Business Ethics - Project 1: News Event

BMGT 496 - Week 3 Citations

(Are ESOPs Good Retirement Plans?, 2018)

(Ballman, 2012)

(Boffey, 2017)

(Brusseau, 2012)

(Brusseau, Chapter 8: Manager’s Ethics: Getting, Promoting, and Firing Workers, 2012)

(Chuck, 2015)

(Cope, n.d.)

(Decot, 2017)

(EU workplace headscarf ban 'can be legal', says ECJ, 2017)

(Feder, 2015)

(Fisher Phillips, 2009)

(Halloran & Sage, 2002)

(Elsesser, 2018)

(Morris, 2015)

(Nagele-Piazza, 2018)

(Nelson & Ellis, 2016)

(OSHA’s Wall of Shame: Agency Targets ‘Severe Violators’, 2016)

(Peterson, Whitaker, & Bjork, 2016)

(Porath, 2017)

(Porath C. , 2017)

(Rapoport, 2018)

(Robinson, 2016)

(Scheiber, 2018)

(Schumpeter: When workers are owners, 2015)

(Shamsian, 2015)

(U.S. Equal Employment Opportunity Commission, 2003)

(WBAL Radio, 2014)

Bibliography Are ESOPs Good Retirement Plans? (2018, May 24). Retrieved March 27, 2021, from

National Center for Employee Ownership: https://www.nceo.org/articles/esops- too-risky-be-good-retirement-plans

Ballman, D. (2012, November 21). 8 Ways Your Employer Can Legally Discriminate Against You. (AOL Jobs) Retrieved March 27, 2021, from Business Insider: https://www.businessinsider.com/can-your-boss-discriminate-against-you-2012- 11

Boffey, D. (2017, November 20). EU to push for 40% quota for women on company boards. Retrieved March 27, 2021, from The Guardian: https://www.theguardian.com/world/2017/nov/20/eu-to-push-for-40-quota-for- women-on-company-boards

Brusseau, J. (2012). Chapter 7: Employee’s Ethics: Making the Best of the Job You Have as You Get from 9 to 5. In J. Brusseau, & 277-326 (Ed.), The Business Ethics Workshop. Washington, DC: Saylor Academy. Retrieved March 27, 2021, from https://saylordotorg.github.io/text_the-business-ethics-workshop/

Brusseau, J. (2012). Chapter 8: Manager’s Ethics: Getting, Promoting, and Firing Workers. In J. Brusseau, The Business Ethics Workshop (pp. 327-377). Washington, DC: Saylor Academy. Retrieved March 27, 2021, from https://saylordotorg.github.io/text_the-business-ethics-workshop/

Chuck, E. (2015, April 7). Former Hooters Waitress Awarded $250,000 in Racial Discrimination Case. Retrieved March 27, 2021, from NBC: https://www.nbcnews.com/news/us-news/former-hooters-waitress-awarded- 250-000-racial-discrimination-case-n337396

Cope, T. K. (n.d.). LIFESTYLE DISCRIMINATION: IS IT LEGAL? (MCR Attorneys ) Retrieved March 27, 2021, from Mesch Clark Rothschild: https://www.mcrazlaw.com/lifestyle-discrimination-is-it-legal/

Decot, C. N. (2017, May 8). Employers Must Use Caution When Basing Pay Decisions On Prior Salary History. Retrieved March 27, 2021, from Foley & Lardner, LLP: https://www.foley.com/en/insights/publications/2017/05/employers-must-use- caution-when-basing-pay-decisio

Elsesser, K. (2018, September 5). Pay Transparency Is The Solution To The Pay Gap: Here's One Company's Success Story. Retrieved March 27, 2021, from Forbes: https://www.forbes.com/sites/kimelsesser/2018/09/05/pay-transparency-is-the- solution-to-the-pay-gap-heres-one-companys-success-story/?sh=37760f7a5010

EU workplace headscarf ban 'can be legal', says ECJ. (2017, March 14). Retrieved March 27, 2021, from BBC: https://www.bbc.com/news/world-europe-39264845

Feder, J. (2015). The Pregnancy Discrimination Act and the Supreme Court: A Legal Analysis of Young v. United Parcel Service. CRS Report, Congressional Research Service. Retrieved March 27, 2021, from https://fas.org/sgp/crs/misc/R44204.pdf

Fisher Phillips. (2009, December 1). EEOC Settles Beef With Restaurant. Hospitality Labor Letter(4). Retrieved March 27, 2021, from Fisher Phillips: https://www.fisherphillips.com/resources-newsletters-article-eeoc-settles-beef- with-restaurant

Halloran & Sage. (2002, July 21). Legal discrimination in four letters: BFOQ. (M. Lee Smith Publishers LLC) Retrieved March 27, 2021, from HR.com: https://www.hr.com/en/communities/legal/legal-discrimination-in-four-letters- bfoq_eacylj3d.html

Morris, D. (2015, August 14). Is it okay to hire cooks to match the cuisine? (part I). Retrieved March 27, 2021, from Lexology: https://www.lexology.com/library/detail.aspx?g=482b0e83-df69-443e-be11- dc60c8e7a2dd

Nagele-Piazza, L. (2018, February 7). Thinking About Using Payroll Debit Cards? Read This First. Retrieved March 27, 2021, from SHRM: https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local- updates/pages/employers-payroll-debit-cards-.aspx

Nelson, E., & Ellis, S. (2016). The Hidden Obstacle to Great Corporate Culture: Unconscious Bias. Customer Strategist, 8(1), 44-48. Retrieved March 27, 2021, from TTEC: https://www.customerstrategist- digital.com/customerstrategist/spring_2016/MobilePagedReplica.action?pm=2&f olio=44#pg44

OSHA’s Wall of Shame: Agency Targets ‘Severe Violators’. (2016, December 19). Retrieved March 27, 2021, from Business Ethics: https://business- ethics.com/2016/12/19/0711-oshas-wall-of-shame-agency-targets-severe- violators/

Peterson, Whitaker, & Bjork. (2016, December 16). New Overtime Rules Suspended for Now. Retrieved March 27, 2021, from PWB CPAS & Advisors: https://www.pwbcpas.com/new-overtime-rules-suspended-for-now/

Porath, C. (2017, May 2). Chris Porath - "Mastering Civility: A Manifesto in the Workplace," WJLA Interview. Georgetown McDonough. Retrieved March 27, 2021, from https://www.youtube.com/watch?v=IMSayTfQQM0

Porath, C. (2017, September 15). The silent killer of workplace happiness, productivity, and health is a lack of basic civility. Retrieved March 27, 2021, from Quartz: https://qz.com/1079344/the-silent-killer-of-workplace-happiness-productivity- and-health-is-a-lack-of-basic-civility/

Rapoport, I. (2018, December 1). Kareem Hunt faces more than baseline six-game suspension. Retrieved March 27, 2021, from NFL Network: https://www.nfl.com/news/kareem-hunt-faces-more-than-baseline-six-game- suspension-0ap3000000994219

Robinson, T. A. (2016, January 3). The Top 10 Bizarre Workers’ Compensation Cases for 2015. Retrieved March 27, 2021, from LexisNexis: https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/recent- cases-news-trends-developments/posts/the-top-10-bizarre-workers- compensation-cases-for-2015

Scheiber, N. (2018, February 17). If a Law Bars Asking Your Past Salary, Does It Help or Hurt? Retrieved March 27, 2021, from New York Times: https://www.nytimes.com/2018/02/16/business/economy/salary-history- laws.html

Schumpeter: When workers are owners. (2015, August 20). (The Economist Group Limited) Retrieved March 27, 2021, from The Economist: https://www.economist.com/business/2015/08/20/when-workers-are-owners

Shamsian, J. (2015, September 13). The strange loophole that lets Hooters hire only female servers. Retrieved March 27, 2021, from Business Insider: https://www.businessinsider.com/how-can-hooters-hire-only-women-2015-9

U.S. Equal Employment Opportunity Commission. (2003, April 23). Employee Rights When Working for Multinational Employers. Retrieved March 27, 2021, from U.S. Equal Employment Opportunity Commission: https://www.eeoc.gov/laws/guidance/employee-rights-when-working- multinational-employers

WBAL Radio. (2014, June 19). Anne Arundel Medical Center Won't Hire Smokers In The Future. Retrieved March 27, 2021, from WBAL News Radio 1090 AM 101.5 AM: https://www.wbal.com/article/108061/3/anne-arundel-medical-center-wont-hire- smokers-in-the-future

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May 24, 2018

Are ESOPs Good Retirement Plans?

Research Shows That ESOPs Provide Retirement Benefits that Are Both Much Larger and Much More Equitably Distributed than Most Other Retirement Plans

Introduction

W E B A R T I C L E

For a quick side-by-side comparison of retirement security in ESOPs versus 401(k) plans, see

the table at the end of this article. For a more detailed review of this topic, see Corey Rosen,

"Do ESOPs Need Reform? A Look at What the Data Show," Tax Notes, June 22, 2015.

Perhaps the most common and politically important question about ESOPs is whether

they are too risky to be a good retirement program for employees. ESOPs inherently

increase the concentration of retirement assets in a single security—company stock— and

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ESOP Contributions Are Larger

Based on Department of Labor �lings, companies on average contribute 50% to 100%

more to ESOPs than non-ESOP companies do to 401(k) plans.

Most of the money in a 401(k) plan comes from the employee. With few exceptions,

all the assets in an ESOP come from the company.

Research by the Department of Labor shows that ESOPs not only have higher rates of

return than 401(k) plans and are also less volatile.

ESOPs lay people o� less often than non-ESOP companies.

ESOPs cover more employees, especially younger and lower income employees, than

401(k) plans

ESOP companies are somewhat more likely to o�er secondary retirement plans than

conventional companies are to o�er any plan

critics contend that this reduced diversi�cation makes ESOPs too risky. Even worse,

employees depend on the same company for both their paychecks and their retirement

accounts. �is is an understandable concern, but it rests on an assumption that turns out

to be incorrect in most cases. �e diversi�cation argument assumes that companies with

ESOPs are substituting the ESOP for a diversi�ed retirement plan. �at turns out not to be

true. ESOP companies are slightly more likely to have a secondary retirement plan (even

de�ned bene�t plans), than non-ESOP companies are to have even just one plan.

Moreover, many mature ESOPs begin to diversify some of the assets in the plan over time.

So for the very large majority of cases, the real choice is between non-ESOP participants,

who have $X in diversi�ed assets, versus ESOP participants who also have $X in

diversi�ed assets, but who have, in addition, $Y in company stock. In practice, ESOP

participants are actually better o� by a considerable margin in terms of retirement assets.

Moreover, by their design, ESOPs are particularly better for lower income and younger

employees than typical 401(k) plans. Consider the following facts:

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ESOPs Are More Likely to Offer Secondary Retirement Plans Than Other Companies Are to Offer Any Plan

ESOPs Cover More People

Which is riskier: a $100,000 account balance all in company stock or $50,000 diversi�ed

401(k) plan? ESOP accounts tend to be larger than 401(k) accounts partly because

contributions by the company to the ESOP average about 6% to 8% of pay per year. Non-

ESOP companies contribute about 4% of pay per year into their 401(k) plan according to

the 401(k) Plan Help Center, but that only goes to those who actually defer into the plan,

typically about two-thirds to three-quarters of the eligible employees. As we will see below,

ESOPs are actually not more volatile than 401(k) plans, but even if they were, there is

considerable room for a downside in an ESOP before the risk equals that of a diversi�ed

plan.

In a survey by PlanSponsor Magazine in 2013, 95% of ESOP companies o�ered 401(k)

plans compared to 86% for respondents overall. ESOPs were also slightly more likely to

o�er de�ned bene�t plans and pro�t sharing plans. Survey respondents tended to be larger

companies and more likely to o�er some kind of retirement plan than companies in

general. In a 2010 project funded by the Employee Ownership Foundation, the NCEO did

an extensive analysis of ESOP companies using data from the U.S. Department of Labor

Form 5500 reports. We looked at every ESOP company for which data are available

compared to all retirement plans. �e study found that ESOP companies are 20% more

likely to o�er a second de�ned contribution (DC) plan than non-ESOP companies are to

o�er any DC plan at all.

ESOPs, by their terms, include all employees meeting minimum service rules whether they

defer any income or not. 401(k) plans, the most common retirement plan, only cover

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What Is at Risk Is Rarely Employee Money

ESOPs and ESOP Participants Often Diversify Over Time

ESOPs Are Less Volatile and Have Better Rates of Return

employees who defer into the plan. What they get then depends on what they defer,

typically a 50% match up to about 6% of pay. So younger, lower income employees not only

are more likely to be uncovered entirely, but are also getting a lower percentage of their

pay contributed by the company than higher income ones. In most ESOPs, by contrast, all

employees get the same percentage of pay. It is also important to note that according to the

Employee Bene�ts Research Institute, 47% of the full-time adult workforce does not

participate in any retirement plan. A plan with diversi�cation risk but signi�cant assets is

far better than no plan at all.

�e vast majority of ESOPs are funded entirely by the company. ESOP participants often

accumulate very large account balances, typically well over six �gures after 10-15 years. If

that value sharply declines, then employees obviously have su�ered a real loss. But this is a

very di�erent kind of loss than would be the case in a 401(k) where most of the money

came from the employees.

Once ESOPs have bought all the shares they are going to buy, companies often start

putting cash into the plan. Mature ESOPs often have 20% or more in cash. In addition, by

law employees with 10 years or more in the plan who are at 55 or older can diversify up to

25% of their company stock, and �ve years after they start doing this, can diversify up to

50%.

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Measure 401(k) Plans ESOPs

Mean Rate of Return 7.8% 9.1%

Standard Deviation    

1991-2000 11.2% 11.1%

2001-2010 13.5% 12.4%

2006-2010 15.5% 14.0%

2008-2010 19.3% 17.0%

Data from the Department of Labor for retirement plans with 100 or more participants

show that ESOPs outperformed 401(k) plans in 15 of the 20 years between 1991 and 2010

and underperformed in only three (two were the same). ESOPs were also less volatile

during that time as measured by standard deviation scores for the periods 1991-2000,

2001-2010, 2006-2010, and 2008-2010 (the periods the DOL analyzed). �e table below

provides a summary of the �ndings: Return Rates and Volatility in ESOPs versus 401(k)

Plans

Source: Private Pension Plan Bulletin Historical Tables and Graphs, U.S. Department of

Labor Employee Bene�ts Security Administration, November 2012 �ere are two reasons

for this di�erence. First, almost all ESOPs are in closely held companies. By law, they must

have an annual independent appraisal. �e appraisal technique typically projects earnings

over the next 3-5 years and then calculates a risk-adjusted present value to use as the key

element of valuation. �is then tends to average out future volatility. Second, ESOP

companies tend to be managed for the long term. Equities in 401(k) plans are typically in

public companies where quarter-to-quarter performance is the key issue. As we have seen

in the last two decades, the stock market can be extremely volatile, partly as a result.

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ESOPs Lay People Off Less Than Conventional Companies

The Bottom Line

ESOPs Versus 401(k) Plans for Retirement Security*

  ESOPs 401(k) Plans

General Social Survey data from 2002, 2006, and 2010 indicate that employee ownership

plan participants are one-third to one-fourth as likely to be laid o� as non- participants.

For many people, job security is the most critical issue for retirement security.

In the analysis of Form 5500 data discussed above, we concluded that looking only at

de�ned contribution plan assets originally contributed by the company, ESOP participants

have approximately 2.2 times as much in their accounts as participants in comparable non-

ESOP companies with DC plans. �ey are somewhat more likely to have a 401(k) plan or

other retirement plan as well. We could not include de�ned bene�t plans in this analysis

because of how they are funded, but the PlanSponsor data indicate that ESOPs are actually

more likely to have these plans than non-ESOP companies. Overall, then, ESOPs make a

substantial contribution to retirement security. �ey are not without risk, but the

percentage of participants who end up with their retirement at risk is a tiny fraction of

those who end up with a greatly enhanced retirement package. �at is particularly true for

the millions of employees with no retirement plan at all. �e table below provides a quick

summary of the key di�erences comparing ESOPs to the most common form of retirement

plan, the 401(k) plan.

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Contribution rate from company to the plan

6% to 8% of pay per year for all eligible employees.

4% of pay of those eligible employees making deferrals per year (about two- thirds to three-quarters of eligible employees defer into the plan).

Rate of return Department of Labor data indicate ESOPs had a 9.1% annualized rate of return from 1990-2010.

Department of Labor data indicate 401(k) plans had a 7.8% annualized rate of return from 1990-2010.

Volatility Department of Labor data show that ESOP returns were less volatile between 1990 and 2010 than 401(k) plans.

Department of Labor data show that 401(k) plan returns were more volatile between 1990 and 2010 than 401(k) plans.

Diversification in the plan

Mature ESOPs tend to partly diversify over time and participants can choose to partially diversify at age 55 and 10 years of participation.

401(k) plans are generally, but not always, well diversified.

Secondary plans

ESOP companies are slightly more likely to have a 401(k) or pension plan than non-ESOP companies are to have any retirement plan.

Most companies with 401(k) plans do not have secondary plans.

Coverage of younger and lower income employees

All employees meeting minimum age and service requirements are in the plan and receive contributions based on a percentage of pay or more level formula. Employee contributions are rarely required.

Most 401(k) plans require employees to make deferrals to get company matching contributions; lower paid and younger employees are the least likely to defer and defer and lower percentages of pay.

Job security Employees in employee ownership plans are one-third to one fourth as likely to be laid off as non-plan participants.

Employees not in employee ownership plans are three to four times as likely to be laid off as employees in these plans.

Bottom Line ESOP participants have approximately 2.2 times as much in their accounts as participants in

Most of the money in a 401(k) plan comes from the employees, not the company. Median account balances for

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comparable non-ESOP companies with DC plans

401(k) participants age 55-64 are only $120,000 (2012 data from Center for Retirement Research at Boston College).

*Sources: Data compiled from Department of Labor plan �lings; PlanSponsor magazine

employer survey; Employee Bene�t Research Institute, and the General Social Survey.

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8 Ways Your Employer Can Legally Discriminate Against You Donna Ballman , AOL Jobs Nov 21, 201

Donna Ballman , AOL Jobs Nov 21, 2012, 2:17 PM I talk lots about illegal discrimination, but there are many forms of employment discrimination that are perfectly legal. Here are some of the types of discrimination that may be legal if they happen to you:

1. Bankruptcy

The Bankruptcy Code says: "No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt..." Yet several courts have decided that this provision does not apply to potential employers. The 3rd, 5th and 11th Circuit Courts of appeal say you may be denied employment due to your bankruptcy.

2. Political Views

Some, but not all states have laws prohibiting discrimination based upon political affiliation. But in most situations you can be fired because you exercise your right to free speech and express political opinions. Only government employees have First Amendment rights. The one big exception is that the National Labor Relations Act says you can't be fired for discussing working conditions, including discussing which candidates would be best for working conditions. For more information about political discrimination, you can check out my blog post on the topic.

3. Favoritism

Many Americans think favoritism at work is illegal. It isn't. Discrimination against you because you're you is legal. If you're being subjected to favoritism because of your race, age, sex, religion, national origin, disability, pregnancy, color or genetic information, that is unlawful discrimination. If you have to complain, make sure you complain about something illegal. Your employer can retaliate against you legally for complaining about favoritism, but they can't legally retaliate for reporting discrimination.

4. Nepotism

I get emails all the time complaining about employers who favor family members and friends. Playing favorites is not illegal. Hiring relatives is not illegal -- not if you're in the private sector. If you work for government, every state has some law about conflict of interest or hiring relatives at a certain level. Under Sarbanes-Oxley, management has to disclose potential conflicts of interest. So hiring of relatives, while probably legal even for publicly-held companies, can't be hidden from shareholders. If the favored few are all of the same race, religion, national origin or other protected category, the company could be engaging in illegal discrimination. If the boss favors only individuals who have engaged in sexual relations with her, and you've turned her down, you might have a sexual harassment claim (although sexual favoritism is mostly legal).

5. Appearance

Very few states or municipalities have prohibitions against appearance discrimination, and there are no federal laws against it. Sometimes, women are subjected to appearance standards when men are not (or vice versa) and that would probably be illegal discrimination. But hating someone because they're beautiful? Probably legal.

6. Credit History

If your state is like most, an employer can refuse to hire you due to bad credit. Some states finally got wise and passed laws against using poor credit history as the basis for employment decisions. If your potential employer is going to run a credit check, then they must comply with the Fair Credit Reporting Act. The EEOC is looking closely at the use of credit reports in employment decisions because they frequently have a disparate impact on women and minorities.

7. Weight

As I wrote in my article on weight discrimination, it's mostly legal. A very few states and municipalities have limitations on appearance or weight discrimination. Otherwise, if you're morbidly obese you are likely protected under disability discrimination laws. If you need medical treatment for a condition relating to your weight, you may be protected for the days you miss work under the Family and Medical Leave Act. If you're held to different standards than members of the opposite sex, it might be sex discrimination.

8. Unemployment

Discrimination against the unemployed is indeed legal. Many companies consider unemployment to be a factor that automatically disqualifies applicants. Unemployment discrimination is rampant. While a handful of states (New Jersey, Oregon, D.C.) have passed laws against unemployment discrimination, it's legal almost everywhere in the United States.Other states have tried to pass laws and failed or been vetoed. President Obama has proposed the American Jobs Act, which has many provisions that will help put Americans back to work. Included in that law is a prohibition against discriminating against the unemployed, but it hasn't passed yet. Unemployment is having a disparate

impact on older workers and minorities, so you might be able to pursue a discrimination claim if you've been subjected to unemployment discrimination and a less qualified younger employee or person of a different race, sex or national origin was hired.

So there you have it. Lots of types of discrimination are illegal. (Hopefully employers won't use this as a primer on legal discrimination.) However, some of these "legal" kinds of discrimination may also have an illegal effect. Try to look around and see if what's happening at work is really about sex, race, age, disability, pregnancy, national origin, or some other type of illegal discrimination.

If you need legal advice, it's best to talk to an employment lawyer in your state, but if you have general legal issues you want me to discuss publicly here, whether about discrimination, working conditions, employment contracts, medical leave, or other employment law issues, you can ask me at AOL Jobs. Please note: Anything you write to me can be featured in one of my columns.

Read the original article on AOL Jobs. Copyright 2012. Follow AOL Jobs on Twitter.

Chapter 7: Employee’s Ethics: Making the Best of the Job You Have as You Get from 9 to 5 from

The Business Ethics Workshop was adapted by Saylor Academy and is available under a

Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported license without

attribution as requested by the work's original creator or licensor. UMGC has modified this work and it is available under the original license.

Saylor URL: http://www.saylor.org/books Saylor.org 277

Chapter 7

Employee’s Ethics: Making the Best of the Job You Have as You Get from 9 to 5

Chapter Overview

Chapter 7 "Employee’s Ethics: Making the Best of the Job You Have as You Get from 9 to 5" examines

some ethical decisions facing employees. It considers the values guiding choices made over the course of a

workday.

Saylor URL: http://www.saylor.org/books Saylor.org 278

7.1 Taking Advantage of the Advantages: Gifts, Bribes, and

Kickbacks

L E A R N I N G O B J E C T I V E S

1. Define a conflict of interest.

2. Show how gifts in the business world may create conflicts of interest.

3. Delineate standard practices for dealing with gifts.

4. Consider how receiving gifts connected with work may be managed ethically.

5. Define bribes and kickbacks in relation to gifts.

6. Show how the ethics of bribes and kickbacks can be managed inside the ethics of gifts.

Living the High Life

If you’re young, looking for work, and headed toward a big city (especially New York), then you could do a

lot worse than landing a job as a media buyer for an advertising agency. According to an article in New

York magazine, it’s working out well for twenty-four-year-old Chris Foreman, and it’s working out despite

a salary so measly that he can’t afford his own place, a ticket to a movie, or even to add meat to his

homemade spaghetti. [1]

This is what makes the job click for Foreman: as a media buyer, he oversees where big companies like

AT&T place their advertisements. And because those ads mean serious money—a full page in a glossy,

top-flight magazine costs about five times what Foreman earns in a year—the magazines line up to throw

the good life at him. Thanks to the generosity of Forbes magazine, for example, Foreman spends the

occasional evening on the company’s vast Highlander yacht; he drinks alcohol almost as old as he is,

munches exquisite hors d’oeuvres, and issues orders to white-suited waiters. While guests arrive and

depart by helicopter, Foreman hobnobs with people the rest of us see only on movie screens. A scan of the

Highlander guest book turns up not just celebrities but serious power too: Margaret Thatcher was a guest

once.

A night on the Highlander is a good one, but it’s far from the only event lighting up Foreman’s glitzy life. A

few of his other recent outings are listed in the article, with some estimated cash values attached: An all-

Saylor URL: http://www.saylor.org/books Saylor.org 279

expenses-paid ski weekend (worth almost $1,000, in Foreman’s estimation); tickets to see Serena

Williams at the US Open ($75 each); invites to the Sports Illustrated Swimsuit Issue party, where he

chatted with Heidi Klum and Rebecca Romijn-Stamos; prime seats for sold-out Bruce Springsteen

concerts ($500 each); dinners at Cité, Sparks, Il Mulino, Maloney & Porcelli, and Monkey Bar, to name a

few of his favorites ($100 a pop).

Foreman observes the irony of his life: “It’s kind of crazy, I had dinner at Nobu on Monday [the kind of

restaurant few can afford, even if they’re able to get a reservation], but I don’t have enough money to buy

socks.” [2]

The Highlander’s spectacularly wealthy owner is Steve Forbes. If he invites former British Prime Minister

Margaret Thatcher aboard for a holiday weekend, you can understand why: she’s not just an interesting

person; she’s living history. Serena Williams would be an interesting guest, too, in her way. The same goes

for Heidi Klum and Ms. Romijn-Stamos, in a different way. What they all have in common, though, is that

you know exactly what they’ve got, and why a guy with a big bank account would treat them to an evening.

But what, exactly, does Mr. Forbes expect to get in return for inviting media buyer Chris Foreman? The

answer: “We media buyers are the gatekeepers—no one at AT&T actually purchases the ads. If at the end

of a buying cycle, your budget has an extra $200,000, you’ll throw it back to the person who treated you

best.” [3]

The answer, in a word, is money.

What’s Wrong with Gifts and Entertainment?

The fundamental problem with the gifts Foreman received and the free entertainment he enjoyed is that

they create a conflict of interest, a conflict between professional obligations and personal welfare. As a

paid media buyer, it’s Foreman’s job and obligation to buy ads in the magazines that will do his clients the

most good, that’ll deliver the biggest bang for the buck. But against that, as a single twenty-four-year-old

guy in New York City, it’s in his personal interest to purchase ads in Forbes magazine since that probably

gets him invited back to the Highlander with its free drinks, exquisite dinners, and, if he’s lucky, some face

time with women he’s already seen quite a bit of in Sports Illustrated. This is a tough spot, and there are

two broad ways it can play out:

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1. Foreman can do the parties at night, go home, sleep, wake up with a clear head, and buy the best ads for

his client. Let’s say the advertising money he’s spending belongs to AT&T and they’re trying to attract new

clients in the forty-five to fifty-five demographic of heavy cell phone users. He takes that target, checks to

see what magazine those people like to read more than any other, and buys a full pager there. If the

magazine happens to be Forbes, great, if not, then Forbes doesn’t get anything back for its party. In this

case, Foreman knows he’s done right by AT&T and his employer. To the best of his ability, he guided

advertising money to the spot where it’ll do the most good. There remains a potential problem here,

however, which is the appearance of a conflict of interest. Even though Foreman didn’t let the parties

affect his judgment, someone looking at the whole thing from outside might well suspect he did if it

happens that Forbes gets the ad buy. This will be returned to later on in this chapter.

2. The darker possibility is that Forbes isn’t the best media buy, but they get the ad anyway because

Foreman wants to keep boarding the Highlander. In this case, Foreman is serving his own interest but

failing his obligations to his employer and to his client.

In pure ethical terms, the problem with the second possibility, with selling out the client, can be reduced

to an accusation of lying. When Foreman or any employee signs up for a job, shows up for work, and then

accepts a paycheck, they’re promising to be an agent for the organization, which is formally defined in

commercial law as someone acting on behalf of the organization and its interests. In some situations it

can be difficult to define exactly what those interests are, but in Foreman’s it’s not. He does well for his

employer when he gives the clients the best advice possible about spending their advertising dollars.

That’s his promise and he’s not fulfilling it.

Redoubling the argument, in the case of the typical media buyer, there’s probably also an explicit clause in

the employment contract demanding that all media advice be objective and uncorrupted by personal

interest. Even without that formal step, however, the shortest route to an ethical condemnation of buying

ads because a night on the Highlander (or some other gift) has been received is to underline that the act

turns the media purchaser into a liar. It makes him or her dishonest every time they come into work

because they’re not providing the objective and impartial advice they promise.

In discussing conflicts of interests, it’s important to keep in mind that those who find themselves caught

up in one haven’t necessarily been corrupted. Just because Foreman finds himself torn between giving

impartial advice to his client and giving the advice that gets him good parties doesn’t mean his judgment

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is poisoned. That said, it’s extremely difficult to walk away from a conflict of interest unstained: any time

serious gifts or rich entertainment gets injected into a business relationship, suspicious questions about

professionalism are going to seep in too.

Finally, there are two broad ways of dealing with gifts, especially those creating conflicts of interest. They

can be flatly refused, or rules can be formulated for accepting them responsibly.

Refusing Gifts and Entertainment

One way to avoid the gift and conflict of interest problem altogether for Chris Foreman or anyone in a

similar situation is to simply refuse any gifts from business partners. Far more frequently than private

businesses, government organizations take this route. The approach’s advantage, obviously, is that it

wipes out the entire question of wrongdoing. The disadvantage, however, is that it dehumanizes work; it

seems to forbid many simple and perfectly appropriate gestures of human interaction.

Here’s an example of what can happen when efforts to eradicate conflicting interests go to the extreme:

it’s from a New York Times front-pager about the state governor:

Governor David A. Paterson violated state ethics laws when he secured free tickets to the opening

game of the World Series from the Yankees last fall for himself and others, the New York State

Commission on Public Integrity charged on Wednesday. [4]

So, the governor is in trouble because he got some tickets to watch his home team play in the baseball

championship? That’s going to make Chris Foreman’s head swim. Without getting into the details of the

Paterson case, accepting these tickets doesn’t seem like a huge transgression, especially for someone

whose job pays well and is already packed with gala events of all kinds. It’s not as though, in other words,

Peterson’s going to be blown away by the generosity or become dependent on it. In the case of Foreman

who could barely afford to eat, it’s reasonable to suspect that he may come to rely on his occasional trip to

the Highlander, but it just doesn’t seem likely that the governor’s judgment and ability to fulfill

professional obligations are going to be distorted by the gift provided by the New York Yankees baseball

club. More, as the state’s elected leader, a case could probably be made that the governor actually had a

professional responsibility to show up and root for the home team (as long as the visitors aren’t the Mets).

As a final note, since the now former governor is legally blind, the value of the gift seems limited since he

couldn’t actually see the game he attended.

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Despite this case’s apparent frivolity, the general practice of eliminating conflict of interest concerns by

simply banning gifts can be justified. It can be because so many gifts, just by existing, create the

appearance of a conflict of interest. An appearance of conflict exists when a reasonable person looking at

the situation from outside (and without personal knowledge of anyone involved) will conclude from the

circumstances that the employee’s ability to perform his or her duties may be compromised by personal

interest. This is different from an actual conflict because when there’s really conflict, the

individual feels torn between professional obligations and personal welfare. Almost certainly, Foreman

was tempted to help out Forbes because he really liked the parties. But the case of Governor Paterson

presents only the appearance of a conflict of interest because we don’t know whether he even wanted the

tickets to the Yankees game. Given the fact that he’s blind, he may well have preferred staying home that

night. Still, for those of us who can’t know his true feelings, it does seem as though there might,

potentially, be some incentive for Paterson to return the Yankee favor and provide them some special

advantage. It’s almost certain that at some time in the future, the baseball club will have an issue up for

debate by the state government (perhaps involving the construction of a stadium or maybe just a license

to sell beer inside the one they currently have), and as soon as that happens, the appearance of conflict is

there because maybe Paterson’s response will be colored by the tickets he got.

Conclusion. Refusing to accept any gifts from business associates is a reasonable way of dealing with the

ethical dilemma of conflicting interests. By cutting the problem off at the roots—by eliminating not only

conflicts but the appearance of them—we can go forward with confidence that a worker’s promise to

represent the organization faithfully is uncorrupted by the strategic generosity of others.

What Other Remedies Are Available for Conflict of Interest Problems Stemming

from Gifts?

Categorically refusing gifts may be recommendable in some cases, but in most economic situations a total

ban isn’t realistic. People make business arrangements the same way they make friendships and romance

and most other social things—that mean invitations to the Highlander if you’re lucky, or just to a few

Budweiser’s in the hotel bar. And if you turn everyone down every time, it’s probably going to dampen

your professional relationships; you may even lose the chance to get things done because someone else

will win the contract between drinks.

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So where does the line get drawn for accepting gifts with ethical justification? Whether you happen to be a

renowned politician in a large state or someone just out of school trying to make a go of it in the world,

there are a number of midpoints between Governor Paterson’s obligation to refuse tickets to a game he

couldn’t see anyway and Chris Foreman’s raucous partying on the Highlander. Three of the most common

midpoints are

1. transparency,

2. recusal,

3. organizational codes.

Transparency, as the word indicates, manages the acceptance of gifts by publicly recognizing their

existence. The idea is that if Foreman is willing to openly acknowledge exactly what he’s getting

from Forbes magazine, then we can trust that there’s nothing underhanded going on, no secret

agreements or deals. Of course the gifts may still influence his judgment, but the fact that they’re public

knowledge at least removes the sense that he’s trying to get away with something.

Recusal is abstaining from taking part in decisions contaminated by the appearance of a conflict of

interest. Foreman could, for example, keep going to Highlander parties but not manage any media buying

for the demographic that reads Forbes. It’s fairly easy to imagine a team of media buyers working together

on this. Every time something comes up that might be right for Forbes, Foreman passes the decision on to

Sam Smith or whoever and so removes himself from the conflict.

In the public sphere, especially politics and law, it’s common for judges and legislators to remove

themselves from considering issues bearing directly on their welfare. A judge who owns stock in the

Omnicom communications group may recuse herself from hearing a civil case brought against the

company. Legislators deciding what the salary should be for legislators may ask for recommendations

from an independent panel.

Organizational codes are one of the theoretically easiest but also one of the more practically difficult

ways to handle gifts. The advantage of a code is that it can provide direct responses for employees trying

to decide whether they can accept a gift. In Oregon, for example, legislators are prohibited from accepting

gifts valued at more than fifty dollars. Assuming the code is reasonable—and in this case it was judged so

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by the state’s supreme court—legislators may assert that by implication accepting a gift valued under that

amount is, in fact, ethical. [5]

However, the problem with codes is that, like laws, they frequently leave gray areas. That’s especially true

in a media buyer’s world where so much is spent on entertaining. In that kind of reality, it’s very difficult

to put a specific price on everything. A night on the Highlander, obviously, is worth a lot to Foreman, but

how does it appear in the accounting books of dollars and cents? Because it’s hard to know, monetary

limits provide only vague ethical guidance for those in Foreman’s line of work.

The broader lesson is that gifts come in so many forms—and with values that can be so difficult to

accurately measure—that it’s virtually impossible to write something encompassing all the specific

possibilities. Many codes of conduct, therefore, end up sounding noble but are really just saying, “Figure it

out for yourself.” Take a look at the last lines from the Code of Conduct from Omnicom, a massive group

of companies including many leading advertising firms that purchase ads in Forbes:

We expect each employee to exercise good judgment and discretion in giving or accepting any

gift. No set of specific rules can anticipate or capture every possible instance in which an ethical

issue may arise. Instead, all of us must be guided by the overarching principle that we are

committed to fair and honest conduct and use our judgment and common sense whenever

confronted with an ethical issue. [6]

Questions to Ask before Accepting a Gift

In their book Moral Issues in Business, authors William Shaw and Vincent Barry formulate a list of

questions that, when answered, can provide support and clarity for making decisions about whether a gift

may be accepted. They’re not going to tell you what to do—there’s no magic guide—but they can help you

see things more clearly. In modified form and with some additions and subtractions, here’s the list. [7]

 Is there a conflict of interest, or the appearance of a conflict, that arises because of the

gift? Not every gift raises conflict of interest concerns. Maybe a marketer at Forbes gets a late

cancellation for a Highlander night and can’t find any targeted media buyer to fill the spot, so the invite

gets handed off to a buyer specializing in purchasing ads for young teenagers. Why not? It’d just go to

waste otherwise. And should that lucky media buyer say yes? It’s difficult to find an ethical reason not to

since no conflict of interest concerns seem to arise.

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 What’s the gift’s value? This can be an easy one. When Foreman was invited to a Springsteen concert

he could just look at the tickets and see that he’d been offered something worth $500. On the other hand,

getting the chance to chat up a Sports Illustrated swimsuit model on the Highlander is going to be harder

to quantify. In those cases where a value can be set, the number allows a clean dividing line: anything

above the a specified amount gets categorized as potentially influencing a decision and so causing a

conflict of interest, while any gift worth less may be considered nominal, too small to threaten

professionalism. What’s the magic number? That depends on who’s involved and the general context, but

many organizations are currently setting it at $25, which is, not incidentally, the limit the IRS sets for

business deductions for gifts to any single person during one year.

 Is the gift provided out of generosity or for a purpose? No one can peer into the soul of another,

but something offered during the holiday season may be more acceptable than the same thing offered just

before a major advertising buy is being made.

 What’s the gift’s purpose? Just because a gift isn’t an outpouring of generosity so much as an

expression of self-interest doesn’t mean there’s a corrupting intent. For example, if Forbes magazine

sends Foreman a free copy of each issue, that’s more like advertising for themselves than an attempt to

buy the guy off. Almost all of us have had the same experience: we’ve received calendars or notepads in

the mail from a local real estate agent or insurance seller. These aren’t attempts to buy us, just ways to

present their services. On the other hand, it’s hard to see how tickets to a Springsteen concert given by a

magazine can be anything but an attempt to induce the receiver to give a gift back by throwing some ad

money the publication’s way.

 Is it a gift or entertainment? Traditionally, a distinction has been drawn between giving gifts and

paying for entertainment. As a rule of thumb, the former is something you can take home and the latter is

enjoyed on the spot. Presumably, entertainment raises fewer ethical concerns because it isn’t a payoff so

much as a courtesy extended to a media buyer in exchange for hearing a pitch. If someone

from Forbes wants to convince Foreman that her magazine is the best place for advertising dollars, then it

doesn’t seem so bad, buying him a lunch or a few beers while he hears (endures) the pitch. After all, it’s

her job to sell the magazine and it’s his to know the advantages all the magazines offer. This is just normal

business. Gifts, on the other hand, seem much more like bribes because they don’t exist in the context of

normal business conversations. Take the tickets to a Springsteen concert; they have nothing to do with

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business and can’t be justified as a courtesy extended within the boundaries of normal exchanges between

magazines and ad buyers. Finally, with respect to the parties on the Highlander, those are technically

entertainment since Foreman can’t take the yacht home afterward. It doesn’t sound, though, like a lot of

business talk was going on.

 What are the circumstances? There’s a difference between Forbes magazine handing concert tickets

to media buyers to mark the launching of a new column in the magazine and their constant, ongoing

provisioning. As part of the launch campaign, it’s much easier for Foreman to accept the gift without

feeling trapped by an obligation to throw business Forbes’ way since he can respond to the gesture simply

by being aware that the new column is there and taking it into account when he makes future buying

decisions.

 What power do I have to bestow favors in return for gifts? Foreman’s job title is assistant media

buyer, meaning he probably doesn’t actually decide which magazine gets the business. He just gathers

research data and makes a recommendation to the boss. Does this free him to enjoy the Highlander

night’s guilt free? Hard to be sure, but it definitely helps him fulfill his professional obligations: it’s just

much easier to do the data mining and recommendation writing in the back office than it is to be the guy

sitting out front telling Forbes magazine the answer’s “no,” even though the parties were great. If that’s

the way things go, Foreman may be a coward for letting his boss deliver the bad news to Forbes, but that’s

a personal ethical failure, not a business one.

