HR Certification Podcast Episode 15: Employment Law for HRCI & SHRM

Welcome to the HR Certification Podcast: a podcast for HR leaders working towards their human resources certification with HRCI and SHRM. Join host Jessica Miller-Merrell, founder of Workology.com and HR certification prep program, Ace The HR Exam, as she shares study tips, exam insights, and topical review for HR exams, including the aPHR, PHR, SPHR, SHRM-CP, and SHRM-SCP. Now, here’s Jessica with this episode of the HR Certification Podcast.

HR Certification Podcast Episode 15: Reviewing Employment Law for HRCI & SHRM Exams

Hey there and welcome to the HR Certification Podcast. I’m your host Jessica Miller -Merrell and I am so excited to be here. My mission, passion, and purpose is elevating the HR industry and in the HR Certification Podcast, I help HR leaders in their personal and professional development solely focused on HR certification exams. Now this podcast is powered by Workology’s HR Certification Prep courses and resources. You can learn more about those at www.HRCertificationPodcast.com. Now, before we dive in, I do wanna hear from you. Give me a follow over on Instagram or TikTok, @WorkologyBlog, where I’m happy to answer your questions. That’s @WorkologyBlog and maybe I’ll feature your question in an upcoming podcast episode. In every single episode, I cover information and resources to help you with your HR certification exams. This podcast is short and to the point so you can get your review in and move on. The HR certification podcast is divided into different segments and in every single episode, we address a common question or HR topical area to assist you in your review. We review an HR glossary term and I also walk you through an HR certification exam question. That’s every single episode. Again, this podcast, this podcast, these podcasts are designed for SHRM and HRCI certification exams. And that includes the aPHR, the PHR, the SPHR, the SHRM-CP, and the SHRM-SCP. In the transcript notes of every single podcast, I will also share recommended resources and information to assist you in your review, which is available at www.HRCertificationPodcast.com.

Now there are a handful of HR exam topics for both HRCI and SHRM exams that are what I consider to be foundational ones. Meaning that these are must-haves when you’re in your HR career, whether it’s a coordinator all the way up to the VP of HR. These are terms and topics that set the tone for not just passing your exam, but provide you a solid foundation for your career and every part of your career. I am talking about the topic today for the podcast episode, which is employment laws. Side note, if you’re taking the exam and you’re not located in the US, whether it’s SHRM or HRCI, you can scroll through this episode. International SHRM exam test takers will not be tested on US-based employment law, which is what we are talking about today. And for those of you who are taking the aPHRI, the PHRI, or the SPHRI, meaning any HRCI exam with an I. That includes the DPHR too. You will not have US-based employment law questions. So again, you can scroll on through. This podcast episode is not for you. For everyone else, let’s get down to business with our employment law review.

Because employment law can be a challenge, I really want to dive into some topics that are highly complex as it relates to employment law. So I am not necessarily reviewing employment laws per se, but things that are important parts contained within the topic of employment law. You’ll be reviewing some terms here, including adverse impact and the four-fifths rule. This is a video I did on TikTok responding to a comment and a question from Sharon. She’s an HR leader and she was asking me to make a video about the four-fifths rule so you can listen in.

Let’s talk about the four-fifths rule. But before we do that, I need to walk you through adverse action. It’s all going to make sense. Let’s go. Hey there, I’m Jess and I help HR leaders ace the HR certification exams with my HR certification program for HRCI and SHRM. It’s called Ace the HR Exam. Let’s talk about the four-fifths rule and adverse impact. All right, so under the guidelines, adverse impact is substantially different. It’s a different rate of selection used in hiring, promotion, or other employment decisions, which works to the disadvantages of members of a race, sex, or an ethnic group. So let’s talk about what is substantially different rate of selection. Agencies have adopted a rule of thumb under which they generally consider selection rate for any race, sex, or ethnic group, which is less than four -fifths, or 80 % of the selection rate for the group with the highest selection rate as substantially different rate of selection. Okay, let’s talk about fourth-fifths and what that means. The four-fifths or 80 % rule of thumb is not intended as a legal definition, but it’s a means of keeping the attention of the enforcement agencies on serious discrepancies in rates of hiring, promotion, and other selection decisions. So let’s walk through an example. For example, if the hiring rate for whites other than Hispanics is 60%, for American Indians, it’s 45%. For Hispanics, it’s 48%, and for blacks, it’s 51%. And each of these groups constitutes more than 2 % of the labor force in the relevant labor area. A comparison should be made of the selection rate for each group with that of the highest group, which is white. These comparisons show that there are adverse impact ratios happening. Let’s talk a little bit more about this. So let’s break this down and look at each individual group. The comparison shows that the following impact ratios are for American Indians, 75%, Hispanics, 80%, and Blacks, 85%. So if we apply the fourth fifths rule, which is 80%, American Indians are impacted potentially adversely, but not Hispanics and Blacks. So let’s walk through an example here. And this comes directly from the EEOC’s website. So here we have two groups, applicant poll groups. We have white and black. Remember, we focus on sex, orientation, race when it comes to the four-fifths rule. We have 80 white applicants and 48 of them were hired. That is 60 % of those candidates that were white were hired versus black, 12 hired, we had 40 applicants, that is 30%. When it comes to the four-fifths rule, we have to take this one step further. We can’t just look at the selection rate, percent hired. We have to do one more thing. So we’re gonna look at a comparison of the black selection rate, which is 30%, with the white selection rate of 60%. And that shows us that the black rate is 30 by 60. 30 divided by 60 is one-half, or 50 % of the white rate. Since the one half, that 50%, is less than four-fifths or 80%, adverse impact is usually indicated. This is the process to determine if there’s adverse impact using the four-fifths rule.

