Legal Issues Case Assignment for Goal #4 NutsandBolts Inc. is a manufacturer of industrial fasteners, mostly nuts and bolts. It has a total of 500 employees, the majority of whom work in its manufacturing plant and the rest of whom perform standard business functions such as accounting, sales and marketing, human resources etc. The companys operations are all located in the United States, and the majority of its sales are domestic with a limited number of international customers. For the last two years, competition has been increasing in the industry, and profit margins for the company have been shrinking. The company is still profitable, but top management is concerned with the trends and sees a real possibility of a net loss next year. Because of this, the CEO and the President are discussing the need for layoffs. Company turnover is low, and most employees stay with the company for five or more years. The company has a history of treating its employees well, and there is no labor union representation. The company is considering expanding its international business, but fears that it does not have either the time or the money to do this before financial results turn from profit to loss. After some discussion, the CEO and the President agree that a labor force reduction of about ten percent would be sufficient to keep the company profitable for the foreseeable future. The company has no history of layoffs, so they are exploring uncharted territory for them. They feel that the layoffs must be done quickly to have the desired effect, so reducing staff by attrition will take too long, and they have rejected this option. A. Answer the following questions relating to legal issues (each answer should be between 1/4 and 1/2 page long): 1. Does NutsandBolts, Inc. have a potential legal duty to inform the workers that there will be layoffs? Explain. 2. The NutsandBolts layoff Option 1 calls for each division head to determine which specific employees will be laid off. Some of these employees will almost certainly fall into various classifications, such as race, color, religion, national origin, sex, disability and age, which are protected under federal law, most notably Title VII of the Civil Rights of 1964 which protects the first five. It is quite likely that some of these workers will feel they are being laid off not because of their lack of skills and abilities, which is presumably what the division heads will say (and quite likely are applying) is their criteria, but are in fact being laid off because of their race etc. How would these workers make their legal case that they are being intentionally fired for such an illegal act? 3. The NutsandBolts layoff Option 2 calls for employees to be terminated by alphabetical order beginning with the letter A until the desired number is reached. This approach would be applying facially neutral criteria since all people have names and thus, on the surface this does not appear to be illegally discriminatory. However, under Title VII even using facially neutral criteria is illegal if it has a disparate impact on protected groups. Give an example of disparate impact analysis, and then discuss whether this is likely to occur in this scenario.

Legal Issues Case Assignment for Goal #4
NutsandBolts Inc. is a manufacturer of industrial fasteners, mostly nuts and bolts. It has a total of 500 employees, the majority of whom work in its manufacturing plant and the rest of whom perform standard business functions such as accounting, sales and marketing, human resources etc. The companys operations are all located in the United States, and the majority of its sales are domestic with a limited number of international customers. For the last two years, competition has been increasing in the industry, and profit margins for the company have been shrinking. The company is still profitable, but top management is concerned with the trends and sees a real possibility of a net loss next year. Because of this, the CEO and the President are discussing the need for layoffs.
Company turnover is low, and most employees stay with the company for five or more years. The company has a history of treating its employees well, and there is no labor union representation. The company is considering expanding its international business, but fears that it does not have either the time or the money to do this before financial results turn from profit to loss. After some discussion, the CEO and the President agree that a labor force reduction of about ten percent would be sufficient to keep the company profitable for the foreseeable future. The company has no history of layoffs, so they are exploring uncharted territory for them.
They feel that the layoffs must be done quickly to have the desired effect, so reducing staff by attrition will take too long, and they have rejected this option.



A. Answer the following questions relating to legal issues (each answer should be between 1/4 and 1/2 page long):


1. Does NutsandBolts, Inc. have a potential legal duty to inform the workers that there will be layoffs? Explain.


2. The NutsandBolts layoff Option 1 calls for each division head to determine which specific employees will be laid off. Some of these employees will almost certainly fall into various classifications, such as race, color, religion, national origin, sex, disability and age, which are protected under federal law, most notably Title VII of the Civil Rights of 1964 which protects the first five. It is quite likely that some of these workers will feel they are being laid off not because of their lack of skills and abilities, which is presumably what the division heads will say (and quite likely are applying) is their criteria, but are in fact being laid off because of their race etc. How would these workers make their legal case that they are being intentionally fired for such an illegal act?


3. The NutsandBolts layoff Option 2 calls for employees to be terminated by alphabetical order beginning with the letter A until the desired number is reached. This approach would be applying facially neutral criteria since all people have names and thus, on the surface this does not appear to be illegally discriminatory. However, under Title VII even using facially neutral criteria is illegal if it has a disparate impact on protected groups. Give an example of disparate impact analysis, and then discuss whether this is likely to occur in this scenario.