 What’s the industry accepted practice? In New York state government, as the Paterson case shows,

the accepted practice is no gifts, period. In the looser world of Manhattan media business, New York

magazine sums things up: “Everybody in our industry is guilty of it. Many of those who travel for work

take their boyfriends and call it a vacation.” [8]

Care should be taken here to avoid the conclusion that

whatever everyone else is doing is OK. That’s not it at all. But it is true that if everyone’s guilty—if all the

magazines are lavishing gifts on media buyers, and all the buyers are accepting—it’s going to be much

easier for Foreman to satisfy his professional obligations. It’s going to be easier for him to tell Forbes “no”

(assuming the demographic facts recommend that) when all the magazines are gifting about equally and

everyone’s accepting than it would be if Forbes were the only magazine giving the gifts and he was the

only one accepting.

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 What’s the organization’s policy? As the Omnicom Code of Conduct illustrates, sometimes policy

provides words but no guidance. As the New York government policy (which prohibits all gifts) shows,

however, sometimes there is guidance. When true guidance is provided, an employee may fairly reason

that following it is fulfilling professional obligations to the employer.

 What’s the law? Generally, laws on gift giving and receiving apply to public officials and those working

with them (politicians, judges, lawyers, businesses doing work for the government). As is always the case,

the legal right doesn’t in itself make ethical right. It can, however, provide the foundation for making an

ethically recommendable decision, assuming other factors—many of which will come up through the set of

questions just listed—have not been ignored.

Conclusion. Gifts cause a conflict of interest when they threaten to corrupt an employee’s judgment on

business matters related to the interests of the person or organization providing the gift. Sometimes gifts

are given with that intention, sometimes not. Regardless, and no matter what the law or corporate

philosophy may be, it’s frequently the employee who ends up deciding whether a gift will be accepted. If it

is, a responsibility follows to justify accepting it.

What’s the Difference among Gifts, Bribes, and Kickbacks?

One advantage of the developed framework for thinking ethically about gifts in the midst of advertising

business relationships is that it provides a compact way to manage the ethics of bribes and kickbacks.

Bribes are gifts—everything from straight cash to entertainment—given to media buyers with the direct

purpose of corrupting their professional judgment by appealing to their personal welfare. When a

representative from Forbes magazine gives Chris Forman tickets to the Springsteen show with the

intention of spurring Foreman to consider buying ad space in Forbes, that’s a gift; it’s left to Foreman to

decide whether he can accept it without betraying his obligation to serve his employer’s interests. When,

on the other hand, the rep gives the same tickets with the intention of getting Forman to directly buy the

space, that’s a bribe. A bribe, in other words, is an extreme conflict of interests where the individual’s

personal interest completely overwhelms the professional responsibilities implied by his job. If Foreman

accepts this kind of gift—one where he knows the intention and accepts that the objectivity of his

judgment will be blinded—then he’s crossed into the zone of bribery. Receiving bribes, finally, seems

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unethical for the same reason that accepting gifts can be unethical: it’s betraying the promise to act as an

agent for the organization.

Kickbacks resemble bribes except that instead of the gift or entertainment being given over first and then

the ad space getting purchased, the ad space is purchased and then a portion of that revenue is sent back

to the media buyer as cash or Springsteen tickets or whatever. Regardless of whether the media buyer gets

his reward first and then buys the ad space, or buys the space and then gets rewarded, what’s happening

on the ethical level doesn’t change. Personal interest is being exploited to corrupt professional judgment.

That means accepting the reward becomes a form of lying since it’s a betrayal of the implicit promise

made to do the job right when you sign the contract.

In the Real World, What’s the Difference among Gifts, Bribes, and Kickbacks?

In actual day-to-day business it can be extremely difficult to distinguish among gifts, bribes, and

kickbacks because at bottom all of them spark conflicts of interest. All of them, consequently, are also

going to incite at least remote suspicions of corruption. Of course it’s always easy to find examples at one

extreme or the other. On the safe side, if a woman seeking your business pays for one cup of coffee for you

once, it’s unlikely that you’ll give her proposal any special consideration, and it’s doubtful that she’d

expect it. If she offers to make your car payments on the other hand, it’s pretty clear something’s going on.

Usually, however, the lines are blurry and the reality more like the one Foreman lived through. The exact

monetary value of what he received wasn’t certain. Did he get the invitations with the intention of having

his judgment tainted or were they extended as a courtesy and in accordance with the industry’s common

practice? Would he get more and better invitations if he sent Forbes magazine some extra dollars? While

these questions don’t have certain answers, the ethics can be rendered in straightforward form. Agents of

an organization have a duty to act in favor of the organization’s interests regardless of what happens after

hours.

K E Y T A K E A W A Y S

 Conflicts of interest arise when an individual’s professional judgment is challenged by an appeal to

personal interest, as occurs when a prospective client offers a gift.

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 Because suspicions of unethical practices arise almost immediately when a conflict of interest exists, even

appearances of a conflict of interest present problems in business.

 Standard practices for dealing with gifts include outright refusal, acceptance of gifts with only nominal

value, acceptance in accord with industry practices, and good sense within a clearly understood situation.

 In certain contexts, gifts of significant value may be accepted ethically, as long as they don’t corrupt

professional judgment.

 Bribes and kickbacks can be managed ethically within the framework constructed for gifts. Both bribes and

kickbacks function as gifts that do, in fact, corrupt an employee’s professional judgment.

R E V I E W Q U E S T I O N S

1. Why do gifts create conflicts of interest?

2. What is the main advantage and disadvantage of dealing with gifts and conflicts of interest by prohibiting

the acceptance of gifts?

3. What questions could you ask yourself to help frame the question as to whether you can ethically accept a

business-related gift?

4. What’s the difference between a conflict of interest and the appearance of a conflict?

5. What’s the difference between a gift and a bribe?

6. What’s the difference between a bribe and a kickback?

[1] Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19,

2011,http://nymag.com/nymetro/news/media/features/2472.

[2] Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19,

2011,http://nymag.com/nymetro/news/media/features/2472.

[3] Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19,

2011,http://nymag.com/nymetro/news/media/features/2472.

[4] Nicholas Confessor and Jeremy “Paterson’s Ethics Breach Is Turned Over to Prosecutors,” New York Times,

March 3, 2010, accessed May 19, 2011,http://www.nytimes.com/2010/03/04/nyregion/04paterson.html?hp?hp.

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[5] Bill Graves, “Oregon Supreme Court Upholds $50 Gift Limit for Legislators, Public Officials,” OregonLive.com,

December 31, 2009, accessed May 19,

2011,http://www.oregonlive.com/news/index.ssf/2009/12/oregon_supreme_court_upholds_5.html.

[6] “Code of Conduct,” Omnicom Group, last updated October 16, 2008, accessed May 19,

2011, http://www.omnicomgroup.com/corporategovernance/codeofconduct.

[7] William Shaw and Vincent Barry, Moral Issues in Business (Belmont, CA: Thomson Wadsworth, 2007), 398–99.

[8] Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19,

2011,http://nymag.com/nymetro/news/media/features/2472.

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7.2 Third-Party Obligations: Tattling, Reporting, and Whistle-

Blowing

L E A R N I N G O B J E C T I V E S

1. Define third-party obligations.

2. Elaborate three standard responses to third-party obligations.

3. Define whistle-blowing.

4. Consider justifications and requirements for whistle-blowing.

Caught in the Crossfire

A hypothetical situation. You work at Omnicom, at the desk next to Chris Foreman. Like him, you’re an

assistant media buyer. Though your area of concentration is distinct (you’re in charge of placing ads on

radio stations) you team up with him from time to time to run numbers, and you know enough about how

it all works to recognize when something’s going wrong. In your opinion, it is. Chris is sending ads

to Forbes that would deliver more for the client if they’d been placed in Business Week. Further, you

believe he’s doing it in exchange for the gifts. You can’t prove that but you do know this: he’s occasionally

supplementing his lousy income by selling some of what he’s receiving—concert tickets, vouchers for limo

service, things like that—on eBay. You’ve tried talking about it, bringing the subject up one way or

another, but he doesn’t want to talk back. And when you say it directly, when you ask whether it’s right to

accept gifts from Forbes and convert them to money, he laughs. “Everyone does it,” he says.

This situation is different from most of those discussed so far for an important reason: you’re not directly

faced with an ethical dilemma; you’re not the one placing the ads or accepting the gifts. Still, you do work

with Chris, sometimes even sending over marketing data that he uses for his accounts. You’re a

third party, which in this situation means you’re not directly responsible for what’s going on but you’re

caught in the cross fire between Foreman and Forbes magazine.

There are infinite variations on this kind of predicament. The financier-fraudster Bernie Madoff asked his

secretary to cover up his affairs by answering his wife’s phone calls and saying he was in a meeting and

couldn’t be interrupted. In the student union of your campus, maybe the breakfast menu offers omelets

cooked with fresh eggs, but you work there and know the manager occasionally messes up the stocking

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order and so ends up selling omelets made from a preordered mix of egg-like chemicals. What do you do?

It can be a hard call and at least two questions arise on the way to making it:

1. You need to decide if something truly unacceptable is happening.

2. You’ve got to determine whether it’s any of your business.

If, finally, something unacceptable is happening and you should do something about it, you’re facing

a third-party obligation. This is an ethical responsibility to correct something you’re not actually doing.

Why Should I Get Involved? Ethics and Self-Interest

When confronted with a third-party obligation, employees may get involved for a number of reasons. One

is as a response to an ethical responsibility. Another: as an opportunity to benefit themselves.

Tattling, as any child knows, is revealing an ethical transgression involving others, and revealing it for

your own benefit. Take the case of assistant media buyer Chris Foreman and another assistant media

buyer who learns that Foreman is shortchanging the ad agency’s client for personal benefit. If you’re that

other assistant media buyer and you’re crafty, you may see not only an ethical lapse here but also your

own personal chance. Every senior media buyer has several assistants underneath, and when the time

comes for promotion, there’ll be space, presumably, for only one assistant to advance. Getting Foreman

out of the way may not be a bad career move.

It’s an extremely ambiguous ethical move, however. On one hand, there’s solid justification for getting the

truth known about Foreman. He’s clearly not fulfilling his professional obligations to the company.

However, if you turn him in because that’ll give you a leg up on the promotion ladder, you can hardly say

that ethical righteousness has driven your action. On the other side, this should also be noted: the fact

that you may benefit from revealing unethical behavior probably can’t justify keeping everyone in the

dark.

Typically, we think of ethical restrictions as painful, as obstacles you put between yourself and what you

really want. That’s not always the case, though; they don’t necessarily make you suffer, they may make

others suffer and serve your interests. When they do, you have weaponries ethics—that is, perfectly

reasonable moral dictates used to attack others and benefit yourself. Tattling, finally, is the use of

weaponries ethics; it’s doing the right thing for selfish reasons.

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Responding to a Third-Party Obligation: Reporting

Regardless of the motivation for responding to a third-party obligation, there are two broad paths the

response can take: reporting and whistle-blowing.

Reporting ethical transgressions means bringing them to light, but only within the organization. In most

situations, this route is the most direct way for third parties to balance their basic and immediate

obligations. Staying with the advertising scenario where you believe Foreman is essentially accepting

bribes from Forbes, you have an obligation not only to halt the bribery but also to protect the agency’s

interests. Obviously, a noisy public blowup about Foreman misspending a client’s money is going to

damage the advertising company’s business. Reporting—because it stays inside agency walls—promises to

rectify the bribery without causing larger publicity problems.

Bringing this into the real world, because reporting ethical problems does allow them to be addressed

without harming the agency, the Omnicom Code of Conduct includes this:

All reports of possible violations about which management becomes aware will be promptly

considered. We will not punish any employee or representative for making any report in good

faith. [1]

It’s in Omnicom’s interest to get ethical dirty laundry washed in-house.

Up to here, the situation’s resolution has come easily. But there’s another, potentially complicating,

obligation to consider: the human link to Chris Foreman. Almost all organizations rely on and seek to

nurture bonds of shared responsibility and dependence between employees: in working life, when

someone’s sick or just having a bad day, the others have to pick up the slack. That nurturing explains why

anyone who’s entered a fast-food restaurant knows the workers aren’t “coworkers” but “teammates.” In

most organizations, some form of the camaraderie holds, and you can’t just break those bonds from one

moment to the next. That means if you’re working with Foreman and you know he’s doing wrong, you

may well feel an obligation to not report anything because you don’t want to cause him problems.

Reporting, the conclusion is, a coworker for ethical lapses is easy. But in the real world there are no

coworkers; there are only flesh and blood people.

Next, even if those human connections to others don’t move you, you also have obligations to yourself and

your own welfare to consider, and turning others in to company authorities can ultimately come back

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against you. By giving rise to distrust and possibly resentment among other colleagues who fear they may

be the next ones to get reported, you may be in essence isolating yourself in your own cubicle.

In the end, seeing what Foreman is doing and stretching ethical obligations through the situation, you

may find yourself torn between reporting him and not. There’s no automatic resolution to this dilemma,

only the attempt to weigh the obligations and get a sense of which outweigh the others.

Responding to a Third-Party Obligation: Whistle-Blowing

Whistle-blowing is bringing ethical transgressions to light publicly outside the organization. A recent case

involved one of the many advertising agencies gathered under the Omnicom umbrella, Leo Burnett. Two

employees—Vice President Greg Hamilton and Comptroller Michelle Casey—alleged, and a subsequent

federal investigation backed them up, that Leo Burnett was overbilling the government for their work on

the US Army’s “Army of One” recruiting campaign.

The agency was supposed to calculate its hourly rate with a formula dividing charges between the more

expensive work done directly in Leo Burnett’s offices and the less costly hourly labor performed by

subcontractors. What Leo Burnett did was simple: they billed subcontractor work at the higher in-house

rate. The accounting in these massive campaigns—TV, radio, and prints ads as well as sponsorships and

events—is so knotted that a virtual army of accountants is required to keep track of where all the money is

going. In that kind of numerical chaos, the agency could expect that switching a few hours from one

column to another deep inside the mountain of paperwork would go unnoticed by outside auditors. It did

go unnoticed—until Hamilton and Casey told the government what was going on.

Almost inevitably a lot of dust gets kicked up when employees turn on their employers noisily and

publicly. In this case, the US Justice Department lawyers rode in, and they probably wanted a scalp on

their wall: they have limited resources, limited time and money, and when they take something on they

want to win, and they want people to know about it. Back on the agency’s side, they’re going to defend

themselves, and that typically entails attacking their accusers, maybe labeling them disgruntled,

incompetent, or worse. In this case, there was also a tug-of-war over money. The agency obviously wanted

to keep as much as it could, the government wanted money back, and thanks to the False Claims Act,

Hamilton and Casey also demanded their share, which came to almost $3 million.

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The False Claims Act is a federal law designed to encourage whistle-blowing on private contractors who

are attempting to defraud the government. Whistle-blowers are entitled, under the law, to 30 percent of

the damages the government obtains. The incentive doesn’t apply to situations involving only private

companies, but even there whistle-blowers may encounter suspicions that ulterior motives—not a

dedication to doing the right thing—finally spurred their loud assertions about misdeeds.

Finally, with respect to the Leo Burnett fraud, the full details will never be known. Because the case never

went to trial, there was little public exhibition of evidence and testimony. To head the whole mess off, Leo

Burnett agreed to settle. In the words of a published report, “Leo Burnett denied any wrongdoing and said

in a statement that it agreed to the settlement ‘to avoid the distraction, burden and expense of

litigation.’” [2]

Every case of whistle-blowing is different, but a few questions get to the heart of most instances:

 What, exactly, is whistle-blowing?

 What justifies whistle-blowing?

 What weighs against whistle-blowing?

 Can the whistle-blower expect protection?

 Is whistle-blowing morally required?

What Is Whistle-Blowing?

Whistle-blowing is bringing an organization’s ethical transgressions to public light. Spilling the beans to

the family over dinner, however, doesn’t count; the truth must be exposed to an authority or institution

capable of taking action. In the case of the advertising agency, Hamilton and Casey took their information

to the federal government. They also could have selected one of the important industry publications—

say, Advertising Age magazine. Any information published there would draw attention from those

involved and give the client (in this case the US Army) the opportunity to act on behalf of its own

interests. The news media—a newspaper, a TV station—may have been a possibility in this case, given the

large scope of the fraud and the national interest underneath it. Other possibilities could be listed, but

what’s important is that the report of misdeeds goes to someone who can do something about it (or at

least provoke others to do something). Finally, whistle-blowing may be anonymous. However, in practical

terms, that’s frequently not a real option because government authorities, like private ones (editors of

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industry publications and so on), are far less likely to spend time tracking down the truth about

accusations when even the accuser is unwilling to stand behind them.

What Justifies Whistle-Blowing?

Whistle-blowing needs careful justification because it requires violating the obligation any employee has

to protect the interests of the employer. Here are five items that could be checked before publicly lighting

up an organization’s misdeeds from the inside. Importantly, the fact that the items may all be

checked doesn’t oblige action, but it does raise the possibility as ethically justifiable.

1. There is clear evidence of continuing wrongdoing by the organization or continuing effects of past

wrongdoing. In the business world, actions that are entirely locked in the past are the subject of history,

not ethics.

2. The wrongdoing must be serious. In the case of Leo Burnett, the case wouldn’t cross this threshold if only

one hour of labor had been attributed to the higher-cost office. But the threshold would be crossed if the

agency significantly overcharged many hours for years, bleeding the account of its resources and

ultimately damaging the army’s ability to recruit new, top-flight soldiers.

3. The organization’s established, internal channels for reporting and correcting problems have been

exhausted. Most organizations provide clear ways for employees to voice concerns internally. A

conversation with a supervisor is an obvious example. At larger organizations, sometimes an entire

internal department has been mounted to receive and act on the concerns of employees. Here’s the web

page of a typical example; it links to Wal-Mart’s internal department for

ethics:http://ethics.walmartstores.com/Statementofethics/RaiseAConcern.aspx. Whether, finally, there’s

a clear, formal route for internal reporting or not, employees have a responsibility to try to resolve

problems in ways that benefit—or do the least possible damage to—the organization, and therefore the

possibility of raising concerns internally needs to be explored fully. (As always, there are special cases. If,

for example, the CEO of a small advertising company is robbing its client’s money, there may be no

internal route to resolution, leaving external whistle-blowing as the only moral corrective. Also, though

whistle-blowing is defined as taking action outside the organization, the definition could be stretched to

include the act of bringing wrongdoing to light directly before high officials within an organization by

skipping over the normal chain of authority.)

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4. There’s unmistakable and convincing evidence of misconduct. The evidence must be unmistakable in the

sense that it clearly indicates wrongdoing; it can’t be that an innocent explanation seems as likely as a

guilty one. In the Leo Burnett accounting books, if it turns out that on one page all the internal hours are

in the external hour’s column and vice versa, that may be an attempt to defraud the government, or it may

just be that the data-entry guy came to work one morning hung over and ended up confusing the

numbers. Further, the evidence must also be compelling in the sense that there’s enough of it for a

reasonable person to conclude the misdeeds are actually occurring. So even if you’re certain numbers are

being entered incorrectly intentionally, but it turns out that the difference—the amount of extra money

Leo Burnett is making—is trivial, then it’s going to be hard to justify creating a stink. It may be, for

example, that someone in the accounting department is making small adjustments in order to balance

errors found elsewhere in the giant balance sheet.

5. There’s reason to believe that whistle-blowing will resolve the problem. In the case of Leo Burnett—or

any business that’s overcharging a client—you can be pretty sure that bringing the fraud to light will spark

action, at least by the defrauded client. On the other hand, if you’re in the production department of the

advertising agency (in other words, you’re actually filming commercials) and you regularly get shipped

down to Mexico to shoot campaigns because everything’s cheaper down there and you learn that some of

the extras in the commercial’s background are working longer hours than local regulations allow, you

might reasonably figure that you can talk all you want in public, but it’s not going to make any difference.

What Weighs against Whistle-Blowing?

The three heaviest arguments against whistle-blowing are

1. legal requirements for confidentiality,

2. prudential concern for one’s career and personal welfare,

3. an employee’s sense of loyalty to the organization.

A legal requirement for confidentiality may weigh against whistle-blowing by binding employees to not

share a company’s internal information. The requirement traces back to a section contained in many work

contracts. Called a confidentiality clause, here’s a basic version:

Employees may have access to records and other information about customers and other

employees, including proprietary information, trade secrets, and intellectual property to which

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the Company holds rights. Employee agrees to keep all such information strictly confidential and

to refrain from discussing this information with anyone else without proper authority.

While this is most directly aimed at protecting consumer information (say, credit card numbers) and

company trade secrets (Coke’s secret formula), it may also be read as safeguarding the kind of information

a whistle-blower wants to make public. In the case of the Leo Burnett agency, what Vice President

Hamilton and Comptroller Casey told the government did, in fact, involve “records and other information

about customers.”

The second major argument against whistle-blowing, self-interest operates in both the professional and

personal sense. Turning against the company may be the right thing to do, but it’s almost inevitably a

painful thing to do, at least according to a survey published in the New York Times. What condition, the

study sought to determine, do whistle-blowers find themselves in a few years afterward?

 One hundred percent who worked for private business were fired.

 Twenty percent could still not find work at the time this survey was taken.

 Seventeen percent lost their homes.

 Fifty-four percent had been harassed by peers at work.

 Fifteen percent viewed their subsequent divorce as a result of whistle-blowing.

 Eighty percent suffered physical deterioration.

 Eighty-six percent reported significant emotional stress (depression, anxiety).

 Ten percent reported having attempted suicide. [3]

It doesn’t sound good. Of course every case is different, and if you look on the other side of these numbers,

they leave room for the possibility that at least some people do the right thing and get on with their lives

just fine. Still, there are no guarantees and ethics isn’t only about duties to others and the world outside,

all of us have equal duties to ourselves: duties to maximize our potential, protect those nearest to us, and

defend our own welfare.

Finally, the values and reasons supporting loyalty as a reason for not blowing the whistle will be

considered in their own section further on.

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Protecting the Whistle-Blower

As the survey data about whistle-blowers reveal, there’s not a lot of protection for them. That isn’t for a

lack of trying, however. At both the state and federal levels, reams of laws have been enacted to protect

those who expose wrongdoing organizations. Perhaps the most notable is the Sarbanes-Oxley Act. Passed

in 2002 by the federal government as a response to a series of disastrous accounting frauds at large

companies, Sarbanes-Oxley is a massive piece of legislation intervening in many parts of the business

world, and especially in aspects connecting to an organization’s finances and transparency.

Specifically with respect to whistle-blowers, the law attempts to encourage it by protecting whistle-

blowers at publicly traded companies that report activities to government agencies. (The act doesn’t apply

to privately held firms dealing exclusively with other private firms.) Employers are prohibited from taking

retaliatory action (firing, demoting, harassing), and whistle-blowers are provided clear avenues for

lawsuits should such retaliation occur. Here’s the legislative language: “In order to establish a case under

Sarbanes-Oxley, an employee must prove that she (1) reasonably believed that her employer was breaking

the law; (2) engaged in whistle blowing activity as defined by the statute; (3) suffered an adverse

employment action; and (4) that there was a causal connection between the whistle blowing activity and

the adverse employment action.” [4]

The problem is that last clause. Everyone who’s ever had a job knows that mistakes happen every day.

Deadlines are missed, projects contain errors, and goals aren’t met. Bosses who have it in for you aren’t

going to have many difficulties converting those mishaps into reasons for denying wage hikes and even

outright firing. In your heart you may know—everyone may know—that you’re suffering retaliation for

reporting the company, but proving it can be difficult.

The bottom line is—and as the previous survey shows—if you publicly divulge information seriously

damaging your employer, you’re probably going to be gone. And even if you find some protection in one or

another law, it’s difficult to imagine that your career is going anywhere inside the company. Worse still,

prospective new employers are, very likely, going to hesitate before extending a job to someone who has

already caused serious problems for a former employer. Taken all together, the bleak reality is that in

most cases whistle-blowers can’t count on getting back the life they had before they publicly disclosed

their organization’s misdeeds.

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Is Whistle-Blowing Morally Required?

Given the abundant reasons—financial, professional, emotional, and ethical—against whistle-blowing, are

there any cases where a moral argument can be formed to require publicizing an organization’s unethical

actions? Probably, but they’re few. Here’s a possible rule of thumb: whistle-blowing is required when the

act can prevent harm to others in ways that are serious and go beyond the bottom line. If someone is

getting ripped off, the reasoning goes—if an advertising company is overcharging its clients—whistle-

blowing may be justified, but not required. All that’s at stake is money. On the other hand, if a nuclear

power plant is being constructed near a residential area and you learn the contracting company you work

for is using cheap cement to boost the profit margin, it seems as though you have little choice—the weight

of elementary personal integrity in the face of potentially lethal wrongdoing probably requires personal

sacrifice.

What about the hypothetical Chris Foreman situation? You’re working with him and have acquired

sufficient evidence to know that he’s selling out his client by sending their ad dollars to Forbes magazine

in exchange for Highlander nights. You’ve reported the matter internally and received no response. Do

you go public? You’d certainly be justified in taking the story to Ad Age magazine. Just running down the

list of conditions justifying whistle-blowing, they all get checked:

1. There’s clear evidence of continuing wrongdoing by the organization.

2. The wrongdoing is serious (at least in the world of advertising).

3. The organization’s established, internal channels for reporting and correcting problems have been

exhausted.

4. There’s unmistakable and convincing evidence of misconduct.

5. There’s reason to believe that whistle-blowing will resolve the problem.

The question remains, however, whether the issue affects life beyond business and the bottom line. It

doesn’t appear to. At bottom, this is the case of a client—AT&T mobile phone services—getting poor

service from an Omnicom company. That should be corrected, and presumably market forces will correct

it sooner or later, but whether they do or don’t, there’s no requirement here to seriously jeopardize your

own financial, professional, and emotional welfare.

What about the case of Leo Burnett? Again here a client is getting a raw deal, but there’s an important

difference: this is the army, not a telephone company. If it’s true that the recruiting budget is being

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seriously hindered, the situation may be crossing the line from justified whistle-blowing to justified and

required. If it does cross that line, the reason will be that protecting your own financial and emotional

welfare is trumped by the responsibility to help soldiers in war resist mortal danger as totally as possible.

The fact that the army isn’t getting the best recruits possible doesn’t just affect people in the pocketbook,

it threatens those on a live battlefield. Faced with that reality, it will be hard for individuals including

Burnett employees Hamilton and Casey to keep quiet just because they don’t want to lose their jobs.

K E Y T A K E A W A Y S

 Third-party obligations arise when you know of wrongdoing by an organization or by individuals within it,

and though you aren’t directly at fault, you’re in a position to correct the problem.

 In some cases, third-party obligations can be opportunities to sabotage a fellow worker for personal gain.

 Responses to third-party obligations include reporting the problem inside the organization for correction

and publicizing the problem, also known as whistle-blowing.

 Because whistle-blowing harms the organization, employees must take into account their responsibility to

defend the organization’s interests before publicly decrying the wrongdoing.

 In some cases whistle-blowing is not justified, in some it is, and in some extreme cases, whistle-blowing

may be ethically required.

 In practical terms, whistle-blowing can be devastating for the employee.

R E V I E W Q U E S T I O N S

1. Create a hypothetical third-party obligation involving an employee of a major company.

2. What does it mean to deploy weaponries ethics?

3. What questions can be asked to help determine whether whistle-blowing is justified?

4. What questions can be asked to help determine whether whistle-blowing is ethically required?

5. Why might an employee hesitate before whistle-blowing?

6. The Sarbanes-Oxley Act tries to protect whistle-blowers. Why is it not very effective?

[1] “Code of Conduct,” Omnicom Group, last updated October 16, 2008, accessed May 19,

2011, http://www.omnicomgroup.com/corporategovernance/codeofconduct.

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[2] Mehhen Streit, “Leo Burnett Settles Suit for $15.5 Million,” Chicago Business, January 6, 2009, accessed May

19, 2011, http://www.chicagobusiness.com/cgi-bin/news.pl?id=32498.

[3] Survey cited in Manuel Velasquez, Business Ethics: Concepts and Cases, 6th ed. (Upper Saddle River, NJ:

Pearson, 2006), 378.

[4] Welch v. Cardinal Bankshares Corp., 2003-SOX-15 at 35 (ALJ 2004).

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7.3 Company Loyalty

L E A R N I N G O B J E C T I V E S

1. Define company loyalty.

2. Elaborate three degrees of company loyalty.

Two Kinds of Loyalty

There is narrow company loyalty and broad company loyalty. The narrow definition pertains to

employment: the loyal employee sticks with the company instead of looking for work elsewhere, especially

during economic booms when jobs are plentiful and moving on is easy.

This kind of loyalty, however, is in trouble according to an article from the Harvard Business School: “The

very nature of the relationship between employers and employees has undergone a fundamental shift:

Today, workers not only don’t expect to work for decades on end for the same company, but they don’t

want to. They are largely disillusioned with the very idea of loyalty to organizations.” [1]

Part of the reason for the shift—and part of the reason employees don’t stay at companies for decades—is

that many employers don’t hesitate to fire their workers at the drop of the hat when it serves the

company’s interest. On the other side, according to the article, it’s also true that today’s workers don’t

hesitate to move on to a new job when a better one, or maybe just a different one, comes along. Regardless

of who went first, the fact is company loyalty—whether it’s going from the company to the worker or the

worker to the company—isn’t what (we are told) it once was.

The broad definition of company loyalty goes beyond employment questions and measures an employee’s

willingness to sacrifice income, leisure time, personal relationships, family responsibilities, and general

life aspirations in the name of the organization. To create this dynamic of sacrifice, two distinct kinds of

relationships with the organization are required:

1. Attachment to the organization that is non-instrumental. This means the attachment isn’t maintained

only because it serves the employee’s concrete interests, such as the need for a salary to pay the rent and

grocery bills.

2. A deposited value in the organization that goes beyond any individual and their attachment; the

organization’s value continues even without those who currently feel it.

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Probably, there’s not a lot of this kind of deep loyalty in the advertising field. Agencies are constantly

stalking new clients, even trying to steal them from others. For their part, most clients are constantly

looking for better deals and ways to refresh their image, and they are usually open to proposals from new

firms interested in handling their communication. More, companies that employ advertising agencies

constantly “put their account up for review,” which means the current account holder has to compete with

new entrants just to maintain the business. There are exceptions, of course, but for the most part

advertising agencies are constantly clinging to the business they have, seeking new opportunities, and

always on the lookout for fast money. In that kind of cutthroat environment—one where it’s your job to

sing the praises of Burger King one day and McDonald’s the next—it’s going to be difficult for workers to

feel as though they should (or even can) be true to their current employer.

Other kinds of organizations seem more likely to instill feelings of loyalty. A religious hub—a church, a

synagogue, a mosque—is one obvious example. Most priests are attached to, and deeply concerned by, the

welfare of their church; they serve their institution and aren’t working there for the money (which

probably isn’t great). Further, most also believe their institution has value beyond them: the importance

was there before they arrived (or were even born) and will continue after they leave. Taken together, these

elements create space for true employee loyalty to the organization. Something similar—the existence of a

space for labor that’s not about money and similar rewards—could be found surrounding many who work

for Greenpeace, Doctors Without Borders, political parties, the CIA, the United Nations.

Other professions open on both sides of the line—that is, there’s ample space for an instrumental

relationship (I keep this job because it makes me happy) and one based on broad loyalty. Some medical

doctors are in it for the money but others for the care, for the principle that bringing health to others is a

good cause. Law is another example. Ambulance-chasing lawyers just want payoffs, but some judges

believe in the law as something larger than themselves and a basic force for civilization that’s worth

serving. Moving down to street level, there are police officers who just like a steady paycheck and others in

the field to serve and protect: they see their work as improving the lives of others and the general

community.

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Three Degrees of Loyalty

Within a dynamic of employee loyalty, there are three levels of dedication: obedience loyalty, balanced

loyalty, and free agency.

Obedience loyalty, which is an extreme case, works from the idea that the organization is worthy and the

employee is comparatively worthless or only worthwhile to the extent he or she serves the organization.

This extreme will be reached only rarely, but there are glimmers of it in some professional activities. One

quick way to identify these kinds of labors is to check whether the truly dedicated are willing to sacrifice

even their lives for the cause their organization embodies. The armed forces come to mind here. Some

political organizations command this devotion, especially in revolutionary times. Some workers’ devotion

to their labor union has been sufficient to put their lives in danger. The exploring scientist Charles Darwin

believed in accumulating knowledge and put his life at risk in the field as he tracked rare species and

ecosystems.

Not so dramatic or extreme, some professions and organizations can suck the emotional life out of

employees. Or they may take vast chunks of the employee’s time. Undercover police work exemplifies by

requiring a loyalty reflected as self-sacrifice to an extent few of us would contemplate. April Leatherwood,

for instance, went undercover in Memphis for an entire year. Almost entirely separated from family and

friends, she lived on the street, wore the same clothes every day, went without brushing her teeth, and

rarely bathed. That was an ugly year of her life, one sacrificed for the job. [2]

Balanced loyalty is a situation where both the employee and the organization recognize in each other an

independent value. In this case, the employee can be expected to make sacrifices—possibly even do things

he or she would normally consider unethical—in the name of serving the larger organization. One example

would be a lawyer working in a public defender’s office, one who believes that the system of law and the

rules of its enforcement are noble and should be respected to some important extent that is independent

of the particular lawyer’s welfare and beliefs. The loyalty can be reflected in a number of ways. First, it’s

simply the case that most public defender positions don’t pay as well as similar posts in private firms.

Pushing further, the public defender may be asked to represent and defend a client she knows

(or strongly suspects) is guilty. In this case, presumably, she’s being asked to do something she wouldn’t

do in her day-to-day life—that is, serve the interests of a guilty man. More, presenting a full-blown legal

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case for the defendant’s innocence would essentially be lying and, again, something the lawyer might not

typically do.

At the same time, this lawyer probably won’t be sacrificing everything; she’ll recognize that her life and

aspirations have value also, and there may come a point where she decides the sacrifices demanded by the

job are too great to bear. Perhaps she’s just had a child and needs to up her income, or, maybe a man she

helped set free has committed a gruesome crime. However the situation might be, when the lawyer leaves

the office of the public defender for a higher paying job at a large private firm, she has demonstrated a

balanced sense of loyalty. She’s willing to sacrifice in the name of a larger organization she respects. But

only up to a point.

Other demonstrations of balanced loyalty to the organization could include

 buying the company’s products (though they aren’t the personal preference),

 evangelizing in public life (telling your friends how great the company or its products are),

 voting for the political candidate the company affirms will best serve its interests,

 moving for the company.

Free agency is the extreme on the bottom end: the absence of loyalty. Some theorists propose that this

should be the default state for most employees for this reason: it’s ultimately impossible to be loyal to a

typical company because profit-making institutions just aren’t the kinds of things that can properly

demand or receive any loyalty. The entire idea of loyalty, the argument goes, only exists in a reality where

individuals stand by others to some extent without conditions (example: parents who love each other and

their children unconditionally). Money-making businesses, on the other hand, are incapable of that kind

of unconditional fidelity. On the contrary, the only desire most private enterprises know is the one to

serve its own interests by making more profits. If that’s right—if companies have no loyalty to give—then

its employees can’t enter into that kind of relationship. Instead, in the business world at least, you and I

are forced to pursue our own interests—a higher salary or whatever—just as the larger company pursues

its own.

Translating this into the working world, the absence of company loyalty is the idea that workers find value

in their organization only because it serves their own interests. Of course it’s impossible to know the souls

of others, or exactly what their deepest values are, but there might be a hint of this free-agent loyalty in

the Leo Burnett case. Two high-level and highly paid workers served the company well—and were

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compensated well—until they turned whistle-blower against the firm. When vice president Hamilton and

comptroller Casey alleged that Leo Burnett was overbilling the government for their work for the US

Army, they weren’t just doing the right thing, they were doing a lucrative thing for themselves since the

False Claims Act promised 30 percent of damages the government obtained. If the money is

the reason they turned on the agency, they exemplify free-agent loyalty. They worked hard for the

organization because the pay was good, but the moment they saw the chance to get even more money by

turning against it, they jumped. At bottom, that means, their loyalty is only to themselves.

K E Y T A K E A W A Y S

 Company loyalty defined narrowly concerns employees sticking with the organization instead of looking

for work elsewhere.

 Company loyalty defined broadly emerges from the idea that the organization possesses nobility that’s

worth serving, even if employees don’t benefit personally from the contribution.

 The three degrees of company loyalty are obedience loyalty (the worker exists to serve the organization’s

interests), balanced loyalty (workers and organizations share interests), and free agency (the organization

exists to serve the worker’s interests).

R E V I E W Q U E S T I O N S

1. Name an organization that might inspire obedience loyalty. Why is obedience inspired? What does the

loyalty look like?

2. Name an organization that might inspire balanced loyalty. Why is it inspired? What does the loyalty look

like?

3. Name an organization that might inspire an attitude of free agency. Why is it inspired? What does the free

agency look like?

4. Take a career you’re (considering) pursuing. On the scale from obedience loyalty to free agency, where do

you imagine most employees in that line of work are located? Why?

5. [1] Lauren Keller Johnson, “Rethinking Company Loyalty,” Harvard Business School Working Knowledge,

September 19, 2005, accessed May 19, 2011,http://hbswk.hbs.edu/item/5000.html.

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6. [2] Kristina Goetz, “A Year of Living Dangerously Takes a Toll on Undercover Memphis

Officer,” Commercial Appeal, August 30, 2009, accessed May 19,

2011,http://www.commercialappeal.com/news/2009/aug/30/year-of-living-dangerously-takes-its-toll.

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7.4 Stress, Sex, Status, and Slacking: What Are the Ethics of Making It through the

Typical Workday?

L E A R N I N G O B J E C T I V E

1. Consider ethical questions attached to several issues commonly arising during the workday.

Bringing the Office Home: High-Stress Work

No book can cover the ethics of everything happening on every job, but four issues arising in most

workplaces sooner or later are stress, sex, status, and slacking off. Starting with stress, what happens if

the workday doesn’t end when the workday ends? For those enduring—or choosing—high-stress jobs,

there’s no five o’clock whistle; even if they’re shopping or watching a baseball game, the job’s effects hum

in the background. One simple example—and also one all of us see on the street every day—come from an

article in the USA Today. It recounts an academic journal’s finding that overweight people pack on still

more pounds when their work continually produces serious anxiety. If you’re overweight, the study shows,

and you’re stressed in the office, there’s a high likelihood your stomach or your thighs are going to keep

growing. [1]

One of the central arguments Aristotle made in ancient Greece was that doing right isn’t the highest goal

of ethics. The careful understanding of our values and purposes centers on, ultimately, living a good life.

Doing the right thing is part of that goodness, but happiness is there too, so one of the issues stress at

work brings forward is this: how is my decision to accept stressful employment affecting my happiness

and the happiness of those around me? Here are some more specific questions that could be asked on the

way to pinning down the ethics of stress:

 What positive returns, exactly, am I getting from my stressful job?

 Are there prospects for reduced stress in the future?

 What are the costs of the stress? Is it affecting my weight, my leisure time, my friends, my marriage and

family?

 Who is affected? Is anyone else suffering stress because I’m stressed out? Are people suffering from my

stress in other ways?

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Stress at work isn’t only a psychological problem or a medical one—it’s also laced with questions about

value. It’s the most fundamental ethics: what’s worth doing and what isn’t? It’s impossible to know, of

course, exactly where the line should be drawn and when stress is worth accepting. Any answer that will

be justifiable, however, will have to begin with a clear understanding of exactly what the costs and benefits

are.

Office Romance

Hooking up at work is one eternal way of making the time fly, but what’s going on in today’s offices is

somewhat different from the past. An article from the Wall Street Journal indicates how the meaning of

sex in the office is shifting: “Marriage is a priority for most Americans—more than 90 percent of American

adults eventually marry—but these days it may not happen, as it so often did before, in the immediate

post-high-school or post-college years. The truth is that we’re marrying later.” [2]

When marriages were typically celebrated at the end of the schooling years, work-related romances went

hand in hand with infidelities. In that environment, questions arose about the organization’s role in any

affair that may be occurring during company time.

The entire context of discussion changes, however, when a large number of people flowing into the

workforce are unmarried and are looking to wed. Inevitably, the office is going to become a mating

ground—people pass eight hours a day there—and one of the questions young workers are going to start

asking when they think about jobs and careers is, will I be able to meet someone if I get into one or

another line of work?

The aspiration to connect introduces a thorny dimension to employment decisions made by young people

(and some older ones too). If you’re a guy working on a heavy construction job, the pay may be good, but

there’s probably not going to be a woman in sight. On the other hand, doing the coursework to earn

paralegal certification may be a headache, but getting into the field isn’t a bad way to meet successful and

interesting women.

