Under the sentencing guidelines applying to organizations found guilty of illegal conduct, judges may consider certain mitigating factors in reaching their decision about punishment. One important factor is the extent to which the organization has in place an effective compliance program. The program cannot just be on paper but must be ongoing and should include compliance standards, systems for monitoring and reporting potential wrongdoing, and oversight by high-level personnel. In addition, an effective compliance program should involve communication to employees on compliance standards and procedures. For Chadwick (2001), this meant ethics training. USSC Chair Judge Diana Murphy (n.d.) argued that, even though the sentencing guidelines do not mention ethics training specifically, it is likely that effective compliance training must include an ethics component. Similar to sexual harassment training, then, whereas ethics training is not mandated by statute, courts may be favorably impressed by organizations with such training in the event of charges of corporate wrongdoing.
The Tax Code and Training

Employee training and education activities incur costs. These costs may be borne by the employer and/or its employees. One way employers may promote employee learning and development is by assuming some or all of those costs, and although employers may have good reasons on their own to pay for training and education, the tax code also offers breaks or incentives for employers to assume training costs. Beyond the issue of direct financial support for employee training, employers may wish to encourage the educational self-development and improvement of their employees by taking advantage of various statutorily authorized provisions of the Internal Revenue Code (IRC). A foundation principle for employer-provided training is found in Section 132 of the tax code (Certain Fringe Benefits, 2001), in which certain employer costs for training can be considered legitimate business expenses. Expenses such as the costs of training staff salaries and benefits, fees for purchased training programs, consulting support, and so on would all apply. The employer takes these training expenses as a deduction, thereby reducing tax liability. At the same time, the employer does not make any payment to the employees who participate in the training; as such, employees are not credited with any additional compensation and avoid any personal tax implications.
44
For other kinds of training and development expenses, though, participating employees may receive some form of payment that could have personal tax implications. These education payment plans are of two kinds: educational reimbursement programs and educational assistance plans (Employee Assistance Programs, 1999). Under the more common Educational Reimbursement Program (ERP), the employer has maximum discretion in structuring what training is paid for and how the training is funded. Consider the case in which an employer sends an employee in a sales position to attend a public training seminar on sales techniques; the employee pays for the cost of the program plus attendant expenses (travel, meals, lodging) up front but then is reimbursed for those incurred expenses by the employer. If the educational expenses are considered ordinary and necessary, the employer may again deduct the training expenses. Normally, though, the basic IRC rule is that payments to an employee should be considered part of the employees gross income, and the employer should withhold all applicable taxes. As part of an educational reimbursement plan, though, payments to an employee would not be considered part of the employees gross income due to two possible exceptions. First, as a so-called working condition fringe benefit exception, employer payments can be excluded from employee gross income if the employee privately could have deducted the expense, and the educational expenses were job-related. Second, the socalled accountable plan exception is based on the working condition criteria but adds an internal operational procedure. For expenses to qualify as a working condition benefit, the employee must provide an itemized accounting of the educational expenses to the employer, the reimbursement paid to the employee is no more than the itemized cost, and the payment is made independently of normal payroll. The second type of payment plan to employees for training and educational purposes is the Educational Assistance Program (EAP). Under Section 127 (2001), an employer can pay an employee up to $5,250 per year for certain educational expenses. The amount of the assistance provided (within the $5,250 per employee limit) can be deducted by the employer as an employee benefit business expense without adding the payment to the employees gross income for the year. Furthermore, unlike the ERP, the training or educational courses do not have to be job-related nor do they have to be part of a degree program to qualify. The education may be provided by an independent educational institution (such as a college or university), by other educational providers (such as an industry association), or by the employer directly. During the 1990s, the EAP provisions of the tax-code frequently lapsed and were then reinstated. The Economic Growth and Tax Relief Reconciliation Act of 2001 removed that see-saw movement and installed these rules permanently (for the following 10 years).
45
For an educational assistance plan to qualify for tax-free treatment under Section 127, the employer must establish a formal program that meets the following conditions: (a) the plan must exist as a separate, written document designed exclusively for employees of the organization; (b) the benefits provided by the plan do not favor highly compensated employees (as defined in the IRC); (c) the program does not provide more than 5% of the total benefits to owners (including shareholders) who own more than a 5% stake in the business; (d) employees cannot elect to receive cash or other benefits instead of the assistance; and (e) employees are given reasonable notice of the program. The educational assistance plan does not have to be separately funded. The plan may set up a variable pay schedule for reimbursement based on the grade received. Employers do not have to apply to the Internal Revenue Service to receive a determination that their plans are qualified. The employer must meet certain record-keeping and reporting requirements under the Employee Retirement Income Security Act (ERISA) (2002). In summary, the costs of training are covered by IRC provisions. For employers, the costs of providing training directly to employee can be deducted as a legitimate business expense with tax implications for employees. When employees are paid for training, though, these monies can again be deducted as an expense by the employer and excluded from employee taxable gross income under two conditions. An educational reimbursement plan simply covers employee outlays for ordinary and necessary training in essential job-related skills. The educational assistance plan allows employees to receive up to $5,250 in educational support payments for a broad range of courses under a specific educational benefit program.
Compensating Trainees and Recovering the Costs of Training