So that is adverse impact in the fourth-fifths rule. Both of these terms and topics are going to be part of HRCI and SHRM’s BoCK and BASK.

This podcast episode is flying by. This was a fast review already, but it’s time to take a reset while we move into our next segment here on the HR Certification Podcast powered by Workology. I’m your host, Jessica Miller-Merrell. Now, Workology offers HR Certification Prep courses and resources. If you want to learn more about what we offer in terms of courses and prep resources, you can visit www.HRCertificationPodcast.com or head on over to www.Workology.com. We offer a variety of prep resources, including physical products like our flashcards and study guides, along with courses for all types of learners. Most importantly, these are accessible to you wherever and whenever you are. Our digital courses are on demand. They are also accessible on our very own Workology app, which is available for Android and iOS or Apple devices. So be sure to check out the Apple or the App Store and see. Before we move on to our segment, I want to hear from you. Send me your HR certification questions at my TikTok or my Instagram, @WorkologyBlog. I’m happy to answer questions there, connect, or talk more about HR certification prep. It’s my happy place. TikTok and Instagram are my happy places.

HR Glossary Term(s) – Worker Misclassification

We are now moving to a special segment of the HR Certification Podcast where we review an HR Glossary Term. And we do this for every single episode. Are you excited? We are going to be talking about one particular term that I feel like is incredibly important. But before we do, know that all the terms that we cover are for SHRM and HRCI exams, both of them. So the term we’re talking about today continues our conversation around employment law, but I’m talking about kind of employment law adjacent terms and topics. So today we’re discussing worker misclassification. Worker misclassification refers to the incorrect categorization of a worker as an independent contractor instead of an employee. Now, this issue has significant legal and financial consequences as employees and independent contractors have different legal requirements. They have different benefits and also protections under employment law. So we’re going to break down these different considerations looking at employment law. Are you ready? Let’s go.

First, the Fair Labor Standards Act or FLSA that sets standards for minimum wage, overtime pay, record keeping, and youth employment. Misclassification can lead to violations of wage and hour provisions and these might result in back pay and other various damages. Moving on, we’re moving to the Internal Revenue Service or IRS. This uses common law rules to determine a worker status, focusing on the degree of control and independence. A misclassification here can result in unpaid payroll benefits and taxes. Let me just say that additional state laws can also vary, although you won’t be tested on these. Let me give you an example. California’s AB5 law uses the ABC test, which is more stringent in classifying workers as employees. Compliance with state -specific laws are crucial to avoid those state-level penalties and fines.

Moving on here back to our national employment law, let’s talk about the National Labor Relations Act, or NLRA. Misclassified employees might be denied their rights to unionize and engage in that collective bargaining. Ensuring the classification is correct helps protect these workers rights under the National Labor Relations Act. And finally, the Employment Retirement Income Security Act or ERISA mandates that misclassified employees might miss out on benefits they are entitled to. That includes health insurance and retirement plans. Proper classification ensures compliance with these benefit regulations.

So, misclassification matters. We should know that. It has serious financial implications. Companies may face back taxes, penalties, and different fines for these misclassified workers. They also might be liable for unpaid wages, overtime, and benefits. Moreover, there is significant legal risk, including lawsuits and increased scrutiny from labor departments and other regulatory agencies. Most importantly, proper classification ensures that our workers receive those protections and benefits that they’re entitled to under those various employment laws that we have talked about today. By understanding and addressing worker misclassification, HR leaders can ensure compliance with employment laws and also protect their organization from legal and financial risk, which is what a lot of our job, not all of it, but much of it is about.