What’s going on here is that as society changes—as marriage and family life get pushed back into time that

used to be reserved for work—the factors shaping the way we think about which jobs are more desirable

than others simply on a day-to-day basis are changing, and part of your responsibility to yourself is to

keep track of what you really want from your 9 to 5 time. One of the standard moral obligations we share

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is the responsibility to be sincere not only with others but also with ourselves about important decisions

touching the business part of life. And if romance is part of what you want from work, then the

possibilities have to be taken into account just like salary and other benefits.

Status

Chris Foreman, the media buyer who enjoyed yacht evenings on the Highlander and tickets to all kinds of

major events, received a piddling salary. He thought about changing jobs but decided not to. One reason

was that all the entertainment added a lot of indirect money to his income. There was another reason

too—the special, VIP privileges he constantly received from his benefactors: “There’s a feeling of

superiority. When you pass by a line at a screening because you’re on the list you do get that ego boost.

You’re thinking, Ha, ha! I’m not a chump.” [3]

Status on the job makes a difference in quotidian working life, but it’s hard to quantify; it’s not like a

salary, which is an objective number and can be directly compared with others on a pay scale. How much

is it worth, the question is, to wing by others forced to stand in line?

Knotting matters further, defining exactly what counts as status isn’t easy, and any answer is going to

move and slide depending on who you talk to. For some, being a lawyer is impressive and lucrative, for

others it’s dirty and, well, lucrative. For some, being a test pilot is exciting and respectable, for others it’s

scary and weird. Many people seated in first class on an airplane rush to get on early so that all the

economy travelers get to see them as they file past. Some of those people headed toward the back of the

plane see the first-class passengers as legitimate power elites, but others get the feeling that most of them

are really chumps: the reason they’re in first class is because they used frequent-flyer miles to bump up,

and the reason they have a lot of those is because their bosses always make them take the trip to see

clients instead of bothering to do it themselves.

More generally, in the world of New York City media buyers, status seems linked with superiority, with

being visibly more privileged than those forced to stand in lines. For others, however, status will be

quieter. The teacher, the nurse—they find status not as superiority but as social importance.

Conclusion. Status means different things to different people, but anyone looking to get it from a job

should ask how much is really there, and how much is it going to help me get out of bed in the morning

and want to go to work?

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Slacker’s Paradise

Typical ways of getting through the day include throwing yourself into your work (frequently with the

hope of a promotion or pay raise), firing up an office romance, and enjoying the status a post allows.

Another way of making it from 9 to 5 is by trying to avoid doing work, by working to do as little as

possible. This is the slacker reality, and there are two routes into it: Personal slackers adopt the attitude

for their own private reasons. The context slacker is dedicated to not working because the incentive

system of the labor contract—or some other external factor—encourages slacking off.

Beginning with the personal slacker, the attitude starts with a decision: You take a typical job and make it

your project to expend as little effort as possible. The reasons for adopting this stance depend on the

person. Maybe there’s a passive-aggressive element, some personal frustration with life or perhaps a

somewhat idealistic attempt to make a statement. In any case, the motives behind this kind of behavior

should be pursued in a psychology course. Here all that matters is that for one reason or another the

private decision gets made to get through the day by working to not work.

The second slacker pathway starts with a context. Here’s an example from an online discussion board:

“Haha I worked in a union job and they were there to punch in…take a lunch…take 2 15min breaks…and

punch out. They had n0 incentive to work hard because they would get a 0 dollar raise.” [4]

The key here is the incentive, the idea that working hard doesn’t benefit the worker because labor

agreements are so protective and constricting that, on one side, it’s almost impossible to fire a worker, and

on the other, it’s nearly impossible to reward one for superior performance. That means there are islands

in the general economy where the traditional rule regarding performance and reward—the rule that doing

well gets you ahead—doesn’t apply very well.

One of the curiosities of these islands is that it’s not right to conclude that there’s no incentive to do

anything. Actually, there is an incentive system in place even when, as the discussion board poster writes

it, “hard work gets a 0 dollar raise.” In this case, the incentive is negative. If union rules (or whatever rules

happen to be in effect) mean workers can’t compete against each other with the best performer winning a

better post, the workers can still compete. It’s just that since wages are fixed, the competition turns

negative: the most successful worker is the one who manages to do the least work. It makes perfect sense:

if you do less work than anyone else, and you’re paid the same amount as everyone else, you have, in fact,

found a way to win. You get the highest salary; you’re the one paid most for the least work.

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Is slacking ethically acceptable? Whether someone is a contextual or personal slacker, when success is

defined not as how well you do but how little you do, two basic questions arise:

1. Is someone or some organization being cheated?

2. Is there something fundamentally unethical about being a slacker?

The first question applied to those trapped—willingly or not—in contextual slackerism leads quickly to the

conclusion that the organization bears at least as great a burden of responsibility as the employee for

deficient work motivation. Applied to the personal slacker, the question about whether an employer was

cheated becomes more difficult. There does seem to be an element of reneging on implicit or explicit

pledges to fulfill responsibilities here, but it’s also true that most employment contracts in the United

States (though not so much in Europe where this question would require more prolonged consideration)

leave the organization broad latitude for dismissing workers whose performance is inadequate.

Next, is there something fundamentally unethical about slacking off? Most basic ethical theories are going

to return some form of a yes verdict. From a utilitarian perspective—one trying to maximize the common

good and happiness—it seems like problems are going to arise in most workplaces when coworkers are

forced to pick up assignments the slacker was supposed to complete or could have completed easily with

just a bit more effort. Similarly, basic ethics of duties include the one we all have to maximize our own

potential and abilities, and rigorously avoiding work seems, in most cases, to run against that aspiration.

Probably, a satisfying ethical defense of the slacker lifestyle would need to be founded on a personal

project going well beyond the limited economic world. Slacking off, in other words, would need to be part

of someone’s life ambition, and therefore its questions belong to general ethics, not the more limited field

of economic values treated here.

K E Y T A K E A W A Y S

 Stress at work invites ethical considerations of workers’ obligations to their own happiness.

 Office romance may broaden the range of values applying to career choices.

 Status deriving from one’s work can be an important compensation, but it is difficult to quantify.

 Slacking off—working to not work—may result from an employee’s work environment or it may be a

personal choice.

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R E V I E W Q U E S T I O N S

1. What are some of the ways stress at work can cause unhappiness in life?

2. Why the office is an important scene of romance in today’s world?

3. What do you imagine the rewards of status to be?

4. What kind of work contract would encourage slackerism?

5.

6. [1] Nanci Hellmich, “Study: Overweight People Gain More When Stressed by Work,” USA Today, July 8,

2009, accessed May 19, 2011,http://www.usatoday.com/news/health/weightloss/2009-07-08-obesity-

stress_N.htm.

7. [2] Christine Whelen, “Older but Wiser,” The Wall Street Journal, November 3, 2006.

8. [3] Sarah Bernard, “Let Them Eat Crab Cakes,” New York, accessed May 19,

2011,http://nymag.com/nymetro/news/media/features/2472.

9. [4] Eazy E, “IS it me or are most Union workers lazy?,” Yahoo! Answers, accessed May 19,

2011, http://answers.yahoo.com/question/index?qid=20081008004353AAn1iL7.

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7.5 Case Studies

Payola and the iPhone App

The word payola traces back to rock and roll’s early days, back when the only large-scale way new acts

could get their name and music out was on the radio. Deejays in the 1960s controlled their own playlists

much more than today, so a band could drive into town, play a few concerts, and pay off a few deejays to

get their songs into the rotation. When they rolled out toward the next stop, they left behind the

impression that they were the next big thing.

It’s not illegal for a deejay, radio station, or anyone at all to accept money in exchange for playing

someone’s music, but US law does make pay for play illegal if the sponsorship isn’t openly divulged, if the

song isn’t treated, in other words, as a commercial.

Today’s media world provides almost infinite ways for musicians, video commentators, moviemakers, and

iPhone app developers to get word out about what they’re doing. Anyone can post a video on YouTube or

give away software on a web page. Payola is still out there, though. Wired magazine ran a story about it in

the world of iPhone apps.

It works like this. You invent an iPhone app but can’t get anyone to notice. What do you do? One

possibility is offer money to one of the well-known iPhone app review sites in exchange for a review of

your creation. That gets the word out pretty well, so developers are starting to pay up. This modern payola

scheme is enraging the iPhone community, however. Jason Snell, who works for Apple’s own app-review

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website complains, “Readers need to know that true editorial reviews are fair, and aren’t the product of

any quid pro quo involving money or any other favors.” [1]

Michael Vallez, owner of the app-review site Crazy Mike’s Apps, disagrees. He charges for reviews without

disclosing that to his readers, but he doesn’t guarantee a positive report. If he thinks the app isn’t worth

buying, he sends the money back and cancels the review.

The Wired article concludes with an opinion from Kenneth Pybus, a professor of journalism and mass

communication: “Undisclosed paid reviews are indisputably unethical because they manipulate the

public. That’s an easy call to say it’s ethically wrong because that is a disservice to readers. It ought to be

information that applies to readers and not information that advances you financially.”

Q U E S T I O N S

1. Professor Pybus believes there’s a conflict of interest operating when Vallez accepts money to write

reviews for his website Crazy Mike’s Apps. What, exactly, is the conflict?

2. Vallez says that his actions do not cause a conflict of interest, only the appearance of a conflict.

o What’s the difference between a conflict of interest and the appearance of a conflict of interest?

o How could Vallez argue that in his case there’s only an appearance, and, on close inspection, there

really is no conflict here?

3. Three standard strategies for alleviating ethical concerns surrounding conflicts of interest are

o transparency,

o recusal,

o organizational codes.

How could each of these strategies be applied to the conflict-of-interest issue at Crazy Mike’s

Apps?

4. You develop an iPhone app and you pay Vallez to review it. He tries the app, likes it, and writes up

a positive paragraph.

o Make the case to defend the payment as an ethically acceptable gift. Are there limits to how much

you could give before it would shift from a gift to a bribe? If there is a limit, how was the number

chosen?

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o Vallez says that if he doesn’t like an app he returns the money and refuses to review it. Does this

fact interfere with the possibility of justifying the payments as a standard, business-type gift?

5. Old style payola—paying to get a rock band on the airwaves isn’t dead. According to a story from

ABC News, the practice is alive and well; the only difference is that it’s no longer the deejays who

get the cash, it’s high-level executives because they’re the ones who set today’s playlists. Here’s a

comment from Foo Fighters drummer Taylor Hawkins: “I think back in the ’70s they used to pay

people with hookers and cocaine, and now they’re just doing it with straight-up money. So they

can all go out and buy their own hookers and cocaine.” [2]

There’s a difference in the business world between providing entertainment and giving gifts. What

is the distinction?

o Why might entertainment be considered less ethically objectionable than gifts?

o Leaving aside moral concerns about hookers and drugs, ethically, is there a difference between a

rock group’s manager inviting radio executives out on a hooker and cocaine evening on one side

and just sending those cash on the other? If there’s a difference, what is it? If not, why not?

The Decorator’s Kickback

On a message board, Ms. G. C. from Miami writes,

Here’s the problem: an interior decorators bid is broken down into two parts-(A) the decorator’s

services and (B) the cost of labor and supplies. Most customers think (B) is a fixed cost-they forget

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it’s not the decorator’s fault if cabinetmakers charge an arm and a leg. So, where do customers

look the closest when they’re comparing costs? That’s right, (A)-the decorator’s fee.

Well, decorators are creative people and for years they’ve been doing some very creative bidding.

They’ve been low balling (A) and padding (B), expecting the laborers to kick back a percentage of

their inflated fees to the decorator. Surprised? Everyone’s doing it. Everyone, that is, except me.

It’s deceptive. And as a Christian, I think it’s just plain wrong.

The customer’s final cost is about the same either way you cut it, so most decorators don’t feel

they’re doing anything wrong. Are they right?

Needless to say, “blowing the whistle” on such a widespread and accepted practice would only

damage my professional reputation. [3]

Q U E S T I O N S

1. Mrs. G. C. confronts a third-party obligation. What is it?

2. Ethics can be weaponries—that is, used in your personal interest. Show how this could be the case here.

Does the fact that she would benefit by getting these kickbacks eliminated somehow make her position

less morally respectable? Why or why not?

3. Typically, according to Mrs. G. C, a client contracts an interior decorator. Later that decorator hires a

laborer, and the laborer gives the designer a kickback. There’s a conflict of interest here, what is it? What

is the ethical case against this kickback scheme?

4. Consequence theories of ethics represent the point of view that acts themselves are not good or

bad; all that matters are the consequences. Therefore, lying isn’t bad if it happens that a fleeing

criminal is asking you which way is the best escape route, and you point him down the street

leading to the police station. Duty theorists, by contrast, believe that certain acts including lying

and stealing are wrong regardless of the context and consequences.

o Do you suppose Mrs. G. C. adheres to a consequence ethics or a duty ethics? Why?

o Could you use the idea of consequence ethics to try to convince her to simply join the crowd and

do what everyone else is doing? What would that case look like?

5. If you wanted to put an end to this pervasive kickback practice in the interior decorating world

and only had time to present one argument, which of the following would you choose?

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o The practice should be stopped because it involves unethical kickbacks.

o It should be stopped because it’s dishonest in the sense that consumers are misled.

o It should be stopped because the straight shooter is getting the shaft.

Why did you choose that argument and how could it be elaborated more fully?

6. Imagine that Mrs. G. C. from Miami reveals her name and makes a whistle-blowing cause out of

her unhappiness with the standard practice in her profession.

o What kind of reprisals and negative effects might she expect?

o Do you believe whistle-blowing is justified in this situation? Why or why not?

o Is it required? Why or why not?

Sex, Money, and Whistle-Blowing

Like all recent NBA All-Star players, Kevin Johnson made a lot of money during his pro basketball career.

It drained out fairly quickly too. A few hundred-thousand went to the family of a sixteen-year-old high-

school girl in Phoenix after a he-said, she-said sex accusation. A decade later, a similar story emerged, but

at a different place: this time it was three girls in Sacramento, California, who attended St. Hope

Academy. They took their stories—each told of a similar incident involving Johnson—to the recruitment

advisor, Jacqueline Wong-Hernandez. Soon after, Ms. Wong-Hernandez was gone. Her resignation was a

protest over the way the complaints were handled internally at the school, which was by dismissing them.

Not only did St. Hope Academy take no action, the local police also decided not to press any charges in a

case that essentially came down to one person’s word against another’s.

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St. Hope Academy, as it happens, wasn’t a public school but a private business, and Kevin Johnson was

the founder and CEO. A lot of the money flowing into the young institution came from the federal

government as grants from the AmeriCorps program. After accusations surfaced that the grant money

wasn’t spent appropriately, the school agreed to pay back $423,836.50 to the government (about half of

what the school had received). The first payment, about $73,000, was made by Kevin Johnson himself.

So things probably would have ended, except for an AmeriCorps inspector general named Gerald Walpin.

He believed Johnson had gotten way too good a deal: the school should have been forced to pay back

much more of the grant money it had received. On May 5, 2009, he took the accusation to a California

congressman who in turn brought public attention to the issue. On June 10, Mr. Walpin was fired. In an

editorial statement, the Washington Times complained, “Mr. Walpin was fired with no explanation and

no warning to Congress; even though the act governing inspectors general says IGs can be removed only

after the president gives Congress 30 days’ notice and a reason for the firing. Rather than investigate the

IG’s serious complaints, Mr. Obama fired him. In short, he snuffed out the whistleblower rather than heed

the whistle.” [4]

A local Sacramento TV station doing some follow-up uncovered a report detailing hush money payments

at St. Hope and noted that the former NBA All-Star “often described himself as a personal friend” of

another avid basketball player, President Obama. [5]

Q U E S T I O N S

1. How were the following two faced with a third-party obligation?

o Jacqueline Wong-Hernandez

o Gerald Walpin

2. In general, there are three possible responses to third-party obligations, do nothing, report the

problem, become a whistle-blower. How would you categorize the response made by

o Wong-Hernandez?

o Walpin?

3. What questions can be asked to help determine whether whistle-blowing is justified? How might

they be answered in the case of

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o Wong-Hernandez?

o Walpin?

4. What questions can be asked to help determine whether whistle-blowing is ethically required?

How might they be answered in the case of

o Wong-Hernandez?

o Walpin?

Loyal to the Badge

When police officer April Leatherwood went undercover in Memphis, she changed her name to Summer

Smith. She didn’t change her socks for a year—no showers or brushing her teeth either.

Her daily routine was to hang out on the street smoking and trying to befriend drug addicts. They’d take

her to their dealers, where she’d make a buy and then try to find out who was the next person up the

ladder. Her work resulted in about three hundred arrests, everyone from two-bit drug sellers to major

movers who organized the street-level crime from luxury apartments.

Why’d she do it? According to the newspaper article relating her story, she loved the camaraderie of the

department and its protect-and-serve mission.

When she emerged from the undercover program, she was promoted to detective. Unfortunately, her

three-year romantic partner had moved on, and it was difficult to get the bad memories out of her mind.

Still, when the reporter asked whether she’d do it again, she said, “Yeah.” [6]

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Q U E S T I O N S

1. The two ideas on which company loyalty—or organizational loyalty to broaden the title—is built

are the following:

o An attachment to the organization that is non-instrumental, meaning the attachment is not

maintained only because it serves the employee’s concrete interests, such as the need for a

salary.

o A deposited value in the organization that goes beyond any individual and their attachment: the

organization’s value continues even without those who currently feel it.

How are these ideas manifested in the case of April Leatherwood?

2. Three measures on the scale of loyalty intensity are obedience loyalty, balanced loyalty, and free agency.

Given what you’ve read about Leatherwood, where would you put her on this scale? Why?

3. Think about one of the career lines you’re considering, or the one you’re currently on, and

imagine your company loyalty was similar to Leatherwood’s.

o What kinds of sacrifices do you imagine you’d make for the organization?

o Thinking about yourself, really, would you be able to make those sacrifices?

4. Leatherwood’s pay is not high, about $50,000 a year. That works out to about $7 an hour for the

twelve undercover months. Obviously she enjoyed no status while she was undercover. Now,

however, she has appeared in the newspaper and made detective grade in the department. In

your opinion from what you’ve read, do you believe she has acquired a level of status through her

work?

o If she has acquired a status, how would you describe it, what is it based on, how is it different

from the status enjoyed by, say, a senator or a movie star?

o Does this status—assuming she’s acquired it—compensate what she suffered? Explain.

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The Gawker Sex Tape

All kinds of things happen in advertising agencies. Part of the reason is the diversity: a typical medium-to-

large agency requires many different kinds of work, and that brings together a rainbow of people. There

are suited, business types in the client services section. They work with budgets and bulleted lists and

connect the agency with the corporate client. Down the hall the planners dress more casually and study

demographics and culture. They invent market segments with names like soccer moms and then devise

strategies for appealing to soccer moms’ distinct interests and tastes. Further down the hall, there are the

agency’s actual commercial makers. They call themselves creative talent and are free to appear for work

in jeans and ratty t-shirts. For their paycheck, they plan the short films the rest of us call TV commercials.

The typical large agency also needs some HR people, accountants, computer techs, and lawyers.

Most advertising agencies have a pretty good mix of men and women, and in general, there are a lot of

young people in the field because the long hours and short deadlines tend to lead workers to seek

employment elsewhere eventually.

Most agencies are good places for romance. The chemicals are right: young workers, long hours, the

excitement of million-dollar accounts, and lots of different types of people for different tastes. Those are

also, as it happens, good ingredients for sex, as people at BBDO (an Omnicom agency) in New York City

discovered when a grainy cell phone movie went viral. Shot by a guy in the creative department, he stuck

his camera over the top of a cubicle and caught a nude couple wedged into the back corner.

As far as the scandal went, it didn’t take long for industry insiders to figure out who’d been caught, and

from there, the information spread that they were both married to other people. The website Gawker.com

followed the action closely, posting the original film and then running follow-ups. In a nutshell, this is

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what happened. The romantic couple continued at their jobs. No word about how their marriages are

doing. The filmer got fired. He downloaded the footage onto his computer and then sent it around to a few

friends. He had nothing to do—he says—with the fact that a few weeks later it was all over the web. In his

words,

It ended up on Gawker and Media bistro and then the word got back to me that all the creative’s

were sending it around. I freaked. I thought it was amazing how something could go viral and

end up online so quickly when I had nothing to do with it really. [7]

Well, he was the one who filmed and originally distributed it.

The discussion posted on the Gawker web page is probably hotter than the sex that got everything going.

Many issues come up, including: Why did the filmer get fired while the adulterers got to keep their

jobs? One answer someone wrote in is that filming and distributing a sex tape is unethical (and possibly

illegal if minors end up seeing it). A poster who calls himself BritSwedeGuy responds:

How could you be sacked for filming something you could see at work?

Would he have been sacked if he’d taken the video to HR?

Probably not.

So is he being sacked for withholding evidence then?

That only makes sense if the evidence was of a sackable offence.

Has he been sacked for passing the video on? Surely he’s a whistle-blower in that case and ought

to be protected.

This is his argument. First, it doesn’t make sense to fire the filmer for recording the sex, since the act took

place in public, and anyone (tall) could’ve seen it. The perpetrators couldn’t reasonably object to being

filmed if they were exhibiting themselves so openly. Second, if the filmer had taken the film to HR to

report the fact that sex was going on, he probably wouldn’t have been fired, and the entire episode

would’ve been managed internally (and quietly) inside the agency. That means the only justifiable reason

for firing the guy was that he digitalized the video and, in essence, made it possible for others to beam it

across the Internet. If that’s what he did, though, then he’s a whistle-blower and should be protected.

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Q U E S T I O N S

1. If the filmer did take the video to the human resources department, what would he be reporting?

What ethical misdeeds are happening?

o With respect to those misdeeds, where does the line get drawn between flirting for a second and

stripping down for a fifteen-minute frolic?

2. On the question of whistle-blowing—and the possibility that the filmer’s action was ethically

justifiable as a form of whistle-blowing—a poster named Bad Uncle isn’t buying it. He writes, “OK,

I’ll be less glib. I don’t see how f***ing someone is a major ethical violation worthy of whistle-

blowing (fnar)…it’s hardly damaging to a company, its clients, or its employees. Wake me when

their monotonous thrusting implants the seed of fraud into an earnings statement.”

Bad Uncle doesn’t think the filmer could defend himself by claiming to be a whistle-blower. In

your own words, why not? Do you agree? Explain.

3. Do you believe the filmer sensed a company loyalty? Would a stronger sense of company loyalty have

encouraged him to erase the tape instead of disseminating it? Why or why not?

4. Advertising agencies are notorious for fast money and little loyalty to their employees. Many agencies, if

they lose an account, straight off fire many of those who worked on the account even if the loss had

nothing to do with the employee’s work performance (the client may have discontinued a line of products,

for example, and for that reason discontinued the advertising). Given that business attitude, does the

company have a right to demand that employees think of the agency’s interests when doing things like

filming? Why or why not?

5. Work in advertising—especially in the creative department where people often have to actually make ads

for air right now—is very stressful. There’s a lot of money involved and a lot of competition among

creative’s. Do you believe sex at work is an ethically defensible way of alleviating the stress comparable

with taking a cigarette break or just a quick walk around the block? How could the argument be made in

favor?

6. If someone told you they wanted to work in advertising because it’s a good spot to meet someone and get

married (which is probably true at most agencies), do you believe that’s a reasonable decision, one in

harmony with the ethical responsibility to pursue one’s happiness and welfare? Why or why not?

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7. If someone told you they were going to work in advertising because they’d heard it’s a good place for fast,

cheap sex (which it probably is at most agencies), do you believe that’s a reasonable decision, one in

harmony with the ethical responsibility to pursue one’s happiness and welfare? Why or why not?

[1] Brian X. Chen, “Fallout from Wired.com’s iPhone App Payola Story,” Wired, Gadget Lab, March 24, 2010,

accessed May 19, 2011, http://www.wired.com/gadgetlab/2010/03/app-review-payola-reaction.

[2] Brian Ross, Richard Esposito, and Vic Walter, “Pay to Play: Music Industry’s Dirty Little Secret,” ABCNews.com,

February 8, 2006, accessed May 19, 2011,http://abcnews.go.com/Primetime/story?id=1591155&page=1.

[3] Ms. G. C. from Miami, “The Case of the Casual Kickback,” Urbana.org.

[4] “Editorial: Stonewalling on Walpin-gate,” The Washington Times, July 10, 2009, accessed May 19,

2011,http://www.washingtontimes.com/news/2009/jul/10/stonewalling-on-walpin-gate.

[5] “Report: Johnson Offered to Pay Accuser,” KCRA.com, November 20, 2009, accessed May 19,

2011, http://www.kcra.com/news/21679385/detail.html.

[6] Kristina Goetz, “A Year of Living Dangerously Takes a Toll on Undercover Memphis Officer,” Commercial Appeal,

August 30, 2009, accessed May 19, 2011,http://www.commercialappeal.com/news/2009/aug/30/year-of-living-

dangerously-takes-its-toll.

[7] Hamilton Nolan, “The Cameraman Speaks: He’s Fired but the Sex Tape Couple Keep Their Jobs,” Gawker,

November 26, 2008, accessed May 19, 2011,http://gawker.com/5099143/the-cameraman-speaks-hes-fired-but-

the-sex-tape-couple-keep-their-jobs.

Chapter 8: Manager’s Ethics: Getting, Promoting, and Firing Workers from The Business Ethics

Workshop was adapted by Saylor Academy and is available under a Creative Commons

Attribution-NonCommercial-ShareAlike 3.0 Unported license without attribution as requested by

the work's original creator or licensor. UMGC has modified this work and it is available under the original license.

Saylor URL: http://www.saylor.org/books Saylor.org 327

Chapter 8

Manager’s Ethics: Getting, Promoting, and Firing Workers

Chapter Overview

Chapter 8 "Manager’s Ethics: Getting, Promoting, and Firing Workers" examines some ethical decisions

facing managers. It considers the values that underlie and guide the hiring, promoting, and firing of

workers.

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8.1 Hiring

L E A R N I N G O B J E C T I V E S

1. Locate ethical tensions affecting the breadth of a hiring search.

2. Define applicant screening and mark its ethical boundaries.

3. Define applicant testing and consider what makes an appropriate test.

4. Draw the lines of an ethical interview process.

Help Wanted, but from Whom?

The Central Intelligence Agency’s hiring practices are widely known and well depicted in the movie The

Recruit. After discretely scouting the special capabilities of a young bartender played by Colin Ferrell, Al

Pacino catches him at work, orders a drink, carries on a one-sided and cryptic conversation, performs a

magic trick with a ripped newspaper, announces that “things are never quite as they appear,” and finally

admits that he’s actually a job recruiter.

Ferrell seems annoyed by the man’s presence.

Pacino returns to the newspaper, pulls out a page covered by an ad announcing “Two Day Specials.” He

circles the letters c, i, and a in “Specials” and walks out. Colin Ferrell follows. [1]

Actually, that’s not true. The CIA doesn’t hire that way. They advertise on CareerBuilder just like any

other company. You can understand, though, why they wouldn’t mind scouting out their applicants even

before allowing people to apply; they don’t want to end up hiring double agents.

Something like that happened soon after Procter & Gamble grew jealous of a competitor’s hair-care

products. Salon Selective, Finesse, and Thermasilk were all doing so well for Unilever that P&G contracted

people to get hired over at Unilever and bring back secrets of their success. The corporate espionage—

which P&G executives characterized as a “rogue operation”—led to a multimillion-dollar settlement

between the companies and left behind the lesson that when you’re the boss and you’re hiring, you’ve got

to make sure that the people you bring in will be loyal to the company. [2]

The problem is you’ve also got to make sure that they’re going to do good work, the best work possible.

Between the two requirements there’s a tension stretching through every decision to hire a new worker.

On one side, you want to limit the people you even consider to those few who, for one reason or another,

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you know won’t be a total disaster. On the other side, no company can survive playing it safe all the time;

generally, the corporations able to hire the best talent will win over the long run. And one way to get the

best talent is to cast as large a net as possible, let a maximum number know that a position is available,

and work through the applications carefully no matter how many pour in.

Conclusion. Hiring employees can be safe or risky depending on how broadly you announce a job opening.

Three Strategies for Announcing a Job Opening: Nepotism, Internal Public

Announcement, Mass Public Announcement

Start on the safe side of hiring. Nepotism is granting favored status to family members. In the case of

hiring, it means circulating information about open jobs only to your relatives. Naturally this happens at

many small businesses. A sales representative at a small firm importing auto accessories meets a woman

at work. She’s also a rep. Marriage follows. A year later he decides to quit his job and strike out on his own

with a new website project that reviews and sells the same kind of car products. Things go well, page hits

climb, sales increase, and soon he needs help so he hires…his wife. They’ve worked together before, and

they both know the field. Most important, the risk is minimal. Since he’s waking up with her in the

morning he can figure she’s not going to skip out on work just because it’s a nice spring day. And is she

going to steal office supplies? A little money from the payroll? An important client? Probably not. This is a

case where nepotism makes sense.

But what about the other way? What if the husband’s solo venture flops, and at the same time, his wife’s

career flourishes. Now he needs a job, and she’s got the power to hire. A job opens up. Probably, she’s got

junior staff ready for the post, but can she push them aside and bring her husband in?

There is some justification: she’s worked with him before, and she knows he performs well. Plus, as a boss

of his own (failed) business, he’s obviously got leadership experience and he has demonstrated initiative.

All that counts for something. But if she goes with him she’s going to breed resentment in her group. You

can hear it:

“Hey, what do you need to get a promotion around here?”

“A last name.”

And

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Now you might be asking why nepotism bugs me so much. It’s the presumption. It’s the attitude.

It’s just one more example of how life isn’t fair. Am I jealous? I don’t know. I guess I take

advantage of the company in other ways…LOL. What can I learn from this? That life is good if

you’re born into the right family? That I need to control my attitude and stop letting petty crap

drive me to drink? [3]

That last paragraph comes from a blog entry titled “Nepotism Sucks.” It does for his company too: few

firms can be successful with employees musing about how they “take advantage of the company” while

they’re punctuating comments about their work with LOL. As for the central issue, he’s right. Basic

fairness isn’t being honored: people are getting considered for a job because of who they’re related to, and

it’s not this blogger’s fault that his last name is wrong.

On the other hand, “Is Nepotism So Bad?” titles an article on Forbes.com that compiles a list of large

companies—including Forbes—where nepotism has been the norm…and successful. According to the

article, experts estimate that executive-level nepotism works out about 40 percent of the time. What are

the advantages to bringing in your own? Familiarity with the business and trust are noted. Another

advantage is also underlined: frequently, relatives don’t want to let their own relatives down. Sons work

harder for fathers, cousins for cousins, brothers for sisters. There’s a productivity advantage in nepotism.

Arguably, that factor weighs more heavily than the bitterness arising when deserving workers already

employed don’t get a chance to apply for a job because it already went to the boss’s sister-in-law. [4]

Finally, at least theoretically, there’s a creative solution to the bitterness caused by nepotism: make

virtually every post a nepotism-first position. Oil-Dri, a producer of absorbent materials, celebrated its

fiftieth anniversary with a party for all employees. “Would everyone,” the group was asked at one point,

“who is related to someone else in the company please stand up?” Of the seven hundred employees, about

five hundred left their seats.

Internal public job announcements occupy a middle spot on the continuum between playing it safe (only

letting selected people you’re certain will be loyal and at least moderately capable know when a job is

available) and going for the best talent (broadcasting the post as broadly as possible and accepting

applications from anyone).

An example of an internal public job announcement comes from the National Review, a political

magazine and website run by the kind of people who wear suits and ties to baseball games. Their blog is

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called The Corner, and the magazine’s editors fill it with thoughts and arguments about the day’s political

debates in Washington, DC. There’s also a bit of insider humor, provocation, and satire tossed back and

forth between posters. If you keep reading for a few weeks, you’ll start to sense an intellectual soap opera

developing along with the libertarian-conservative politics; there’s an undercurrent of shifting alliances,

snarkiness, and thoughtful jabs.

You’ll also notice that National Review places job announcements on The Corner blog. There aren’t a lot

of openings, but every couple of weeks a little announcement appears between posts.

The National Review Online is seeking an editor with web capabilities. Send applications to

[email protected].

It’s pretty ingenious. The only people who are going to be reading The Corner are

 sincerely interested in the wonkish subjects these guys publish about;

 not out there just looking for any job (at the time they see the announcement, they’re not looking for a job

at all because it’s not a job site);

 compatible on a personal level with the National Review crew. The posters let personalities shine

through, and if you don’t have chemistry with their style of humor and talk, you’re simply not going to be

reading them.

What an internal public job announcement seeks to do is get the most applications in the hopper as

possible, and so the announcement is published on a free Internet page that anyone can see. That’s the

public part. But because the page is only commonly followed by people who are already inside the world

of public policy defining the employees at National Review, the bosses don’t need to worry about the

wrong kind of people sending in résumés. That’s the “internal” part. Recruiters can get a lot of

applicants—increasing their chances of finding really talented people—without worrying too much about a

bunch of lefties who really prefer websites like Daily Kos trying to fake their way into the organization.

Mass public job announcements are just what they sound like. You need someone and you post the

position at Monster, CareerBuilder, and The Ladders. Here you’re giving up confidence that applicants

will fit into the organization naturally, and you’re even risking corporate spying moles like those that

infested Unilever. In exchange, however, you’re getting the broadest selection possible of people to toss

their hat into the ring, which maximizes your chances of finding stellar work performance.

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Beyond the advantage of many applicants, there are good ethical arguments for mass public job

announcements. The simplest is fair play: everyone should get an equal opportunity to take a run at any

job. Just past that, there are concerns about discrimination that are eased by mass announcements. While

there’s no reason to launch charges of inherent racism at nepotistic hiring practices, it might well be true

that if a small business is initiated by an Asian family, and they start hiring relatives, the result at the end

of the day is a racial imbalance in the company. Again, no one is equating nepotism with racism, but the

appearance can develop fairly easily whenever job announcements are not publicized as widely as

possible. The parallel case can be made with respect to internal public job announcements. If 90 percent

of the people who come in contact with the “help wanted” message happen to be women, sooner or later,

there’s going to be some guy out there who complains. So, one argument in favor of mass announcements

is the stand it helps take against illegal and unethical discrimination.

Another argument for mass announcements is reciprocity. If a company is trying to sell a product to the

general public, to anyone who’s willing to pay money for it, then shouldn’t they allow everyone a shot at

becoming an employee? It doesn’t seem quite right to profit from anyone—to try to sell, say, a car to

anyone who walks in the door—and then turn around and not give all those consumers a decent chance at

earning a living there at the dealership.

Conclusion. Announcing a job opening is not automatic. You can announce the spot more publicly or less

so. There are advantages and disadvantages to the various approaches, but there’s always an ethical

responsibility to clearly account for the reasons why one approach is selected over another.

Ethical Perils of Job Announcements

Ethical perils of job announcements include

1. describing a position in ways that don’t correspond with the reality,

2. announcing a post to people who really have no chance for the job.

Once you’ve identified the demographic pool you’d like to recruit from, it’s easy to oversell the job in the

announcement you post. The most blatant cases—You can earn $300 per hour working from home!—are

obvious frauds, but even sincere attempts can cause misunderstandings. Say a job requires “occasional

travel.” Fine, but does that mean occasionally during the year or occasionally during the month?

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The much more severe case of insincerity in job announcements is posting one before an audience that

has no reasonable chance of getting the job. When Hooters posts a “server wanted” sign, we all know what

they’re looking for just like when the rough bar next door advertises for a bouncer. But what if it’s a formal

restaurant advertising for a waiter? If the place is across town, you can’t just drop in to check out the kind

of people they hire. So maybe you go through the application process and make the telephone calls and

finally go in for the interview. As you walk through the door, the first thing they check out is your weight

profile. Then your jaw line, haircut, eyes, and the rest. They want to see how you compare with the other

waiters who all look like they model on the side.

If you’re lucky, you see yourself fitting right in, but if you’re like most of us, you know the interview’s over

before it started; the whole thing has been a huge waste of time.

Now put yourself on the other side. As the restaurant manager trying to fill the position, you know

you should put the requirement that applicants be devastatingly handsome into the ad. The duty to be

honest requires it. The duty to treat others as an end and not a means requires it. The idea that our acts

should be guided by the imperative to bring the greatest good to the greatest number requires it. Almost

every mainstream ethical theory recommends that you tell the truth about what you’re looking for when

you announce a job. That way you don’t waste peoples’ time, and you spare them the humiliation of being

treated as irrelevant. So you should want to put in the ad something about how only potential movie stars

need apply.

But the law virtually requires that you don’t put the line in. If you explicitly say you’ll only consider

exceptionally attractive men for your job, you open yourself to a slew of lawsuits for unfair and

discriminatory hiring practices. In fact, even Hooters aren’t safe. In 2009 the chain was sued by a Texas

man named Nikolai Grushevski because they refused to hire servers who looked, well, like him. When it

gets to that point—when hairy guys can get away with calling lawyers because they aren’t hired to serve

food in short shorts and halter tops—you can understand why restaurants don’t want to publicly admit

exactly what they’re looking for. [5]

Bottom line: if Hooters just comes out and states what it is that makes their kind of employee, they can get

sued. So they’re much better off just making the announcement ambiguous. That way, when it turns out

that no hairy guys ever seem to get hired, they can always say it’s because they didn’t seem so adept at

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dodging tables while shooting around with trays of beers and sandwiches. Or whatever. One lie is as good

as another so long as it keeps the restaurant out of the courtroom.

For managers, this is a tight spot. They’re caught between what’s right and the law. In ethical terms,

they’re stretched between two conflicting duties: to tell the truth and to get the famous Hooters Girls into

the restaurant.

Screening

Reducing a large pool of applicants to a manageable selection of people for serious consideration

is applicant screening, sometimes referred to as filtering. Screening begins with the job announcement.

Requirements like “three or more years of experience” and “willingness to work the night shift” go a long

way toward eliminating applicants.

It’s impossible, though, to completely define the perfect applicant beforehand, and even if you could,

there’s almost always going to be someone like Nikolai Grushevski who shows up. So screening continues

as the preliminary review of applications and applicants to see who can be quickly crossed off the list

without any serious consideration.

Legally, who can be crossed out? The default response is no one. In its broadest form, civil rights

employment law guarantees equal opportunity. All applicants deserve to be considered and

evaluated solely on their ability to do the job, and the federal government’s Equal Employment

Opportunity Commission is stocked with lawyers who are out there doing their best to make sure the rules

are upheld. For managers, that means they’ve got to take all applicants seriously; they’ve got to pursue

interview questions about ability, training, experience, and similar. Now, this is where a guy like

Grushevski can come in the door and say, “Look, I can deliver a round of burgers and beer as well as any

woman.” He’s probably right. Still, he’s not the right person for the job; there’s no reason for a manager to

lose valuable time dealing with him.

Similarly, a wheelchair-bound man shouldn’t be a beach lifeguard; an eighty-year-old shouldn’t be flying

commercial jetliners; the seven foot one and 330-pound Shaquille O’Neil isn’t going to be a horse jockey.

There is a legal way for companies to summarily screen out inappropriate applicants: by appealing

tobona fide occupational qualifications (BFOQs). BFOQs are exceptions granted to equal opportunity

requirements. A form of legalized discrimination, they let managers cross off job applicants for reasons

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that are normally considered unfair: gender, physical size, religious belief, and similar. (As a note, race

isn’t allowed to be considered a BFOQ.)

When do bosses get this easy way out? When they can show that the otherwise discriminatory practices

are required because of a business’ nature. So while it’s clear that Shaquille O’Neil’s intimidating size

doesn’t mean he’ll be a bad accountant, the nature and rules of horse racing require that riders be

diminutive, and that means Shaq would be a disaster. A horse owner can show that the job requires a

physically little person to be successful. Thus size becomes a BFOQ and a legitimate way of screening

applicants for that particular job.

A maker of men’s clothes can reasonably screen out women from the applicant pool for models—but they

can’t eliminate female applicants from consideration for a sales position. Or they could, but only if they

could show that maintaining a masculine public image was integral to the success of the company. For

example, you could imagine a company called Manly Incorporated, which sold products based on the

premise that every employee was a quality control officer.

Along similar lines, a Catholic school may screen atheists from the search for a teacher, but it’s harder to

justify that filter for janitors. At the airport security line women can be assigned to pat down women and

men to men, but either may apply for the job to hand check the carry-on bags.

Another common screen is education. Imagine you have just opened a local franchise of Jan-Pro, which

offers commercial cleaning services to car dealerships, gyms, banks, churches, and schools. [6]

What level

of education will you be looking for in potential employees? Since the job involves mixing chemicals, it

seems like requiring some basic education is a fair demand, but is a college degree necessary for the work?