Employees participating in training programs are covered by laws governing compensation. The principle federal statute applying here is the Fair Labor Standards Act (FLSA) and its various amendments. In general, the FLSA requires that nonexempt employees be paid at least the minimum wage (as defined by law) for their hours on the job (compensable time); any hours worked in excess of 40 during the workweek must be paid at the overtime rate of time and one-half. There are several exceptions to the overtime rule. For example, police and firefighters who attend certain types of required training outside normal working hours do not have to be paid overtime rates for that time (Fair Labor Standards Act, 2001, Sections 785.27 et seq.). A second exception applies to employees without a high school diploma or who have no more than an 8th grade education: An employer may employ any employee for a period or periods of not more than 10 hours in the aggregate in any workweek in excess of the maximum work-
46
week . . . without paying . . . for overtime if that time is devoted to remedial education but not job-specific training (Fair Labor Standards Act, 2001, section 7.q). Learning to comply with the provisions of this law may carry its own training obligations, as Food Lion, the North Carolina-based grocery chain, learned in the late 1980s when it was charged with repeated and willful practices of violating overtime payment standards when it required its store employees to work off the clock (that is, clock out but still continue working). The consent judgment reached with the Department of Labor (Food Lion Settlement, 1993) involved not only back pay and fines in excess of $16 million but also included an agreement to train both its management personnel and employees in the law regarding minimum wages and overtime. Food Lion also agreed that its top management officials will publicly support and actively participate in this training initiative (Food Lion Settlement, 1993, p. 5 attachment). There are several other training implications from this law. First, if an employer requires a nonexempt employee to be on duty, that is, under the employers requirement to be available to work, that employee must be paid for that time. This basic rule applies regardless of the nature of the employees activity (e.g., the employee could be hired to do nothing). Furthermore, the rule also applies even if the employer did not specifically instruct the employee to do work (such as taking work home) but was aware that the work was being done (suffering and permitting work). Thus, if an employer requires its nonexempt employees to participate in a training program that stretches beyond normal working hours, those employees must be paid for additional time. Failure to pay employees properly can result in back pay (which can be doubled for willful violations). The recent decision affecting Boeing Company (Seattle Professional Engineering Employees Association et al. v. The Boeing Company, 2000) illustrates this point. For a number of years prior to this suit, Boeing required its newly hired employees to attend a so-called pre-employment orientation program during which time participants completed various employment forms and procedures, watched videos, and listened to presentations. Participants were also told they would not be paid for this time. The Seattle Professional Engineering Employees Association charged that this practice violated Washington states minimum wage law, a claim supported at trial and affirmed on appeal: for those employees required to attend, the orientation period constituted work, and the nonexempt employees had to be paid for their time. On the other hand, training time may not be compensable if the following four conditions are met (Kahn et al., 1996): (a) attendance at the program is in fact purely voluntary; (b) the program is scheduled to occur outside the employees normal working hours; (c) the program is not directly related to the employees job; and (d) the employee performs no productive work
47
while attending the program. So, class time spent pursuing a degree at an independent educational institution does not qualify as compensable time, and neither would be time spent in attending an optional promotion preparation program scheduled after a shift. This issue may become more pronounced with the diffusion of online learning. These training systems carry the promise of learning anytime and anywhere, as training moves from the classroom to the desktop or laptop. It is easy to imagine situations in which employees are expected (suffered and permitted) to do training at home while on their ownuncompensatedtime (Zielinski, 2000). In some cases, employees in the role of trainee or apprentice can be paid somewhat less than the minimum wage. The FLSA designates that, in certain industries (such as clothing or some specific manufacturing sectors), employees may be employed in a learner status if experienced workers are not available. However, the employer must obtain a special certificate from the Department of Labor authorizing the approved lower rate of pay. Finally, some