Chapter six discusses ethical decision-making in the workplace, focusing on employer responsibilities and employee rights. It covers topics such as due process, ethical downsizing, employee health and safety, and the impact of workplace ethics on employee loyalty and performance. The chapter emphasizes the importance of fairness, ethical treatment, and the balance of power between employers and employees in various workplace scenarios.

1. Chapter Six: Ethical
Decision Making:
Employer
Responsibilities and
Employee Rights
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Chapter Objectives 1
After reading this chapter, you will be able to:
• Distinguish between the two distinct perspectives of the ethics of
workplace relationships.
• Explain the concept of due process in the workplace.
• Describe how to downsize in an ethical manner.
• Explain the difference between intrinsic and instrumental value in terms of
health and safety.
• Illustrate an employer’s responsibility with regard to employee health and
safety and why the market is not effective at managing this responsibility.

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Chapter Objectives 2
• Explain the basic arguments for and against regulation of the global labor
environment.
• Describe the argument for a market-based resolution to workplace
discrimination.
• Define diversity as it applies to the workplace, as well as its benefits and
challenges.
• Explain affirmative action and describe the three ways in which affirmative
action may be legally permissible.

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Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Ethical Decision Making
Hire character. Train skill.
Peter Schutz

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Ethics and Business
The employer generally gets the employees he deserves.
J. Paul Getty

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Introduction 1
Ethics in the employment context is a universal topic.
The law provides guidance for thinking about ethical issues in
the workplace, but these issues go well beyond legal
considerations.
This chapter explores areas of ethical decision making in the
workplace remains relatively fluid and where answers are not
easily found by simply calling the company lawyer.

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Introduction 2
Various ethical challenges facing the nature of employer
responsibilities and the employee are addressed in this chapter.
• As each issue is examined, try to employ the ethical decision-making
process to reach the best possible conclusion for the stakeholders.
• Utilizing an ethical decision-making process avoids later hurdles and
removes barriers to progress and momentum.

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Ethical Issues in the Workplace: The Current Environment 1
• Ethics at work and in human resource management is about
relationships with others and with the company.
• Companies who place employees at the core of their
strategies produce higher long-term returns to shareholders
than their industry peers – more than double.

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Ethical Issues in the Workplace: The Current Environment 2
50% of U.S. workers feel strong loyalty to their employer.
• Important factor for them was to feel valued by elements such as benefits
and opportunities for professional growth.
78% of those workers who experienced unethical or uncivil
behavior at work report that their commitment to the
organization declined.
• 66% said their performance declined.

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Ethical Issues in the Workplace: The Current Environment 3
Treat employees well for a return.
• The return is harmony, productivity, and innovation.
• Effective firms share common practices, all of which involve treating
employees in humane and respectful ways.
• Managers have an impact on the emotions of their workers as do rewards,
compensation, and composition of teams.
Treat employees well out of a sense of duty.
• This approach emphasizes the rights and duties of all employees.
• And treating them well simply because it is "the right thing to do".
• A sense of duty might stem from the law, professional codes of conduct,
corporate codes of conduct, or moral principles.

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Defining the Employment Relationship 1
• Ethical issues are bound to rise once a relationship is formed
between an employer and an employee.
• To work for another person raises issues of power, obligation,
responsibility, fair treatment, and expectations.
• Legal requirements might protect some of the employee's and
employer's interests but can only go so far.

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Defining the Employment Relationship 2
The next sections cover the ethics underlying the concepts of
due process and fairness that determines acceptable workplace
behavior.
• The relationship is further defined by the application of these principles to
working conditions.
Issues in the following sections are settled from an ethical
perspective by their justification.

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Due Process and Just Cause 1
Should employers’ rights and ability to hire, fire, or discipline
employees be restricted to prevent injustices?
Philosophically, the right of due process is the right to be
protected against the arbitrary use of authority.
• In legal contexts, due process is the procedures that police and
courts must follow in exercising their authority over citizens.

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Due Process and Just Cause 2
Due process in the workplace acknowledges an employer’s
authority over employees.
• Basic fairness—implemented through due process—demands that this
power be used justly.
• However, workplace bullying and other emotional abuse is a problem,
especially in the service sector.
• This behavior directly and indirectly impacts employees.

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Due Process and Just Cause 3
While basic fairness demands employers use power justly, the
law does not always clearly support this mandate of justice.
Most U.S. employment law evolved in a context of a legal
doctrine knows as employment at will (EAW).
• EAW holds that, in the absence of a particular contractual or other legal
obligation that specifies the length or conditions of employment, all
employees are employed "at will."
• Employers may fire employees at any time, for any reason.
• Employees are also free to fire an employee at any time and for any
reason; EAW worker may opt to leave a job at any time for any reason
• So the freedom is theoretically mutual.