You may have one as a manager, but that doesn’t mean you should necessarily demand that much from

employees. And on the other side, is it fair to screen out someone who’s got too much education, say a

master’s degree in chemistry? It does seems reasonable to suspect that this kind of person will soon

become bored pushing a vacuum over carpets.

Then again, do you know that will happen? Is it fair to screen based on what you suspect might occur?

Another type of screening catches high-risk lifestyles. Smoking is one of the most often cited, and the

Humana company in Ohio is one of a growing number that’s directly banning smoking—on or off work—

by new employees. [7]

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These healthy lifestyle policies set off firestorms of ethical debates. With respect to smoking and in broad

strokes, the company has an interest in prohibiting smoking because that should mean healthier workers,

fewer sick days, lower health insurance premiums, and higher productivity. In short: better working

workers. On the other side, job applicants (at least the smokers) don’t believe that they’re less productive

than everyone else, and anyway, they resent being excluded for a recreational habit pursued on their own

time. In long discussion boards—there are hundreds online—the debate plays out. Here’s one exchange

from a typical board:

bonos_rama:

I wouldn’t hire anyone that has a habit of leaving their desk every hour to stand outside for

10 minutes. Doesn’t matter if it’s to smoke, drink coke, or pass gas that they’re leaving, it’s

bad for productivity.

Mother of a

Dr.:

But it’s OK to stand by the coffee pot and discuss sports and politics? Productivity actually

improves when you get away from the computer every hour.

matt12341:

Even discounting the productivity argument, smokers tend to have more long-term health

problems, leading to higher insurance premiums so companies end up paying more.

jamiewb:

What if we apply this logic to people who are overweight? What about people who have a

family history of cancer? Or a higher incidence of diabetes? As long as it doesn’t impact job

performance, I don't think it’s fair to refuse to hire smokers.

happily-

retired:

I think it is a great idea to not hire smokers. Up next should be obesity, as it leads to diabetes,

heart problems, joint problems, etc. Companies following that path would be demonstrating

good corporate citizenship by fostering a healthier America.

Zom Zom:

Yes, the good citizenship of fascism. Now my employer has the right to dictate what I do with

my body? “Land of the free,” unless your boss doesn’t like the choices you make. [8]

You can see that underneath the back-and-forth, this is ultimately a debate about ethical perspectives.

One side tends toward a utilitarian position: the greater good in terms of health and related issues justifies

the filtering of smokers in hiring decisions. The other side tends toward a fundamental rights position:

what I do with my time and body is my decision only. Both sides have strong arguments.

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Criminal record screening is another common filter for job applicants. Most states won’t allow employers

to deny someone fair consideration for a job only because of a prior criminal conviction. There’s wiggle

room, though. In New York, Article 23-A of the correction law certifies that employment may be denied if

 there’s a direct relationship between the criminal offense committed and the employment sought,

 the applicant would pose an unreasonable risk to property or the safety or welfare of others.

Those are big loopholes. The first one means the Brinks armored car company can legally refuse to

consider ex-bank robbers for a position. It may also apply to the shoplifter who wants to be a cashier or

the drug dealer who wants a job in the pharmacy.

The second exception is still broader and applied in Grafter v. New York City Civil Service

Commission. [9]

In that case, the Fire Department of New York refused to hire Grafter because he’d been

caught drunk driving on his last job. A potentially drunken fireman does seem like a risk to the welfare of

others. Pushing that further out, the same would probably go if he applied to be a taxi driver. In fact, the

list of jobs that may seem dangerous for others if the worker is drunk extends a long way, probably

everything in construction, transportation, or anything with heavy equipment. So the law does allow

employers to resist hiring convicts across a significant range of wrongdoing.

Finally, the basic ethical tension pulls in three competing directions for any manager facing a criminal

hiring decision:

1. The ethical responsibility to recovering criminals. Rehabilitation (via honest work) is good for ex-

convicts.

2. The manager’s responsibility to the company. Managers need to avoid problems whenever

possible and keep the machine running smoothly so profits flow smoothly too.

3. The company’s responsibility to the general public. If a taxi syndicate is hiring ex-drunk drivers,

you’ve got to figure something’s going to go wrong sooner or later, and when it does, the person who put

the driver behind the wheel will be partially responsible.

Social media is another potential filter. Fifty-six percent of millennial believe that the words and pictures

they put on Facebook and Twitter shouldn’t be allowed to factor into hiring decisions. [10]

Recruitment

officers, they’re saying, shouldn’t be going through online photo albums to check out the kinds of things

you and your buddies do on Friday nights.

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From the employers’ side, however, the argument in favor of checking the pages is simple. If an applicant

is sufficiently incautious to leave pictures of massive beer funnel inhalations available for just anyone to

see—and if they do that while they’re trying to put their best face forward as job seekers—then God knows

what kind of stuff will be circulating once they’ve got a job. As a manager, it’s part of your job to protect

the company’s public image, which means you’ve got to account for clients and others maybe running the

same Google and Facebook searches that you are.

It’s an easy scenario to imagine: you hire someone with a flamboyant online life. Soon after, a client

working with her gets nosey does a Google image search, and what comes in at the top of the list is a

picture of your new employee slamming beers, chain-smoking cigarettes, or maybe inhaling something

that’s not legal. This isn’t good and the person who looks really bad is the supposedly mature manager

who allowed the whole thing to happen by hiring her.

Of course there’s always the standard but still powerful argument that what employees do after hours is

their own business, but one of the realities inherent in the Internet is that there is no such thing as “after

hours” anymore. Once something goes online, it’s there all the time, forever. Managers need to take

account of that reality, which might mean rethinking old rules about privacy.

Testing

Once an ad has been placed, and applicants have been pooled, and the pool has been screened, the real

hard work of hiring begins: choosing from among apparently qualified people. One tool used in the

selection process is applicant testing. There are various sorts of tests, but no matter the kind, for it to be

legitimate; it should itself pass three tests. It ought to be

 Valid. The test must measure abilities connected to the specific job being filled. A prospective roadie for

Metallica shouldn’t be asked to demonstrate mastery of Microsoft Excel, just as there’s no reason to ask an

accountant to wire up his cubicle with speakers blasting 115 decibels.

 Normalized. The test must be fair in the sense that results are adjusted for the circumstances of the

testing session. If you’re checking to see how frequently applicants for the post of TV weatherman have

predicted sunshine and it turned out to rain, and one woman gets tested in Phoenix while another takes

Seattle, it’s pretty easy to see who’s going to win in terms of raw numbers. Those numbers need to be

adjusted for the divergent levels of difficulty.

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 Constant. The results any test taker achieves over time should be similar. Just like a broken clock is right

twice a day, an applicant for an interior design job who happens to be color-blind might once in a while

throw together a carpet-sofa combination that doesn’t clash. A good test eliminates the lucky hits, and

also the unlucky ones.

Of the many kinds of hiring tests now in use, the most direct try to measure the exact skills of the

job. Skill tests can be simple. They’re also relatively easy to control for validity, normalization, and

constancy. For example, applicants for a junior-level position in copyediting at a public relations firm may

be given a poorly written paragraph about a fictional executive and asked to fix up the spelling and

grammar.

Psychological and personality tests are murkier; it’s more difficult to show a direct link between the

results and job performance. On one side, you’ve got a test that probes your inspirations and fears, your

tastes and personal demons. On the other side, the test’s goal is to reveal how well you can handle plain

work assignments. Here’s an example of the disconnect. The following is a true-or-false question that

Rent-A-Center placed on one of its employee application tests: I have no difficulty starting or holding my

bowel movement. [11]

Well, it’s hard to see the link between bathroom performance and the ability to rent washer and drier sets.

Rent-A-Center wouldn’t be asking, though, if they didn’t think the link was there. And they could be right;

there may be some connection. One of the firmest sources of belief in the link between personality profile

and job performance is the very interesting Minnesota Multiphasic Personality Inventory (MMPI). That

specific test is the origin of the bathroom question. Other true-or-false choices on the long test include the

following:

 I am very attracted to members of my own sex.

 Evil spirits possess me sometimes.

Now, the MMPI is a real test with a long and noble history. One of the things it tries to do is

establish correspondences. That is, if we take a group of successful executives at Rent-A-Center and we

discover that they nearly universally have trouble in the bathroom, then it may make sense to look for

people who suffer this discomfort when looking to recruit future company leaders. As for the why

question—as in why is there a link between bathroom habits and success?—that doesn’t matter for a

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correspondence test; all that matters is that some link is there. And if it is, then you know where to look

when you’re hiring.

Theoretically, correspondence testing makes sense. Still, it’s hard to know how applicants are going to

react to questions about sexual attraction and evil spirits. Obviously, some are going to find the whole

thing too weird and not turn in responses that actually match their profile. As for applicants and

employees of Rent-A-Center, they filed a lawsuit. [12]

Inescapably, correspondence-type personality tests are vulnerable to lawsuits because they’re explicitly

based on the premise that no one knows why the results indicate who is more and less suitable for a post.

The administrators only know—or at least they think they know—that the correspondence is there. It’s not

obvious, however, like it is with a simple skill test, so it makes sense to imagine that some are going to

doubt that the test is valid; they’re going to doubt that it really shows who’s more and less qualified for a

job.

So the problems with psychological tests include validity failure and lawsuits. Problems with constancy

and normalization could also be developed. Added to that, there are invasion of privacy questions that are

going to get raised whenever you start asking perspective employees about their bathroom habits and

bedroom wishes.

On the other hand, it needs to keep being emphasized that the tests do happen, and that’s not a

coincidence. At the Universal Studios Hollywood theme park, recruiter Nathan Giles reports that the tests

he administers—with true-or-false questions including “It’s maddening when the court lets guilty

criminals go free”—actually do produce valuable results. They correlate highly, he says, with personal

interviews: if you do well on the test, you’re going to do well face to face. And though the application and

interpretation of these tests are expensive, in the long run they’re cheaper than interviewing everyone.

Finally, if that’s true, then don’t managers have a responsibility to use the tests no matter how heated the

protests? [13]

Lie detectors in the Hollywood sense of wires hooked up to the fingers for yes-or-no interrogations are

illegal except in highly sensitive and limited cases, usually having to do with money (bank guards) and

drugs (pharmaceutical distribution). Written honesty tests are legal. Generally, the questions populating

these exams resemble those found on psychological tests, and deciphering the results again works through

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correlation. Obviously, the test can’t work directly since both honest and dishonest people will answer

“yes” to the question “are you honest?” Here are some typical questions that do get asked:

 I could help friends steal from my company.

 I’m not an honest person and might steal.

 I return quarters I find on the street to the police station.

Medical tests are generally only considered appropriate when the specific job is labor intensive. As always,

there’s a difference between testing and prying, and it’s your responsibility as a manager to limit the

questioning to specifically work-related information. Questions about past physical problems are

generally considered off limits as are future problems that may be indicated by family health history. A

simple example of an appropriate medical test would be a vision examination for a truck driver.

When Michael Phelps—the thick-grinned Olympic swimming hero—got photographed pulling on a bong,

he immediately failed the drug test with one of his employers: Kellogg’s breakfast cereal. He wouldn’t be

hired again, the company explained, because smoking pot “is not consistent” with the company’s image.

The National Organization for Reform of Marijuana Laws rushed to disagree, insisting that the problem’s

not that the drugs are bad; it’s the law that’s outdated and wrongheaded. They were supported, NORML

claims, by the Washington Post and Wall Street Journal. [14]

However that might be, it’s seems difficult to object to Kellogg’s argument. The reason they’d hire Michael

Phelps in the first place is to brand their product with the image of beaming, young health, not zoning out

in front of the TV eating Doritos. Whether it’s legal or not, pot smoking is going to clash with the job

description.

But what if he hadn’t been caught by someone with a camera? Would Kellogg’s have the right to demand a

drug test before signing Phelps up as a representative? It depends where you are. Because there’s no

broad federal law on the subject, the rules change depending on your state, even your city. If you’re

looking for a job and you share a pastime with Michael Phelps, you may be in trouble in Alaska where any

employer can test any applicant at any moment. In Arizona, on the other hand, you have to get written

warning beforehand, which might allow for some cleanup. And if you’re applying for a government job in

Berkeley, California, you can party on because a local ordinance prohibits testing. [15]

Looking at the Berkeley law allows a sense of the central ethical conflict. On one side, the employers’, the

obvious and strong argument is that drug use negatively affects work performance, so evaluating job

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prospects in terms of their future productivity implies, it almost requires, making sure they’re not

distracted or disoriented by drug habits. In contrast, the Berkeley ordinance persuasively states that

mandatory drug testing fails two distinct tests:

1. It assumes guilt instead of innocence.

2. It invades the individual’s privacy.

Deciding about drug tests seems to come down to deciding whose legitimate rights deserve higher billing:

the employer’s or the employee’s.

In 1971 the US Supreme Court banned intelligence quotient (IQ) testing except in very limited

circumstances after finding that the tests disparately affected racial minorities. Further, serious IQ tests

(as opposed to seven-question Internet quizzes) are extremely expensive to apply, so even if it were legal,

few employers would use the test with any frequency.

Conclusion. Tests applied by employers to job applicants include those probing skills, psychological

profile, honesty, medical condition, and drug use.

Interviewing

In 1998 the Indianapolis Colts had a very good problem. Holders of the top pick in the National Football

League draft, they had to choose between two exceptional players: two that everyone agreed radiated

Super Bowl talent. Both were quarterbacks. Peyton Manning had a better sense of the field and smoother

control of the ball; Ryan Leaf had a larger frame and more arm strength. Which would make the better

employee? The call was so close that the team with the second choice, the San Diego Chargers, didn’t care

much who the Colts selected; they’d be happy with either one.

The Colts didn’t have the luxury of letting the choice be made for them, and as draft day approached they

studied film of the players’ college games, poured over statistics, measured their size, speed, and how

sharply and accurately they threw the ball. Everything. But they couldn’t make a decision.

So they decided to interview both candidates. The key question came from Colts coach Jim Mora. He

asked the young men, “What’s the first thing you’ll do if drafted by the Colts?” Leaf said he’d cash his

signing bonus and hit Vegas with a bunch of buddies. Manning responded that he’d meet with the rest of

the Colts’ offense and start going over the playbook. Mora saw in Manning a mature football player ready

for the challenges of the sport at its highest level. In Leaf he saw an unpredictable kid.

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More than a decade later, Peyton Manning heads into another season as starting quarterback. Having won

the Super Bowl, set countless team and NFL passing records, and assured himself a spot in the NFL Hall

of Fame, you can understand that the Colts are happy with their selection.

Ryan Leaf has recently been indicted on burglary and drug charges in Texas. He got the news while in

Canada at a rehab clinic. As for football, after a rocky first few seasons, his performance collapsed entirely.

He hasn’t been on a field in years.

Interviews matter. Grades, recommendation letters, past successes, and failures on the job—all those

numbers and facts carry weight. But for most hiring decisions, nothing replaces the sense you get of a

candidate face to face; it’s the most human part of the process.

Because it’s so human, it’s also one of the most ethically treacherous. Two factors usually weigh heavily in

deciding which questions should and shouldn’t be asked:

1. Fairness

2. Pertinence

Fair questioning means asking similar questions to all applicants for a post. If the position is entry level,

many candidates will be young, inexperienced, and probably easily flustered. That’s normal. So too there’s

nothing necessarily wrong with trying to knock applicants off rhythm with a surprise or trick question.

The problem comes when one candidate gets pressed while another gets softballs.

What do tough questions look like? One answer comes from Google. There are always blog entries

circulating the Internet from applicants talking about the latest weird questions asked by that successful

and unpredictable company:

 How many golf balls can fit in a school bus?

 You are shrunk to the height of a nickel and your mass is proportionally reduced so as to maintain your

original density. You are then thrown into an empty glass blender. The blades will start moving in 60

seconds. What do you do?

 How much should you charge to wash all the windows in Seattle?

 Every man in a village of 100 married couples has cheated on his wife. Every wife in the village instantly

knows when a man other than her husband has cheated, but does not know when her own husband has.

The village has a law that does not allow for adultery. Any wife who can prove that her husband is

unfaithful must kill him that very day. The women of the village would never disobey this law. One day,

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the queen of the village visits and announces that at least one husband has been unfaithful. What

happens?

 Explain a database in three sentences to your eight-year-old nephew. [16]

We’re a long way from “why do you want to work at Google?” and even further from “what was your

biggest accomplishment or failure in your last job?” Those are softballs; anyone going into Google for an

interview is going to have prepared answers to those. It’s like reading from a script. But looking at the

hard questions Google actually poses, there is no script, and you can see how things could go south

quickly. You can’t figure out about golf balls and school buses, and you start to get nervous. Next, the

blender question seems odd and threatening, and it’s all downhill from there. Some interviews just don’t

go well and that’s it. As an applicant, you probably don’t have too much to complain about as long as the

next guy gets the same treatment. But if the next guy gets the softballs, the fairness test is getting failed.

As a manager, you can go hard or soft, but you can’t change up.

On the question of pertinent interview questions, the Google queries seem, on the face, to be troublesome.

Is there any job that requires employees to escape from a blender? No. But there are many jobs that

require employees to solve unfamiliar problems calmly, reasonably, and creatively. On that ground, the

Google questions seem perfectly justifiable as long as it’s assumed that the posts being filled require those

skills. By confronting prospective employees with unexpected problems demanding creative solutions,

they are, very possibly, rehearsing future job performance.

When the Colts were interviewing Peyton Manning and Ryan Leaf, something similar happened at the key

moment. At first glance, it seems like the question about the first thing each player would do after draft

day wouldn’t reveal much about all the other days to come. But the guys probably weren’t prepared for the

question, and so they had to reveal how they’d face a rapidly shifting reality that they had no experience in

dealing with, a reality just like the one they’d face the day after the draft when they’d go from being college

students on campus to wealthy adults in the big world. That makes the question pertinent. And that

explains why the answers that came back were telling. They distinguished a great hire from one of the

sports world’s monumental bungles.

On the other side, what kinds of questions reveal employees’ personalities’ but not their job skills?

Interview consultants typically warn managers to avoid asking about these subjects:

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 Sex life

 Opinions about homosexuality

 Beliefs about contraception

 Personal finances

 Religious faith

 Political affiliations

Except in special circumstances (a job is with a church, a political party, or similar), these kinds of

questions fall under the category of privacy invasion.

Finally, there are legal red lines to respect. While managers should ensure that applicants are old enough

to work and so can confirm that people are, say, eighteen or older, it’s discriminatory in the legal sense to

hire one person instead of another because of an age difference. This means asking “how old are you?” is

an off-limits question. It’s also illegal to ask about citizenship, though you can ask whether applicants are

legally authorized to work in the United States. It’s illegal to ask about disabilities, except as they relate

directly to the job. It’s illegal to ask about past drug and alcohol use, though you may ask applicants

whether they are now alcoholics or drug addicts.

The interviewer’s fundamental responsibility is to choose the best applicant for the job while giving

everyone a fair shot. Being fair isn’t difficult; all you need to do is just ask everyone the standard

questions: Why do you want to work for our company? What are your strengths? How do you work with

others? Do you stay cool under pressure? The problem here, though, is that it’s easy to get gamed. It’s too

easy for applicants to say, “I love your company, I’m a team player, and I never get mad.” Since everyone

knows the questions and answers, there’s a risk that everything will be fake. And that makes identifying

the best applicant nearly impossible.

One response to this is to junk the standard questions and come up with surprising and (seemingly) crazy

questions like they do at Google. Another strategy is a different kind of interview. A situational or

behavioral interview asks candidates to show how they work instead of talking about it.

Here’s how it goes. Instead of asking an applicant, “Do you stay cool under pressure?” (the correct

response is “yes”), the question gets sharpened this way:

You know how jobs are when you need to deal with the general public: you’re always going to get

the lady who had too much coffee, the guy who didn’t sleep last night and he comes in angry and

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ends up getting madder and madder…at you. Tell me about a time when something like this

actually happened to you. What happened? How did you deal with it?

It’s harder to fake this. Try it yourself, try inventing a story. Unless you’re a real good liar, you’re going to

hear the slipperiness in your own voice, the uncertainty and stammering that goes with making things up.

Probably, most people who get hit with situational questions are going to opt for the easiest route, which

is tell the truth and see how it goes. So the advantage to this kind of interview is that it helps sort out

qualified candidates by giving an unvarnished look at how they confront problems. On the other side,

however, there’s also a disadvantage here, one coming from the fairness side. If candidate A has spent

years at the counter of Hertz and candidates B through G have all been working in the Hertz back office, of

course the counter person is going to do better.

K E Y T A K E A W A Y S

 In publicizing a job opening, a tension exists between limiting the job announcement to ensure that

applicants are appropriate, and widely publicizing the announcement to ensure that applicants include

highly qualified individuals.

 Decisions about how broadly to publicize a job opening can be implemented through nepotism, internal

public job announcements, and mass public job announcements.

 Screening job applicants makes the hiring process more efficient but raises ethical concerns.

 Common screening techniques involve BFOQs, educational requirements, high-risk lifestyles, criminal

record, and an applicant’s social media history.

 Testing allows applicants’ suitability for a post to be measured but raises ethical concerns.

 Common tests include skill tests, psychological and personality tests, honesty tests, medical tests, and

drug tests.

 Applicant interviewing provides valuable information for evaluating job candidates, but questions ought to

be fair and pertinent to job-related concerns.

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R E V I E W Q U E S T I O N S

1. Why might an employer opt for nepotism when hiring?

2. What is an advantage of a mass public job announcement?

3. Invent a job description that would allow applicants to be screened by a BFOQ.

4. Why might an applicant pool be screened for use of social media?

5. List the three requirements for a fair and legitimate job-applicant test.

6. How do psychological and personality tests work through correspondence?

7. Imagine a job and then an interview question for applicants that would not be pertinent and one that

would be pertinent.

8. Why might a behavioral interview be used?

[1] R. Donaldson (director), The Recruit (Burbank, CA: Touchstone Pictures, 2003), film.

[2] “Fortune: P&G Admits Spying on Hair Competitors,” Business Courier, August 30, 2001, accessed May 24,

2011,http://cincinnati.bizjournals.com/cincinnati/stories/2001/08/27/daily43.html.

[3] Marti’s Musings, “Nepotism Sucks,” August 30, 2004, accessed May 24,

2011,http://businessethicsworkshop.com/Chapter_8/Nepotism_sucks.html.

[4] Klaus Kneale, “Is Nepotism So Bad?,” Forbes, June 20, 2009, accessed May 24,

2011,http://www.forbes.com/2009/06/19/ceo-executive-hiring-ceonewtork-leadership-nepotism.html.

[5] “Texas Man Settles Discrimination Lawsuit Against Hooters for Not Hiring Male Waiters,” Fox News, April 21,

2009, accessed May 24, 2011,http://www.foxnews.com/story/0,2933,517334,00.html.

[6] “2011 Fastest-Growing Franchise,” Entrepreneur, accessed May 24,

2011,http://www.entrepreneur.com/franchises/fastestgrowing/index.html.

[7] Megan Wasmund, “Humana Enforces Mandatory Stop Smoking Program,” wcpo.com, June 16, 2009, accessed

June 7, 2011,http://www2.wcpo.com/dpp/news/local_news/Humana-Enforces-Mandatory-Stop-Smoking-

Program.

[8] “Humana: We Won’t Hire Smokers,” Newsvine.com, June 16,

2009,http://sorrelen.newsvine.com/_news/2009/06/16/2935298-humana-we-wont-hire-smokers.

[9] Grafter v. New York City Civil Service Commission, 1992.

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[10] Wei Du, “Job Candidates Getting Tripped Up By Facebook,” MSNBC.com, August 14, 2007, accessed May 24,

2011, http://www.msnbc.msn.com/id/20202935/page/2.

[11] Martin Carrigan, “Pre-Employment Testing—Prediction of Employee Success and Legal Issues,” Journal of

Business & Economics Research 5, no. 8 (August 2007): 35–44.

[12] Karraker v. Rent-A-Center, 2005.

[13] Ariana Eunjung Cha, “Employers Relying on Personality Tests to Screen Applicants, “Washington Post, March

27, 2005, accessed May 24, 2011,http://www.washingtonpost.com/wp-dyn/articles/A4010-2005Mar26.html.

[14] Paul Armentano, “The Kellogg Company Drops Michael Phelps, The Cannabis Community Drops

Kellogg’s,” NORML (blog), February 6, 2009, accessed May 24, 2011,http://blog.norml.org/2009/02/06/the-

kellogg-company-drops-michael-phelps-the-cannabis-community-drops-kelloggs.

[15] American Civil Liberties Union, “Testing Chart,” aclu.org, accessed May 24,

2011,http://www.aclu.org/FilesPDFs/testing_chart.pdf.

[16] Michael Kaplan, “Want a Job at Google? Try These Brainteasers First,”CNNMoney.com, August 30,

2007,http://money.cnn.com/2007/08/29/technology/brain_teasers.biz2/index.htm.

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8.2 Wages

L E A R N I N G O B J E C T I V E S

1. Explore the limits of wage confidentiality.

2. Delineate the uses and ethics of wages as a work incentive.

Two Salary Issues Facing Managers

Two salary issues facing managers are wage confidentiality and the use of wages as a work incentive.

Starting with wage confidentiality, in the private sector it’s frequently difficult to discover what an

organization’s workers are paid. Because of freedom of information laws, many salaries in government

operations and contracting are available for public viewing, but in the private sector, there are no laws

requiring disclosure except in very specific circumstances.

The main ethical reason for keeping wage information concealed is the right to privacy: agreements struck

between specific workers and their companies are personal matters and will likely stay that way. Still,

ethical arguments can be mounted in favor of general disclosure. One reason is to defend against

managerial abuse. In a law firm, two paralegals may have similar experience, responsibilities, and

abilities. But Jane is single and living in a downtown apartment while John has just purchased a home

where his wife is living and caring for their newborn. Any boss worth his salt is going to see that Jane’s got

no local commitments and, who knows, she may just up and decide to spend a few months traveling, and

then make a run at living in some different city. Maybe she likes skiing and a few years in Denver don’t

sound bad. John, on the other hand, is tied down; he can’t just walk away from his job. He can always get

a new one, of course, but if money’s tight and a recession is on, there’s an incentive to raise Jane’s salary

to keep her and not worry so much about John who probably won’t be going anywhere anyway. That

seems to be taking unfair advantage of John’s personal situation, and it also seems like paying someone

for something beyond the quality of the work they actually do. But if no one knows what anyone else is

making, the boss may well get away with it.

Stronger, the boss may actually have an obligation to try to get away with it given his responsibility to

help the company maximize its success.

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Another argument against confidentiality is the general stand in favor of transparency, and in this case,

it’s transparency as a way of guaranteeing that ethical standards of equality are being met. Since the

signing of the Equal Pay Act in 1963, the ideal of “equal pay for equal work” has become a central business

ethics imperative in the United States. But it’s hard to know whether the equality is really happening

when no one knows how much anyone else is making.

Of course, workers do frequently know how much other people are getting. In an extreme case, if you’re

laboring in a union shop, it’s probable that your wage scale will be set identically to those of your

companions. Even if you’re not unionized, though, people still talk at the water cooler. The result is, in

practice, that some wage transparency is achieved in most places. From there, arguments can be mounted

for the expansion of that transparency, but in most cases, the weight of privacy concerns will carry the

day.

Another wage issue concerns its use to provide a work incentive. Many sales positions have the incentive

explicitly built in as the employees receive a percentage of the revenue they generate. (That’s why

salespeople at some department stores stick so close after helping you choose a pair of pants; they want to

be sure they get credit for the sale at checkout.) In other jobs, generating a motivation to work well isn’t

tremendously important. The late-night checkout guy at 7-Eleven isn’t going to get you out of the store

with cigarettes and a liter of Coke any faster just because his salary has been hiked a dollar an hour.

Between the two extremes, however, there are significant questions.

Probably, the main issue involving the use of wages as a carrot in the workplace involves clarity. It’s quite

common, of course, for managers to promise an employee or a team of workers a pay hike if they win a

certain account or meet productivity goals. Inevitably, the moment of the promise is warm and fuzzy—

everyone’s looking forward to getting something they want, and no one wants to sour things by

overbearingly demanding specifics. The problems come afterward, though, if the terms of the agreement

have been misunderstood and it begins to look like there’s an attempt to worm out of a promised salary

increase. It is management’s responsibility as the proposers of the accord to be sure the terms are clearly

stated and grasped all around:

 What, exactly, needs to be accomplished?

 How much, exactly, is the wage hike?

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The mirror image of promised wage hikes to encourage improved worker performance is the bonus paid

at year’s end to employees marking a job well done. In a letter to the editor of the Greensboro News-

Record in North Carolina, a teacher cuts to the central ethical problem of the bonus: on the basis of what

do some employees receive one while others don’t? Some teachers, the writer states, “at schools with high

‘at-risk’ populations and students coming from homes where education is just not valued, work

themselves into a tizzy every year, but because of the clientele they serve, will never see that bonus money.

Inversely, schools with middle-class clienteles have teachers who work hard, but also others who merely

go through the motions but usually can count on that bonus because their students come from homes that

think education matters. Where is the justice in this?” [1]

It’s not clear where the justice is, but there’s no doubt that bonuses aren’t serving their purpose. The

problem here isn’t a lack of clarity. No one disputes that the rules for assigning a bonus are clear. The

problem is that the rules don’t seem to account for divergent working conditions and challenges.

The important point, finally, is that even though a bonus is extra money outside the basic salary structure,

that doesn’t mean it escapes the question, “Where’s the justice in this?,” coming with every decision about

who gets how much.

K E Y T A K E A W A Y S

 Wage confidentiality pits the right to privacy against the desire for, and benefits of, transparency.

 Wages and bonuses are used to provide a work incentive, but problems arise when the pay increments

don’t obviously align well with promises or with job performance.

R E V I E W Q U E S T I O N S

1. Why might a company want to maintain wage confidentiality?

2. What is an example of a payment bonus becoming disconnected from work performance?

[1] Bill Toth, “Entire State ABC Bonus System Unfair,” News-Record.com, Letters to the Editor, August 19, 2008,

accessed May 24, 2011, http://blog.news-record.com/opinion/letters/archives/2008/08/.

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8.3 Promoting Employees

L E A R N I N G O B J E C T I V E S

1. Distinguish criteria for promoting employees.

2. Locate and define ethical issues relating to promotion.

The Drinking Strategy

If you want a promotion, does going out for drinks with the crew from work help the cause? Here’s a blog

post; it’s about two uncles—one who goes drinking with the crew and one who doesn’t—and you’ll see why

the answer might be yes:

Look at my uncles, they both work for Ford and one has been in his position for 10-plus years and

still doesn’t have a company car, while my other uncle has a company car, increase salary, paid

training. Even though he comes home to my auntie blinded drunk in the end it’s all worth it if you

want to be noticed. [1]

Get hammered to get promoted! Too good to be true? Probably.

But not entirely, the Reason Foundation commissioned a report on the question of whether drinkers earn

more money than nondrinkers. [2]

The title “No Booze? You May Lose” pretty much tells what the study

concluded about the link between social drinking with workmates and promotions. A few things should be

noted, though. Drinking doesn’t mean coming home blind drunk every night; it just means taking down

alcohol in some amount. And the payoff isn’t huge, but it is respectable: about 10 percent pay advantage

goes to the wet bunch compared to those workers who stay dry. The really interesting result, though, is

that guys who drink in bars at least once a month get another 7 percent pay advantage on top of the 10

percent. The bad news for drinking women is that for them, going to the bars doesn’t seem to help.

So there are two findings. First, just drinking is better than not drinking for your wallet. Second, at least

for men, drinking socially at bars is even better. One of the study’s authors, Edward Stringham, an

economics professor at San José State University, comments on the second result: “Social drinking builds

social capital. Social drinkers are networking, building relationships, and adding contacts to their

Blackberries that result in bigger paychecks.” [3]

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Now, going back to the blog comment about the drunken uncle, isn’t this more or less what the blogger

sees too? Here are the next lines from the entry:

No senior management wants to promote a boring old fart. They want outgoing people, in and

outside of work. They want social people. If you can display your social abilities to them, it means

that you want more than the 9am to 5pm, thank God, time to go home. They want people who

enjoy working with the company and the people who they work for. [4]

That sounds reasonable, and it may explain why there’s some serious scientific evidence that partying

with the workmates does, in fact, lead to promotions in the company.

The link between lifting a glass and moving up may be solid, but is it right? From the worker’s side,

there’s not a lot you can do about the situation so you may want to leave some Thursday and Friday

evenings available for happy hour regardless of whether you think that’s the way promotions ought to be

arranged. From management side, however, there is a stark issue here. When you sit down to look at two

candidates in your company for one promotion, do you have a right to consider how well they mix after

hours? Do you have a duty or responsibility to consider it?

There are two issues:

1. Should you consider a worker’s party aptitude?

2. If you do, how should you manage it?

The reasons for not considering party ability are many. Two stand out. First, workers are being paid for

what they do from nine to five. That’s the job. If you’re going to start considering other things, then why

stop at parties? You could give the promotion to the better player on the company softball team, or the

one who’s got curlier hair, or whatever. Second, workers may not have an equal opportunity to party. The

guy who lives closer to work and isn’t married obviously holds an advantage over the guy who has diabetes

when gin and tonics become job qualifications.

On the other hand, when workmates gather after work to drink, what do they talk about? Well, work.

That’s why people say a new advertising campaign or a fresh product idea got scratched onto a napkin. It’s

not a metaphor. Further, the ability to labor together with others—teamwork—that’s a real job

qualification, and it’s reasonable to suppose that people who get along well drinking will carry the

camaraderie over to the next morning’s breakfast meeting (where coffee and tea are served). This explains

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why companies including Deloitte Consulting encourage and even to some extent pressure employees to

socialize outside the office. [5]

Finally, it’s a hard call—there are reasonable arguments to be made on both sides. It’s also difficult to be

absolutely certain how the party qualification should be managed if it’s included in the performance

evaluation. On one hand, a strong case can be made for transparency and openness, for simply stating

that after-hours socializing is, in fact, a part of the job. To not inform workers, the argument goes, that

hanging out is a job requirement is really a form of lying: it’s dishonest because the default understanding

typical employees are going to have is that what counts in determining the quality of work is the work,

period. Whether the assigned task got outlined in a cubicle or on a bar stool is irrelevant. Therefore, any

manager who secretly totes up the social aptitude of the workers is not being honest about the way

workers are graded. It’s the equivalent of a college teacher assigning grades partially based on class

participation without listing that in the syllabus.

On the other hand, all teachers know that listing class participation as part of a student’s grade can lead to

brown nosing, and there’s a similar threat in the workplace: if employees are told to party, then at least a

few are going to tag along for drinks even when they really don’t want to go and end up souring the

evening for everyone. If you as a manager believe in honesty above all, then you may accept that cost. On

the other hand, if your vision of corporate responsibility dovetails more closely with profit maximization,

you may be able to build an ethical case around the idea that in the name of evaluating employees as

perfectly as possible some elements of that evaluation may have to remain close to the vest.

Three Considerations for Promotion: Work Performance, Seniority, Projected

Work Performance

When managing a promotion, there are three fundamental considerations; work performance is the most

obvious. The person most deserving to step up to a higher level of responsibility is the one who’s best

managed current responsibilities. This may be measured by accounts won, contributions to a larger

group, or some other work-related factor, but the key is that the measured performance be related with

the job.

The problem comes in determining exactly what that word related means. When read narrowly, it means

that the employee who looks best on paper—the one who’s written the best reports, achieved the highest

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sales, won the most cases—will be the most deserving. When read broadly, however, the range of

considerations can expand dramatically to include contributions having to do with personality, chemistry,

and other characteristics tangential to nine-to-five tasks. This is where questions about going out for

drinks after work start to gain traction and importance. Finally, it’s not clear that after-hours socializing

should be considered part of work performance, but the fact that it can be included shows how broad this

category is.

The second consideration when weighing a promotion is seniority. Seniority is preference for promotion

granted to the person who’s been with the company the longest. A strong or pure seniority system simply

reduces the choice to comparisons of time with the firm: the promotion goes to the longest-serving

employee. There’s a taste of fairness here since no one will be overlooked for a job because of a personal

conflict with the boss, or because he doesn’t smile enough at work, or because her skirt is too short or his

necktie too absurd or whatever. More, there’s an inherent tranquility in the fact that all employees know

exactly where they stand. The connected problem, obviously, is that good work is not directly rewarded.

This explains why the seniority system seems especially suited to production line jobs or any kind of labor

where experience is more important than analytic skills, high-level training, or creativity. If it’s true that

experience is what matters on a job, then a seniority system should produce promotions that more or less

dovetail with expertise and the ability to do a good job.

A weak seniority system considers time with the company as a positive element, but only as one

component in evaluating candidates for a promotion. The advantage of this kind of system is the

encouraging of worker loyalty. The retention of good workers is nearly the highest human resources

priority of any company, and rewarding seniority plus performance gives good workers a reason to stick

around. Equally important, it helps retain good, loyal workers without forcing the company to promote

old-timers who’ve never really learned to get the job done well.

The third promotion consideration is projected performance, which evaluates candidates in terms of what

they’ll be able to do in the future. A tool used by companies to groom young people for future leadership

roles, the escalation normally goes to highly qualified individuals currently working at a level beneath

their ability. For example, a health insurance company may hire a college graduate with a strong premed

profile and hope to keep that person out of medical school by pulling her up the career ladder at a crisp

rate. She simply doesn’t have the experience, however (no one does), to just start near the top. In order

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for her to play a leadership role in the future, she does need to be familiar with how the company works at

every level, including the lowest. That means spending some time on the front lines, say, manning

telephones, answering questions from (frequently frustrated or angry) customers. Of course it’s difficult to

really stand out in this kind of work, so if she’s going to move up, it’s going to have to be because she’s

expected to stand out at something more demanding later on.

Other employees are going to be tempted to resent the rapid ascension since many of them have done just

as well at the same job for a longer time. Within the narrow view of performance evaluation (your job

performance equals how well you do the work) their resentment is justified. The rule of equal treatment is

being severely broken. But if you’re in management, you have a responsibility to the company (and to

shareholders if the company is public) to be successful. And you need to face the problem that highly

educated and qualified young people have options. Arguably, retaining them is a higher priority—not just

financially but also ethically—than keeping more replaceable talent content.

K E Y T A K E A W A Y S

 Work performance is defined in diverse ways, and managers may have a right to consider after-hours

activities as part of that definition.

 Three common criteria for awarding promotions are seniority, work performance, and projected

performance. Each contains specific ethical tensions.

R E V I E W Q U E S T I O N S

1. Why might someone’s social skills be considered a factor in receiving a promotion?

2. What are some advantages and disadvantages of seniority promotion?

3. Why might a promotion be based on projected performance?

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[1] Maya, “Alcohol: Income Booster?,” Monster (blog), September 20, 2006, accessed May 24,

2011, http://monster.typepad.com/monsterblog/2006/09/alcohol_ income_.html.

[2] Bethany L. Peters and Edward Stringham, “No Booze? You May Lose,” Reason Foundation, September 1, 2006,

accessed May 24, 2011,http://reason.org/news/show/127594.html.

[3] Bethany L. Peters and Edward Stringham, “No Booze? You May Lose,” Reason Foundation, September 1, 2006,

accessed May 24, 2011,http://reason.org/news/show/127594.html.

[4] Maya, “Alcohol: Income Booster?,” Monster (blog), September 20, 2006, accessed May 24,

2011, http://monster.typepad.com/monsterblog/2006/09/alcohol_ income_.html.

[5] Deloitte Consulting: WetFeet Insider Guide (San Francisco: WetFeet), accessed May 24,

2011, http://www.wellesley.edu/Activities/homepage/consultingclub/wetfeet%20-%20deloitte_consulting.pdf.

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8.4 Firing

L E A R N I N G O B J E C T I V E S

1. Define legal guidelines on firing employees.

2. Elaborate justifiable reasons for deciding to fire.

3. Set standards for the actual firing process.

4. Consider ways of limiting the need to terminate employees.

Optimal Level Firing

A study funded by the CATO Institute and titled “The Federal Government Should Increase Firing Rate”

concludes this way: “The rate of ‘involuntary separations’ is only about one-fourth as high in the federal

government as in the private sector. No doubt private-sector firing is below optimal as well since firms are

under threat of expensive wrongful discharge lawsuits.” [1]

There is, in other words, an optimal level for firing, and in both the public and private sectors it’s not

being met. People aren’t being fired enough.

The strictly economic question here is, “What is the optimal firing level?” No matter the answer, there’s an

ethical implication for the workplace: firing workers is a positive skill. For managers to perform well—for

them to serve the interest of their enterprise by maximizing workplace performance—the skills of

discharging employees must be honed and applied just like those of hiring and promoting.