employers may require applicants to complete certain training programs before they are hired as employees. Applicants who are not employees would not be protected by the FLSA and would not need to be paid for their training time. Indeed, an employer may run a training program or school specifically to prepare job applicants for employment, such as might be the case with airlines and flight attendant training. If people in these situations are employees during the training period, they must be paid for their time while in the training. If they are not employees, however, they do not have to be paid for their training time. Thus, it makes some difference to employers if trainees are also employees. The Wage and Hour Division guidelines for considering whether trainees are also employees and therefore entitled to coverage under the FLSA were formed in response to two cases in the 1940s regarding trainees. In both Walling v. Nashville, Chattanooga, and St. Louis Railway (1945) and Walling v. Portland Terminal Co. (1945), the court found that individuals in the trainee roles they occupied with their railroads were not employees. Based on these and subsequent rulings, trainees can be excluded from the training overtime payment requirement if an employer-provided training program meets the following conditions (Kahn et al., 1996):
1. The training curriculum is similar to what would be given in a comparable vocational school, even if the program is offered on site. 2. The training is provided for the benefit of the students. 3. The trainees do not replace or do the work of regular employees (but may work under their close supervision). 4. The employer providing the training obtains no particular advantage from the activities of the trainees. 5. The trainees are not inherently entitled to a job with the employer/trainer once they complete the training.
48
Human Resource Development Review / March 2003 6. Both the employer and the trainees understand the trainees are not entitled to wages during this training period.
These guidelines were successfully applied and defended in the case of Donovan v. American Airlines (1981; see also Donovan v. Trans World Airlines, 1983, for parallel case with the same underlying facts and outcome). Since the late 1950s, American Airlines had run a 5-week so-called stewardess college (later called flight attendant training) to cover all mandated training requirements plus other topics. Participants lived on site at no cost but did not perform any tasks related to airline operations. In short, the training was independent of the airlines and included no on-the-job training elements. Students were not paid during their training period, and based on the findings in court, students were not operating as employees and were not entitled to any pay for their time. Recovering Training Costs In addition to the issues involved in properly compensating employees for their training time, some employers may seek to recover the costs of training from employees who leave. A recent case decided by the Michigan Supreme Court (Sands Appliance Services, Inc. v. Wilson, 2000) highlighted the issues involved here. In 1992, Sand Appliance Services hired 19-yearold Christopher Wilson as a trainee service technician. Wilson was required to sign a tuition contract in which he agreed to pay Sands a specified amount as a repayment for the training he received if he left during his first 6 years on the job. Sands argued that this contract was necessary to help defray lost training costs. Wilson left before 4 years and Sands sued. Under Michigan law, employers are prohibited from demanding or collecting remuneration for consideration in exchange for employment (in effect, making bribes or kickbacks for employment illegal). The majority ruling of Michigans Supreme Court found in Wilsons favor, ruling that the tuition contract amounted to consideration payable to the employer as a condition of employment. The dissenting opinion, however, pointed to the complexity of the issue. Instead of seeing the tuition contract as a consideration or kickback for being given the job, the dissenting judge argued that the training provided by Sands was a valuable outcome in and of itself, and that this contract was just that: an agreement in which something of value (training) was exchanged for something else of value (6 years employment or repayment for the costs of training). In the dissenting view, such a contract was not a kickback, the contract should have been honored, and Wilson forced to repay for his 4 years of training. How to reconcile these views? Can an employer obtain repayment from the departing employee for the training provided? Several factors would need to be considered here (Kahn et al., 1996). First, although there is no
49