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Due Process and Just Cause 4
The ethical rationale for EAW is that it is an important
management tool, which gives managers the ability to make
efficient decisions that should contribute to the greater overall
good .
• Even if EAW were an effective management too, justice demands such
tools not be used to harm other people.
• The right of private property itself is limited by other rights and duties.
• While the freedom to terminate employment is theoretically mutual,
there is an unbalanced power relationship between the two parties.
The courts and legislature has created exceptions to EAW.
• Civil rights laws, labor laws, and constitutional limitations on government
authority into the workplace to protect employees.

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Exceptions to the Doctrine of Employment at Will 1
States vary in terms of their recognition of the following
exceptions to the doctrine of employment at will. Some states
recognize one or more exceptions, while others might recognize
none at all. In addition, the definition of these exceptions may
vary from state to state.
• Bad faith, malicious, or retaliatory termination in violation of public policy.
• Termination in breach of the implied covenant of good faith and fair
dealing.
• Termination in breach of some other implied contract term, such as those
that might be created by employee handbook provisions (in certain
jurisdictions).

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Exceptions to the Doctrine of Employment at Will 2
• Termination in violation of the doctrine of promissory estoppel (where the
employee reasonably relied on an employer’s promise, to the employee’s
detriment).
• Other exceptions as determined by statutes (such as the Worker
Adjustment and Retraining Notification Act [WARN] or the Family and
Medical Leave Act [FMLA]).

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Due Process and Just Cause 5
EAW holds in court until and unless an exception can be
demonstrated.
• The burden of proof lies with the dismissed employee to show that she or
he was unjustly or illegally fired.
• Due process and just cause would reverse this burden of proof onto the
employer.
• Just cause: A standard for terminations or discipline that requires the
employer to have sufficient and fair cause before reaching a decision against
an employee.

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Due Process and Just Cause 6
Due process issues arise in other employment contexts.
• Fair treatment involves fairness in areas such as promotions, salary, and
benefits.
• As these decisions are made on the basis of performance appraisals, due
process rights should extend to this aspect of the workplace.
The ethical questions that remain, are whether this atmosphere
is fair and just for all stakeholders.
Due process is the right to be protected against the arbitrary use
of authority.
• Decision makers must guard against those arbitrary decisions.
• Decisions should be made in light of reasons that can be ethically
defended.

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Downsizing 1
The reduction of human resources at an organization through
terminations, retirements, corporate divestments, or other
means.
The decision itself raises ethical issues because maybe there
were alternatives available to an organization in financial
difficulty.
• Consider the impact of each alternative from the stakeholders'
perspective.

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Downsizing 2
Negative outcomes include:
• Poor recommendations of the firm by former employees.
• A decline in customer service by surviving employees.
• An increase in errors or dangerous behavior by employees.
• Bad attitudes from remaining workers.

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Downsizing 3
Ethics must be central to the design and management of layoff
policies.
• The decision for downsizing should be made by a representative group to
consider all stakeholder interests and earn the trust of those who will be
impacted.
• The facts should be collected, and issues should be determined.
• Notice of an intent to downsize should given as soon as the downsizing is
going to happen.
• Costs and benefits must be weighed in any communication decision.
• Identify stakeholders and define the impact of downsizing on each.

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Downsizing 4
From a legal perspective, the decision about whom to include in
a downsizing effort must be carefully planned.
Firms should review both the fairness of their decision-making
process and the consequence of that process on those
terminated, and the resulting composition of the workforce.
• Downsizing impacts countless stakeholders.

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Health and Safety 1
Employees have a fundamental right to a safe and healthy
workplace.
• However, in some workplaces in our world, employees lack even the most
basic health and safety protections; these work environments have been
called sweatshops.
The extent of employer responsibility is in dispute, and there is
disagreement about the best policies to protect health and
safety.

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Health and Safety 2
Like work, health and safety are "goods" that are valued as a
means for attaining an end and also as ends in themselves.
• Health and safety have intrinsic value in addition to instrumental value.
• If a person dies in a workplace accident, their lost wages would be the
instrumental value.
• The intrinsic value of their life is irreplaceable by financial means.
If "safe" means completely free from risk, certainly no workplace
is perfectly safe.
• If health and safety are interpreted as ideals, impossible to realize, then it
would be unreasonable to claim that employees have a right to a healthy
and safe workplace.

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Figure 6.1: Calculating Acceptable Level of Risk
From this perspective, a workplace is safe if the
risks are acceptable.
Access the text alternative for slide image.

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Challenges to the Acceptable Risk Approach to Health and Safety
• Treats employees disrespectfully by ignoring their input as
stakeholders.
• Ignores the fundamental deontological right an employee
might have to a safe and healthy working environment.
• Assumes an equivalency between workplace risks and other
types of risks when there are significant differences between
them.
• Improperly places incentives because the risks faced at work
could be controlled by others who might stand to benefit by
not reducing them.