HR Test Question Review for SHRM and HRCI Certification Exams

We’re now moving to a special segment of the HR Certification Podcast where we review an HR test question. And I do this for every single episode. You can’t get enough test questions. These are all test questions that cover the knowledge base for SHRM and HRCI exams. I want to make that clear. These cover both SHRM and HRCI. Before I share the question, I do want to walk you through a little quick review of my HR test question framework. This is important. More information.

is available on my HR test question framework inside our Ace the HR Exam course, but you can also go to our YouTube channel. I’m going to link to that podcast or the video itself of the HR test question framework in the transcript of this podcast. So don’t worry, you’re going to review it, but let’s go through quickly the five steps. All right. So there’s five steps in the HR test question framework. Step one is to read each question slowly and concisely. Step two, identify the competency, the HR competency that the question is about. Step three is to eliminate wrong answers. Step four is WWSD or WWHD. What Would SHRM Do or What Would HRCI Do in this question? Think about the test question from the point of view of the person at HRCI or SHRM that is writting it. And step five is to go with your gut. Answer every single question for both exams.

Let’s go ahead and get started. In this episode featured HR certification exam practice test question. Are you ready? Let’s go here. A large corporation’s board requires its president and CEO to retire upon the age of 65. Which of the following statements below is correct? Is it A, under the ADEA, companies mandatory retirement policies are illegal. B, there are exceptions to the ADEA that allow mandatory retirement if certain conditions are met. Is it C, companies may only have mandatory retirement policies for positions where age may be a factor in job performance. And finally D, companies may have mandatory retirement policies for employees over the age of 70. What do you think here? Is it A, B, C, or D? I’m going to go ahead and repeat that test question again a second time for you. So let’s get ready for that.

A large corporation’s board requires its president and CEO to retire upon reaching the age of 65. Which of the statements below that I’m mentioning is most correct? There are four options here. The first choice is…

A) Under the ADEA, companies mandatory retirement policies are illegal. Or is it…

B) There are exceptions to the ADEA that allow mandatory retirement if certain conditions are met? Is it…

C) Companies may only have mandatory retirement policies for positions where age may be a factor in job performance. Or is the answer…

D) Companies may have mandatory retirement policies only for employees if they are over the age of 70.

What do you think? Is it A, B, C, or D? What’s your answer? Drum roll, please. The answer here is B. Did you get it right? There are exceptions to the ADEA that allow mandatory retirement if certain conditions are met. That is an important distinction for you to know as it relates to the ADEA, the Age Discrimination in Employment Act or ADEA. The Age Discrimination in Employment Act is of 1967 and it protects applicants and employees 40 years of age or older from discrimination on the basis of age in things like hiring, promotion, discharge, compensation, or terms, conditions, or privileges of employment. So that’s the ADEA. Did you get that question right or did you not? If you didn’t get it right and you got this one wrong, don’t worry. Make a note for yourself. I like to pull out my little notebook and make a note for further review. And I do a lot of these test questions that I encourage you to do the same. Add this topic to your daily review so that you can move this information from short-term to long-term memory. Now I do have more test questions that you can access in our test question bank. There’s 25 free test questions and you can head on over to www.HRTestQuestion.com. You can grab those 25 test questions, but we have so many more test questions. It is unbelievable. I am a test question-writing machine.

HR certification is such an important step in your career, whether you are looking to increase your HR knowledge base, gain credibility at your office, maybe you’re looking to increase your potential in your income, or just prove to yourself that you deserve to be here. And I’m telling you, you deserve all those things and more. I want to work together to elevate the HR profession. So thank you for joining me on this episode of the HR Certification Podcast, season two. My name is Jessica Miller-Merrell and I help HR leaders ace their HR certifications. Let me do the same for you. Workology does offer a host of courses and resources that are all designed to help you ace your HR certification exam. Yyou can visit www.HRCertificationPodcast.com where you can learn more about how we help HR certification prep for the aPHR, the PHR, the SPHR, the SHRM-CP and the SHRM-SCP exams. We support HRCI and SHRM certification exams. Now, if you have a suggestion for a podcast topic or arid review, you can let me know for an upcoming episode of this podcast. So give me a follow on Instagram or TikTok, it’s @WorkologyBlog. Let me know what your ideas or your suggestion, or if you have a question, and maybe I’ll feature it on a future podcast episode. I’ll see you next time on the HR Certification Podcast. My name’s Jess. Thank you for joining me and let me know how I can help you in your HR certification process.