direct prohibition against such actions by the FLSA, state statutes governing payroll payments may still limit what deductions may be withheld. Second, if reductions are taken from nonexempt employees, the reductions should not have the effect of lowering that persons rate of pay below the minimum wage. Third, any training cost recovery agreements should be able to withstand the scrutiny of state laws regulating employment-based contracts (as seen in the Michigan case) that have the effect of restraining trade by limiting the operations of a free labor market. For example, it could be argued that the training repayment requirement effectively restricts an employees mobility. Employers wishing to pursue such action are advised to put the relationship into an enforceable contract. The amount to be recovered should either be documented costs or reasonable estimates. The term under which the contract can apply should also be reasonable, say during the first year or two or employment; lifetime limitations would be onerous and hard to defend. Finally, the contract should be freely entered into by the employee, without taint of coercion, and should probably be independent of an offer of employment.
Employee Benefits
Over the past 20 years, employers have shifted away from the more costly defined benefit programs to the more flexible defined contribution plans, particularly 401(k) plans. This trend has presented the HRD function with a new and unexpected challenge, however. Along with shifting more responsibility to employees for funding and managing their retirement investments, defined contribution plans also move more risk to employees. Under these newer arrangements, both the quality and the adequacy of an employees pot of self-managed retirement dollars can be put in question (Johnson, 1996; Mandelker, 1998). As a result, employers faced a new form of liability. Even after shifting investment responsibility to employees, the question of potential risk remains: How much is the employer still responsible if the employees investment choices under a defined contribution plan lose value? Can an employer be responsible for providing faulty or insufficient information if the employees investment underperform? One obvious solution is to provide employees training and education in financial management. Yet even so, liabilities still remain. Under the ERISA (2002), retirement plan sponsors must act in a fiduciary manner to protect the best interests of the plan and its participants; failure to do so may result in personal liability. As initially formulated, a party (such as an employer operating through its training function) providing investment advice could become a de facto plan fiduciary and thereby acquire personal responsibility for shortfalls in retirement investments.
50
Employers offering defined contribution plans, therefore, face a challenge in making sure employees receive sufficient training so that they can make informed decisions, while also avoiding providing investment advice. The line between these two training intentions is often hard to detect, putting employer-provided educational programs in the situation of being damned for providing too little investment education and being damned for providing too much in the way of advice. The crux of the problem involves whether certain forms of employee educationspecifically, the giving of investment advice beyond simply offering informationmay convert a plan sponsor into more of a fiduciary role with the attendant assumption of responsibility for asset management and results. In this context, the Pension and Welfare Benefits Administration of the Department of Labor issued guidance on participant investment education in 1996. The intention of this guidance is to create certain safe-harbor protections for investment education programs to neutralize the risks to employers from assuming fiduciary responsibilities. If a party provides education and training using any or all of the four following categories of information, that party would not be considered as rendering investment advice and would be enjoy a presumptive exemption from fiduciary risk: (a) information about the plan itself, the benefits of contributions and/or preretirement considerations, as long as no particular investment option is pushed; (b) general financial management information, historical comparisons of various investment alternatives, or techniques for assessing future retirement needs or personal risk tolerance; (c) asset allocation models that calculate various outcomes under different investment assumptions; and/or (d) interactive investment materials, such as worksheets, software, and the like, that provide estimates of future income needs or resources. According the Interpretive Bulletin 96-1 issued on this matter, investment education and training that stays within these limits should protect the parties from becoming plan fiduciaries. Even so, plan sponsors are still expected to be careful in selecting qualified individuals to conduct such programs so that they will act prudently and solely in the interest of the plan participants and beneficiaries (p. 29590).
Notes