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Health and Safety as Market Controlled
Defenders of the free market and the classical model of
corporate social responsibility would favor individual bargaining
as the approach to workplace health and safety.
• Workers demanding higher safety standards and healthier conditions
would settle for lower wages.
• Workers willing to take higher risks would demand higher wages.
In a competitive and free labor market, individual bargaining
would result in the optimal distribution of safety and income.
• The market approach can support compensation to injured workers when
it can be shown that employers were responsible for the harm.
• The threat of compensation acts as an incentive for employers to maintain
a reasonably safe and health workplace.

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Challenges with the Free-Market Approach to Health and Safety
• Labor markets are not perfectly competitive and free.
• Employees seldom, if ever, possess the kind of perfect
information markets require.
• We ignore important questions of social justice and public
policy if we approach questions solely from the point of view
of an individual.

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Health and Safety as Government-Regulated Ethics 1
Mandatory government standards:
• Can be set with the best available scientific knowledge and thus
overcoming market failures from lesser information.
• Prevent employees from choosing between job and safety.
• Focus on prevention rather than compensation.
• Are a social approach addressing public policy questions ignored by
markets.
Occupational Safety and Health Administration (OSHA): Agency
of the federal government that publishes and enforces safety
and health regulations for U.S. businesses.

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Health and Safety as Government-Regulated Ethics 2
OSHA regulations were aimed at achieving the safest feasible
standards, allowing tradeoffs between health and economics.
Critics in both industry and government argue that OSHA should
use cost-benefits analysis when setting standards.
• This approach would lead back to the goals of the market-based approach
of individual bargaining, along with its ethical challenges.
• Note however, that rejecting cost-benefit analysis in setting standards is
not the same as cost-effective strategies in implementing those standards.
• Cost-benefit analysis uses economic criteria in setting standards and is
therefore ethically problematic.

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Health and Safety as Government-Regulated Ethics 3
The policies that have emerged by consensus within the United
States seem to be most defensible.
• Employees have a legitimate ethical claim on mandatory health and safety
standards within the workplace.
• Employees should have the right to be informed about workplace risks.
The policy that has emerged by consensus in the U.S. is if risks
have been reduced to the lowest feasible level and employees
are fully aware of them, then the duty is done.

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Rights and Responsibilities in Conflict 1
Ethical matters of the employment relationship were explored.
The next section concerns matters still up for debate.
• From a Kantian perspective, agreement on the fundamental rights and their
prioritization is not yet universal.
• From a utilitarian viewpoint, reasonable minds do not always agree on
which resolution leads to the greater good.
• Both camps of distributive justice make arguments for fairness.

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Rights and Responsibilities in Conflict 2
The authors’ purpose is to articulate and apply the ethical
decision-making process to the challenges presented.
• Provide a cross section of the arguments advocates involved make.
• Explore the insights that ethical theory might supply.

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The Global Workforce and Global Challenges 1
Workers outside the United States may be subject to some U.S.
laws if they work for an American-based organization, though
enforcement is scattered.
In certain developing countries, workers find themselves subject
to conditions that U.S.-based workers would find intolerable.
• Some commentators believe that encouraging greater global production
will create additional opportunities for expansion domestically, providing a
positive impact on more stakeholders.
• Many economists argue that the maintenance of sweatshops is therefore
supported by economic theory.
• Sweatshop: All workplaces with conditions that are below standards in
more developed countries.

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The Global Workforce and Global Challenges 2
It is helpful to consider the global dimension of an ethically
responsible workplace.
• Some minimum standards might apply, and multinationals may have some
core ethical obligations to employees.
Scholars suggest the Kantian universal principles should govern
the employment relationship and that the ethical obligation of
respect for persons should guide the employment interactions.
• A fundamental moral minimum set of standards exists that should be
guaranteed to workers in all countries notwithstanding culture, stage of
economic development, or availability of resources.

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The Global Workforce and Global Challenges 3
Setting a living wage is problematic because there is no exact
number that one can agree on regarding the count of people
who live in poverty.
• Almost 100 companies have joined the Ethical Trade Initiative (ETI), an
alliance of corporations, trade unions, and voluntary organizations
dedicated to improving the conditions of workers.
Nonwage benefits can provide an advantage to both the worker
and the employer (for example, health checkups and basic
health services).
International nongovernmental organizations suggest voluntary
standards to which possible signatory countries or organizations
could commit.