On the ethical front, these are the basic questions:

 When can an employee be fired?

 When should an employee be fired?

 How should an employee be fired once the decision’s been made?

 What steps can management take to support workers in a world where firing is inevitable?

When Can an Employee Be Fired?

In the world of for-profit companies, most work contracts offer at-will employment. Within this scheme, a

clause is written into the contract offering employment only as long as the employer desires. Stated more

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aggressively, managers may discharge an employee whenever they wish and for whatever reason. Here’s a

standard version of the contractual language:

This is an “At Will” employment agreement. Nothing in Employer’s policies, actions, or this

document shall be construed to alter the “At Will” nature of Employee’s status with Employer,

and Employee understands that Employer may terminate his/her employment at any time for

any reason or for no reason, provided it is not terminated in violation of state or federal law.

The legal parameters for firing seem clear.

Things blur, however, once reality hits. As the Cato study authors note, simply the fear of a possible

lawsuit does impinge to some extent on the freedom to fire, especially when the discharged worker fits

into a protected group. This means older workers, foreigners, or disabled workers may protest that no

matter what reasons are given for termination—assuming some are given—the real reason is their age,

nationality, or disability. Further, gender protection may be claimed by women fired from largely male

companies and vice versa.

Another round of blurring occurs on the state level where legislation sometimes adds specific employee

protections, and so curtails employers’ rights. In Minnesota, for example, firing may not be based on a

worker’s participation in union activities or the performance of jury duty.

These varied and frequently changing legal protections are the reason managers are typically instructed to

keep detailed records of employee performance. If those can be produced to show a pattern of

incompetence or simply inadequate results, they can justify a dismissal before a judge, if it ever comes to

that.

Even though legal complexities mean managers are well advised to be careful about firing workers, and

it’s prudent to be sure that there are directly work-related reasons for the dismissal, none of that changes

the fact that at-will hiring gives wide latitude to the company, and fired workers are typically left with few

good avenues of protest. One way to see how tilted the table is toward the employer and away from the

employee is to compare the American at-will firing system with the European model, where a reasonable

cause for termination must be demonstrated. In the United States, employers may more or less fire

anyone for any reason, and the burden of showing the termination was illegal or unfair falls entirely on

the worker. In Europe, by contrast, the legal burden falls largely on the employer. Instead of the worker

having to show the firing was wrong, now the company has to show the firing was right. This is a big deal.

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It’s like the difference between innocent until proven guilty and guilty until proven

innocent. Just because firing means the company holds the burden of proof: it must demonstrate that the

worker wasn’t holding up his or her end of the employment contract. That’s a lot harder to do than just

producing some work evaluations to buttress the claim that she wasn’t fired because she’s Jewish or he

wasn’t let go because he’s Asian. As opposed to the European reality, the conclusion is, employees in the

United States hired at will have little recourse against a company that wants them out.

Finally, it’s worth noting that elements of just cause law have been working their way into the American

legal system in recent years.

When Should an Employee Be Fired?

Because the legal footing is usually more or less solid for American managers, the real hard questions

about terminating employees aren’t legal ones about what can’t be done but ethical ones about what

should be done.

Sometimes firing is unavoidable. Economic slowdowns frequently bring furloughs and terminations.

When the company’s books turn red, and after the entire easy cost cutting has been done, people need to

be cut. Who? There are three broad philosophies:

1. Inverted seniority

2. Workload

3. Recovery preparation

Inverted Seniority occurs when the last worker hired is the first released. This works especially well for

assembly-line-type labor where one worker can replace another easily. As long as replacement is possible,

dismissing the most recently hired allows clear and impersonal rules to make downsizing orderly.

Workload firings focus the pain of job cuts on that part of the company suffering most directly from a

falloff in business. An office furniture supply company may find its line of hospital products unaffected by

an economic downturn (people keep getting sick even if they don’t have a job) so layoffs are taken from

other divisions. This may mean losing workers with higher seniority or better job performance, but it

minimizes cash-flow disruption.

Recovery preparation takes the long view on an economic slowdown: firings and layoffs are executed not

so much to compensate for the present downturn but to sharpen the company for success when the

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economy bounces back. Staying with the office furniture supply company, the owner may see better long-

term opportunities for profits in the nonhospital units, so the downsizing may occur across the board. The

idea is to keep those slow-moving units at least minimally prepared to meet new demand when it

eventually comes.

Sometimes economic slowdowns don’t reflect a problem with the larger economy, they’re the result

of fundamental changes in the market, frequently brought on by technological advance. For example, the

popularization of digital photography has shrunk the market for old fashioned film. Seeing this coming,

what can a company like Kodak do? They’re probably going to let workers from the old film side go to

create room for new hires in the digital division. This is potentially unfair to terminated workers because

they may be doing exemplary work. Still, it would be unfair—and financially disastrous—to the company

as a whole to not change with the times.

Rank and yank is a management philosophy promoted by former General Electric Company CEO Jack

Welch. Every year, he counsels, the entire workforce should be ranked and the bottom 10 percent

(“There’s no way to sugarcoat this,” he says) should be fired to make room for new employees who may be

able to perform at a higher level. Here, the responsibility to the company is being weighed far heavier than

the one to the employee because, theoretically at least, those in the bottom 10 percent may be doing fine

on the job—fulfilling their responsibilities adequately—it’s just that others out there who could be hired to

replace them may do it better. In the hope they will, workers who’ve done nothing wrong are sacrificed. [2]

There are two main criticisms of this practice. First, it’s a betrayal of employees who are fulfilling their

contractual obligations (they’re just not over performing as well as others). Second, it’s counterproductive

because it lowers morale by drowning workers in the fear that even though they’re doing what’s being

asked, they may end up in that dreaded bottom 10 percent.

Employee misbehavior is the least controversial reason to fire a worker. Here, the ethics are relatively

clear. Employees aren’t being mistreated when they’re dismissed because it’s their own actions that lead

to their end. Standard definitions of misbehavior include

 rudeness toward clients or customers,

 drinking or drugs on the job,

 theft of company property or using company property for personal business,

 frequent and unexplained absences from work,

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 entering false information on records,

 gross insubordination,

 fighting or other physical aggression,

 harassment of others (sexual, sexual orientation, religious, racial, and similar).

How Should an Employee Be Fired Once the Decision’s Been Made?

At the Friday all-staff meeting the office manager stands up to announce, “The good news is the following

people have not been fired!” He reads a list of seventeen names. There are nineteen people at the meeting.

That’s from a (perhaps unemployed) comic’s stand-up routine. Unfortunately, people have written into

the CNNMoney.com with real stories that aren’t so far removed:

 An employee received news of her firing in a curt letter delivered to her home by FedEx.

 A man tells of being halted at the building door by security and being humiliatingly sent away.

 People report that they arrived at their office to find the lock changed and their stuff thrown in a box

sitting on the floor. [3]

All these are inhumane firings in the sense that no flesh and blood person took the trouble to present the

bad news.

It’s easy to understand why inhumane firings occur: not many people enjoy sitting down with someone

and telling them they’re out. So it’s tempting to yield to cowardice. Instead of facing the worker you’ve

fired, just drop a note, change the lock, and talk to security. On the ethical level, however, firing an

employee is no different from working with an employee: as a manager, you must balance your duties to

the company and the worker.

How can the manager’s duty to the organization be satisfied when terminating a worker? First, to the

extent possible, the fired person should leave with a positive impression of the organization. That means

treating the employee with respect. No mailed notices of termination, no embarrassing lockouts, just a

direct, eye-to-eye explanation are probably the most reliable rule of thumb.

Second, the terminated employee should not be allowed to disrupt the continued work of those who

remain. If deemed necessary, security personnel should be present to ensure the ex-worker leaves the

premises promptly. Also, if the worker is involved in larger projects, a time for severance should be found

when their contribution is minimal so that other members of the team will be able to carry on near

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normally. (It may be recommendable to arrange the termination to coincide with the finishing of a larger

project so that everyone may start fresh with the new, substitute employee.)

Third, the financial costs of the termination should be minimized. This means having clear reasons for the

termination and documents (pertaining to worker performance or behavior) supporting the reasons to

guard against lawsuits. Also, there should be clear understandings and prompt payment of wages for work

done, as well as reimbursements for travel expenses and the full satisfaction of all monetary obligations to

the employee. This will allow the human resources department to close the file.

With duties to the company covered, how can the manager’s duty to the employee be satisfied?

Consultants—both legal and ethical—typically share some bullet-point answers. First, the employee

should be addressed honestly and directly with a clear explanation for termination. Speak firmly, the

advice is; don’t waver or provide any kind of false hope. Further, the termination should not come as a

total surprise. Previous and clear indications should have been given concerning employee performance

along with specific directions as to what areas require improvement. Many companies institute a structure

of written warnings that clearly explain what the employee’s job is and why their work is not meeting

expectations.

Second, getting fired is embarrassing, and steps should be taken to minimize the humiliation. The

employee should be the first to know about the discharge. Also, the severance should occur in a private

meeting, not in view of other workers. To the extent possible, the employee should have an opportunity to

say good-bye to workmates or, if this is the preference, to leave discreetly. For this reason, a meeting late

in the day may be chosen as the appropriate time for notice to be given.

Third, to the extent possible and within the boundaries of the truth, an offer should be extended to

provide a recommendation for another job.

Fourth, make sure the employee gets all the money coming for work done, without having to jump

through hoops.

What Steps Can Management Take to Support Workers in a World Where Firing

Is Inevitable?

One response to the inescapable reality that firing happens is preemptive; it’s to reduce the moral

uncertainty and hardship before they arise. Two strategies serve this purpose: actions can be

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implemented to minimize the occasions when firing will be necessary, and steps can be taken to reduce

the severity of the firing experience for employees when it happens.

In her book Men and Women of the Corporation, Rosabeth Moss Kanter generates a list of measures that

corporations use to diminish firings, and reduce the professional impact for those who are let go. Here’s

an abbreviated selection of her recommendations, along with a few additions:

 Recruit for the potential to increase competence, not simply for narrow skills to fill today’s slots.

 Rotate assignments: allow workers to expand their competence.

 Retrain employees instead of firing them.

 Offer learning opportunities and seminars in work-related fields.

 Subsidize employee trips to work-related conferences and meetings.

 Provide educational sabbaticals for employees who want to return to school.

 Encourage independence and entrepreneurship: turn every employee into a self-guided professional.

 Keep employees informed of management decisions concerning the direction of the company: What units

are more and less profitable? Which ones will grow? Which may shrink?

 Ensure that pensions and benefits are portable. [4]

K E Y T A K E A W A Y S

 At-will firing grants employers broad legal latitude to discharge employees, but it does not erase ethical

concerns.

 Justifiable worker firings include cases where workers bear none, some, or all of the blame for the

discharge.

 The act of firing a worker requires managers to weigh responsibilities to the organization and to the ex-

employee.

 Steps can be taken to limit the need for, and effects of, employee discharge.

R E V I E W Q U E S T I O N S

1. What’s the difference between at-will and just cause firing?

2. How might fundamental changes in the marketplace require a company to fire workers?

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3. What is rank and yank?

4. When managers fire employees, what duties do they hold to the organization, and what are the duties to

the dismissed worker?

5. What are some steps organizations can take to protect their workers from the effects of discharge if firing

becomes necessary?

[1] Chris Edwards and Tad DeHaven, “Federal Government Should Increase Firing Rate,” Cato Institute, Tax and

Budget, no. 10 (November 2002), accessed May 24, 2011,http://www.cato.org/pubs/tbb/tbb-0211-10.pdf.

[2] Allan Murray, “Should I Rank My Employees?,” Wall Street Journal, accessed May 24,

2011, http://guides.wsj.com/management/recruiting-hiring-and-firing/should-i- rank-my-employees.

[3] “Worst Ways to Get Fired,” CNNMoney.com, September 6, 2006, accessed May 24,

2011, http://money.cnn.com/blogs/yourturn/2006/09/worst-ways-to-get-fired.html.

[4] List adapted from Rosabeth Moss Kanter, Men and Women of the Corporation (New York: Basic Books, 1993),

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8.5 Case Studies

Fashionable

In her blog Love This, MJ (full name not provided) relates that she’s been an aspiring clothes designer

since she started sewing tops for her Barbie dolls. Things weren’t going well, though, as she tries to break

into the industry. One thing she notices is that there aren’t a lot of female fashion designers out there—

Vera Wang, Betsey Johnson, and a few more. Not many. So she starts trying to figure it out with questions

like these:

 Do women want straight guy designers to dress them because they dress to please the men? It could make

sense: what that designer likes, the man in her life is going to love too.

 Do women prefer gay men to dress them because gay men are their new girlfriends? Gay men are usually

more receptive to trends and physical appearances too.

 Do women prefer women designers because she knows a woman’s body better?

 Do men have the same issue? Do some men prefer a lesbian designer? Would they balk at being dressed

by a gay designer? [1]

Q U E S T I O N S

1. Assume MJ is right when she hypothesizes that most women like straight male designers because straight

guys are the ones they’re trying to impress, so they want clothes straight guys like. Now imagine you’ve

been put in charge of a new line of women’s clothes. Your number one task: sales success. You’ve got five

applicants for the job of designing the line. Of course you could just ask them all about their sexual

Ima ge re

mov ed d

ue to cop

yrig ht is

sues .

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orientation(s), but that might leave you open to a discrimination lawsuit. So could you devise a test for

new applicants that’s fair—that gives everyone an equal chance—but still meets your requirement of

finding someone who produces clothes that straight guys get excited about?

2. Four standard filters for job applicants are

o education level,

o high-risk lifestyle,

o criminal record,

o flamboyant presence in social media.

Which of these might be used to winnow out applications for a job as a clothes designer? Explain

in ethical terms.

3. MJ wonders whether women might prefer women designers because she knows a woman’s body better. Is

there a bona fide occupational qualification for a women’s fashion company to hire only women

designers? Is there a difference between a BFOQ based on sex and one based on sexual orientation?

4. MJ asks, “Do women prefer gay men to dress them because gay men are their new girlfriends?” Assume

you think there’s something to this. Could you design a few behavioral interview questions that test the

applicants’ ability to become girlfriends (in the sense that MJ means it) with their clients? Would these be

ethically acceptable interviews, or do you believe there’s something wrong and unfair about them?

God at Work

Image remov

ed due to cop

yright issues.

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The University of Charleston is a private, nonreligious institution with a very particular job opening: the

Herchiel and Elizabeth Sims “In God We Trust” Chair in Ethics. According to the job description, the

successful candidate for this job as a professor “must embrace a belief in God and present moral and

ethical values from a God-centered perspective.” [2]

Q U E S T I O N S

1. You’re in charge of getting applicants for this post and you’ve got a small advertising budget. What ethical

responsibilities should you consider when determining where to place the ad? How broadly should you

advertise the position?

2. According to Erwin Chemerinsky, a law professor at Duke University, “The description that

‘candidates must embrace a belief in God and present moral and ethical values from a God-

centered perspective,’ violates the Civil Rights Act as religious discrimination in

employment.” [3]

Imagine you’re in charge of every step of the process of filling this job. How

could you respond in terms of

o bona fide occupational qualifications (BFOQs),

o testing,

o interviewing?

3. You’re the university president. The person who currently holds the In God We Trust

Professorship has, by all accounts, been doing a mediocre to poor (but not directly unacceptable)

job. One day you happen to trip across the person’s blog page and notice that your professor

claims to be a sadist and practices a mild form of devil worship (also, the prof’s favorite movie

is The Omen). Right now the In God We Trust Professor of ethics is down the hall lecturing to

seventy-five undergrads. You sneak to the door and listen from outside. The professor sounds just

like always: dull and passionless, but the talk is about the Bible, and nothing’s being said that

seems out of line with the job description. Still, you decide to terminate the relationship.

o In a pure at-will working environment, you can just fire the professor. But imagine you want to

demonstrate just cause. How does this change the way you approach the situation? What would

your just causes be?

Saylor URL: http://www.saylor.org/books Saylor.org 369

o The professor’s classes are passionless because he doesn’t believe in what he’s teaching. Still, his

teachings are not directly wrong. Does this case show why a manager may be ethically required in

certain situations to implement a strategy of rank and yank? Explain.

Testing Baseball Players’ DNA

The New York Times reports that there’s a “huge difference between sixteen and nineteen years old,”

when you’re talking about prospects for professional baseball. A kid whose skills knock your socks off for a

sixteen-year-old just looks modestly good when he practices with nineteen-year-olds. [4]

This is a significant problem in the Dominican Republic, which produces excellent baseball players but

little in the way of reliable paperwork proving who people really are and when they were born. The

Cleveland Indians learned all about that when they gave a $575,000 bonus to a seventeen-year-old

Dominican named Jose Ozoria, only to later find out he was actually a twenty-year-old named Wally

Bryan.

This and similar cases of misidentification explain why baseball teams are starting to apply genetic tests to

the prospects they’re scouting. Typically, the player is invited to provide a DNA sample from himself and

his parents to confirm that he’s no older than he claims. The player pays for the test and is reimbursed if

the results show he was telling the truth.

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Q U E S T I O N S

1. Many experts in genetics consider testing an unethical violation of personal privacy.

o What does it mean to “violate personal privacy”?

o Can a utilitarian argument (the greatest good for the greatest number should be sought) in favor

of DNA testing in the Dominican Republic be mounted? What could it look like?

2. In the baseball world, other tests that clearly are allowed as part of the hiring process include testing a

player’s strength and speed. Is there anything in the fair application of these tests that may ethically

allow—even require—that baseball teams extract DNA to confirm the age?

3. Assume you accept that testing a prospect’s age is a bona fide occupational qualification (after all,

the job is to be a prospect: a developing player, not an adult one). Once you accept that, how do

you draw the line? Couldn’t teams be tempted to use DNA facts for other purposes?

The Times article interviews a coach who puts it this way:

I know [the baseball teams taking the DNA samples] are looking into trying to figure out

susceptibility to injuries, things like that. If they come up with a test that shows someone’s

connective tissue is at a high risk of not holding up, can that be used? I don’t know. [5]

Can you formulate an ethical argument in favor of teams secretly using DNA tests to do just that,

check for as many yellow and red flags as possible in the young prospect’s genetic code?

4. Baseball scouting—the job of hiring excellent future players and screening out mediocre ones—is very

competitive. Those who do it well are paid well; those who don’t are cycled out quickly to make room for

someone else. You have the job, you have the DNA sample. What do you do? Why?

5. You decide to do the test in question four. The problem is people aren’t trees; you can’t age them

just by counting genetic rings—you also need to do some cross-testing with the parents’ DNA. You

do that and run into a surprise: it turns out that the young prospect’s father who’s so proud of his

athletic son isn’t the biological dad. Now what?

o Is there an argument here against DNA testing, period? What is it?

o Remember, the family paid for the test. Do you have a responsibility to give them these results?

Explain.

Saylor URL: http://www.saylor.org/books Saylor.org 371

6. Lou Gehrig was the first athlete ever to appear on a box of Wheaties. From 1925 to 1939 he played for the

Yankees in every game: 2,130 straight appearances, a record that lasted more than fifty years. He was

voted into the baseball Hall of Fame in 1939. He died in 1941 from a genetic disorder—yes, Lou Gehrig’s

disease—that today’s DNA tests would identify. Is there an ethical argument here against DNA testing of

prospects or one in favor? Or is the argument about this more theoretical—should the rules be decided

regardless of what has actually happened at some time or place? Explain.

7. In a different sport, the sprinter Caster Semenya won the world eight-hundred-meter challenge in 2009

with a time that few men could equal. She looked, in fact, vaguely like a man, which led the International

Athletics Federation to run a genetic gender test. She is, it turns out, neither a woman nor a man; she’s a

hermaphrodite: a little bit of both. Does the fact that genetic tests don’t always return clean, black-and-

white results make their use less advisable from an ethical perspective? Why or why not?

Windfall at Goldman

Goldman Sachs is an expansive financial services company. Many clients are institutional: private

companies and government organizations wanting to raise cash seek Goldman’s help in packaging and

then selling stock or bonds. On the other side, private investors—wealthy individuals wanting to multiply

their riches—receive a hearty welcome at Goldman because they have the cash to purchase those stocks

and bonds. Ultimately, Goldman Sachs is a hub where large companies, governmental powers, and

wealthy people come and do business together.

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Executives at Goldman Sachs are among the world’s highest paid. According to a New York Times article,

“At the center of Goldman’s lucrative compensation program is the partnership. Goldman’s partners are

its highest executives and its biggest stars. Yet while Goldman is required to report compensation for its

top officers, it releases very little information about this broader group, remaining tightlipped about even

basic information like who is currently a partner.” [6]

The rest of the article investigates this shadowy partnership. The conclusions: “Goldman has almost 860

current and former partners. In the last 12 years, they have cashed out more than $20 billion in Goldman

shares and currently hold more than $10 billion in Goldman stock.”

This tally of accumulated wealth in Goldman stock doesn’t even include the standard salary and cash

bonuses the partners receive, but leaving that aside, here’s the math: $30 billion divided by 860 divided

by 12 should give some sense of the wealth each of these corporate stars is accumulating over the course of

a year. To give a provisional idea of how large the number of dollars is here, when you try plugging $30

billion into an iPhone calculator, you find the screen can’t even hold a number that long. Using a different

calculator yields this result: $2.9 million per partner every year.

The 2.9 million can be compared with the salary earned by the average American: $50,000 a year. The

Goldman partner gets that in less than a week. This huge money explains the clawing fight that goes on

inside Goldman to become a partner. The odds are long. Each time the books are opened to admit a new

class, only 1 of 330 Goldman employees makes the cut. It is, in the words of one former partner, “a very

Darwinian, survival-of-the-fittest firm.”

In the public comments section of the New York Times story about Goldman, a person identified as GHP

picks up on the firm’s characterization as a “Darwinian, survival-of-the-fittest” place. He wrote, “The

French revolution was also very Darwinian, let’s give that a try.” During the French Revolution, the

wealthy and powerful were rewarded with a trip to the guillotine.

Probably, GHP isn’t just annoyed about how much money executives at Goldman make, he, like a lot of

people, is peeved by the fact that the company was bailed out by the federal government during the 2008–

9 financial crisis. Had the taxpayers (people making $50,000) not kicked in, Goldman might’ve gone

bankrupt, and all that money its partners accumulated in stock would’ve vanished. As it happens, the US

government’s bailout was masterminded by US Treasury Secretary Henry Paulson. His previous job was

CEO (and partner) at Goldman.

Saylor URL: http://www.saylor.org/books Saylor.org 373

Q U E S T I O N S

1. Goldman is dominated by a “Darwinian, survival-of-the-fittest” mentality. What does that mean?

o In ethical terms, how can this mentality be justified?

o Would a company dominated by this mentality, whether it’s Goldman or not, be more likely to

announce job openings to a limited public, or as a massive public announcement? Why?

2. Describe the advantages of a “behavioral interview.” If you were in charge of hiring for a company seeking

employees who flourish in a survival-of-the-fittest environment, what kind of question might you ask in a

behavioral interview? Why?

3. One contributor to the New York Times comments section writes, “There are sure to be lots of

pointed, angry posts about how unfair it is that these guys make so much money etc. But if we are

honest, there is a fair amount of envy and pure remorse that we weren’t bright enough to go

down that path! And these guys are very bright.”

How could these comments be construed to explain why high wages and big bonuses are used by

Goldman to motivate its workers? What is it that makes big money (or the possibility of big

money) function as a powerful motivator to encourage employees to work hard and well?

Ethically, how can this use of big money be justified?

4. One difference between offering an employee a wage increase and offering a bonus is that the

latter doesn’t come automatically the next year. The employee has to earn it from scratch all over

again.

o Why might managers at Goldman award their best workers with a bonus instead of a wage

increase?

o By appeal to an ethical theory, could you make the case that, in general, employees should be

paid mainly through a bonus system? How would the theory work at two extremes: wealthy

Goldman executives and waitresses at a corner diner?

5. Given the kind of work that’s done at Goldman—bringing wealthy people and powerful organizations

together to make deals—why might party aptitude (the ability to mix socially after hours) be considered

when deciding who does and who doesn’t make partner at Goldman? How could that decision be justified

ethically? How could it be criticized ethically?

Saylor URL: http://www.saylor.org/books Saylor.org 374

6. Make the case that in theoretical terms, managers at Goldman have an ethical responsibility to institute

the process of rank and yank.

The Five O’Clock Club

A Washington Post story about firing employees relates that some companies use “the surgical method:

terminations that last about 15 seconds, after which former employees are ushered off company

property.” [7]

It doesn’t have to be that way, though. For about $2,000 per fired employee, the outplacement company

Five O’Clock Club will help employers manage the actual termination moment more compassionately.

Later on, the fired worker receives a year of career coaching to help get back on track.

What do the Five O’Clock Club recommend managers do at the critical moment when giving the bad

news? To answer, according to the Post, they offer a booklet titled How to Terminate Employees While

Respecting Human Dignity, which “asks managers to approach layoffs with the understanding that,

‘unlike facilities and equipment, humans have an intrinsic worth beyond their contribution to the

organization.’” [8]

Then some catchphrases are provided for managers to use:

 George, you’ve been a trooper. I’m sorry that this organization has moved in a different direction.

 George, you have made many good friends here. We hope those friendships will continue.

 George, you have made considerable and long-lasting contributions and they are acknowledged and

appreciated. [9]

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Five O’Clock Club vice president Kim Hall—who downs a lot of Tylenol and coffee on the job—relates

several other phrases that may be helpful:

 I know this is hard, but you’ll get back on your feet.

 The timing could actually work in your favor. A lot of people take vacation in the summer. There’s no

competition for job hunters.

 Maybe this is a chance to begin your dream career. Follow your heart. [10]

In sum, the Five O’Clock Club helps workers feel better when they’re fired, and helps them get on with

their lives. Meanwhile, employers get a hedge against lawsuits. The outplacement service, according to the

Five O’Clock Club literature, “can redirect anger or anxiety away from the organization and…encourage

the newly-fired to sign their severance agreements so they can get on with their lives.” [11]

Q U E S T I O N S

1. The Five O’Clock Club charges $2,000 per firing. If you were fired, would you prefer to receive the

compassionate end the Five O’Clock Club provides, or just get shown the door but also get to keep

that $2,000 for yourself?

o If you’re the boss, do you have the right to decide this for the fired employee? Why or why not?

o If you’re the boss, do you have the responsibility to decide this for the fired employee? Why or

why not?

2. According to the Five O’Clock Club, “Unlike facilities and equipment, humans have an intrinsic

worth beyond their contribution to the organization.”

o Does this sound like utilitarian ethical thinking to you, or is it more in line with the notion of an

ethics guided by basic duties and rights? Why?

o Probably, everyone agrees that humans aren’t just machines that can be installed and replaced.

But can an ethical argument be made to treat people in the workplace as machines—that is, to

abruptly hire them when they’re useful and fire them when they’re not? What ethical theory (or

theories) could help you make the case?

3. In general terms, here are three firing situations:

Saylor URL: http://www.saylor.org/books Saylor.org 376

o an economic downturn (good workers are sacked because the company can’t afford to keep

them)

o rank and yank (workers are fulfilling their duties but not as well as most of the others)

o misbehavior (a worker is fired directly because of something done or not done)

Looking at these three contexts and the Five O’Clock Club, do you think their services should be

hired in all three situations? Do the ethics of firing change depending on why the person is being

fired? Explain.

4. Recall some of the Five O’Clock Club’s pre-packed firing sentences:

o George, you've been a trooper. I'm sorry that this organization has moved in a different direction.

o George, you have made many good friends here. We hope….

o George, you…are acknowledged and appreciated.

o Maybe this is a chance to begin your dream career. Follow your heart.

The contrasting method of firing employees—the surgical method—is to look the person in the

eye, say you’re fired, and have security march the ex-employee out the door, all in less than a

minute.

o Is it possible to make the case that the surgical method is actually more compassionate and

respectful?

o Is there a place for compassion in business? From a manager’s perspective, how should

compassion be defined within a business context?

5. Maybe the Five O’Clock Club gets hired because a company really wants to help and support fired

employees. Or maybe the company doesn’t really care about them; all they want is to avoid wrongful

termination lawsuits. Ethically, does it matter why the company contracts the Five O’Clock Club? Explain.

[1] “Sexual Orientation in the Fashion Industry,” Love This! (blog), accessed May 24,

2011,http://lovethis.wordpress.com/2007/07/28/sexual-orientation-in-the-fashion-industry.

[2] Rob Capriccioso, “Divinely Inspired Bias?,” Higher Ed, March 1, 2006, accessed May 24,

2011, http://www.insidehighered.com/news/2006/03/01/charleston.

Saylor URL: http://www.saylor.org/books Saylor.org 377

[3] Rob Capriccioso, “Divinely Inspired Bias?,” Higher Ed, March 1, 2006, accessed May 24,

2011, http://www.insidehighered.com/news/2006/03/01/charleston.

[4] Michael S. Schmidt and Alan Schwarz, “Baseball’s Use of DNA Raises Questions,” New York Times, July 21, 2009,

accessed May 24, 2011,http://www.nytimes.com/2009/07/22/sports/baseball/22dna.html?hp.

[5] Michael S. Schmidt and Alan Schwarz, “Baseball’s Use of DNA Raises Questions,” New York Times, July 21, 2009,

accessed May 24, 2011,http://www.nytimes.com/2009/07/22/sports/baseball/22dna.html?hp.

[6] Susanne Craig and Eric Dash, “Study Points to Windfall for Goldman Partners,” New York Times, January 18,

2011, accessed May 24, 2011,http://dealbook.nytimes.com/2011/01/18/study-points-to-windfall-for-goldman-

partners/?hp.

[7] Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24,

2011, http://www.washingtonpost.com/wp-

dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.

[8] Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24,

2011, http://www.washingtonpost.com/wp-

dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.

[9] Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24,

2011, http://www.washingtonpost.com/wp-

dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.

[10] Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24,

2011, http://www.washingtonpost.com/wp-

dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.

[11] Eli Saslow, “The Art of Letting Employees Go,” Washington Post, August 9, 2009, accessed May 24,

2011, http://www.washingtonpost.com/wp-

dyn/content/article/2009/08/08/AR2009080802659.html?hpid=topnews.

3/27/2021 EU to push for 40% quota for women on company boards | European commission | The Guardian

https://www.theguardian.com/world/2017/nov/20/eu-to-push-for-40-quota-for-women-on-company-boards 1/3

EU to push for 40% quota for women on company boards

Daniel Boffey in Brussels

Mon 20 Nov 2017 00.00 EST

The European commission is to push for a quota for women on company boards to address the slow progress to gender equality in the senior ranks of publicly listed businesses.

Under the proposals, companies whose non-executive directors are more than 60% male would be required to prioritise women when candidates of equal merit were being considered for a post.

Previous attempts by the EU’s executive to set a 40% goal for women in the top ranks of listed companies have been blocked by Germany, the Netherlands and Sweden overs fears that Brussels was overreaching into domestic affairs. Hungary and Poland have opposed the move on ideological grounds.

The result of the impasse has been slow progress to greater diversity at the top of companies. Women made up 29% of recruits to UK boards in 2016, down from 32.1% in 2014 and 31.6% in 2012, according to research by the recruiter Egon Zehnder.

The proportion of women on the boards of the largest listed companies across the EU has more than doubled, from 10% in 2005 to 22% in 2015. However, women

3/27/2021 EU to push for 40% quota for women on company boards | European commission | The Guardian

https://www.theguardian.com/world/2017/nov/20/eu-to-push-for-40-quota-for-women-on-company-boards 2/3

account for only 7% of board chairs and presidents and 6% of chief executives in the largest companies.

On Monday, the commissioner for justice and gender equality, Vĕra Jourová, will publish proposals to redress the gender pay gap.

Speaking to the Guardian before the launch, Jourová said: “We have so much evidence that it is good for business to have diversity, to have women and men on boards. Women [make up] 65% of university graduates, so why don’t we use that talent and the investment?

“Women have a very good talent for long-term, sensible spending [and] for crisis-solving because they can come up with proposals for negotiation and compromise. It is a necessary balance to the approach of men: attack and escape.”

A quota for boards will be one of a series of legislative proposals aimed at tightening the law to improve diversity and pay practices in work.

The pay gap in the EU, quantifying the difference in average hourly pay for male and female workers, remains resolutely large.

According to figures released in October, Britain registered the biggest increase in the EU’s gender pay gap in 2015. The UK’s gender pay gap jumped from 19.7% in 2014 to 20.8% in 2015, the largest annual rise among Europe’s main economies. The gap in the UK now outstrips the EU’s average of 16.3%.

Jourová, the Czech Republic’s representative in the commission, said: “In each country there are special reasons for this. I think that in most member states, maybe all, the main problem is segregated jobs. Females’ jobs, nurses, social services, teachers are underpaid. And is it because women are working in these roles? Maybe. I would guess this is also the case with the UK and [it is] something they should think about.

“We are addressing the member states with a strong call to look into it and change their renumeration policy in the public sector. The gender pay gap is also partly caused because women have more duties at home and take part-time jobs. And are paid less. It is a trap.”

Across the EU there is a full-time equivalent employment rate of 40% for women and 56% for men.

Jourová said she believes discrimination is still a major factor, and that current EU legislation is ineffective because it is not strongly enforced. Jourová has also suggested legislation to force listed companies to publish gender-specific statistics on pay.

3/27/2021 EU to push for 40% quota for women on company boards | European commission | The Guardian

https://www.theguardian.com/world/2017/nov/20/eu-to-push-for-40-quota-for-women-on-company-boards 3/3

... we have a small favour to ask. Millions rely on the Guardian for independent journalism that is open to everyone, no matter where they live or what they can afford to pay. Readers chose to support us financially more than 1.5 million times in 2020, joining existing supporters in 180 countries.

With your help, we will continue to provide high-impact reporting that can counter misinformation and offer an authoritative, trustworthy source of news for everyone. With no shareholders or billionaire owner, we set our own agenda and provide truth-seeking journalism that’s free from commercial and political influence. When it’s never mattered more, we can investigate and challenge without fear or favour.

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“There are no teeth [to current laws],” she said. “According to our estimates, discrimination accounts for 8-10% of the gap. There is not enough enforcement. It must be done by labour inspectorates, and it should be captured in collective bargaining by the trade unions.”

Former Hooters Waitress Awarded $250,000 in Racial Discrimination Case A former Baltimore waitress has been awarded more than $250,000 after an arbitrator found that racial discrimination contributed to her firing. April 7, 2015, 4:16 PM EDT / Updated April 8, 2015, 10:30 AM EDT / Source: NBC News By Elizabeth Chuck

A former Hooters waitress has been awarded more than $250,000 after an arbitrator found that racial discrimination contributed to her getting fired.

Farryn Johnson, who is African-American, was fired from her Baltimore restaurant job in August 2013 because "Hooters prohibits African-American Hooters Girls from wearing blond highlights in their hair," according to a lawsuit.

While other women were allowed to highlight their hair, the restaurant manager told Johnson she couldn't be at work with blond streaks because it didn't look "natural" on African-Americans, the suit said.

"The manager at the time literally said, 'You can't have blond because black people don't have blond hair,'" Johnson, who had worked at the restaurant for about a year, told NBC affiliate WBAL-TV in Baltimore.

Johnson told the station her shifts were slashed and she received written warnings about her hair, and then ultimately, she was fired.

"I was shocked. I couldn't believe it," she said.

Johnson sued, and last Thursday, an arbitrator awarded her more than $250,000 for lost wages and legal fees.

Arbitrator Edmund D. Cooke Jr. wrote that Hooters violated state and federal civil rights laws and that the hair policy "was implemented in a discriminatory manner adversely affecting African-American women."

Hooters criticized the ruling in a lengthy statement on its website, claiming the restaurant never told Johnson she couldn't wear her hair a certain way.

"Nothing could be further from the truth," the statement said, calling the arbitrator's decision "flawed."

Ericka Whitaker, senior brand manager of Hooters of America, said in the statement, "As a former Hooters Girl who happens to be African-American, I, like countless other African-American Hooters Girls today, regularly wore my hair in various shades of blond, or any other color consistent with our ‘girl next door’ image.”

The restaurant chain also called reports of Johnson receiving $250,000 in back pay exaggerated.

"Ms. Johnson did not receive $250,000 in back pay, but rather only $11,886.40, while her attorneys on the other hand received approximately $244,000 in attorneys’ fees," it said.

But Johnson's lawyers said that claim was incorrect, and that Johnson was fully compensated for all her lost wages, as well as for compensatory damages.

"I hope that Hooters sees this as an opportunity to make improvements in the way they train their managers and the way they deal with their employees," Andrew Levy, Johnson's attorney, told WBAL.

3/27/2021 Lifestyle Discrimination: Is it Legal? - Mesch Clark Rothschild

https://www.mcrazlaw.com/lifestyle-discrimination-is-it-legal/ 1/6

ATTORNEYS PRACTICE

GROUPS

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LIFESTYLE DISCRIMINATION: IS IT LEGAL?

Thom K. Cope

Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits

discrimination in employment on the basis of sex, race, color,

national origin, or religion. Other federal employment law

prohibits discrimination based on age, disability, and genetics.

In the changing world of personal appearance, the lines

between discrimination based on federally protected classes

may become blurred with bias towards lifestyle choices:

piercings, tattoos, smoking, weight, or sexual orientation.

Employers should be aware of the potential of employees (or

prospective employees) using Title VII or other discrimination

theories to advance new, non-traditional discrimination claims.

Sexual Identity

Title VII and the Americans with Disabilities Act (ADA) do not

protect against discrimination based on a person’s sexual

orientation or transgender status, but at least 20 states have

passed laws that do. Even under Title VII, there are several

cases where an employer has been found liable under Title VII

for discriminating against an employee for “failure to conform

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to gender stereotypes.” These cases are based on the logic of

a 1989 U.S. Supreme Court case, Price Waterhouse v.

Hopkins.

In this particular case, a highly-qualified, sometimes

aggressive, successful female accountant was repeatedly

denied partnership because, her male colleagues said, she was

not feminine enough. Her supervisor advised her to walk, talk,

and dress more femininely, wear makeup, have her hair

styled, and wear jewelry. She sued the company for gender

discrimination under Title VII. The case was battled all the way

to Supreme Court, which ultimately held that gender must be

irrelevant to employment decisions, and that an employer who

makes a decision because of an employee’s “failure to conform

to gender stereotype” has unlawfully discriminated against her.

The concept of discrimination based on “failure to conform to

gender stereotype” has been applied in the context of alleged

discrimination against homosexuals and transsexuals. For

example, a male Ohio firefighter was diagnosed with Gender

Identity Disorder (GID) and made the decision to go through

the gender reassignment process. He discussed his diagnosis

with his employer and began to express a more feminine

appearance on a full-time basis as part of the process. His co-

workers said his appearance and mannerisms were not

“masculine enough,” and his employer then devised a plan to

terminate his employment because of his transsexualism and

its manifestations. After he was fired, he successfully sued the

fire department alleging discrimination. Transsexuals are not a

protected class under Title VII, but he sued that he was

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discriminated against not because he was a transsexual, but

because he was a man that did not act like a man.

In contrast, a male bus driver diagnosed with GID began to

appear as a woman at work with the full support of the

employer, the Utah Transit authority. The employer became

concerned, however, when it realized that the bus driver, who

had not yet undergone gender reassignment surgery, was

required to use public restrooms along the route. The

employer worried about the company’s liability for the

uniformed bus driver using female public restrooms while still

possessing male anatomical parts. The bus driver was

terminated because the employer could not accommodate the

restroom use, but told the bus driver to reapply after the

gender reassignment surgery. The bus driver sued, claiming

unfair treatment on the basis of gender because of failure to

conform to gender stereotypes, but did not prevail. The court

stated that an employer’s requirement that employees use

restrooms matching their biological sex is not discriminatory.

Employers should be sure that they do not make employment

decision because an employee “isn’t acting like a man or

woman should.”

Weight Discrimination

Recent studies by Yale University’s Rudd Center for Food Policy

and Obesity reveal that weight discrimination has increased by

66 percent in the past decade. Only Michigan and some

Connecticut cities have laws prohibiting weight bias, but the

federal government does consider someone who is “severely”

obese (weighing more than 100 percent of that individual’s

Articles By Attorneys

J. Emery Barker

Douglas H. Clark, Jr.