1. The diversity in types of laws is reflected in an equally diverse literature. Federal statutes are enshrined in the United States Code (USC), although derivative or implementing regulations are in the Code for Federal Regulations (CFR). State statutes go by various labels, including Codes, Annotated Codes, Statutes, Revised Statutes, and so on. The judicial rulings from court cases are found in any number of court reporting volumes, assembled by jurisdiction, level, and area of law. With few exceptions, both federal and state statutes, regulations, and court decisions are all available online. The standard citation format is different, though, than the format (journal name, volume, number, pages) typically used in the social and behavioral science literature. The legal format puts the source (volume or journal name, usually abbreviated) in the middle, preceded by the title number (for statutes) or the volume number
51
(for court decisions) and followed by the chapter (statutes) or location (for cases). The DrugFree Workplace Act is found at 41 USC 701-707; this reads as Title 41 of the U.S. Code, chapters 701 through 707. The case of Stender v. Lucky Stores is at 803 F. Supp. 259, or in volume 803 of the Federal Supplement beginning on page 259. For a good overview to legal research, see Pauwels, Fariss, and Buckley (1999); Appendix D in the Publication Manual of the American Psychological Association (2001) provides a good summary of citation and formatting procedures. 2. The legal framework covering the practice of HRD in the federal government is extensive (Lombard, 1997). Furthermore, the unique nature of federal employment means that laws passed by the Congress concerning federal employees essentially become policies for how federal employees are to be managed. Given the extensive scope and unique conditions of federal HRD laws and policies, they will not be addressed here. 3. In a report produced under contract to the Department of Energy, Eyers and Moreland (1994) listed a number of environmental and energy laws that carry training requirements.
References
Air carriers, operating requirements . . . training, 14 CFR 135 et seq. (2000). Bartlett, C. J. (1978). Equal employment opportunity issues in training. Human Factors, 20, 179188. Bland, T. S., & Walsh, T. J. (2000). Dont cross that line. HR Magazine, 45(6), 121-128. Bridenbaugh, C. (1961). The colonial craftsman. Chicago: University of Chicago Press. Certain fringe benefits, 26 USC 132 (2001). Chadwick, B. (2001). U.S. sentencing guidelines revisited. Audit News, 30, 3-4. Retrieved from www.bc.edube_org/fvp/is/news/fedsent.html ttp://www.bc.edube_org/fvp/is/news/ fedsent.html Clardy, A. B. (1997). Studying your workforce, applied research and tools for the training and development practitioner. Thousand Oaks, CA: Sage. Conway, J. C. (1995). Note: Self-evaluative privilege and corporate compliance audits. Southern California Law Review, 68, 621-690. Copyright Act, 17 USC 106 et seq. (1976). Donovan v. American Airlines, 514 F. Supp. 526, 1981 U.S. Dist. LEXIS 18473 (U.S. Dist. Ct., N.D. Tex., 1981). Donovan v. Trans World Airlines, 1983 U.S. Dist. LEXIS 18806 (U.S. Dist Ct., W.D Mo., 1983). Driskell, J. E., & Adams, R. J. (1992). Crew resource management: An introductory handbook. Washington, DC: Federal Aviation Administration. The Drug-Free Workplace Act, 41 USC 701-707 (1988). Economic Growth and Tax Relief Reconciliation Act, 26 USC 1 (2001). Educational Assistance Programs, 26 USC 127 and 26 CFR 1.127 et seq. (2001). EEOC settles racial harassment suit against Georgia Pacific Corporation. (2001, April 3). Retrieved from www.eeoc.gov/press/4-3-01.html ttp://www.eeoc.gov/press/4-3-01.html Electronic Communications Privacy Act, 18 USC 2511 (2001). Employee Assistance Programs. (1999). BNAs compensation and benefits guide. Washington, DC: Bureau of National Affairs. Employee Retirement Income Security Act, 29 USC 1001 et seq. (2002). Employment and Training Administration. (1987). Apprenticeship: Past and present. Washington, DC: Government Printing Office. Employment, 775 Ill. Code 5 et seq. (1999). Eyres, P. S. (1990). Keeping the training department out of court. Training, 27(9), 59-67. Eyres, P. S. (1996). Training and the law. In R. L. Craig (Ed.), The ASTD training and development handbook (pp. 177-202). New York: McGraw Hill. Eyres, P. S., & Moreland, W. H. (1994). Training and legal issues. Amherst, MA: HRD Press.
52
Fair Labor Standards Act, 29 USC 201 et seq. (2001). Fair Use of Copyrighted Materials. (1998). Retrieved July 9, 2000 from www.utsystem.edu/OGC/ IntellectualProperty/copypol2.htm Food Lion Settlement, File #4: 93CV457 Consent Judgment (U.S. Dist. Ct., Salisbury Division, North Carolina, 1993). Gilley, J. W., Eggland, S. A., & Gilley, A. M. (2002). Principles of human resources development (2nd ed.). Cambridge, MA: Perseus. Goldstein, I. L., & Ford, J. K. (2002). Training in organizations (4th ed.). Belmont, CA: Wadsworth. Griffin v. City of Milwaukee, et al., No. 89 C 1562 (U.S. Dist., E. D. Wisc), affd 1996 U.S. App. LEXIS 1033 (7th Cir. 1996). Health Insurance Portability and Accountability Act, 45 CFR 160 et seq. (1996). Holt, T. (1977). A view from Albemarle. Personnel Psychology, 30, 65-80. Hubbartt, W. S. (1998). The new battle over workplace privacy. New York: AMACOM. Jacoby, D. (1991). The transformation of industrial apprenticeship in the United States. Journal of Economic History, 51(4), 887-910. Johnson, R. (1996). 