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they pvi an ploy more than enough varbl to attend to. but suppe we add still anher element, and ong with it, an enrely new set of pameters r an employeto accept, unrstad coly with; in ca owaltan huenndhitn. [nrator] >> vanuesen and whney d been friends and business associates for a number of years. whenever they got together, the conversation would sooner or later turn to the subject of business. they'd brainstorm ideas, trying to decide what kind of new business venture the world needed. but things never really went any further than just talk. finally, one day, they decided to get serious and go into their own business. it seemed like the perfect partnership. van huesen and whitney got along famously, and they were also the perfect blend of talents. >> i'm an engineer by training, so i've always been pretty organized and systematic about things.

i like to think of myself as a creative problem solver, working with customers to come up with just the right combination of products to satisfy their needs. >> the only real technical background i have is what i picked up in the field, handling equipment repair projects, and managing work groups. my strong suit is sales and management. i like dealing with customers, negotiating contracts, and getting people to do things for me. i'm a great believer in the gentle art of persuasion. >> walt van huesen and don whitney pooled their skills, their financial resources, and theicourage, and started up valve resources incorporated. the company had two missions. the first was to sell valves, instruments, gauges, and related products cto incling oil refineries, utility companies, general contractors, and municipal governments. the company's second mission was to provide repair services for those products, both at on-site locations and in the repair shop.

the two missions complemented each other, and valve resources was successful in pursuing both of them. their repair business boomed and as the company's name spread, their sales figures grew along with it. >> now we figured the only way to make it was to go all out. every penny we made got plowed right back into the business. no job was too small for us to take on. sixteen to 17 hour days, six to seven days a week, wasn't unusual at all. and that went not just for don and me, but for our employees too. you know, looking back on it, maybe that's where things went wrong. [narrator] >> what went wrong was that the shop and the repair crews were starting to talk about forming a labor union, and from the looks of things, that talk would soon lead to action. don whitney tried to listen to their grievances, but his patience was quickly wearing thin. >> i'm sitting there, trying to talk sense to these guys-- it's obvious to me they can't see any further

than the tip of their nose. i mean, sure, we're paying a little low right now. but there's a future to consider. it's a new business. you bring in a union wage, you cut us off at the knees. [shouting in background] right then and there i decided, "that if i heard the word union one more time, i'd go ahead and fire every one of those ingrates, starting with that instigator, jerry krause." union, huh? over my dead body. we'll close this place down first. [shouting in background] [narrator] >> at that point, valve resources incorporated faced a situation for which it was totally unprepared. and so they consulted an attorney to find out whether there were any legal guidelines for unionization and, if so, what those guidelines might be. >> congress passed the national labor relations act, also known as the wagner act, initially, as a response to concerns that employees were being punished or terminated in their attempts to create unions. and, along with the taft-- hartley act, the labor management relations act,

these two laws served to establish the procedures whereby unions could be established without employer intervention. the initial process for organizing a union requires that the union representatives go into a factory or a plant, or perhaps even an entire company, but in the bargaining unit, obtain the signatures on what they refer to as authorization cards, of 30% of the employees; which means that 30% of the employees are interested in having a union election held. once the authorization cards are turned in, then the national labor relations board, which was the federal agency set up by congress in the national labor relations act, will then require that an election be held. >> the nlrb will then verify the election results and declare whether a collective bargaining agent has been selected or not and if so, if there are several unions vying for this collective bargaining agent position,

they will designate which one of the competing unions has prevailed as the selected bargaining agent for the employees. [narrator] >> in addition to governing the union organizing process, the law also identifies unfair labor tactics. for example, management is prohibited from interfering with the right of employees to form or join a labor union. management is also not permitted to discriminate against union organizers or union members. >> management can't terminate someone because they have chosen to join a union, and management cannot refuse to promote, or in any way compensate someone because they've joined a union or decided to go along with the authorization card. in essence, there can't be any retaliatory action by management. also, management cannot become involved in the union, or in any way inhibit the free speech that union members should have in their organization efforts.