Gary J. Cohen

Melvin C. Cohen

Thom K. Cope

Richard Davis

David J. Hindman

Barney M. Holtzman

Patrick J. Lopez

Michael McGrath

Frederick J. Petersen

Isaac D. Rothschild

Nathan S. Rothschild

Jonathan Rothschild

Jana L. Sutton

Bern M. Velasco

Robert M. Way

Jill F. Weickhardt

Alex Winkelman

3/27/2021 Lifestyle Discrimination: Is it Legal? - Mesch Clark Rothschild

https://www.mcrazlaw.com/lifestyle-discrimination-is-it-legal/ 4/6

ideal weight) to be disabled and protected by the 2009

amendment to the ADA, the Americans With Disabilities

Amendments Act (“the ADAA”). The ADAA does not grant new

protection to those who are overweight or moderately obese.

Dress Codes, Grooming, Tattoos, and Piercings

Employers may decide not to hire someone because of an

applicant’s piercings or tattoos, and employers may impose

non-discriminatory dress codes in the workplace. Sometimes,

however, an employer may be confronted with the issue of an

employee who dresses or grooms in a certain way because of

the culture of his or her national origin or religion.

For example, a potential Abercrombie & Fitch hire brought a

discrimination claim against the retailer, claiming she was not

hired because she wears a hijab, as she believes her Muslim

faith requires. Abercrombie is famous for its preppy, young

style. In an effort to promote that image, Abercrombie instilled

a “Look Policy” for its employees, which included a “no hat”

policy.

The young woman was not hired after a positive interview

because the interviewer assumed her faith would prevent her

from adhering to the Look Policy.

Generally speaking, an employer cannot impose a dress code

that would treat certain employees unfairly because of their

national origin or religion unless the employer cannot offer

some reasonable accommodation to the employee, and it

would result in undue hardship to the employer to not impose

the dress code. At the same time, it is inappropriate to

3/27/2021 Lifestyle Discrimination: Is it Legal? - Mesch Clark Rothschild

https://www.mcrazlaw.com/lifestyle-discrimination-is-it-legal/ 5/6

question an employee or potential hire about his or her religion

when making an employment decision.

When crafting and issuing dress codes, employers should be

sure to give employees and potential hires the opportunity to

review the dress code and let them know that if they have any

conflict with the dress policy, they must bring the issue to their

employer’s attention and request a reasonable

accommodation.

Smoking

Many states have outlawed smoking in public places and many

employeer ban smoking from the workplace or even decide not

to hire smokers. Those in favor of banning smokers from

employment argue that the practice increases worker

productivity, reduces healthcare costs, and encourages

healthier living. Others fear that refusing to hire smokers may

lead to the adoption of other selective employment practices,

such as not hiring people who are overweight or who have

high cholesterol. Federal law does not protect smokers from

“discrimination,” or from employers’ judgments about

employees’ lawful activities away from work; however, there

are currently 29 states and the District of Columbia that

consider smokers a protected class. If you do decide to ban

smoking from the workplace, and are permitted to do so by

your local law, consider whether you would like to add

“vaping” and e-cigarettes to the definition of “smoking.”

Employers should keep these thoughts in mind as they shape

employer policies or make employment decisions.

3/27/2021 Lifestyle Discrimination: Is it Legal? - Mesch Clark Rothschild

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Employers Must Use Caution When Basing Pay Decisions On Prior Salary History Carmen N. Decot (Couden) 08 May 2017

Labor & Employment Law Perspectives Imagine a scenario where an employer hires two individuals – a male and female – to fill two identical jobs

(i.e., same job qualifications and same job duties). Both individuals satisfy the educational, skill, and other

technical requirements for the job and they have similar employment histories. However, at their prior places

of employment, one individual earned $50,000 at his/her prior place employment, while other earned

$60,000 per year. The employer agrees to hire both individuals at 10% more than their prior salaries. Thus,

the starting pay for one hire is $55,000 while the starting pay for the other is $66,000, leading to a pay

differential of $11,000 (20%) during the first year of employment. The two individuals eventually learn

about the difference in pay and the lower-paid employee questions whether the starting pay differential is

legally permissible.

This question is at the heart of a current Department of Labor – Office of Federal Contract Compliance

Programs’ (OFCCP) current investigation into compensation practices. According to OFCCP investigator,

during an onsite audit of the subject company’s California headquarters, a company representative stated

that the business asks prospective hires about their most recent salaries and then offers up to 20% more when

setting starting pay. As a result of these alleged statements and the preliminary indicators of potential

gender-based pay disparities, the OFCCP is seeking information regarding 2014 salaries, as well as several

years of salary history information, for approximately 20,000 employees. The company denies that there are

any gender-based pay disparities with respect to employees performing the same job and thus far has refused

to turn over the requested information.

While litigation in this matter is ongoing, employers should be aware that both the OFCCP and the Equal

Employment Opportunity Commission take the position that, in light of historical societal differences in pay

based on gender and race, Executive Order 11246, Title VII, and the Equal Pay Act prohibit employers from

justifying differences in pay based solely on salary history. Further, decisions from the federal courts on this

issues are mixed, with courts in the Seventh, Ninth, and Eighth Circuits allowing employers to rely on prior

pay as a defense in certain circumstances and courts in the Fifth, Tenth, and Eleventh Circuit rejecting the

use of salary history as a defense to allegations of discrimination.

Finally, in an effort to reduce the reliance on salary history as a justification for differences in pay, multiple

jurisdictions – namely California, Massachusetts, New Orleans, New York (limited to state agencies), New

York City, Philadelphia, and Puerto Rico – have passed laws that prohibit employers from using prior pay as

a defense to discrimination. And, in some cases, these laws even prohibit employers from asking about

salary history altogether. In addition, Connecticut, Delaware, New Jersey, Pennsylvania, Rhode Island, and

Washington D.C. are contemplating similar laws.

With this in mind, employers should be mindful of the risks of relying on prior salary history as a lone or

significant factor in setting pay and should avoid consideration of prior salary history in those locations with

prohibitions on questioning or using prior salary history in making pay decisions. Where prior salary history

is used as a factor for pay decisions, employers should take the following steps to have the best defense to

claims of discrimination:

Ensure that compensation policies and practices comply with the law in all applicable jurisdictions;

Avoid reliance on salary history alone when establishing starting pay;

Document all factors that contribute to an initial pay determination including, but not limited to,

educational history, degree, prior employment experience, special skills and expertise, individual

candidate negotiations, market factors, and other position-specific factors;

Document how each factor contributed to pay and the specific reasons for the rate of pay chosen;

Periodically evaluate whether initial differences in pay should be reduced over time when employees

have substantially similar job duties and responsibilities;

Conduct regular, privileged compensation analyses to assess pay equity and ensure

non-discriminatory treatment; and

Consult with legal counsel regarding any questions or concerns.

Pay Transparency Is The Solution To The Pay Gap: Here's One Company's Success Story Kim Elsesser Senior Contributor Careers I cover the intersection of business, psychology and gender.

One advantage of pay transparency is it highlights any gender disparities in pay. (Photo credit:... [+]

If you found out that you were being paid less than your colleagues for the

exact same work, you'd probably demand to be paid more. This type of open

access to your colleague's pay, referred to as pay transparency, has long been

touted as a cure for the gender pay gap. After all, if everyone knows everyone

else's pay in the organization, any bias would be highlighted, and the

organization would be forced to make the appropriate corrections.

Unfortunately, pay transparency is not widely adopted, because many

organizations fear that revealing employees' salaries will result in too many

complaints from disgruntled workers.

Last month, Verve, a U.K.-based tech firm proved these pay transparency

naysayers wrong. Verve took the plunge into pay transparency, allowing all of

their employees access to the pay of their bosses, their peers and even their

CEO – nobody in the organization is off limits. Verve’s positive experience

with pay transparency suggests there are benefits for the organization even

beyond reducing bias and promoting diversity.

Employees Were Largely In Favor Of Pay Transparency

For ages, it has been considered taboo to discuss your salary with

coworkers. However, the reality is that the secrecy surrounding salaries

typically benefits the organization more than the employees. The concealment

of pay allows more money to be allocated to those who negotiate more

aggressively, those who threaten to quit, or those who are friends with the

boss. Unconscious bias can also infiltrate salary decisions when pay is kept

secret. When pay is transparent, organizations must be able to justify each

employee’s salary – thus reducing or eliminating any type of bias.

The leadership at Verve felt it was important to get their employees on board

with pay transparency before moving forward. Perhaps surprisingly, they

found that their employees were largely supportive of the change. CEO

Callum Negus-Fancey says, “The discussion was overwhelmingly in favor [of

pay transparency]. There were very few that didn’t want it, and those that

didn’t were open about the fact that it had much more to do with how they

were brought up and an emotional feeling they had about money.”

The Key To Successful Implementation Is Using Objective

Measures Of Performance

One argument against pay transparency is that most employees perceive

themselves as top performers and therefore will be disappointed if they learn

they're not at the top of the pay scale. University of Utah professor Todd

Zenger surveyed 700 engineers from two large Silicon Valley companies and

found that almost all of them thought their performance was above

average. Nearly 40% of the engineers felt they were in the top 5% of

employees, and 92% reported that they were in the top quarter of

performers. Only one of these engineers felt that their performance was below

average. Zenger cites this study as evidence that pay transparency can’t

work. Organizations want to pay their top performers more, and clearly,

linking pay to performance would be challenging if everyone thinks they’re a

top performer. However, the true lesson learned from this study is that

objective criteria must be used to set salaries if the organization is going to be

open about salary. Performance is not an objective criterion.

PROMOTED

At Verve, job scope and the market value of the position are the sole

determinants of pay. Both are purely objective measures. Negus-Fancey says,

“As people perform well, they get given more responsibility and bigger

projects, which then results in more pay.” In other words, as their scope

increases, their pay increases. Determining the current market value for

different job roles was also a key element of their pay transparency

strategy. Prior to the pay transparency launch, the company purchased salary

data to be certain they were using the correct benchmarks for the market value

of particular job functions, and they audited their own pay data to be sure they

were ahead of the curve.

At Verve, no employees left the organization after pay became transparent. A

handful of employees needed further explanation as to why some employees

were paid significantly more than others. But, because Verve was using

objective data to determine the salaries, there were rational explanations for

all of the pay discrepancies.

Pay Transparency Helps Attract A Diverse Workforce

So, has pay transparency helped Verve attract and maintain a diverse

workforce? Negus-Fancey says yes. While most tech firms are struggling for

diversity, Verve maintains an impressive almost 50% female workforce. He

says, “Pay transparency helps attract a more diverse workforce. People join

organizations based on what they do, not what they say. They want to see

tangible proof that your company encourages diversity.”

Pay Transparency Motivates All Employees To Achieve Goals

Pay transparency doesn’t just help with diversity, it helps all employees in the

organization. Openness and honesty about pay and how pay is determined can

help employees to set and achieve their goals. Negus-Fancey describes,

“People have a lot more clarity about how they can move up in the

organization, horizontally or vertically, and that is going to help them think

more intelligently about their career, and gives them power they haven’t had

before. As a result of pay transparency, we’ve all been spending much more

time thinking about career development and how we can help people

understand the different skills they need to acquire to operate on a different

level in the organization.” By offering clear, objective data on how to advance

in their organization, employees are motivated to succeed.

Hiring Process Streamlined For Both Parties

Another benefit of pay transparency is that negotiation is almost completely

eliminated in the hiring process. Negotiating can be a double-edged sword for

female employees. Women are less likely to negotiate for a higher salary, and

if they do, they can be penalized for behaving too aggressively. Eliminating

negotiations evens the playing field for women, and Negus-Fancey says that

the hiring process has become easier on the organization's end as well. A

particularly qualified candidate can make an argument for a position with

greater scope, which may result in more pay, and some job candidates have

negotiated more stock relative to cash in their pay, but overall there is no

haggling over salary for a set job description.

Pay Transparency Is A Realistic Solution For The Gender Pay Gap

When Lilly Ledbetter received an anonymous note revealing that she was

making thousands less than her male counterparts at Goodyear Tire, she took

action (The Lilly Ledbetter Fair Pay Act is named for her). When the Sony

hack revealed that actress Charlize Theron was making $10 million less than

her male co-star, Chris Hemsworth, Theron took action. It’s a natural

response. We all want to be treated fairly. Finding out what other people earn

makes the pay gap problem self-correcting. Women who work in

organizations with open pay structures need not fear that their pay is not

commensurate with their male colleagues, instead, they'll know if it's

not. Organizations like Verve, demonstrate that pay transparency isn't a pipe

dream. It's a realistic solution that can be implemented today.

3/27/2021 EU workplace headscarf ban 'can be legal', says ECJ - BBC News

https://www.bbc.com/news/world-europe-39264845 1/5

EU workplace headscarf ban 'can be legal', says ECJ 14 March 2017 Comments

Not only headscarf-wearing Muslim women, but other working people who express their religious adherence through

clothing and insignia could be affected by the ruling

Workplace bans on the wearing of "any political, philosophical or religious sign" such as headscarves need not constitute direct discrimination, Europe's top court has ruled.

But the ban must be based on internal company rules requiring all employees to "dress neutrally", said the European Court of Justice (ECJ).

It cannot be based on the wishes of a customer, it added.

This is the court's first ruling on the wearing of headscarves at work.

The ECJ's ruling was prompted by the case of a receptionist fired for wearing a headscarf to work at the security company G4S in Belgium.

The issues of Muslim dress and the integration of immigrant communities have featured prominently in debates in several European countries in recent years. Austria and the German state of Bavaria have recently announced bans on full-face veils in public spaces.

GETTY IMAGES

3/27/2021 EU workplace headscarf ban 'can be legal', says ECJ - BBC News

https://www.bbc.com/news/world-europe-39264845 2/5

Rights group Amnesty International said Tuesday's ECJ rulings were "disappointing" and "opened a backdoor to... prejudice".

Reality Check: Has EU court banned Islamic headscarf at work?

The Islamic veil across Europe

What's the difference between a hijab, niqab and burka?

What's the background to the decision?

The ECJ was ruling on the case of Samira Achbita, fired in June 2006 when, after three years of employment, she began wearing a headscarf to work.

She claimed she was being directly discriminated against on the grounds of her religion and Belgium's court of cassation referred the case to the EU's top court for clarification.

ADVERTISEMENT

3/27/2021 EU workplace headscarf ban 'can be legal', says ECJ - BBC News

https://www.bbc.com/news/world-europe-39264845 3/5

"Not a provocation" - some Muslim women have rejected the surge of legislation against the use of the headscarf in public

and at work as Islamophobic

At the time of Ms Achbita's hiring, an "unwritten rule" had been in operation banning overt religious symbols, and the company subsequently went on to include this explicitly in its workplace regulations, the court explained.

Does the ruling affect other religious symbols?

G4S's rules prohibited "any manifestation of such beliefs without distinction", and were therefore not directly discriminatory, the court said.

It said "an employer's desire to project an image of neutrality towards both its public and private sector customers is legitimate" - but national courts had to make sure this policy of neutrality was applied equally to all employees.

In practice, such a policy must therefore also ban other religious insignia such as crucifixes, skullcaps and turbans, the court confirmed to the BBC.

"The government should make a statement" on the ruling, says chair of the UK's parliamentary Women and Equalities

Committee

AFP

3/27/2021 EU workplace headscarf ban 'can be legal', says ECJ - BBC News

https://www.bbc.com/news/world-europe-39264845 4/5

But the court was not absolute in its ruling - workplaces still have a duty to show that they have also not enabled indirect discrimination - whereby people adhering to a particular religion or belief are in practice put at a particular disadvantage, unless that is "objectively justified by a legitimate aim" achieved by means that are "appropriate and necessary".

For instance, the Belgian court ruling on Ms Achbita's case would need to ascertain whether it could have been possible to offer her another post not involving visual contact with customers.

What if a customer complains about a headscarf?

That won't do - the court ruled that any ban could not be based on "subjective considerations" such as the preferences of an individual customer.

"The willingness of an employer to take account of the wishes of a customer no longer to have the services of that employer provided by a worker wearing an Islamic headscarf cannot be considered a genuine and determining occupational requirement," the court said.

It was referring to another case referred to in this ruling - that of design engineer Asma Bougnaoui, who lost her job at French firm Micropole, after a customer complained that she wore an Islamic headscarf.

A French court would have to determine whether the company in this case had dismissed Ms Bougnaoui solely to satisfy a customer or in accordance with a wider internal prohibition on religious symbols, the court ruled.

How has this ruling been received?

For years, courts across Europe have faced complex decisions on religious symbols in the workplace.

Jonathan Chamberlain, a partner at UK firm Gowling WLG, told the BBC that Tuesday's ruling reflected "what has been the UK's approach for some years".

Germany's constitutional court ruled in 2015 a ban on teachers wearing the headscarf across the country's 16 states was unconstitutional. Such a measure was only justified if religious symbols represented a "concrete danger, or the disturbance of school peace".

John Dalhuisen, director of Amnesty International's Europe and Central Asia programme, said the ECJ's decision gave "greater leeway to employers to discriminate against women - and men - on the grounds of religious belief".

"The court did say that employers are not at liberty to pander to the prejudices of their clients. But by ruling that company policies can prohibit religious symbols on the grounds of neutrality, they have opened a backdoor to precisely such prejudice."

3/27/2021 EU workplace headscarf ban 'can be legal', says ECJ - BBC News

https://www.bbc.com/news/world-europe-39264845 5/5

The headscarf ruling "disproportionately affects Muslim women" says this activist

The Conference of European Rabbis said: "With the rise of racially motivated incidents and today's decision, Europe is sending a clear message; its faith communities are no longer welcome."

But the British Humanist Association's Andrew Copson said: "We need to take an approach that balances everyone's rights fairly and we are pleased that the European Court of Justice has today appeared to reinforce that principle."

The Pregnancy Discrimination Act and

the Supreme Court: A Legal Analysis

of Young v. United Parcel Service

Jody Feder

Legislative Attorney

September 25, 2015

Congressional Research Service

7-5700

www.crs.gov

R44204

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service

Contents

Introduction ..................................................................................................................................... 1

Background ..................................................................................................................................... 1

The Pregnancy Discrimination Act ................................................................................................. 1

Young v. UPS ................................................................................................................................... 3

Legislative Response ....................................................................................................................... 5

Contacts

Author Contact Information ............................................................................................................ 6

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service 1

Introduction In 2015, the Supreme Court issued a decision in Young v. United Parcel Service.

1 In the case, a

United Parcel Service (UPS) worker named Peggy Young challenged her employer’s refusal to

grant her a light-duty work assignment while she was pregnant, claiming that UPS’s actions

violated the Pregnancy Discrimination Act (PDA). 2 In a highly anticipated ruling, the Justices

fashioned a new test for determining when an employer’s refusal to provide accommodations for

a pregnant worker constitutes a violation of the PDA, and the Court sent the case back to the

lower court for reconsideration in light of these new standards.

This report begins with a discussion of the facts in the Young case, followed by an overview of

the PDA. The report then provides an analysis of the Young case, its implications, and a potential

legislative response.

Background According to Young, when she became pregnant, her doctor instructed her to lift not more than 20

pounds during the first half of her pregnancy and 10 pounds thereafter. 3 However, UPS had a

policy requiring drivers such as Young to have the ability to lift packages weighing up to 70

pounds. Furthermore, the collective bargaining agreement stipulated that employees who were

disabled due to an on-the-job injury or who had lost their driving certifications were eligible for a

temporary assignment if their disabilities prevented them from performing their normal work. In

accordance with this provision, UPS offered light-duty work to employees injured on the job, but

it refused to provide such an accommodation to Young on the grounds that her pregnancy did not

constitute an on-the-job injury. 4

Young sued, claiming that UPS’s failure to accommodate pregnant employees while providing

light-duty assignments to other workers violated the PDA. The U.S. Court of Appeals for the

Fourth Circuit, however, ruled in favor of UPS, holding that the company’s policy did not

constitute unlawful pregnancy discrimination. 5 According to the court, the policy was neutral with

respect to pregnancy because pregnant workers were treated the same as other similarly situated

employees who had suffered off-the-job injuries. Young appealed the ruling, and the Supreme

Court agreed to review the case. 6

The Pregnancy Discrimination Act Originally enacted as an amendment to Title VII of the Civil Rights Act of 1964,

7 the PDA

prohibits pregnancy discrimination in employment. The amendment was adopted in response to

the Supreme Court’s decision in General Electric Co. v. Gilbert, in which the Court ruled that an

employer’s practice of excluding pregnant employees from receiving benefits under its temporary

1 135 S. Ct. 1338 (2015).

2 42 U.S.C. §2000e(k).

3 Young, 135 S. Ct. at 1344.

4 Id.

5 Young v. UPS, 784 F.3d 192 (4

th Cir. 2013).

6 Young v. UPS, 134 S. Ct. 2898 (2014).

7 42 U.S.C. §§2000e et seq. Title VII prohibits employment discrimination on the basis of race, color, sex, national

origin, or religion.

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service 2

disability plan did not constitute sex discrimination in violation of Title VII. 8 Congress

subsequently overruled the Court’s decision by enacting the PDA, which amended Title VII to

clarify that the statute’s prohibition on discrimination in employment “on the basis of sex”

includes discrimination “because of or on the basis of pregnancy, childbirth, or related medical

conditions.” 9 In addition, under the statute, “women affected by pregnancy, childbirth, or related

medical conditions shall be treated the same for all employment-related purposes ... as other

persons not so affected but similar in their ability or inability to work.” 10

As a result, employers

are required to treat women affected by pregnancy or childbirth in the same way they treat other

employees who are similarly situated. It was a dispute over how to interpret this latter provision

that was at the crux of the Young case.

Prior to the Court’s decision in Young, federal appellate court opinions interpreting this provision

of the PDA generally reflected two important principles. First, the courts typically agreed that if a

pregnant employee was temporarily unable to perform her job due to the pregnancy, her employer

was required to treat her in the same way it treated other employees who were similarly situated. 11

Thus, an employer who provided accommodations for workers who are temporarily disabled after

suffering an off-the-job injury was required to provide similar accommodations to temporarily

disabled pregnant workers. Such treatment could include providing light-duty, alternative

assignments, disability leave, or unpaid leave to pregnant employees if such accommodations

were granted to other employees.

Second, the courts generally held that the PDA did not require employers to provide

accommodations to pregnant employees unless such accommodations were also available to non-

pregnant employees, reasoning that to do so would require employers to treat their pregnant

employees more favorably than similarly situated non-pregnant employees. 12

As a result, pregnant

employees who challenged policies restricting light-duty work to those injured on the job were

unlikely to prevail if employers uniformly denied reassignments to all disabled workers who were

not injured on the job. In contrast, the Equal Employment Opportunity Commission (EEOC) had

taken the position that an employer’s failure to accommodate a pregnant employee under such

circumstances was a violation of the PDA. 13

Meanwhile, it is important to note that pregnant workers may be eligible for protections or

benefits offered by laws other than the PDA. Indeed, Young’s original lawsuit also contained a

claim based on the Americans with Disabilities Act (ADA). 14

Although pregnancy generally is not

8 429 U.S. 125 (1976). For more information on Supreme Court decisions involving the PDA, see CRS Report

RL30253, Sex Discrimination and the United States Supreme Court: Developments in the Law, by Jody Feder. 9 42 U.S.C. §2000e(k). The statute does contain a narrow exception if an employer can establish that having a non-

pregnant employee is a “bona fide occupational qualification that is reasonably necessary to the normal operation of

that particular business or enterprise.” 42 U.S.C. §2000e-2(e). 10

42 U.S.C. §2000e(k). 11

See, e.g., Equal Emp’t Opportunity Comm’n v. Horizon/CMS Healthcare Corp., 220 F.3d 1184 (10 th

Cir. 2000);

Adams v. Nolan, 962 F.2d 791 (8 th

Cir. 1992). Courts have also ruled in favor of pregnant employees who can

demonstrate that they are being treated differently than similarly situated employees in other contexts, such as the

provision of disability or unpaid leave. See, e.g., Byrd v. Lakeshore Hosp., 30 F.3d 1380 (11 th

Cir. 1994). 12

See, e.g., Serednyj v. Beverly Healthcare, LLC, 656 F.3d 540 (7 th

Cir. 2011); Spivey v. Beverly Enters., 196 F.3d

1309 (11 th

Cir. 1999); Urbano v. Continental Airlines, 138 F.3d 204 (5 th

Cir. 1998). 13

U.S. Equal Employment Opportunity Commission, Enforcement Guidance: Pregnancy Discrimination and Related

Issues, July 14, 2014. The EEOC subsequently updated its guidance in light of the Young decision. U.S. Equal

Employment Opportunity Commission, Enforcement Guidance: Pregnancy Discrimination and Related Issues, June

25, 2015, http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm#IC1. 14

Young v. UPS, 784 F.3d 192 (4 th

Cir. 2013). The ADA is codified at 42 U.S.C. §§12101 et seq.

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service 3

considered to be a disability under the ADA, certain impairments that a woman experiences as a

result of pregnancy may qualify as a disability for purposes of the statute. 15

If a pregnant worker

can demonstrate that she has such a disability, 16

her employer must provide reasonable

accommodations to her limitations unless such accommodation would impose an undue hardship

on the employer. 17

An appellate court, however, rejected Young’s ADA claim, ruling that “there is

no evidence that Young’s pregnancy or attendant lifting limitation constituted a disability within

the meaning of the ADA.” 18

As discussed in more detail below, recent amendments to the ADA

may make it easier for pregnant employees to establish such disability claims.

Young v. UPS As noted above, the dispute in Young centered on how to interpret the second clause of the PDA,

which provides that pregnant workers must be treated the same “as other persons not so affected

but similar in their ability or inability to work....” 19

In her argument to the Court, Young

contended that the PDA’s second clause requires employers to accommodate workers disabled by

pregnancy in the same way that they accommodate employees who are disabled in other ways but

similar in their inability to work. In contrast, UPS argued that its policy did not violate the PDA

because pregnant workers were treated the same as other workers who were disabled due to off-

the-job injuries. In a 6-3 ruling, the Court rejected the argument of both parties.

According to the Court, Young’s interpretation of the statute would grant pregnant workers a

“most-favored nation status” that would require employers who provided one or two employees

with an accommodation to provide the same accommodation to all pregnant employees,

regardless of any other relevant criteria, such as the nature of the jobs in question. 20

The Court

rejected this approach as contrary to congressional intent, noting that disparate treatment law

allows employers to establish policies that may negatively affect protected employees, subject to

certain conditions. The Court also refused to defer to EEOC guidance that echoed Young’s

position, noting that the agency had altered its interpretation after the Court granted review in the

case. 21

Likewise, the Court disagreed with UPS’s interpretation because it would render the

PDA’s second clause “superfluous” and would be contrary to the unambiguous intent expressed

by Congress when it overturned the Gilbert decision. 22

15

The EEOC has explained that complications during pregnancy, such as “a pregnancy-related impairment that

substantially limits a major life activity,” may qualify a woman for protection under the ADA. See 29 C.F.R.

§1630.2(h) App. 16

Under the ADA, an individual is deemed to have a disability if she (1) has “a physical or mental impairment that

substantially limits one or more major life activities;” (2) has “a record of such an impairment;” or (3) is “regarded as

having such an impairment.” 42 U.S.C. §12102(1). Major life activities include a wide variety of daily activities—

including, for example, performing manual tasks, standing, lifting, etc.—and the operation of major bodily functions.

42 U.S.C. §12102(2). 17

42 U.S.C. §12112(b)(5)(A). The ADA states that reasonable accommodations may include ensuring that facilities

used by employees are readily accessible to and able to be used by individuals with disabilities. 42 U.S.C.

§12111(9)(A). The EEOC has published regulations that provide additional guidance regarding the purpose and type of

accommodations that may be required. 29 C.F.R. §1630.2(o) App. 18

Young v. UPS, 784 F.3d 192, 200 (4 th

Cir. 2013). 19

42 U.S.C. §2000e(k). 20

Young v. UPS, 135 S. Ct. 1338, 1349 (2015). 21

Id. at 1351-52. 22

Id. at 1352-53.

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service 4

Instead, the Court relied on an alternative interpretation of the PDA that appears to strike a middle

ground between the approaches advocated by Young and UPS. This analysis rested in part on a

distinction between disparate treatment and disparate impact cases. The former require evidence

of intentional discrimination, while the latter involve neutral employment practices that have a

discriminatory effect. The fact that Young’s claim was based on an allegation of disparate

treatment was central to the Court’s ruling, which ultimately turned on the somewhat technical

application of rules regarding the burden of proof in disparate treatment cases.

In general, a party seeking to establish a disparate treatment claim may prove discrimination in

one of two ways: (1) by producing direct evidence that an employer policy or practice is

explicitly based on a protected category or (2) by using a burden-shifting framework to create an

inference of discriminatory intent. 23

Originally established in the 1973 case of McDonnell

Douglas Corp. v. Green, 24

the burden-shifting model involves three steps. First, a plaintiff must

establish a prima facie case of discrimination. Second, an employer must articulate a legitimate,

nondiscriminatory reason for the disparate treatment. Third, the plaintiff must prove that the

employer’s rationale is a pretext for discrimination. 25

Adapting the McDonnell Douglas framework, the Young Court held that a pregnant worker who

alleges a violation of the PDA’s second clause when an employer denies her an accommodation

must establish a prima facie case of discrimination by showing that she is a member of the

protected class; that she sought an accommodation; that the employer denied the accommodation;

and that the employer accommodated others similarly situated in their ability or inability to

work. 26

At that point, the employer must show that it had a legitimate, nondiscriminatory reason

for denying the accommodation, although the administrative convenience or expense of

accommodating pregnant employees will not be deemed to be a legitimate excuse. Finally, the

employee may rebut this claim by demonstrating that the employer’s rationale is pretextual. 27

Further, the Court ruled, an employee may reach a jury on the issue of pretext if she provides

“sufficient evidence that the employer’s policies impose a significant burden on pregnant

workers, and that the employer’s ‘legitimate, nondiscriminatory’ reasons are not sufficiently

strong to justify the burden, but rather—when considered along with the burden imposed—give

rise to an inference of intentional discrimination.” 28

According to the Court, a pregnant employee

can establish that a “significant burden” exists if she can demonstrate that an employer provides

accommodations to a large percentage of non-pregnant workers but denies such accommodations

to a large percentage of pregnant workers. Based on this reasoning, the Court vacated the lower

court’s judgment and remanded the case so that the court could determine “whether the nature of

the employer’s policy and the way in which it burdens pregnant women shows that the employer

has engaged in intentional discrimination.” 29

Although the Court did not rule on the merits of

Young’s claim, it did appear to indicate that she could meet her burden of proof by arguing that

the “combined effects” of UPS’s policies accommodating three separate categories of non-

23

TWA v. Thurston, 469 U.S. 111, 121 (1985). 24

411 U.S. 792 (1973). 25

Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 252-53 (1981). 26

Young, 135 S. Ct. at 1354. 27

Id. 28

Id. 29

Id. at 1344.

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service 5

pregnant employees, while simultaneously refusing to accommodate the majority of pregnant

employees, imposed a significant burden on the latter. 30

Ultimately, the Court’s ruling preserves the ability of pregnant workers to sue under the PDA

when an employer refuses to accommodate pregnancy-related disabilities, but it does not require

employers to automatically provide accommodations under all circumstances. However, the

significance of the Court’s decision may be limited by changes that were made to the ADA during

the course of litigation. Specifically, under the ADA Amendments Act of 2008, 31

Congress

clarified that the definition of disability includes physical or mental impairments that substantially

limit an individual’s ability to perform major life activities, such as lifting, standing, or bending.

The EEOC subsequently issued guidance stating that “[t]he effects of an impairment lasting or

expected to last fewer than six months can be substantially limiting within the meaning of this

[Act].” 32

This interpretation appears likely to make it significantly easier for a pregnant employee

subject to a temporary lifting restriction to establish a disability claim under the ADA in the

future.

Legislative Response The Young decision appears to have prompted several Members of Congress to propose

legislation clarifying the meaning of the PDA. The most prominent of these bills is the Pregnant

Workers Fairness Act (PWFA), 33

although other bills have been introduced as well. 34

Introduced prior to the Court’s decision in Young, the PWFA was designed to end the debate over

the meaning of the PDA by explicitly providing reasonable workplace accommodations for

employees whose ability to perform their jobs is limited by pregnancy, childbirth, or a related

medical condition. Specifically, the legislation would make it unlawful for an employer (1) to fail

to make reasonable accommodations for such employees unless the employer can demonstrate

that the accommodation will cause undue hardship; (2) to deny job opportunities to such job

applicants or employees if the denial is due to the need to make reasonable accommodations; (3)

to require such job applicants or employees to accept an accommodation; or (4) to require such

employees to take leave if another reasonable accommodation can be provided. In addition, the

bill would adopt the ADA’s definitions of “reasonable accommodation” and “undue hardship” and

would borrow much of its structure from Title VII, including the latter’s remedies, procedures,

and enforcement provisions. 35

Like Title VII, the PWFA would also prohibit retaliation against

any employee who opposed practices made unlawful under the bill or who filed a complaint or

otherwise took part in a proceeding relating to allegations of unlawful practices under the bill.

30

Id. at 1354-55. 31

P.L. 110-325, §4(a). In addition, the amendments specified that “[t]he definition of disability in this Act shall be

construed in favor of broad coverage of individuals under this Act, to the maximum extent permitted by the terms of

this Act.” Id. 32

29 C.F.R. §1630.2(j)(1)(ix) App. 33

H.R. 2654/S. 1512 (114 th

Cong.). 34

See, e.g., H.R. 2800/S. 1590 (114 th

Cong.). 35

The PWFA also incorporates multiple provisions found in several other employment discrimination statutes.

Collectively, these statutes prohibit the same types of employment discrimination as Title VII, but cover employees

who are not protected under Title VII, including congressional employees under the Congressional Accountability Act,

2 U.S.C. §§1301 et seq., presidential employees under Chapter 5, Title 3 of the U.S. Code, and federal employees under

the Government Employee Rights Act, 42 U.S.C. §2000e-16.

The Pregnancy Discrimination Act and the Supreme Court

Congressional Research Service 6

Given the new legal landscape that has emerged in the wake of the Court’s ruling in Young, it is

unclear whether legislation related to the PDA will advance in Congress.

Author Contact Information

Jody Feder

Legislative Attorney

[email protected], 7-8088

www.fisherphillips.com © 2020 Fisher Phillips LLP

Newsletter

EEOC Settles Beef With Restaurant

12.1.09

(Hospitality Labor Letter, No. 4, December 2009)

On November 2, 2009, the Equal Employment Opportunity Commission (EEOC) announced that it settled a class action lawsuit against Lawry's Restaurants Inc. The EEOC reported that the west coast steakhouse chain agreed to settle the lawsuit, alleging gender discrimination, for more than one million dollars.

First filed in March 2006, the lawsuit alleged that for decades that company had intentionally discriminated in its hiring practices. The settlement captured the attention of employers and the media because the class action claimed that the restaurant violated Title VII of the Civil Rights Act of 1964 by discriminating against men. In particular, the lawsuit alleged that Lawry's practice of only hiring females for its server positions constituted gender discrimination.

Sex-Based Selection of Servers

The legal action stemmed from a complaint by one of the restaurant's busboys. The busboy complained that he had been denied a higher-paying server position as a result of his gender. The EEOC investigation determined that Lawry had prohibited men from working as servers since 1938 and based its policy on tradition. Since Lawry's instituted the policy over seventy years ago, female servers had dressed in costumes from the 1930s and 1940s. The EEOC determined that despite the policy's roots in tradition and history, the practice of only hiring women for server positions adversely affected male employees and applicants on the basis of their sex.

The voluntary settlement reached by the parties requires the restaurant to pay $300,000 for an advertising campaign regarding hiring, $500,000 to individuals within the class, and $225,000 for training all of its employees on compliance with federal anti-discrimination laws. According to Lawry's, beginning in 2004, shortly after the initial EEOC charge was filed, the Company began hiring male servers and its hiring practices have complied with the law throughout the litigation. Rich Cope, the director of marketing for Lawry's, was quoted as saying that "[w]hen we were first approached with the charge, we took substantial efforts to work with the EEOC to remedy the situation."

www.fisherphillips.com © 2020 Fisher Phillips LLP

Hairy Hiring Practices

Creating a marketing image and a niche in a competitive hospitality market is essential to a successful business. Employers may seek to further the image by hiring and promoting individuals who fit the image. Litigation over such efforts dates back to the 1970s when several federal lawsuits alleged that the practice of only hiring female flight attendants was not a legitimate or lawful business practice. In the early 1980s, Southwest Airlines unsuccessfully defended its practice of only hiring female flight attendants and the company's arguments that being female was an essential occupation qualification were rejected.

Only in very narrow circumstances can an employer successfully defend a gender discrimination claim by claiming that its gender-based hiring practices were based on a bona fide occupational qualification (BFOQ). The BFOQ defense is very narrowly applied and requires an employer to show that failure to discriminate on the basis of gender would undermine the essence of the business operation.

Hooters of America, Inc., the restaurant chain known well for its orange and white clad "Hooters Girls," has tangled for the last decade and a half with the EEOC over its policy of only hiring females to be servers. At the time this article was drafted, Hooters website explained and justified its policy stating that "[t]he element of female sex appeal is prevalent in the restaurants, and the company believes the Hooters Girl is as socially acceptable as a Dallas Cowboy cheerleader, Sports Illustrated swimsuit model, or a Radio City Rockette."

In the early and mid-1900s, the EEOC alleged that Hooters' hiring practices discriminated against men and the agency conducted an extensive, four-year investigation. Hooters responded by waging a prominent public campaign challenging the EEOC's allegations and centered its campaign on the phrase, "Washington Get a Grip." The EEOC eventually dropped its investigation, but Hooters' challengers were undeterred and a class action lawsuit was brought against the company. In 1997, the company settled the lawsuit for $3.75million. Under the terms of the settlement, the company allowed males to work as bartenders and hosts, but continued to hire only women for server positions.

Despite the agreement, Hooters still faces legal challenges to its practice. In February 2009, a Texas man filed a gender discrimination lawsuit seeking to enjoin the company from discriminating against men in its hiring practices. The man argued that the primary function of a Hooters Girl was to serve food and drinks and, therefore, the company could not establish the defense of bona fide occupational qualification. According to multiple media outlets, a Vice President of Marketing at Hooters stated in response to the lawsuit, "[i]f we lose this go round, you can expect hairy-legged guys in the Rockettes to line up and male models in the Sports Illustrated swimsuit issue." The Company reached a confidential settlement of February 2009 lawsuit in April (at the time of publication no reports of "Hooters Boys" or "hairy-legged" male Rockettes were reported as a term

EEOC Settles Beef With Restaurant

www.fisherphillips.com © 2020 Fisher Phillips LLP

or condition of settlement).

Help Wanted

The recent litigation against Lawry's and Hooters is a cautionary tale for employers. Hiring practices which select individuals based on a protected characteristic, such as gender, are closely scrutinized by the EEOC, the courts, and the public. Only in very limited, narrow circumstances can a company justify a discriminatory hiring practice. The ability to market a company's image through employees' physical appearances is generally not going to satisfy the bona fide occupational qualification defense and resulting litigation can tarnish the company's reputation and put a sizable dent in the corporate bank accounts.

EEOC Settles Beef With Restaurant

3/27/2021 Legal discrimination in four letters: BFOQ - HR.com

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Legal discrimination in four letters: BFOQ

Date: July 21 2002

Can discrimination be legal? The short answer is yes. In this age of political correctness and an overabundance of litigation based on age and gender discrimination, don't you wonder if there are rules about the age of the pilot flying the airliner you're sitting in? Or whether the law permits certain restaurants to hire only female waitresses? Or why you don't see 80-year-old police officers running down the streets after purse-snatchers? These are some of the everyday instances in which we observe blatant discrimination, but it seems to make sense. So how can such discrimination be legal?

Background The above scenarios are examples of bona fide occupational qualifications (BFOQs). A BFOQ is a defense to acknowledged discrimination, usually based on the existence of a facially discriminatory policy, such as "individuals over the age of 50 shall not be hired as police officers." Title VII of the Civil Rights Act of 1964 permits you to discriminate on the basis of "religion, sex, or national origin in those instances in which religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business or enterprise." This narrow exception has also been extended to age discrimination through the Age Discrimination in Employment Act. It does not, however, apply to race discrimination.

Whether a particular policy amounts to a BFOQ requires an analysis of the facts of each particular case. The Equal Employment Opportunity Commission (EEOC) has a list of BFOQs it recognizes. But just because a particular policy or rule doesn't appear on the EEO's list doesn't mean it can't be a BFOQ. This is ultimately a factual determination for the court or jury.