401-k training: A delicate balance. Training, 33(5), 58-63. Kahn, S., Brown, B., & Lanzarone, M. (1996). Legal guide to human resources. Boston: Warren, Gorham, and Lamont. Ledvinka, J., & Scarpello, V. G. (1992). Federal regulation of personnel and human resources management. Belmont, CA: Wadsworth. Lombard, J. M. (1997). Training policy handbook: Authorities and guidelines (Publication HRD 971). Washington, DC: U.S. Office of Personnel Management. Mandelker, J. (1998). Crossing the line. CFO, 14(12), 69-73. Mansfield, R. H. (1987). Training and the law. In R. L. Craig (Ed.), Training and development handbook (3rd ed., pp. 97-111). New York: McGraw Hill. Mathiason, G. C., & Pierce, N. A. (1996). Hidden training requirements can create liability. Corporate University Review, 4, 26-27. Murphy, D. (n.d.) The federal sentencing guidelines for organizations: A decade of promoting compliance and ethics. Retrieved January 28, 2002, from www.ussc.gov/PDF/Murphy.pdf National Apprenticeship (Fitzgerald) Act of 1937, 29 USC 50, 29 CFR 29. Noe, R. A. (1999.) Employee training and development. Boston: Irwin McGraw Hill. Occupational Safety and Health Act, 29 USC 651 et seq., and 29 CFR 1910 et seq. (1970). Occupational Safety and Health Administration. (1992). Training requirements in OSHA standards and training guidelines (Publication 2254, revised). Washington, DC: Government Printing Office. Overview of the United States Sentencing Commission. (n.d.) Retrieved January 28, 2002, from www.ussc.gov/pdf/ovrvuweb.pdf Pantazis, C. (1999). The new Workforce Investment Act. Training and Development, 53(8), 48-50. Pauwels, C. K., Fariss, L. K., & Buckley, K. (1999). Legal research, traditional sources, new technologies. Bloomington, IN: Phi Delta Kappa Educational Foundation. Pension and Welfare Benefits Administration. (1996, June 11). Participant investment education. Federal Register, 61(113), 29586-29590. Pile, L. A. (1993, January). The siren call of modern pied pipers. Employee Assistance, 5-11. Police training commission, 52 NJ Stat 17 et seq. (1998). Prevention of prohibited drug use in transit operations, 49 CFR 653 (1998). Protecting the privacy of patientshealth information. (2001, July 6). U.S. Department of Health and Human Services HHS fact sheet. Retrieved January 28, 2002, from www.hhs.gov/news/press/ 2001pres/01fsprivacy.html Public ethics, state ethics commission, 15 Md. Code Ann. 205 (2001). Publication Manual of the American Psychological Association. (5th ed.). (2001). Washington, DC: American Psychological Association. Raugust, K. (1998). Using comic strips in training. Training, 35(5), 43-47.
53
Rose, C., & Nicholl, M. J. (1997). Accelerated learning for the 21st century. New York: Dell. Russell, J. (1984). A review of fair employment cases in the field of training. Personnel Psychology, 37, 261-276 . Sample, J. (1997). Training programs: How to avoid legal liability. Bureau of Business Practice Supplement for Fair Employment Practice Guidelines, no. 436. Sands Appliance Services, Inc. v. Wilson, 463 Mich 231, 2000 Mich. LEXIS 1464 (Michigan Supreme Court, 2000). Seattle Professional Engineering Employees Association et al. v. The Boeing Company, 139 Wn. 2d 824, 2000 Wash. LEXIS 76 (Sup. Court, Washington, 2000). Sexual harassment, 26 Maine Rev. Stat. 807 (2001). Steinfeld, R. J. (1991). The invention of free labor: The employment relation in English and American law and culture, 1350-1870. Chapel Hill: University of North Carolina Press. Stender et al. v. Lucky Stores, Inc., 803 F. Supp. 259; 1992 U.S. Dist. LEXIS 12546 (U.S. Dist. Court, N. Dist. California, 1992). Training and Retraining of Underground Miners, 30 CFR 48 (1978). Transportation Aviation Programs Air Commerce and Safety, Security, 49 USC 44935 (2002). Walling V. Nashville, Chattanooga, and St. Louis Railway, 60 F. Supp. 1004, 1945 U.S. Dist. LEXIS 2317 (U.S. Dist. Ct., Mid. D. Tn., 1945) Walling v. Portland Terminal Co., 61 F. Supp. 345, 1945 U.S. Dist. LEXIS 2181 (U.S. Dist. Ct., D Maine, 1945). Webb et al. v. Westinghouse Electric Corp., 81 F.R.D. 431, 1978 U.S. Dist. LEXIS 7192 (U.S. Dist. Ct, E. D. Pa., 1978). Workplace Safety, California Labor Code 6400 et seq. (1999). Zielinski, D. (2000). The lie of on-line learning. Training, 37(2), 38-40.
Alan Clardy is an assistant professor at Towson University, Maryland, where he holds a joint appointment in the Psychology Department and the masters degree program in HRD. He teaches graduate courses in change management, applied HRD research, and introduction to human resources management. His research interests include HRD governance, change management, auditing the HRD function, and adult learning. His doctorate is from the University of Maryland College Park. Professionally, he spent 20 years in corporate settings as director of training and vice president of human resources at banks in the Baltimore area, as well as in private consulting practice. He is the author of Studying Your Workforce (Sage), 50 Case Studies for Management and Supervisory Training (HRD Press), and Managing Human Resources (LEA Press).