>> and members of the union, or the advocates of the union on the labor side, cannot use unfair or coercive tactics against fellow workers who may be opposed to a particular union, or may be opposed to any union, so that both sides are forced to deal in an open, honest manner, and allow the workers to vote their conscience. >> they cannot negotiate a deal that requires them to be paid for work that they have not done. also, labor unions, although they have the right to picket the employer, they can't engage in secondary boycotts where they are impacting or refusing to deal with other people who-- other companies who happen to deal with their company, and those companies are not directly involved with the union. [shouting in background] [narrator] >> ultimately, government legislation provided a set of guidelines to deal with the case of valve resources incorporated. no matter how disloyal or ungrateful whitney thought his employees had been, he was prohibited from threatening or coercing them,

and jerry krause was free to try to persuade his fellow employees to unionize without fear of being fired. the two partners hoped they could get their employees to see things from their perspective. but despite their best effts, the employees decided they needed a collective voice to bargain with management on the issues of pay, hours, and working conditions. that collective voice was, of course, the union. in this case, the union became something that valve resources had to deal with. it was not originally a part of the company's environment, or its plans. but as whitney and van huesen learned, when it comes to matters of employment, there are a number of areas common to all organizations; areas that are structured by government regulation. the actions and policies of organizations, owners, and managers result from a combination of management philosophy, profit orientation, and legal requirements.

to protect the rights of employees, and to clarify the responsibilities of owners and managers, a variety of statutes have been enacted, covering the entire period of a person's employment. there are, for example, a number of federal and state statutes intended to insure equal employment opportunity. these statutes are designed to focus on all aspects of job discrimination. workers are protected from employment discrimination on the basis of color, race, religion, sex, national origin, and age. the occupational safety and health act attempts to assure safe and healthy workplace conditions for workers by defining standards, along with the authority to enforce those standards. the entire area of compensation is governed by wage and hour law. under this law, employers are required to pay overtime for hours worked beyond a specified number. the law also defines specific classes of employee compensation.

throughout the course of a person's employment, there is always the possibility of a work related injury. to deal with this possibility, there are specific statutes which impose the liability for an employee's injury on the employer. if an employee becomes unemployed, that person may be eligible for unemployment insurance. this program is designed to provide economic security for temporarily unemployed workers. a series of guidelines establishes both an employee's eligibility for the program and an employer's responsibility for contributions to it. federal law also provides another form of employment insurance for employees. the social security program provides for retirement. it defines benefits for survivors and dependents, and allows for disability insurance. those employers who have established private pension plans for the retirement of their workers, must meet specific requirements.

these then are the general areas covered by gernment regulation of employment and labor. when an employee goes to work for an organization, it is with the intent of providing a skill or performing a service in exchange for wages, benefits, and future opportunity. the most immediate concern to most employees is the compensation they receive for performing their jobs. the expectation is that an employee's pay will be based on the job to be performed and the skills the employee possesses. in that expectation, candy sesco was no different from anyone else. candy had planned her future very carefully. from high school on, she had concentrated all her efforts on eventually becoming a certified public accountant. all through college, candy focused on her goal. she put in the required amount of stud and graduated with honors. with her degree, her outstanding grades, and her state of the art skills, she had no trouble

landing her first accounting job. but after that, problems began for candy. >> i was having lunch one day with a bunch of other people in my department, and we were kind of comparing notes on our jobs. somebody asked me how i liked the company and the big bucks i was making. i said the company was fine, but they had to be kidding if they thought we were making big bucks. so this person answers, "well, i guess beauty is in eye of the beholder, because larry ripley over here, started to work the same time as you, and he sure is pleased to death with what he's making." larry says 25 grand is more than he ever imagined he could start with. well, when i heard that, i almost choked on my food. twenty-five thousand was three thousand more than what i was making. [narrator] >> determined to get to the bottom of the situation, sesco marched directly into the personnel director's office. she stated the facts which were, first, that she and ripley were both hired the same day; second, that they both had the same amount of experience,

namely, none; and third, that both were at the same job level, that is, accounting trainee. to top it off, sesco claims she had actually gone to a more prestigious college with a more manding training program than ripley's. she reminded the personnel director that she had assured her all entry level accountants start at the same salary, and that there were no exceptions. then she waited for the director's reply. >> the first thing she says is, it's none of my business what someone else makes. th she changes her mind and tells me larry ripley a speci case. he needs more money because he has a wife and a kid to support. but , i ve a husband who makes about the same as i do so i don't have the same responsibilities as larry. [voices in background] [narrator] >> when candy heard all this, she felt confused, hurt, and angry, all at the sa time. thinking thing over a little later, she began to wonder whether she had any legal protection, or was the company's policy perfectly correct.