In determining whether a discriminatory policy constitutes a BFOQ, you must first look at the particular job and what it requires. You must then look at the discriminatory policy and determine if it's necessary to performing the job. For example, the Federal Aviation Administration has a rule that airline pilots may not serve as captains after reaching age 60. That rule is obviously based on the probability that a pilot's skills have deteriorated with age and that the safety of the crew and passengers depends most heavily on the captain. The rule pertains only to the position of captain and doesn't prevent pilots 60 years of age or older from serving as flight engineers because age isn't a BFOQ for that position.

In claiming the BFOQ defense, the employer has the burden of proving the discriminatory policy is a valid BFOQ. You must demonstrate "plainly and unmistakably" that your discriminatory employment practice meets the terms and spirit of the Title VII exception. In other words, you must demonstrate that a discriminatory practice is reasonably related to an essential operation of your business. There is no requirement that formal studies be conducted to ascertain the need for a BFOQ. Such a qualification can be demonstrated through expert witnesses, empirical data, or just plain common sense.

BFOQs in age discrimination claims The courts have developed a two-step test for analyzing BFOQ defenses in dealing with policies that bar a certain age group from a job. You must show either (1) there is a substantial basis for believing that all or nearly all employees above a certain age lack the qualifications for the position in question or (2) that reliance on an age classification is necessary because it's highly impractical for you to ensure by individual testing that your employees will have the necessary qualifications for the job. These BFOQs usually apply to jobs that involve driving or flying or physically demanding jobs.

BFOQs in gender discrimination claims While BFOQs related to gender discrimination don't have a specific two-step test, the analysis does require that the discriminatory practice be reasonably necessary to the normal operation of a particular business or enterprise. In other words, gender discrimination is valid only when the "essence" of the business operation would be undermined if the business eliminated its discriminatory policy.

For example, corrections facilities and mental institutions that maintain gender- segregated wards usually have rules requiring at least one staff member of the same gender as the patients to always be on duty. That policy was found to be a valid BFOQ because the privacy rights of the individual patients necessitated that a staff member of the same sex be available to assist them in using the restroom, showering, and disrobing. Another example would be the argument that the essence or identity of a restaurant is based on its exclusive employment of female bartenders and waitresses and the business would be undermined if it was forced to hire male bartenders and waiters.

Surprisingly, gender discrimination based on an employer''s concern for the safety of its female employees isn''t a recognized BFOQ. In one case, a battery manufacturer enacted a policy that prohibited pregnant women and women capable of bearing children from being placed in jobs involving lead exposure. The purpose of that rule was to protect against any risk of harm to fetuses that female employees might conceive. While the policy was well intended, it was found illegal because it wasn''t reasonably necessary to the normal production of batteries. To put it another way, fertile women were as efficient in manufacturing batteries as anyone else.

How effective is the BFOQ defense? The BFOQ defense is very narrowly restricted to limited instances and shouldn''t be relied in most situations. In determining whether a discriminatory policy can be justified as a BFOQ, you must think about the nature of your business, the requirement of the specific job in question, and whether the discriminatory practice is necessary to preserving the normal operation and essence of your business. Would Hooters be Hooters if the person taking your drink order was a 300-pound man, or would it become a nondescript hamburger joint?

3/27/2021 Legal discrimination in four letters: BFOQ - HR.com

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Does the safe operation of a school bus reasonably require that the drivers be under age 65? Are drivers above that age more likely to get into accidents? Should male corrections officers in a female facility be limited to certain duties? Should police officers or firefighters be a certain age?

There is no single answer or test that can be applied to these various situations. Each situation must be examined individually, taking into account the many factors concerning the nature of the business, the goods or services to be provided, and the duties and responsibilities of the job in question.

Copyright 2002 M. Lee Smith Publishers LLC.

This article is an excerpt from Connecticut Employment Law Letter written by the law firm of Halloran & Sage. Connecticut Employment Law Letter should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. Anyone needing specific legal advice should consult an attorne

3/27/2021 Is it okay to hire cooks to match the cuisine? (part I) - Lexology

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USA August 14 2015

Is it okay to hire cooks to match the cuisine? (part I)

We’ve all noticed it: why do many ethnic restaurants seem to have servers and wait staff matching that ethnicity? Why do some customers feel that ethnic food served by staff of a different ethnicity is less “authentic”? Does it bother you when you peek behind the kitchen door at, say, a Chinese restaurant, and see that the people making the food are clearly not Asian?

Although it’s not clear whether customers actually do prefer food served by people of matching ethnicity, it does seem, at least anecdotally, to be a real social phenomenon. But what does the law have to say?

Why do some customers feel that ethnic food served by staff of a different ethnicity is less “authentic”?

Generally speaking, it is illegal to make hiring decisions based on race, color, religion, sex, and national origin. Employment discrimination statutes and case law clearly provide that making adverse employment decisions based solely on national origin or other protected classifications can make a restaurant liable for employment discrimination (see e.g., Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967, Title I and Title V of the Americans with Disabilities Act of 1990 as amended, Title II of the Genetic Information Nondiscrimination Act of 2008, and state laws such as California’s Fair Employment and Housing Act).

Generally speaking, it is illegal to make hiring decisions based on race, color, religion, sex, and national origin.

There are some exceptions to this rule, however. Title VII of the 1964 Civil Rights Act prevents against employment discrimination, but it does not apply to companies with less than 15 employees (see 42 U.S.C. §§ 2000e(b)), or if the discrimination is required for the job as a “bona fide occupational qualification necessary to the normal operation of that particular business or enterprise.” See 42 U.S.C. §§ 2000e-2(e)(1). In the case of small ethnic cuisine restaurants, it seems that many could fall under the carve-out for restaurants with less than 15 employees. 

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Duane Morris LLP - Christopher B. Yeh

And the “bona fide occupational qualification” (or “BFOQ”) defense could be used to justify apparently discriminatory employment decisions if the restaurant can show that it is an essential trait of the job (Hooters is an example of this).

Title VII of the 1964 Civil Rights Act does not apply to companies with less than 15 employees, or if the discrimination is required for the job as a “bona fide occupational qualification.”

This BFOQ requirement is tricky however, and can change with social mores. In the 1960’s, airlines used the BFOQ defense to defend hiring only female, unmarried flight attendants on the ground that their customers (who were mostly male businessmen at the time) preferred being served by single females. The Equal Employment Opportunity Commission challenged this employment policy on behalf of a male flight attendant candidate, and it was ruled discriminatory in Diaz v. Pan Am. World Airways, Inc., 442 F.2d 385 (5th Cir. 1971). In that case, the Court noted Pan Am’s evidence of their clientele’s preferences, but explained that one of the goals of employment discrimination laws is to overcome and maybe even change those discriminatory preferences.

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3/27/2021 Thinking About Using Payroll Debit Cards? Read This First

https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/employers-payroll-debit-cards-.aspx 1/3

S

Thinking About Using Payroll Debit Cards? Read This First

By Lisa Nagele-Piazza, J.D., SHRM-SCP

February 7, 2018

ome businesses may prefer paying workers with payroll debit cards rather than by check or direct deposit, but employers should be

aware of laws that regulate the use of payroll cards and not make them mandatory.

Payroll cards are reloadable debit cards that are funded with employee wages each pay period. Employers that opt to use such cards can

save on the cost of printing and mailing paychecks. Employees who don't have bank accounts may also bene�t from pay cards, because

workers can use the cards to pay bills and avoid check-cashing fees.

The biggest federal issue with payroll cards is that businesses can't mandate that the funds be redeemed at a speci�c �nancial institution,

said Richard Greenberg, an attorney with Jackson Lewis in New York City. Such a mandate would violate the Electronic Fund Transfer Act

(EFTA), which covers direct deposits and payroll cards.

However, payroll card use is mostly governed by state law. Some state laws prohibit employers from using pay cards without consent,

place strict limitations on the fees that can be charged and impose disclosure requirements, Greenberg noted.

[SHRM members-only multistate coverage: Multistate Employer Resources (www.shrm.org/ResourcesAndTools/legal-and-compliance/state-

and-local-updates/xperthr/pages/multistate-employer.aspx)]

"Make sure to comply to the letter," said Rick Grimaldi, an attorney with Fisher Phillips in Philadelphia and Washington, D.C. "This is still

uncharted territory, so make it as easy as possible … for your employees."

Fees

The biggest criticism of payroll cards is that the associated costs may be passed along to workers. Payroll cards are often o�ered as an

alternative for low-income earners who don't have bank accounts or who work temporary jobs that don't provide for direct deposit.

However, employees might be charged fees at the point-of-purchase, for accessing their wages at the ATM or for checking the balance on

the card.

To combat these issues, some states have passed laws restricting the fees that workers can be charged for using payroll cards. In

Pennsylvania, for example, employers may pay workers through payroll cards so long as certain conditions are met

(www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/pages/pennsylvania-law-clari�es-payroll-debit-card-

use.aspx). Among other requirements, employees are entitled to one free withdrawal of all the wages they earned each pay period, and

they must be able to check the balance on the card free of charge.

More than half of the states have laws regarding payroll cards, and many of those laws require that employees have free access to their full

pay at least once per pay period or have a certain amount of free transactions per month. In addition to Pennsylvania, the following states

have rules restricting fees: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kansas, Maine, Maryland, Michigan,

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Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oregon, Rhode Island, Tennessee, Utah,

Vermont, Virginia and Washington.

Choice

Many states with laws governing payroll cards require employers to o�er alternative means for employees to receive their wages, such as

by check, direct deposit or cash.

The Consumer Financial Protection Bureau—the federal agency that enforces the EFTA—has also taken the position that mandating payroll

card use is unlawful under federal law. So it's a good idea for employers that want to use payroll cards to o�er other choices. Employers

should note that many states also require employers to provide certain notices and disclosures about payroll cards.

Best Practices

If there are con�icting federal and state laws, the law that is more favorable to the employee will control, Grimaldi explained. However, he

noted that the laws aren't fully developed for payroll cards. "At the end of the day, when it comes to wages—particularly payroll type issues

—most states and the federal government are living in the last century. Things like payroll debit cards are decidedly 21st century issues."

For businesses that want to use payroll cards, Greenberg recommends that employers:

Do not make their use mandatory.

Limit fees.

Disclose every detail.

Ensure that the full amount can be withdrawn each pay period in multiple withdrawals without fees.

Ensure that there is a reasonable number of establishments nearby from which money can be withdrawn.

"Finally, of course, employers must make sure that the payment system is integrated with payroll to ensure any pay statement requirements

(www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/pages/california-pay-stub-wage-statement-rules.aspx)

under state law are met," he added.

Was this article useful? SHRM o�ers thousands of tools, templates and other exclusive member bene�ts, including compliance

updates, sample policies, HR expert advice, education discounts, a growing online member community and much

more. Join/Renew Now (https://membership.shrm.org/?PRODUCT_DISCOUNT_ID=MART) and let SHRM help you work smarter.

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3/27/2021 Customer Strategist - Spring 2016 - The Hidden Obstacle to Great Corporate Culture: Unconscious Bias

https://www.customerstrategist-digital.com/customerstrategist/spring_2016/MobilePagedArticle.action?articleId=1090564#articleId1090564 1/16

PROOF POINTS: UNCONSCIOUS BIAS

The Hidden Obstacle to Great Corporate Culture: Unconscious Bias Build awareness in the recesses of your brain to boost decision- making.

By Edward Nelson and Steve Ellis

3/27/2021 Customer Strategist - Spring 2016 - The Hidden Obstacle to Great Corporate Culture: Unconscious Bias

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People recognize that the world and the workplace with it are changing. Companies

not only use different countries for different functions, but they create and eliminate

functions all the time—many of the highest paid non-management jobs did not exist 10

years ago. At the same time, computational power and robotics are making many jobs

obsolete.

Alongside other global concerns, we recognize the need to adapt our way of thinking to

address the plethora of current global challenges. This also means challenging the

3/27/2021 Customer Strategist - Spring 2016 - The Hidden Obstacle to Great Corporate Culture: Unconscious Bias

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mental habits, paradigms, and assumptions that have been successful right up until the

21st century.

As companies vie to keep up with these changes, it’s important to recognize that many

of the attitudes and behaviors of people involved will be unconsciously influenced. This

can be both useful and hindering, so understanding this is paramount.

Unconscious bias is a catch-all phrase for how we make decisions that are based on

"rules of thumb" rather than all the facts. There is a fast-increasing body of knowledge

exploring this tricky human phenomena. Businesses are now keen to catch-up with the

science in order to improve the experience they provide to both their customers and

employees. From changing the way businesses hire and hold meetings, to how they

reach their markets, understanding the predictable, but not always rationale, choices of

human beings will help improve their customer experience strategies. The potential

here is only just being realized.

There are many layers of conscious and unconscious thinking. We are more

unconscious than conscious. For example, you are probably not even conscious of your

breathing—until you read this. We only become conscious of things through our senses

and our attention. However, we can’t be conscious of all of our senses all of the time.

As we grow up, we filter information to create mental shortcuts and develop habits that

help us get by. It is these consciously created "rules of thumb" that once learned,

become unconscious. Like habits, unconscious biases are hard things to break.

These biases are formed in our brains unknowingly throughout our lifetime. Some help

us be more efficient or put real "brainpower" to other tasks. But some of these biases

may lead to workplace discrimination, unhealthy risk aversion, overinflated confidence,

and poor business decisions.

Understand the situation The first step to tackling unconscious bias is to raise awareness in ourselves and call it

out in others. As leaders, we cannot begin to do anything about it if we refuse to

recognize its existence. We may even be contributing to the problem.

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Just as there are hundreds of unconscious biases, there are as many ways for it to

show up in the workplace. Three common areas where it has an impact are:

Sales & marketing

Employee engagement

Leadership & decision-making

Overcome bias in sales & marketing Three biases are particularly prevalent here:

Availability cascade (Recency bias). If the information is easy to recall, then we

believe it is more likely to be true. This is enforced by repetition as well as by

recent events.

Affinity bias. People like people like themselves.

Rhyme as reason bias. Emphasis is more powerful than logic (no pain, no gain,

for example).

Availability/recency bias: We are bombarded with more information than we know

what to do with. To find the most relevant information, we tend to make short cuts. For

example, if I were to ask you how happy you are, your answer would most likely be

influenced by what comes to mind first. Scientists have discovered that people are

influenced by things as random as the kind of images on display in the background,

what questions they were just asked, or even if they’ve found a small coin.1

Furthermore, most people were not ever aware that they had been influenced by these

things. Product placement is a tactic marketers use to tap into this bias, for example.

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CASE STUDY: Optimizing sales with a better store experience

As part of a global retail transformation, we worked with a large telephone

company to improve its store accessibility. This was done with both a

physical layout refit, and training that incorporated practical examples to

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work with different needs of customers from ability to communication style.

The program touched more than 55,000 employees and improved both

customer experience and profitability.

Affinity bias: People prefer to say yes to people they know and like, says author and

professor Robert Cialdini. "Not only do people like people like themselves, but they find

comfort in identifying commonalities," he adds. "This is particularly important in new

situations where we are less at ease2."

Most salespeople know this intuitively. Furthermore, the research suggests that when

strangers find common ground, they have more successful outcomes at a negotiation.

Research shows that in negotiations when people engage in a short period of social

exchange and identify common ground, they experience 20 percent less chance of

deadlock3.

Rhyme as reason bias: Simply put, the rhyme as reason effect (or Eaton-Rosen

phenomenon) is a tendency to hear rhyming statements as more truthful. A famous

example was used in the O.J Simpson trial when the defense used the phrase, "If the

gloves don’t fit, then you must acquit4."

While we may consciously reject the information, we may still "feel" it to be true and

treat information that rhymes with more credibility, even when we consciously know it is

not. This is why marketers know that messages have to be simple and repeatable, or

they have no chance of getting through.

Proactively �ght bias to build employee engagement Bias, both conscious and unconscious, impacts the way that organizations attract and

engage their employees in recruitment, retention, and contribution.

Recruitment: There has been much research into where stereotype biases have

impacted recruitment, most notably studying how potential employers respond to CVs

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with different names on them. The more "ethnic" a name of the candidate, the less likely

they were to be contacted, even when all the information on the CV matched a neutral

name.

To mitigate this bias, consider what information you really need when creating a job

posting. Some less essential information may trigger unconscious bias, like what school

applicants graduated from or how old they are. Many organizations and governments

now use forms that separate identity characteristics from job specification questions.

Also, it pays to be clear about what you want: understand the job selection criteria for

success and repeat out loud with your co-assessors to mitigate unconscious prejudices. 5

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CASE STUDY: Little things make a big di�erence

To thwart unconscious bias, one of our clients renamed conference rooms to

address gender bias. It also changed the images on its corporate materials to

reflect its customer base and to drive a culture of inclusion.

Retention: People can be impacted by the negative stories attached to stereotypes,

both through identification, or just labelling others. Stereotypes influence not only hiring,

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but also performance, appraisals, and feelings of belonging. These biases can be

unconsciously triggered with visual imagery that reinforces stereotypes, or by asking

people to identify certain characteristics, like race or age. In addition, exposure to

positive or negative portrayals of people of a particular identity will unconsciously

impact the way that people of that identity perform under pressure. Further research

has shown that even background images will affect people’s behavior, both toward

others6 and subconsciously on their own ability to perform.

To combat these biases, companies should use language that highlights inclusion

rather than exclusion, and opportunity rather than limitation.

Contribution: Feelings of inclusion and value also show up in the way employees

contribute and perform at work. In his book "Drive," Daniel Pink7 cites autonomy, or the

ability to direct one’s own life, as an essential ingredient in driving discretionary effort. If

choice isn’t granted in the workplace, then people will feel less like giving up their time.

Employees want to feel they have control of their destiny.

Making sure you engage your employees in the organization’s purpose and allowing

them to find how they can contribute can help people, particularly those

underrepresented in the workplace, to feel more included—and help your company’s

bottom line.8

Leaders set the tone of corporate culture

Leaders have an opportunity, and an obligation, to consciously shape their businesses

and build on what works by rising above learned and habitual responses that no longer

suit the current state of play.

Alongside training and branding, there is a lot leaders can do to set the tone of an

organization. The first thing is to raise their own awareness. Greater awareness leads

to progress in other key areas, including:

Analysis and diagnostics: Commit resources to collecting data about why people

stay or leave, matching qualitative and quantitative information.

Training programs: Attend and endorse culture change programs at the very top.

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Structural changes: Reimagine recruitment and retention strategies; performance

and compensation.

Environment and culture: These are set by leaders’ language and actions,

values, and vision.

It is through environment and culture that leaders make the biggest contribution to

whether the business successfully addresses its biases. They do this by both setting

the direction of the business, and also by "walking the talk."

The biggest challenge any person faces is the willingness to meet uncertainty with an

open mind. Uncertainty usually creates fear and encourages self-protecting beliefs. This

in turn leads us to find comfort in the familiar—surroundings, people, or mental habits.

We may even be prone to confirmation bias when under threat to give us a sense of

certainty.

Ironically, it is in uncertainty that most need to rise above these biases to make new

connections and to reach new understandings. The leader who can do this has really

mastered the role.

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CASE STUDY: Insurance business defeats bias from the top down

An insurance company wished to attack unconscious bias in the

organization. Its CEO recently sponsored a leadership program for all

leaders. Using various communications including #hashtags and a call to

action, the organization is starting to embed conversations addressing bias

into all team interactions, including the review process. In addition, the

company is setting up measurements and structures that support any

desired culture change.

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Where to start?

Once you are aware of some of the biases in your organization, you can do

something about them. It is one thing to be aware of stereotypes and biases,

but we also have to also take actions. In fact, some researchers argue that

raising awareness alone simply normalizes their bias and "lets people off the

hook9."

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Here are steps that you, your organization, and your leadership can make to

mitigate unconscious bias at work:

Individual Actions STEP 1: KNOW YOU’RE BIASED Raise awareness of your own and your organization’s biases. Organizations

that believe they are not biased often make worse decisions than those that

do.10 Be clear with everyone that raising awareness is only the start. By

raising awareness, you are asking for social permission to implement

systems, processes, and tools to eliminate the risk and lost value of the bias.

ACTION: Assess your own biases through objective tests and undertake

unconscious bias awareness training.

STEP 2: CONFIDENCE & CONFLICT TRAINING It is important to focus on the positive outcomes and how taking action will

support one’s own personal goals, rather than what might get in the way.

Increasing awareness of these dynamics can also help people focus on

strategies that have the best chance of succeeding. Ultimately however,

addressing it will take some degree of confidence and a willingness to step

into the unknown.

ACTION: Undertake practical confidence and conflict training and coaching.

STEP 3: APPRECIATE DIVERSITY Inclusivity implies that differences do exist and necessarily appreciates

diversity. Whilst teams may have alignment of purpose, goals, or a vision,

they may have differences in strategy or style in achieving these goals. This

can create friction, which can result in behavior that can undermine the

organization’s efforts to have everyone add value.

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ACTION: Acknowledge differences beyond the visible and protected

characteristics and appreciate that they are an essential part of a thriving

team. Seek to identify the positive aspects of behaviors you don’t understand

or even dislike.

Organizational Steps STEP 1: GET THE RIGHT DATA Collect organizational data that can drive accurate analysis of the patterns of

exclusion and inclusion. Businesses that say they will be more conscious of

their biases without measuring them tend to be more biased in their behavior

at work.

ACTION: Consult your HR team for the data it collects on performance

trends, as well as hiring and exit data that includes quantitative and

qualitative measures. Use a network analysis diagnostic to look at where

people do and do not communicate or share information.

STEP 2: CREATE CHECKLISTS Make sure you have a structure or checklist in all departments against which

you can check your outcomes. For example, Google created a checklist of

assumptions about its target users to help its design business overcome the

challenge of bias11. Not only does this help it bring up unconscious biases, it

helps them stay customer-centric and avoid reputational disasters.

ACTION: Create product/service checklists in each department in your

business.

STEP 3. KNOW YOUR ENVIRONMENT Take a step back and objectively review your environment. Is there equality

of space? What are the cues of acceptability? Are your meeting rooms

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named after men or white people? Are social activities varied? What is the

dress code?

ACTION: Walk the floor as a customer and review the symbolism—both

intended and unintended, that create the environment.

Actions for Leaders STEP 1: USE FEEDBACK Even with systems and processes we are susceptible to unconscious bias,

especially under time constraints. An open, honest, feedback culture enables

an organization to both raise issues and mitigate against unhelpful bias. It

also helps teams remove guilt, shame, or anxiety about their bias. A

feedback culture and feedback mechanics within decision-making scenarios

give people the chance to check selectivity and bias.

ACTION: Take an anonymous 360-degree report, requesting assessments of

your behavior.

STEP 2: USE YOUR LANGUAGE TO POSITIVELY PRIME YOUR ORGANIZATION Shift the recency bias effect by presenting an equality prime. "We wouldn’t

expect to see any gender differences in these tests/applications for

promotions." This often sends subtle coded messages that get decoded by

the receiver and create self-fulfilling placebo prophecies.

ACTION: Assess your language and notice the primes that you maybe

unconsciously creating.

STEP 3: LEAN IN COLLECTIVELY Don’t just lean in. Make sure that the strategy is scalable rather than leaving

it to ‘minorities’ to assert themselves.

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ACTION: If you see others being excluded, say something to bring them in or

raise awareness.

A �nal word The cumulative effect of bias—multiplied over time and generations—reminds me of the

grain of rice on a chessboard story where the number of grains increases from square

to square by doubling the previous square… By the time you get to the 64th square

there are millions of grains of rice. Whereabouts are you in your leadership board?

Edward Nelson and Steve Ellis are directors of leadership and learning at TeleTech

Consulting; [email protected], [email protected].

1 Daniel Kahneman, Thinking Fast and Slow, Penguin, 2012

2 Robert Cialdini, Influence: The Psychology of Persuasion, Harper, 2007

3 Steve Martin, "Influence: Managing Up, Across, & Down" Harvard Business Review Webinar April 2015

4 Bill Collins in http://www.cognitivebiasparade.com/2014/06/rhyme-as-reason-effect.html

5 Brian Welle, Director, People Analytics Google: https://www.youtube.com/watch?v=nLjFTHTgEVU

6 Daniel Kahneman, Thinking Fast and Slow, Penguin 2012

7 Dan Pink, Drive: The Surprising Truth About What Motivates Us, 2011

8 Vivian Hunt, Dennis Layton, Sara Prince,"Diversity Matters," McKinsey & Co, 19 November 2014

9 Duguid, Michelle M. & Thomas-Hunt, Melissa C."Condoning stereotyping? How awareness of stereotyping

prevalence impacts expression of stereotypes." Journal of Applied Psychology, Vol 100(2), Mar 2015, 343-

359. http://dx.doi.org/10.1037/a0037908

10 Mike Rognlien, Learning & Development Leader, Facebook: https://managingbias.fb.com/

11 "Getting to work on diversity at Google" https://googleblog.blogspot.co.uk/2014/05/getting-to-work-on-

diversity-at-google.html

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OSHA’s Wall of Shame: Agency Targets ‘Severe Violators’ Dec 19, 2016 | Regulation & Legislation

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OSHA and its state counterparts rely on fewer than 1,850 inspectors to monitor about 8 million

workplaces in the U.S.

by Paul Feldman and Stuart Silverstein, FairWarning

Soon after beginning their cleanup of a fume-filled tanker car at an Omaha, Neb., rail maintenance yard, Adrian LaPour and Dallas Foulk were dead.

An explosion that April 2015 afternoon trapped LaPour in a flash fire inside the car and hurled Foulk out the top to his death.

Six months later their employer, Nebraska Railcar Cleaning Services, was hammered by the U.S. Occupational Safety and Health Administration with seven citations for “egregious, willful” workplace violations, along with 26 other charges. The agency proposed fines of nearly $1 million. To top it off, OSHA announced that it was tossing the company into its Severe Violator Enforcement Program, or SVEP.

Six years into the severe violator program – arguably the broadest workplace safety initiative launched during the Obama administration – more than 500 businesses are on its list of bad actors. They include corporate giants such as DuPont and International Paper, each with tens of thousands of employees, as well as more than 300 construction firms, many with fewer than a dozen workers.

Just last week an auto parts maker in Alabama, Ajiin USA, was labeled a severe violator and hit with proposed fines of $2.5 million related to the June death of a 20- year old worker. Regina Allen Elsea, who was two weeks away from getting married, was crushed when a robotic machine she was doing maintenance on abruptly restarted. Ajiin, which supplies automakers Kia and Hyundai, said in a statement it will continue to cooperate with OSHA and that “safety has always been our guiding principle.”

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Focus on Worst Offenders

Along with subjecting employers to a form of public shaming, the severe violator program helps OSHA work out settlements intended to force companies to clean up their job safety practices. The program, which replaced a George W. Bush administration initiative that an inspector general’s audit derided as ineffectual, also can result in extra inspections, sometimes at multiple sites, and force companies to hire new safety personnel. The effort, though, faces an uncertain future under the Trump administration.

The severe violator list represents an attempt to deal with an overwhelming regulatory challenge. With OSHA and its state counterparts relying on fewer than 1,850 inspectors to monitor about 8 million workplaces, it would take federal officials 145 years to inspect each job site once, union researchers estimate. The aim of the list is to let OSHA’s limited staff zero in on some of the worst offenders.

David Michaels, the assistant secretary of labor in charge of OSHA, said in an interview with FairWarning that “even if we doubled our inspectors, we would still be able to only get to a small portion of employers. And so we need tools like SVEP, which extend our capabilities and encourage more employers to do the right thing even without inspections.”

But the targeted nature of the program creates a Catch-22. The death of a worker is clearly the worst thing that can happen at a job site. Yet with about 4,800 workplace fatalities a year nationally, putting every company with a death on the severe violator list would overwhelm OSHA and defeat the goal of tougher enforcement for a subset of the worst offenders. For that reason, the death of a worker will put a company on the list only if the circumstances are particularly flagrant or reflect a pattern of reckless conduct. In 2015 only one out of every roughly 200 employers with an on-the-job fatality landed on the list.

At the same time, it’s not certain that the program has effectively deterred recalcitrant employers, as OSHA lacks any comprehensive assessment of its performance. For evidence of the impact, OSHA officials point to settlements they have reached with

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companies on the list. “There hasn’t been a really good objective evaluation,” said MIT Professor Thomas A. Kochan, co-director of MIT’s Institute for Work and Employment Research.

One critic, John Newquist, a former OSHA official in Chicago, said his sense is that among employers, “There’s no fear of OSHA at all.”

Michaels, who will leave the agency by the Jan. 20 presidential inauguration, expressed hope that the Trump administration won’t dismantle the severe violator effort or other enforcement initiatives. He said tough enforcement protects responsible employers because it “levels the playing field” between them and competitors who skimp on safety. Still, the anti-regulation views of Trump cabinet picks including Andrew Puzder, the president-elect’s choice for labor secretary, are raising expectations of cutbacks in workplace enforcement.

Making the List

Nebraska Railcar –- currently the target, several sources say, of a Justice Department criminal investigation of last year’s explosion –- highlights how long it can take a wayward company to be put into the severe violator program. Jacob Mack, who worked for the company in 2013, says he told OSHA about brutal conditions long before the deadly blast. “Not a day goes by I don’t remember the hell there,” Mack said.

The company wasn’t listed until after the explosion even though it, as well as other businesses controlled by Nebraska Railcar’s majority owner, Steven Braithwaite, had repeatedly been cited by OSHA dating back to 2005. That includes a 2013 citation involving a fire risk from oil storage tanks. Nebraska Railcar stayed off the list, though, partly because its prior violations didn’t involve hazards the agency deemed high- priority, such as falls, amputations, cave-ins and exposure to toxic chemicals.

(Nebraska Railcar is contesting its current OSHA citations, as are other companies cited in this story that haven’t reached a settlement with the agency. Nebraska Railcar and most of the other companies have not responded to requests for comment.)

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Case Farms, a leading poultry processor with plants in Ohio and North Carolina, finally landed on the list in 2015 after being cited for more than 350 violations over a 25-year period, according to OSHA. Case, which processes nearly 3 million chickens a week for fast food chains and supermarkets, last year was fined $861,500 for 55 violations, including amputation and fall hazards, at its Winesburg, Ohio, plant.

Sometimes disaster has struck even after companies were put in the program. One such case, in October, spurred a public outcry in Boston. Two laborers working for Atlantic Drain Service, died after being trapped in a trench that was inundated by water, dirt and debris after a pipe burst. Atlantic Drain had been on the severe violator list since 2012.

The October deaths “were entirely preventable,” The Boston Globe wrote in an editorial, “had city and state officials taken minimal steps to investigate the construction company before issuing permits.”

Whatever the shortcomings of the severe violator program, labor advocates say, the wide range of companies it snares -– and the number and gravity of their violations -– underscore its importance and the need to protect workers from callous bosses. OSHA’s other options are limited. The agency lacks the authority to shut down dangerous workplaces and its fines generally remain modest despite an increase that took effect in August.

“OSHA is one-eighth the size of the EPA, it has the lowest penalties of almost any government agency – but even though it is small, it is critical that enforcement be maintained,” said Deborah Berkowitz, the OSHA chief of staff from 2009 to 2013. The severe violator list, she conceded, is “not an end-all tool,” but an important tool.

An example OSHA officials point to is Ashley Furniture, the nation’s largest retailer of home furnishings. It was listed last year after being cited for 38 violations, 12 of them willful, and assessed $1.76 million in fines. Inspections showed more than 1,000 work-related injuries in less than four years at its plant in Arcadia, Wisconsin.

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Over 100 of the injuries took place on similar woodworking machines, including a July 2014 incident in which a worker lost three fingers. In June, the privately held firm settled the case, agreeing to pay penalties of $1.75 million and to adopt safety measures in Arcadia and at three other plants in Wisconsin and Mississippi.

Unfair Branding?

Some corporate defense lawyers say being labeled a “severe violator” is such a black eye that it strongly motivates companies to avoid trouble with OSHA. However, they criticize the program for lacking due process, because companies are labeled severe violators even as they appeal citations.

“You are dumped into SVEP essentially the day that the citations are issued and a citation is nothing more than an allegation,” said Eric J. Conn, a Washington, D.C.- based attorney who specializes in OSHA defense cases. “Having the federal agency that is responsible for safety and health branding that employer as a bad actor … absolutely has significant consequences to the employer’s business.”

In the meantime, corporate lawyers say, competitors or critics can take advantage of the situation. If residents near a listed site “don’t like your company to begin with, this is more ammunition they can use to go to a zoning board to block permits for expansion,” said Adele Abrams, a Washington, D.C.-based attorney.

On-the-job deaths can keep companies in the program for years. DuPont was listed after four workers at its La Porte, Texas, chemical plant died of asphyxiation in 2014. The disaster occurred after a supply line released more than 20,000 pounds of deadly methyl mercaptan gas. The company, which manufactures pesticides at the Texas plant, was assessed $273,000 for eight OSHA violations. DuPont said it couldn’t comment because it is appealing its case.

AMF Bowling Centers, Inc. has been on the list since 2011, when a worker at its lanes in Addison, Texas, was fatally pulled into an automatic pin-setting machine while trying to clear a jam. OSHA had previously cited AMF in 2007 and 2008 for failing to

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provide proper machine guarding on pinsetters. The case was settled, with AMF agreeing to pay more than $90,000 in penalties.

Oil services giant Nabors Completion and Production Services Co. was listed following the death of welder Dustin Payne, a 28-year-old former Marine who served in Iraq and Afghanistan. He was killed in a 2014 explosion when vapors ignited inside a tank he was welding in North Dakota.

Houston-based Nabors, which boasts of operating the world’s largest land-based drilling rig fleet, was assessed $97,200 in fines and charged with a willful violation for not having thoroughly cleaned the tank of oil residue before sending Payne in.

“Dustin Payne and his fiancée should be discussing marriage and their future together. Instead, she is left stricken and trying to move forward without him,” Eric Brooks, OSHA’s area director in Bismarck, N.D., said in a news release.

International Paper Co. was added to the list last year after a 57-year-old mechanic was killed in a fire while replacing filter bags in machinery at its Ticonderoga, N.Y., plant. The bags contained combustible dust that ignited.

In assessing $211,000 in fines, OSHA said the company had failed to supply fire- resistant clothing or adequate training. The firm had previously been cited for failing to conduct annual inspections of ignitable equipment at company sites in Chicago and Newark, Ohio.

Eluding Follow-ups

Although big companies draw the most widespread attention, the employers most commonly labeled severe violators are small construction firms with high emphasis hazards related to falls or excavation cave-ins. Yet small construction firms often elude the follow-up inspections that are supposed to be a key feature of the program.

A FairWarning analysis of the current list of 523 severe violators found that 167 had not been re-inspected, and almost all were construction firms. In many cases, the

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firms had shut down their worksites or went out of business before inspectors could return.

Eric Frumin, safety and health director of the union coalition Change to Win, said given the way the industry operates, OSHA can be “powerless to find and vigorously confront the worst actors.”

A trench collapse last year in New York that put a construction firm on the list also led to criminal charges. The cave-in collapse in lower Manhattan buried Carlos Moncayo, 22, under tons of dirt. His employer, Sky Materials Corp. of Maspeth, was fined $140,000 and listed for willfully failing to provide cave-in protection.

Last month, Sky’s site foreman was convicted of criminally negligent homicide in the death of Moncayo, one of at least 18 New York City construction workers who died on the job in 2015. The project’s general contractor, Harco Construction LLC, was convicted of manslaughter and criminally negligent homicide in June.

Deadly incidents also have brought rail tank car cleaning companies into the program. At Nebraska Railcar, the disaster came soon after the workers returned from a lunch break and started digging out thick residue from an oil tanker. The lone survivor among the three employees working on the tanker, Joe Coschka, 36, said he was just outside the car, lowering buckets of the blacktop-like material into a 55-gallon drum.

Coschka said the odor from inside the tanker was powerful, and that an air monitor was beeping. Even so, he said he assumed a supervisor who have known better than him whether the air was a hazard. Coschka had started at Nebraska Railcar only a month earlier.

Soon Coschka heard a loud hiss, and then sparks started shooting out of the tanker. The next thing he remembers is dangling from the side of the car, still attached to his safety harness, with a fire raging inside. “And I knew Adrian was in there, and Dallas was looking pretty bad on the ground. I just knew I had to get out of there,” said Coschka. He managed to scramble to safety despite suffering back and shoulder injuries.

3/27/2021 OSHA’s Wall of Shame: Agency Targets ‘Severe Violators’ | Business Ethics

https://business-ethics.com/2016/12/19/0711-oshas-wall-of-shame-agency-targets-severe-violators/ 9/9

Coschka remains haunted by the disaster. Although he sometimes blames himself for not questioning the foreman who sent the workers into the tanker car, most of his anger is aimed at Braithwaite, the main owner of the business. He said he wishes the tougher OSHA actions had come sooner. Referring to the years of citations against Braithwaite’s companies, Coshka added: “It’s just sad because this guy dropped the ball so many times and he just keeps getting away with it.”

This story was reported by FairWarning, a nonprofit news organization based in Pasadena, Calif., that focuses on public health, safety and environmental issues.

3/27/2021 New Overtime Rules Suspended for Now - PWB

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December 16, 2016 By PWB

Many employers have been wrestling with plans to comply with new U.S. Department of Labor (DOL) overtime rules since last May. That’s when the rules were �nalized, with a December 1 compliance deadline. Those new rules included raising the minimum salary overtime exemption to $913 per week from $455. A little more than a week before the deadline for the rules was to take e�ect, a federal court has issued an injunction, at least temporarily blocking implementation of the changes.

In its decision, the court stated it believes the DOL exceeded its authority in promulgating the rule. In addition, the court said the DOL failed to follow Congress’s intent, which was to reexamine the duties test of the overtime rules, and not to focus solely on the salary level, as the �nal rules do.

The DOL’s initial response was to state that it “strongly disagrees” with the ruling, and is “currently considering all of our legal options.” A couple of short-term legal scenarios remain possible: The U.S. District Court for the Eastern District of Texas, which issued the ruling, could drop its temporary injunction.

Alternatively, the ruling could be kicked up to the local U.S. Court of Appeals, which could overrule or uphold the injunction. But the chances of the appeals court rendering a decision on the issue before December 1 are slim.

What Lies Ahead?

In the longer term, the outlook is also unclear. It seems unlikely that the Labor Department under the Trump Administration would �ght the ruling, though other parties might. Initial analysis of the district court’s decision by Judge Amos L. Mazzant suggests that holes could

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be poked into the logic that led to his conclusion. At issue is the fact that the National Labor Relations Act, which laid the groundwork for overtime pay, failed to address the need to periodically adjust the salary threshold. However, a provision for adjusting the threshold was incorporated into regulations way back in 1940.

Also, while Judge Mazzant took exception to the idea of periodic salary threshold adjustments in the context of exempt status, he didn’t declare that it was invalid with regard to all DOL rules.

In any case, employers have several issues to deal with immediately. Those issues vary according to what actions they’ve already taken. Employers that were waiting until December 1 to roll out their plans are in a better position simply to hold tight and act as if the regulations were never issued.

Disruption Issue

The bene�ts of a wait-and-see approach are that there’s no disruption to the status quo and, in most cases, there will be no spike in payroll costs. However, that approach may also bring risks, including having to scramble to make adjustments if the regulations ultimately are upheld. That scrambling might involve paying extra wages due to a�ected employees retroactive to December 1.

Another hazard is that employees who have kept abreast of the issue (independently of any statements made by their employers) who were expecting raises or eligibility for overtime pay could be angered that this bene�t was snatched away from them.

Employers faced with this dilemma will need to weigh their appetite for regulatory risk, the level of �nancial pain that compliance with the overtime regulations would in�ict, and the employee relations considerations.

Some employers have already made their implementation strategy clear to employees. For employers that have announced plans to reclassify some employees from exempt to nonexempt, options include:

Giving those employees the choice of whether to become hourly, or remain in salaried status, while cautioning them that they might need to be moved to hourly status in the future, depending on the outcome of the legal battle,

Move forward with their conversion to hourly status to avoid possible future disruption if the regulations are upheld, or

Drop the plan to switch them to hourly status.

Morale Considerations

If salaried employees had been promised raises to bring them up to the minimum salary threshold (in lieu of moving them to hourly status), dropping plans for those raises could give rise to problems, such as damaged employee morale. Legal issues could also arise, especially if the promised raises have already been granted. For example, employers could run afoul of notice requirements under state or local laws, and possibly violate common law doctrines governing implied contracts.

A compromise approach with respect to planned salary increases could be to phase in the increases instead of raising them immediately to the regulations’ threshold level.

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If employees have already been moved to hourly wage status to comply with the regulations, before switching them back to salaried status, take a fresh look at the “job duties” test for exempt status. This test has always been in place and was not a�ected by the federal court’s temporary injunction. Businesses could �nd themselves in trouble regardless of the outcome of this legal battle if salaried employees have been misclassi�ed for reasons other than failing to meet the minimum wage threshold.