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The Case of Child Labor 1
Child labor: Exploitative work that involves some harm to a child
who is not of an age to justify his or her presence in the
workplace.
• The International Labour Office (ILO) explains that there are 152 million
children classified as child laborers.
High levels of child labor are associated with low literacy levels,
HIV/AIDS, non-HIV infectious diseases, and malaria.
• Risk of passing on poverty and child labor to the next generation
increases.

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The Case of Child Labor 2
We should carefully review the social and economic structure
within which child labor exists.
• Children:
• May begin work as young as 3 years old.
• May work in unhealthy conditions and live in unhealthy conditions.
• Are mostly required to work full-time, precluding them from education.
• Are forced to work in less-hospitable "underground" professions, if they are
not working in the manufacturing industry.
Legalizing child labor may lower the number of children who
work.

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Discrimination 1
The law allows employers to
make decisions on any basis
other than those prohibited by
the:
• Constitution,
• Precedent
• Several statutes.
Some say employers have
enormous autonomy in their
employment decisions while
employers resist any regulation
of their workplaces.
• A global disagreement
remains on employee rights
with regard to discrimination.
• Employers continue to
advocate for their rights to
manage the workplace and
retain control of employees.
• Employees fear unfair
treatment and a loss of
power.

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Discrimination 2
Covert racial discrimination
Based on one's name.
• Researchers found that people
with Chinese-, Indian-, or Pakistani-
sounding names were 28% less
likely to get an interview than
candidates with precisely the same
qualifications but with English-
sounding names.
Covert gender discrimination
Women often face distinct
challenges.
Women and men are both
gender stereotyped, but
women suffer from different
expectations.
• Success and likability do not go
together for women.

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Diversity 1
• Refers to the presence of differing cultures, languages,
ethnicities, races, affinity orientations, genders, religious
sects, abilities, social classes, ages, and national origins of the
individuals in a firm.
• When used in connection with the corporate environment, it
often encompasses the values of respect, tolerance, inclusion,
and acceptance

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Diversity 2
The U.S. workforce today is
significantly more diverse than
ever before.
Some European countries have
outpaced the U.S. in diversity,
in particular, in connection
with board representation.
• Other countries have federal laws
requiring women sit on the
board.
• The business case for
gender diversity is strong.
• Diversity in boards and
management is associated
with higher return on
equity.

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Diversity 3
Aside from the benefits of diversity, it can create conflicts.
• Tension and anxiety may emerge when bringing people together with
diverse differences.
• The nature of the work itself often might cause tension, and additional
challenges such as cultural challenges.
• Diversity may increase tension in several areas.
• Another concern involves integrating diverse viewpoints with a preexisting
corporate culture.
• Be wary of prejudgments based solely on differences in interpretations of
culturally based standards.
• Efforts at multiculturalism, such as acknowledging and promoting diversity in
the workplace can serve to both educate and encourage diversity-related
benefits.
• The cost of ignoring diversity is high, in terms of lost productivity, but also
in terms of legal liability.

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Affirmative Action 1
When balancing employer and
employee rights, a question
arises over affirmative action.
• Not a question of the right to a
fair process but instead whether
a person has a right to the job in
the first place.
For example, efforts to
encourage diversity may also
be seen as a form of reverse
discrimination.
• Arguments on both sides
use emotional persuasion.
• Discrimination on the basis
of someone’s membership
in a protected class is still
wrongful discrimination.
• The text now takes a closer
look at affirmative action to
explore the ethical issues it
raises.

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Affirmative Action 2
The term affirmative action refers to a policy or a program that
tries to respond to instances of past discrimination by
implementing proactive measures to ensure equal opportunity
today.
Affirmative action arises in three ways.
• Through legal requirements of Executive Order 11246 to ensure equal
opportunity.
• A court requirement of "judicial affirmative action" to remedy a finding of
past discrimination.
• Voluntary affirmative action plans.

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Affirmative Action 3
Legal constraints to an affirmative action program that support
an ethical decision-making process.
• Policy may not infringe upon the majority of employees’ rights or create
an absolute bar to their advancement.
• Policy may not set aside any positions for women or minorities and may
not be construed as quotas to be met.
• It may not change legitimate expectation of employees.
• It should be only temporary in that it is for the purpose of attaining, not
maintaining, a balanced workforce.

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Affirmative Action 4
Opponents contend the efforts do more harm than good, that it
creates ill will and poor morale among the workforce.
• It translates into current punishment for past wrongs.
The Supreme Court addressed affirmative action through a case
of ‘reverse discrimination’ in 2003.
• The case was filed by two white females who said the University of
Michigan Law School admitted minority students with lower LSAT scores
than they had attained.
• GM filed a "friend of the court" brief in support of the school’s admission
policy, and the court agreed.
• Yet, the Supreme Court also upheld a Michigan constitutional amendment
banning affirmative action in admissions to the state’s public universities.