The Legal Framework Human Resource Development Overview, Mandates, Strictures, AndFinancial

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Legal Framework Human Resource Development Overview, Mandates, Strictures, AndFinancial

Uploaded by

Copyright:

Available Formats

Human Resource Development Review

Academy of Human Resource Development

Integrative Literature Reviews

Clardy / HRD LEGAL FRAMEWORK

Human Resource Development Review / March 2003

Defining the Legal Framework

Clardy / HRD LEGAL FRAMEWORK

Human Resource Development Review / March 2003

Modeling the Legal Framework for HRD

The Components of the Legal Framework of HRD Risk Practice Guidelines

Absence of meaningful training eliminates potential defense.

Provide meaningful training in sexual harassment and ethics.

TABLE 1 (continued) Legal Component Risk Practice Guidelines

Clardy / HRD LEGAL FRAMEWORK

Administration of the HRD Function

Compliance with Mandatory Training (1, 4)

Minimum organizational & operating conditions (2, 3)

Budgeting & Funding (5)

Recordkeeping * Trainee flow analysis (7) Validation HRD assessments (10)

Job performance (7, 10)

Training Production Functions

Materials (6,10) Curriculum (6, 7, 10) Training Process (7, 10)

Human Resource Development Review / March 2003

Training Mandated Directly by Statute or Regulation

Clardy / HRD LEGAL FRAMEWORK

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

Copyright and Intellectual Property

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

Eavesdropping and Privacy

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

The Tax Code and Training

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

Compensating Trainees and Recovering the Costs of Training

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

Clardy / HRD LEGAL FRAMEWORK

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

Human Resource Development Review / March 2003

Clardy / HRD LEGAL FRAMEWORK

You might also like