>> the equal pay act, which was passed bcongress in 1963, is a guarantee that you will be paid the same wages for doing the same job, regardless of the sex of the employee, and it's unlawful to discriminate, and there are penalties provided for in the act. so that if you are doing the same job, that the issue of sex will not control the salary factor. salaries may be different depending on the level of employment, the level of seniority, and merit pay, but not different if the employees are doing the same job. [narrator] >> in the case of candy sesco, the court determined that the pay differential between her and larry ripley, and the company policy that permitted the differential, were discriminatory. the court went on to say that the policy was based on the outmoded idea that women, in their traditional roles as wives and mothers, must occupy a status second to men outside the home. so for candy sesco, the issue was pay.

but for ernest costello, it was simply a matter of holding onto his job. costello was a vice president at one of the nation's largest insurance companies. his career had spanned 35 productive and rewarding years. and as he ascended to the executive suite, his salary and perks kept pace. but for the last six months, costello had the uneasy feeling that he was being "squeezed out," as he put it. >> we'd just been taken over by one of these big corporations, and the new management was on one of these youth kicks. and one by one, i noticed my executive colleagues were leaving. some took early retirement. there were some outright resignations. and i noticed that three executives were simply fired for making what the new owners called, "major errors in judgment." and i had no particular desire to see myself in any of these categories. i planned to work for a minimum of five more years.

and at 62, i'd begin to consider retirement. but my supervisor was a real eager beaver in his mid '30s, and he didn't see things my way at all. [voices in background] [narrator] >> in conversations with his boss, costello heard comments and suggestions ranging from, "you and your wife must be really looking forward to the day you can call it quits," to, "the pace of work around here must be pretty tough on someone your age," and, "you just can't do things anymore like the old day" before long, what started as seemingly innocent comments soon became obvious criticism. over a four-week period, ernest costello had had three major meetings to discuss his shortcomings. >> none of them had anything to do with lost busiss or even personnel. they were all minor concerns, things like reports that needed to be redone, or being late to an appointment, or not being sufficiently prepared for a meeting. it finally dawned on me that this was all

a form of harassment intended to get me to resign. so i brought the matter up with my supervisor. [narrator] >> the supervisor's response was that costello was longer needed if he couldn't see the necessity for flexibility and constructive criticism. he went on to say that it was obvious costello's goals and those of his company, didn't match. costello protested that he waseing fired beuse of his age d for no other reason. the question is, in thisiation, at legal ptection, if an does ernest costello he? >> the fedal age dirination act providesroctn for emoyees betweethe ages of 40 d 70. anit's designed to protect th in terms of hiring, promotion, merit pay, and even termination, so that someone is not refused employment simply because they're between those ages. the age discrimination act does not afford protection for employees who are fired for cause.

it's just like every other federal statute in terms of the scope of its protection. if an employer can establish that an employee has not performed or has violated the rules and conditions of employment, that it's not an issue of discrimination. it's establishing that the termination was the result of age and not any other factor that is a violation of the act. [narrator] >> those are the specifics of age discrimination legislation. the question, of course, is do they apply in the case of ernest costello? >> this is a classic case of age discrimination. mr. costello was a successful executive with 35 years of experience. new management comes in and suddenly older executives begin to leave, the company hints to mr. costello that he retire, and begins inventing problems with his job performance. >> mr. costello's problem has nothing to do with age. the new management has worked closely with him for six months to try to get him to adapt. he has not responded well to constructive criticism,

nor does he seem willing to try new ways of doing things. the very purpose of the new management's taking over the company was to manage it more efficiently. mr. costello seems unable to do that. >> if the company's criticism is that mr. costello was unable to get any younger, we agree with that. working closely with mr. costello consisted only of trying to convince him to retire. the company could point to no problems with respect to lost business or supervision problems with mr. costello. the only problems the company does point to: being late to a meeting, needing to redo a report, are extremely minor in nature. in addition, since there's no showing that the company shadowed other employees to the same extent they did mr. costello, for all we know, other employees had exactly these same problems. >> the specific problems you mention may seem minor when looked at one by one, but they reflect mr. costello's fundamental problem, which is an attitude of unwillingness to change.

he simply cannot work effectively with the new, more efficient management. >> all the company is really saying, is that it feels mr. costello is too old, and that's exactly the policy that the age discrimination act was designed to stop. [narrator] >> in ernest costello's case, the court held that there had indeed been age discrimination. the basis of the court's decision included the organization's youth movement philosophy, the series of comments on costello's age, the triviality of the criticism his performance, and the general pattern of senior executives leaving the organization. ernest costello's problem was losing his job. but amy torres had just the opposite problem: getting a job in the first place. for years, amy had worked on the west coast with her husband. most of that work was in restaurants. she had learned the restaurant business from the ground up, working as a waitress, cooking, bookkeeping, and managing a restaurant for a year.

after amy's divorce, she decided the time was ripe to return to her roots, so she packed up her belongings and headed for the east coast. she knew she was going to have to find a new job, but was confident that with her background, it would be no problem. she read the want ads in the newspaper and found one that suited her perfectly. >> "wanted. night manager for major restaurant. must have a minimum of one year's experience in management. must be able to demonstrate knowledge of restaurant operations. salary negotiable." hmmm. [narrator] >> amy immediately applied for the position. her interview with the owner went smoothly. her rapport with him was excellent. >> when it was all over, he told me he was very impressed, and he really wished he could hire me. he said he'd let me know if any other openings came up. it was the old "don't call us, we'll call you" routine. i couldn't believe it. when i asked him why he couldn't hire me for the position, he said it was a night job

and he needed a man for it. he'd always had a male night manager because the clientele is pretty rough at night, and it takes a male authority figure to handle those. he said a day job would be a whole different story. >> under title seven of the 1964 civil rights act, an employer is not allowed to discriminate against, or among his employees on the basis of certain suspect classifications. included in the suspect classifications are sex, religion, race, national origin, and creed. >> in the hiring process, an equally qualified male versus female can't discriminate on the basis of sex. you can't take the male employee over the female employee, and vice versa. you take the best qualified and you hire them. the same thing is true in terms of the employment setting once the worker is hired. [narrator] >> as we've seen, the law does offer some protection against discrimination on the basis of sex. the question is, does the case of amy torres

fall under any of the law's provisions? >> amy's failure to get the job is an obvious case of sex discrimination. she had all the necessary qualifications to be a restaurant manager, except that the owner clearly preferred to have a man as manager. >> well, in fact, the owner was simply trying to protect his investment, his customers, and indeed; amy herself. in the owner's experience, criminal activity is more common at night, and customers are more likely to be rowdy and disorderly. thus, in wanting to hire a male, the owner was simply establishing a bona-fide occupational qualification. a male is more likely to be an authority figure who can deter crime and deal with disorderly customers. >> the owner's perceptions are not fact, and his preference for a man is not a bona-fide occupational qualification. he is simply operating of the basis of a female stereotype. there is no evidence that amy or any other woman

is not perfectly capable of dealing with rowdy customers or any other problem that might come up. this is clearly a case of discrimination under title seven of the civil rights act. an employer may not discriminate in employment on the basis of sex. >> in this case, the court decided that amy torres d disimat agt, andas entitled to t nht manager positi ased thadesion onovt gislat ng disiminatn. w se'al legula ma othas of empyment d la me ration bual often see only as near, atosfar guonc wts operations have a different opinion.

they poi out that siness is most closely monitored in the areas where i practices have been perceived by society to be unfair andust. e challenge r governme has been to reconcile both points of view, to create rules that all business as much freedom as posble while not permitti it to cause harm to society. the challenge r business is to follow this sometimes baffling array of regulations, yet at the same time, run a profitable enterprise; a balancing act that illustrates as well as anything, the intricate, often complex, relationship between business and the law. ♪ [music playing]