How the issue will ultimately shake out is uncertain, at best. But observers in Washington, D.C., point out that although many members of Congress opposed the regulations as written, they agreed in principle that some increase in the overtime salary threshold was in order. That is, they didn’t reject the DOL’s legal authority to adjust the threshold, as it has done multiple times since the early days of the underlying statute.

Whatever actions, or non-actions employers take with regard to the rule, it’s essential to communicate as clearly as possible with employees about the issue. One basic message that would be reasonable would be for employers to explain that they are waiting for more clarity on the legal front before making any big decisions.

Employment attorneys are monitoring the issue carefully, and are an essential resource to take advantage of before taking any irreversible action.

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3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 1/11

THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! Published on June 30, 2018

Dr Warren Shepell

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 2/11

Dr. Warren Shepell 88 articles  Follow

Many employees feel disrespected in their workplace. Many employees feel they

are swimming in a toxic culture surrounded by insensitive managers where there is

frequent bullying and harassment. Senior and middle management verey often turn

away from it and pretend they do not see even see it. The employee making the

call is deemed the culprit and the executive the victim. Why? Mostly because many

times the manager/executive doing the bullying and harassment is a valued

member of the management team with their money-making talent, so senior

management and oft times, the president, become complicit in the disrespect of

employees, and want to hang onto these executives - almost at any price.

The employees that find themselves in these difficult, stressful, and humiliating

situations need their jobs, need the income the jobs are generating, and are

frequently in trying personal, home, and family obligations. Although to the casual

observer it is easy to say "they should quit and move on"; it is not easy for

employees with disrespectful and insensitive bosses to quit and move on.

Limited and Part-time Consultant to Companies on HR issues.

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 3/11

Furthermore and unfortunately, yet many ask "what did you do that made you have

to leave?" as if the employee was at fault.

As Christine Porath, the writer reflecting on the painful workplace incidents of

bullying and harassment points out, it is like second-hand smoke - working in a

group where incivility is present affects all employees' mental health, and not just

the employee who is the victim.

We are living next door to a country where the leader of the country name calls,

asks for loyalty at any cost to keep a job, sometimes brow-beats others into

submission, and creates discord and division. It is difficult to remain immune and

that behaviour indirectly gives permission for management who chooses, to

behave badly. It should not, but it does.

Christine, through her writing and her research makes a strong case for workplace

incivility to stop and she points out that "even if employees who experience or

witness incivility want to perform well, they can't.

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 4/11

Incivility makes your employees want to scream, and many do.Therefore, make

civility part of your mission, recognize it, pay attention when incivility occurs, and

ask all managers and executives to show civility in their interactions with their and,

in effect, your employees, build it into your performance appraisals, and if they

continue to do otherwise weed them out. Better still, weed them out before they

even join your organization. Implement an effective hotline for all employees to use

to report incivility that really works without recrimination for the employees that

use it. This is your opportunity to make a difference, a big difference, for your

employees. Do it!

This is the astute article on incivility, written by Christine Porath and published by

Quartz on September 15, 2017:

More than ever before, people are feeling

disrespected at work. Employees, like some at Uber,

feel they’re working in a toxic culture with insensitive managers.

Others complain about being treated disrespectfully

based on gender, race, or religion. Some employees

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 5/11

receive rude, stinging emails like those emails from The

Walking Dead’s Frank Darabont.

What are the costs of employees feeling

disrespected? Over the past 20 years, I have

researched this question. I’ve polled tens of

thousands of workers worldwide about how they’re

treated at work. Nearly half of those surveyed in

1998 reported they were treated rudely at least once

a month, which rose to 55% in 2011 and 62% in 2016.

Though the toll is sometimes hidden, the costs of

incivility are tremendous.

Of the nearly 800 managers and employees across

17 industries Christine Pearson of the Thunderbird

School of Global Management and I polled, those

who didn’t feel respected performed worse. Forty-seven percent of

those who were treated poorly intentionally

decreased the time spent at work, and 38% said they

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 6/11

deliberately decreased the quality of their work.

Sixty-six percent reported their performance

declined and 78% said their commitment to the

organization had declined.

Many of these—and other—costs go undetected.

Stress stemming from incivility can silently kill

productivity—and people. Those who unleash on

others, belittle subordinates or undermine

colleagues may leave a wake and create ripple

effects. Eighty percent lost work time worrying about

an uncivil incident, and 63% lost work time in their

effort to avoid the offender. Incivility can deplete

immune systems, causing cardiovascular disease,

cancer, diabetes, and ulcers. Research also shows that

working in a group where incivility is present affects

people’s mental health, even after accounting for

general stress and the incivility an individual

personally experienced. You don’t have to be the

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 7/11

targeted population, or the employee who gets

ripped publicly to be negatively affected. You may

get pulled off track thinking about the incident, how

you should respond, or whether you’re in the line of

fire.

Whether people suffer from mental or physical health

effects or not, many employees leave the

organization. In our survey, of those treated poorly

12% said they had left their job because of the uncivil

treatment. Yet those who quit in response to incivility

typically don’t tell their employers why.

Even if people who experience or witness incivility

want to perform well, they can’t. In my experiments with

Amir Erez we watched performance plummet after

incivility occurred. Just witnessing incivility caused outcomes to

decrease by nearly half. Witnesses’ of incivility weren’t nearly

as creative on brainstorming tasks.

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 8/11

Incivility kills helpfulness and collaboration. In

experiments, I’ve found that when employees are

exposed to rudeness, they are three times less likely

to help others and their willingness to share drops by

more than half.

Incivility’s toll on customer relationships can be

staggering. My research with Valerie Folkes and

Debbie MacInnis at the University of Southern

California shows that many consumers are less likely

to buy from a company they perceive as uncivil,

whether the rudeness is directed at them or other

employees. Witnessing one quick negative

interaction leads to generalizations about other

employees, the organization, and even the brand. In

the wake of employee complaints of incivility,

harassment, and a toxic environment at Uber, for

example, customers have shared that they’ve turned

to their competitors. An organization’s reputation for

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 9/11

how they treat employees strongly affects customer

support and loyalty.

Leaders set the tone. A study of cross-functional product

teamsrevealed that when leaders treated members of

their team well, and fairly, the team members were

more productive individually and as a team. They

also were more likely to go above and beyond their

job requirements. It all starts at the top. In my study

of over twenty thousand employees around the

world, those who felt respected by their leader reported 92% greater focus and

prioritization, 55% more engagement, 56% better health and well-

being, 1.72 times more trust and safety, and 89%

greater enjoyment and satisfaction with their jobs.

Those that feel respected by their leaders were also

1.1 times more likely to stay with their organizations

than those that didn’t.

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 10/11

If you want to craft more civil cultures, weed out toxic

people before they join your organization. Interview

for civility, using structured interviews with behavioral

questions. Check references thoroughly, but also go

beyond provided references, chasing down leads

and hunches.

Be explicit about your organization’s values. Make

civility a part of your mission statement, posting it

somewhere visible. Engage your team in a dialogue

about what your norms should be. Then make it clear

to your employees that they need to hold their

managers and colleagues accountable for living up

to your norms of civility.

One surefire way to signal how much you value

civility is to measure and reward it during

performance reviews. Find ways to publicly reinforce

civility through awards and recognition.

3/27/2021 (8) THE SILENT KILLER OF WORKPLACE HAPPINESS, PRODUCTIVITY, AND HEALTH IS A LACK OF BASIC CIVILITY! | LinkedIn

https://www.linkedin.com/pulse/silent-killer-workplace-happiness-productivity-health-shepell-ph-d-/ 11/11

Finally, leaders need to correct bad behavior swiftly.

Danny Meyer, owner of twenty-seven restaurants in

New York City, preaches civility and tolerates nothing

less. If bad behavior from an employee at any level

isn’t corrected quickly, they’re gone. Meyer is

convinced that customers can taste incivility. Even

exceptional chefs don’t last in Meyer’s restaurants if

they’re disrespectful to other employees.

Incivility is too costly to ignore. Focus on providing a

culture where people feel respected—it pays.

Kareem Hunt faces more than baseline six-game suspension Published: Dec 01, 2018 at 10:00 PM

Ian Rapoport NFL Network Insider

Recently released Kansas City Chiefs running back Kareem Hunt will learn his immediate fate on Monday at 4 p.m. ET when the waiver wire comes out. Hunt might not learn until the offseason when he'll be allowed to step on a field for an NFL team again. That wait is expected to end with a lengthy suspension. According to sources with direct knowledge of the situation, Hunt faces more than the baseline six-game suspension for violation of the NFL's personal conduct policy. The league also has been investigating an incident involving Hunt allegedly punching a man in the face at an Ohio resort in June. The NFL is believed to have found enough from that incident to add to Hunt's discipline. Since penalties for two incidents aren't likely to be served independently of each other -- and because the clock on a suspension doesn't begin when a player is on the Reserve/Commissioner Exempt List -- Hunt could sit out not only the rest of the 2018 season, but well into the 2019 season. One option Hunt is considering is serving a potential NFL suspension as soon as possible, sources say. Basically, he would admit wrongdoing and likely serve six or more games rather than remain on the Commissioner Exempt List. Of course, this depends on a team signing him to play, which is not a given.

This all played out Friday when TMZ published a surveillance video from a Cleveland hotel showing Hunt shoving and kicking a woman. The Chiefs released him after stating he lied to them by greatly minimizing the incident. He later apologized in a statement: "I deeply regret what I did. I hope to move on from this." The NFL, which never closed its investigation into Hunt, hopes to move quickly. It likely will make another attempt to reach the victims -- there were multiple attempts previously by email and phone to no avail -- and Hunt also will be interviewed. One complication could be if Cleveland Police Dept. begins investigating again; that could prolong the NFL's investigation and disciplinary action. While the video was made public Friday, the outcry was about more than just Hunt's actions. Neither the NFL, nor the Chiefs, had seen the video before it was released. A league source said the NFL asked the hotel for it twice and was told the hotel would only release it to law enforcement. There was a public records request in June that included the body cam footage and 911 calls, but not the tape. The league also asked Cleveland police for it and were told they didn't have it. According to sergeant and public information officer Jennifer Ciaccia of the Cleveland Police Department, she doesn't believe anyone with the department saw the video, either. Officers filed two police reports, but the video was not part of the investigation file. It was a misdemeanor case, she said, and detectives don't follow up as they do with felonies. In other words, detectives didn't go back for the video. They referred victims to the city prosecutor to file charges. The victims have not yet filed charges. The statute of limitations does allow victims to still file charges in the wake of the videos, but Monday is the earliest that can happen, Ciaccia said.

3/27/2021 The Top 10 Bizarre Workers’ Compensation Cases for 2015 - Recent Cases, News, Trends & Developments - Workers' Compensation - …

https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/recent-cases-news-trends-developments/posts/the-top-10-bizarre-workers-compe… 1/9

The Top 10 Bizarre Workers’ Compensation Cases for 2015

Last November, I had the pleasure of speaking at the 24th Annual National Workers’ Com-

pensation and Disability Conference in Las Vegas. My session was a spin-off of what has be-

come one of my most popular annual blog offerings—a presentation of truly bizarre workers’

compensation cases decided during the year. Several years ago, my annual list was featured

on National Public Radio’s Saturday morning show, “Wait, Wait, … Don’t Tell Me.”  As I men-

tioned in Las Vegas, my bizarre case blog is, in many respects, a reenactment of a tradition

that my mentor, Arthur Larson, and I shared prior to his death some years ago. Each January,

Arthur and I would meet in Arthur’s home on Learned Place, near Duke University’s campus

and review our respective lists of unusual or bizarre workers’ compensation cases reported

during the previous 12 months. Our respective lists would usually overlap a bit, but each of

enjoyed hearing the facts of a case that we’d missed. One thing we always kept in mind: while

a case might be bizarre in an academic sense, it was intensely real. It affected real lives and

real families. And so, to continue in the spirit of that January ritual, here follows my list (in no

particular order) of 10 (plus a bonus) bizarre workers’ compensation cases for 2015. I’d love

to hear from any of you if you know of others that should have been included in this year’s list.

Send them—along with questions or comments—to [email protected].

(Publisher’s Note: Citations link to Lexis Advance.)

CASE #1: Employee Terrorized in Employer’s “Active Shooter Drill”

Allegations by a nursing home employee that her employer secretly arranged an “active

shooter drill” in which an on-duty Carbondale, CO police of�cer posed as a “gunman,” that the

of�cer burst into the work area and held the plaintiff-employee hostage at gunpoint as she

3/27/2021 The Top 10 Bizarre Workers’ Compensation Cases for 2015 - Recent Cases, News, Trends & Developments - Workers' Compensation - …

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cried and begged for her life, and that only then did the of�cer tell her in a hushed tone that it

was a “drill,” were suf�cient to raise an issue of fact as to whether the incident was reasonably

incidental to the conditions of the employee’s work. Accordingly, a federal judge refused in

relevant part to grant the employer’s motion to dismiss the employee’s civil action against the

employer on exclusive remedy grounds. According to the complaint, the employer purposely

chose the plaintiff-employee to be the “victim” in the incident. The employer contended that

the incident was part of a safety program and that any injuries arose out of and in the course

of the employment. The employee countered that the drill and the circumstances related to it

were not part of her job duties or connected to her work-related functions and that there was

nothing about the nature of her employment that either allowed or required the employer’s

of�cials to intentionally terrorize and place employees like the plaintiff in fear for their lives.

The judge acknowledged that in Colorado an employee need not be engaged in the actual per-

formance of work at the time of injury in order for the course of employment requirement to

be satis�ed. Nevertheless, the judge said the injury had to arise out of a risk that was reason-

ably incidental to the conditions and circumstances of the particular employment. Such a de-

termination was factual and should be made by a jury, not the judge. See Meeker v. Life Care

Ctrs. of Am., Inc., 2015 U.S. Dist. LEXIS 58761(D. Co., May 5, 2015). See generally Larson’s

Workers’ Compensation Law, § 100.04.

CASE #2: California Worker at Illegal Marijuana Cultivation Business Awarded Bene�ts as

“Covered Residential Employee”

In a split decision, the California Workers’ Compensation Appeals Board held that a claimant

suffered a compensable injury in the form of T–4 paraplegia and bilateral lower extremity

paralysis when he was shot in the chest while working near the home of his purported em-

ployer, who operated several marijuana growing businesses, including one at the grower’s res-

idence. Claimant saw an intruder near the grower’s marijuana plants, informed his “employer”

of the intrusion, followed the employer back out into the area where the intruder had last

been seen, and was shot in the chest. The majority of the WCAB held that even if the em-

ployer was engaged in the marijuana growing business illegally, there was substantial evid-

ence that applicant’s primary job duties were incidental to the ownership and maintenance of

the employer’s premises. Accordingly, claimant fell within the de�nition of a covered residen-

tial employee under Calif. Labor Code § 3351(d). That the claimant took the “job” so that he

could learn the marijuana business and emulate the marijuana grower’s lifestyle—growing

marijuana during the summer and skiing during the winter—was not controlling, said the

WCAB. Nor did it matter that part of his “pay” was in the form of free marijuana. The majority

stressed that the claimant was paid $500 per week and given free room and board for clean-

ing, light construction and maintenance duties. Commissioner Lowe dissented, siding with the

3/27/2021 The Top 10 Bizarre Workers’ Compensation Cases for 2015 - Recent Cases, News, Trends & Developments - Workers' Compensation - …

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Uninsured Employers Bene�ts Trust Fund which, following the majority’s decision, was

saddled with the expense of treating the claimant’s severe medical issues. Commissioner

Lowe would �nd instead that the claimant was not a residential employee because he was em-

ployed to assist in an illegal marijuana growing business.  According to Lowe, even if the

grower had homeowners’ coverage, the policy would not have covered employees of

defendant’s marijuana business. See Arnold v. Pingrey, 2015 Cal. Wrk. Comp. P.D. LEXIS 487

(Aug. 24, 2015), writ of rev. den. Nov. 19. 2015. See generally Larson’s Workers’ Compensation

Law, §§ 66.05, 72.03.

CASE #3: Bringing Home the Bacon—Injuries Sustained in Collision With 400-lb. Wild Hog

Found Compensable

Substantial evidence supported the Commission’s �nding that injuries sustained by a Missis-

sippi casino employee when her car struck a 400-lb. wild hog arose out of and in the course of

her employment, held a Mississippi appellate court. The “collision” took place at 4:00 a.m.,

when the casino employee and her sister were returning home from an Alabama bingo parlor.

The employee, an off-property director of player development for the Mississippi casino, had

recently moved to Alabama and worked from her home. She contended that at the time of the

accident, she was returning from conducting market research of a competing gaming facility—

a duty within her job description. The employer admitted the employee had no �xed hours of

work and often worked long hours. It contended, however, that the employee was not really

carrying out a work task when the accident happened. They pointed to proof that the em-

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ployee was with her sister at the bingo parlor, it was 4 a.m. when they left the facility, and her

sister was driving when they wrecked. When coupled with the facts that the employee did not

submit an itinerary, travel vouchers, or a marketing report, and did not immediately seek

workers’ compensation bene�ts, the employer suggested the outing was personal, not busi-

ness related. The employee countered that she was new to the area and had asked her sister,

who had lived there for a long time, to drive, that she didn’t immediately �le a workers’ com-

pensation claim because she was unfamiliar with the process, and that she had not sought

earlier reimbursement since she thought she was to do that on a quarterly basis. The

employee’s boss admitted that the Alabama bingo halls were a “potential threat” to the

employer’s business because a large part of the Mississippi casino’s traf�c was from central

Alabama. The appellate court acknowledged there was a con�ict in the evidence, but indic-

ated it was for the Commission to resolve. It had done so, in favor of the employee. See

Choctaw Resort Development Enterprise v. Applequist, 2015 Miss. App. LEXIS 214 (Apr. 21,

2015). See generally Larson’s Workers’ Compensation Law, § 5.01.

CASE #4: Mother’s Injuries at Hands of Knife-Wielding Son Not Compensable

A divided Supreme Court of Pennsylvania held that the state’s Commonwealth Court erred in

�nding that a claimant met her burden of proving that she sustained a work-related injury in

the course and scope of her employment when she was brutally stabbed by her son while she

was sleeping in her bedroom. Claimant was paid an hourly wage under a state-funded pro-

gram that provided attendant care for her thirty-three year old son, who suffers from signi�c-

ant health issues related to his long-term drug use. The son, wielding a butcher knife, attacked

and stabbed his mother as she lay in her bed at approximately 1:30 a.m. one morning. There

was some evidence that the two had a disagreement a few hours earlier regarding the

mother’s food preparation; the son had never attacked her before. The majority of the Su-

preme Court, reversing a lower appellate court, said that the claimant had not shown her in-

juries were within the type of harm the Legislature intended to provide compensation for un-

der the Workers’ Compensation Act. The majority speci�cally agreed with the Common-

wealth Court’s dissent, which had stated that it “de�ed logic” to �nd this case to have involved

a work-related injury. See O’Rourke v. Workers’ Comp. Appeal Bd. (Gartland), 2015 Pa. LEXIS

2420 (Oct. 27, 2015). See generally Larson’s Workers’ Compensation Law, § 84.04.

CASE #5: Internet Search for Registered Sex Offenders Leads to Workplace Assault

A Nebraska appellate court af�rmed the denial of workers’ compensation bene�ts for an em-

ployee who sustained injuries to his nose, clavicle and shoulder when he was assaulted on the

employer’s premises by a co-worker wielding a brass hammer. Prior to the incident, the two

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had little contact. They had never exchanged angry words nor been involved in any physical

altercations. The attacking co-worker had, however, performed an Internet search and dis-

covered that the other employee was named on the list of registered sex offenders. The at-

tacking co-worker assaulted the other employee and called him a “chimo” (short for child mo-

lester). The injured employee sought workers’ compensation bene�ts, contending that in as

much as the only contact the two men had was at the workplace, the employee’s injuries arose

out of and in the course of the employment. Quoting Larson’s Workers’ Compensation Law, the

appellate court disagreed. Where the animosity between the two workers was imported from

domestic or private life, and not exacerbated by the employment, the assault did not arise

from the employment. See McDaniel v. Western Sugar Coop., 2015 Neb. App. LEXIS 121<

(July 14, 2015). See generally Larson’s Workers’ Compensation Law, § 8.02.

CASE #6: $20,000 in Medical Expenses Ordered Paid by Employer for Simple Muscle

Strain Due to Lack of Interpreter

An employer must pay almost $20,000 in medical expenses that resulted when a worker—a

U.S. citizen—but whose native language is Spanish and who could not read or write English,

could not communicate effectively with medical staff who in turn misunderstood his com-

plaints of chest pain as a cardiac event, rather than minor muscle strain. The worker com-

plained of chest pain after he picked up a turkey weighing some 80 pounds and lifted it onto a

tray. Fearing the worker might be suffering a heart attack, medical personnel performed EKG,

CPK, and other testing, and eventually transferred the worker to a major hospital for addi-

tional tests and medical work. There the worker underwent a cardiac catheterization that

showed he had normal coronary articles with normal LV function. After the expensive treat-

ment, the worker returned to work without missing any time and suffered no further complic-

ations. The employer refused, however, to pay the medical bills. The Commission ordered

them paid and the employer appealed. The court af�rmed in relevant part, noting that the em-

ployer was immediately aware of the worker’s injury and was not prejudiced. The court added

it was not unreasonable for emergency and medical personnel to have conducted tests to rule

out a heart attack since the consequences of that situation would have been serious. The

Commission’s decision requiring the employer to underwrite the cost was supported by sub-

stantial evidence. See Gonzales v. Butterball, L.L.C., 2015 Mo. App. LEXIS 139 (Feb. 11, 2015).

See generally Larson’s Workers’ Compensation Law, § 94.02.

CASE #7: Horseplay Injury During Lull in Workday Found Compensable

The Supreme Court of South Dakota awarded workers’ compensation bene�ts to a construc-

tion worker who sustained a severely broken leg when he tried to jump a trench while running

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at a construction site. The state’s Department of Labor and a circuit court had earlier denied

the claim, �nding that at the time of the accidental injury, the worker had been engaged in im-

permissible horseplay and, therefore, had deviated from the employment. The Supreme

Court held the Department and the lower court had failed to consider suf�ciently the fact

that the horseplay arose out of a lull in the workday. Quoting extensively from Larson’s Work-

ers’ Compensation Law, the Court indicated that when there are no duties to perform, there is

no work to abandon. The injury occurred on a hot day, when several workers had retreated to

an air-conditioned truck to cool off. The claimant wanted access to the cool air and tricked one

of the co-workers into giving up his spot inside the truck by telling him someone on the other

side of the work site needed to talk to him. Later, when the claimant saw the worker he had

tricked, the claimant started to run and the other worker began to chase him. As claimant

jumped a trench, he landed awkwardly and broke his leg. The Court stressed that under the

four-part Larson test, the injury arose out of and in the course of the employment. See Petrik v.

JJ Concrete, Inc., 2015 SD 39, 2015 S.D. LEXIS 75 (June 3, 2015). See generally Larson’s

Workers’ Compensation Law, § 23.01.

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CASE #8: Worker Injured Having “Kick Ass Time” May Not Sue Co-Worker

An Ohio restaurant employee may not pursue a negligence action against a co-worker for per-

sonal injuries sustained in a golf cart accident that occurred on an island resort where the wo-

men, along with other co-workers, attended their employer’s “Kitchen Managers University.”

The accident occurred as the plaintiff and others were riding in a golf cart driven by the de-

fendant employee. Heading toward a bar to continue their revelry—most, if not all in the

group had already consumed multiple drinks—the defendant apparently made a sudden

swerve, causing the cart to turn over, pinning the plaintiff’s leg underneath. The plaintiff

suffered a severe ankle break. The plaintiff sued the defendant, among others, claiming

defendant’s negligent actions caused injury. The trial court sustained the defendant’s motion

for summary judgment, holding that the plaintiff’s injuries arose out of and in the course of

the employment. The appellate court af�rmed. It noted that the employer had instructed the

workers to come to the island resort via a ferry and not to bring their personal vehicles since

golf carts were the preferred method of travel at the resort. It also observed that the em-

ployer had stocked the meeting facility with food and beverages (including alcoholic bever-

ages) and had provided a daily itinerary that ended with social time “downtown.” The court

held that the undisputed evidence established that the employer not only consented to or ac-

quiesced in the consumption of alcohol and the use of carts to provide transportation

between the resort and the bars—it encouraged such conduct. The itineraries supplied to at-

tendees announced “We can’t wait to see all of you and have a kick ass time in the Key West of

the North!!!!” See Sims v. Marren, 2015-Ohio–2232, 2015 Ohio App. LEXIS 2148 (June 5,

2015). See generally Larson’s Workers’ Compensation Law, § 22.04.

CASE #9: Secretary’s PTSD Claim Connected With Patient’s Suicide Established Since She

Was Not Mere Bystander

A secretary at a medical facility, who claimed she suffered from posttraumatic stress disorder

after she responded to the suicide of a patient, is entitled to workers’ compensation bene�ts,

held a New York court. Af�rming a decision of the state Board, the court held that psycholo-

gical injuries caused by witnessing the aftermath of a suicide could be compensable where the

claimant was an active participant in the tragedy, as opposed to a mere bystander. Evidence

showed that a patient leapt from a window at the facility where claimant worked and impaled

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himself on picnic tables outside claimant’s of�ce. She was one of the �rst workers to reach the

scene and, despite her lack of medical training, her supervisor directed her to retrieve an oxy-

gen tank for the patient. The secretary did so, but began to feel anxious and hyperventilate

and “lost it” altogether after she was ordered by facility of�cials not to speak to investigators

about her prior interactions with the patient. Substantial evidence supported the Board’s de-

termination that claimant was an active participant. See Demperio v. Onondaga County, 126

A.D.3d 1250, 6 N.Y.S.3d 690 (3rd Dept. 2015). See generally Larson’s Workers’ Compensa-

tion Law, § 56.04.

CASE #10: McDonald’s Manager Saves Bag of Fries, But Sustains Neck Injury

A Virginia appellate court af�rmed an award of workers’ compensation bene�ts to a fast food

manager, working at a McDonalds restaurant, who testi�ed that she felt a pop in her neck fol-

lowed by a burning pain when a small bag of French fries slipped from her hands and she im-

pulsively bent over quickly to catch the bag before it hit the �oor. The employer had denied

the claim, citing Plumb Rite Plumbing Service v. Barbour, 8 Va. App. 482, 382 S.E.2d 305

(1989), in which the court held that the simple act of bending over, absent any unusual or

awkward movement does not provide a suf�cient nexus to the employment to meet the

“arising out of” standard. The court stressed that in the instant case, however, the record re-

vealed more than mere bending. When the bag of fries slipped, the manager was required to

bend, jerk, and twist, and to do so quickly. The combination of these motions was done to ad-

vance employer’s business—timely serving the drive-thru customers without throwing away

the fallen food and preparing new food. The court acknowledged that people routinely bend

in their everyday activities, but here the combination of quickly bending, twisting, and jerking

as necessitated by the job-related circumstances was suf�cient to remove the actions from a

“risk of the neighborhood” to a natural incident of the work. See Gene Forbes Enters. v.

Cooper, 2015 Va. App. LEXIS 195 (June 9, 2015). See generally Larson’s Workers’ Compensa-

tion Law, § 3.03.

BONUS CASE #1: Employer Saddled With $21,000 Life Flight Bill for Employee’s Cut

Finger

An uninsured employer is required to pay $21,201 for Life Flight helicopter services in con-

nection with injuries sustained by a part-time irrigator at the employer’s farm. The employee

severely cut the tip of his left “pinky” �nger when his hand slipped into the chain of a motor.

Following the accident, the employee drove himself to the home of an off-duty police of�cer,

who then called 911. EMTs arrived and made a determination that perhaps the tip of the �n-

ger could be reattached. They, therefore, summoned Life Flight. Efforts to reattach the tip

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later were, however, unsuccessful. The employer contended that the Life Flight trip was a

needless expense and that it was not medically necessary. The high court disagreed. The high

court acknowledged that with the bene�t of hindsight, the decision to �y the employee to the

hospital might not have been made. Judging the issue with hindsight was not, however, the

appropriate standard. Given the circumstances, the high court said substantial and competent

evidence supported the Commission’s decision. See Chavez v. Stokes, 2015 Ida. LEXIS 175

(July 7, 2015). See generally Larson’s Workers’ Compensation Law, § 94.03.

BONUS CASE #2: Great Dane & Steep Trails Don’t Mix

In a case from California, a split WCAB panel rescinded the WCJ’s decision and held that the

applicant police of�cer did not sustain a compensable injury while hiking off-duty with his

large dog, a Great Dane. The dog pulled on the leash, causing the applicant to tumble 60 feet

down a hill, strike a boulder, shatter his right shoulder, break four ribs and puncture his lung.

The WCAB panel reasoned that compensation claims stemming from off-duty

recreational/athletic activities are barred under Labor Code § 3600(a)(9) if the employee’s

subjective belief that the activity during which the injury occurred was an expectancy of his

employment, was unreasonable. The applicant failed to prove that it was objectively reason-

able for him to believe that his individual �tness plan with this employer, the City of Vacaville,

covered hiking on a steep, unmaintained trail. See Simon v. City of Vacaville, 2015 Cal. Wrk.

Comp. P.D. LEXIS 289. See generally Larson’s Workers’ Compensation Law, § 22.02.

© Copyright 2016 LexisNexis. All rights reserved.

Mark your calendars: 25th Annual National Workers' Compensation and Disability

Conference, New Orleans Ernest N. Morial Convention Center, Nov. 30-Dec. 2, 2016

3/27/2021 If a Law Bars Asking Your Past Salary, Does It Help or Hurt? - The New York Times

https://www.nytimes.com/2018/02/16/business/economy/salary-history-laws.html 1/3

By Noam Scheiber

Feb. 16, 2018

Laws prohibiting employers from asking job candidates about their past compensation before making a salary offer are gaining momentum, aimed at reducing pay disparities and other obstacles confronting women and minorities.

The premise is simple: Judging an applicant’s worth from his or her previous salary can perpetuate pay gaps that arise from discrimination — or make it hard to get in the door at all.

Laws banning the practice have taken effect in New York City, Delaware and California in recent months. But the way some researchers see it, such laws are likely to be ineffective or even backfire. For example, employers who can’t ask about prior salary might assume that a female candidate would accept less money than a man, because women make less on average.

“It seems like the general social impulse is, ‘We don’t like employers using particular information, so we’ll tell them they can’t use it any more and assume that’s the end of the conversation,’” said Jennifer Doleac, an economist at the University of Virginia. “But if they cared enough about it to ask it to begin with, they probably care about it enough to try to guess.”

Ms. Doleac pointed to some recent studies, including one on which she was an author, showing that employers engaged in precisely this kind of guessing after several cities and states prohibited questions about candidates’ criminal records early in the application process. In her study, employers appeared to assume that young black and Hispanic men were more likely than members of other groups to have a criminal conviction and hired fewer of them once the policies were in place.

But the consequences may not be as clear when it comes to salary history. Some academic evidence suggests that the new laws may help women in certain circumstances.

To anticipate the effects of such laws, it’s worth exploring why employers ask about a candidate’s salary history in the first place. Here are a few reasons.

Employers may want to minimize payroll expenses.

If employers know what a candidate previously made, they effectively know how little that person will accept.

“On one level, I’d like to pay people the least amount of money to get the most amount of benefit from that person,” said Adam Klein of the employment law firm Outten & Golden, who has represented many workers in discrimination cases.

“Under that market-efficiency construct, why wouldn’t you pay women less?” Mr. Klein said, channeling a hypothetical employer who can ask lower-paid women about their salaries. “It makes business sense.”

Several economists said a ban on questions about salary history would probably prompt such employers to engage in what’s known as statistical discrimination — relying on group averages in place of information they were previously able to obtain about an individual.

(Alternatively, employers may try to get the information in slightly less direct ways, like asking candidates about their minimum salary expectation, Mr. Klein said.)

If a Law Bars Asking Your Past Salary, Does It Help or Hurt?

Christoph Hitz

3/27/2021 If a Law Bars Asking Your Past Salary, Does It Help or Hurt? - The New York Times

https://www.nytimes.com/2018/02/16/business/economy/salary-history-laws.html 2/3

In doing so, employers will be further enabled by another feature of the recent salary history laws: They typically allow job applicants to disclose their previous salary voluntarily. As a result, some employers may feel comfortable making lowball offers to women, because they assume applicants will speak up if they make significantly more than the employer’s offer. Those who don’t speak up will be deemed to have made less.

This could, in turn, leave women worse off than before, since they tend to be more reluctant to bargain than men, as a range of studieshave documented.

“By adding that hoop — putting them in a position where they have to negotiate more — I imagine it widening the gender gap,” Ms. Doleac said.

Employers may be trying to determine how to pay fairly.

By asking what the candidate currently makes and paying the same or slightly more, an employer may simply want to ensure that an offer is accepted and that the new hire is satisfied — but may be oblivious to the risk of perpetuating pay disparities.

“What we are seeing is the myth of the sneaky employer,” said Andrew Hoan, president of the Brooklyn Chamber of Commerce.

“In Brooklyn, a high percentage of all firms in the borough are 50-person firms or less,” Mr. Hoan added. “The C.E.O. is the person making the offer. Frankly, he or she has no time to go around and create comparable stats. All this stuff they’re doing now is simply streamlining the process.”

Where this is true, banning salary-history questions could help substantially, advocates say.

“In companies that are treating people the same, and not thinking about how their behavior might differentially harm people, this type of law raises awareness of it,” said Joelle Emerson, the founder and chief executive of Paradigm, a firm that advises employers on promoting diversity. “It forces companies to sit down and say: ‘O.K., why were we doing this before? How should we set compensation now that we don’t do it this way?’”

At Dime Community Bank, which employs about 400 people at 29 branches in the New York City area, the standard job application asked candidates for their salary history until shortly before the New York ban took effect in October.

Angela Blum-Finlay, the bank’s head of human resources, said that she had already begun de-emphasizing salary history in determining compensation beforehand, and that she was asking hiring managers to use competitive benchmarks for different positions instead.

Ms. Finlay said that it was counterproductive for employers to try to squeeze candidates on compensation, especially in a tight labor market.

“We are, at Dime, trying to be an employer of choice, a place people want to come,” she said. “If I lowball you coming in, I’m not going to make you feel valued.”

Christoph Hitz

3/27/2021 If a Law Bars Asking Your Past Salary, Does It Help or Hurt? - The New York Times

https://www.nytimes.com/2018/02/16/business/economy/salary-history-laws.html 3/3

Employers may be seeking to gauge productivity.

Standard economic theory holds that workers are paid in line with their productivity, so a higher salary should imply a better worker.

In effect, employers may also be using salary on the front end of the hiring process — to help determine whom they want to interview — rather than solely on the back end, when preparing an offer.

But restrictions on asking for salary information can play out very differently in those situations. When employers want to know how little money a worker will accept, and the law prevents them from asking, they may rely on cruder information, like stereotypes.

But when employers want to know how good a worker is, they have several alternatives to considering salary history, many of them more revealing. They can, for example, interview the candidate, read letters of recommendation, and talk to former employers and co-workers.

In a recent study, the economists John Horton of New York University and Moshe Barach of Georgetown University conducted an experiment on a prominent online freelancing platform and found that employers responded in precisely this way.

During a roughly two-week period in 2014, half the employers in the experiment were no longer able to view the wage history of prospective workers, as they had in the past, while the other half could continue to see workers’ wage history.

Compared with employers who had the wage information, those without it ended up interviewing and hiring workers who, on average, had made significantly less money in the past. When employers could no longer consult salary history, they expanded the pool of workers they considered and went to greater lengths to evaluate them.

“You’re widening the top of the hiring funnel,” Mr. Barach said. “It doesn’t allow you to as easily throw people away.”

He and Mr. Horton acknowledged that because this approach required spending more time collecting information, employers might not find it worthwhile when filling a low-skilled or entry-level job. In those cases, they might retreat to stereotypes involving gender or race, as other economists have suggested.

But “for some range of jobs,” Mr. Barach said, “more upfront costs could have benefits down the road. If you actually talk to someone, interview them, it will allow you to locate a high-quality candidate.”

Follow Noam Scheiber on Twitter: @noamscheiber.

A version of this article appears in print on , Section B, Page 1 of the New York edition with the headline: Bans on Asking About Past Pay Can Backfire

Christoph Hitz

3/27/2021 Schumpeter - When workers are owners | Business | The Economist

https://www.economist.com/business/2015/08/20/when-workers-are-owners 1/5

Schumpeter

When workers are owners

The received wisdom that employee ownership is a good thing comes with caveats

Aug 22nd 2015 editionBusiness

Aug 20th 2015

IT IS popular to lament the growing gap between capitalists and workers. In one respect, however, the gap is shrinking: the number of workers who own shares in the business that employs them has never been higher. America leads the way: 32m Americans own stock in their companies through pension and profit- sharing plans, and share-ownership and share-option schemes. The idea continues to gain momentum. Hillary Clinton’s recent speeches suggest that she may make it an important plank in her plans to reform capitalism. And worker-capitalists are also on the march in Europe and Asia.

Conservatives like employee ownership because it gives workers a stake in the capitalist system. Left- wingers like it because it gives them a piece of the capitalist pie. And middle-of-the-roaders like it because it helps to close a potentially dangerous gap between capital and labour. David Cameron, Britain’s Conservative prime minister, praises John Lewis, a retailer entirely owned by its staff. Bernie Sanders, America’s only socialist senator and now a candidate for the Democratic nomination (see Lexington), is a champion of employee share-ownership.

3/27/2021 Schumpeter - When workers are owners | Business | The Economist

https://www.economist.com/business/2015/08/20/when-workers-are-owners 2/5

The trend is also being driven by a long-term shift from “defined benefit” (DB) pension plans, in which employers guarantee the retirement income of their workers, to “defined contribution” (DC) schemes, in which workers and employers put money into an investment pot, with no guarantees of how much it will eventually pay out. Including current workers and pensioners there are more than 88m DC plans in existence. A 2013 survey by Aon Hewitt, a consulting firm, found that 14% of such plans’ assets were invested in the shares of the employer in question.

A number of studies have found that workers at firms where employees have a significant stake tend to be more productive and innovative, and to have less staff turnover. Employee ownership has its drawbacks, however. One is the risk that workers have too many eggs in one basket: if their employer goes bust they can lose their pensions as well as their jobs. Enron employees were encouraged to stuff their “401(k)” plans (the most popular type of pension scheme) with company stock. Just before the firm went bankrupt in 2001 the average employee held 62% of his or her 401(k) assets in Enron shares. Likewise when Global Crossing went bust a few months later, the collapse in its shares wiped out a large chunk of its workers’ pension savings. Despite various initiatives by Congress to stop firms touting their shares to employees, cases are still arising: some former workers at Radio Shack, a retailer that filed for bankruptcy in February, are taking the firm to court, arguing that it kept offering to make its pension contributions in the form of company shares, when it should have known they were going to lose value.

A second problem is entrenchment. Supporters of worker ownership argue that it helps companies take a more long-term perspective. Critics argue that it can entrench bad management and undermine a company’s long-term competitiveness: underperforming bosses are much more likely to be able to stay in place, and resist hostile takeovers, if some of the company’s shares are in friendly hands. In 1994 United Airlines handed many of its workers a 55% stake, and representation on the board, in return for pay cuts. But its performance remained poor, and it filed for bankruptcy in 2002.

3/27/2021 Schumpeter - When workers are owners | Business | The Economist

https://www.economist.com/business/2015/08/20/when-workers-are-owners 3/5

A third risk is entitlement. The strongest argument in favour of employee ownership is that workers will not only toil harder if they get a slice of the profits, but will make sure that their colleagues do so too. A new paper by Benjamin Dunford and others, presented at the Academy of Management’s annual meeting in Vancouver, argues that commitment can transmute into entitlement. The academics studied a sample of 409 employees at a commercial-property firm in the Midwest and found that those who invested a higher proportion of their 401(k) accounts in company stock expected better benefits—in the form of promotions and pay rises—than the rest, and took more discretionary leave. (However, the study did not consider whether, nevertheless, employee ownership boosted the firm’s overall performance.)

ESOP fables Arguments about employee ownership can easily become too sweeping: grand claims from supporters invite vigorous rebuttals by critics. A great deal depends on how schemes are structured, and the motives for introducing them. Another recent paper, by Han Kim and Paige Ouimet, of the University of Michigan and University of North Carolina respectively, considers the sizes of ESOPs and of the firms that offer them. They find that small ESOPs (which control a stake of less than 5% in the company in question) are far more likely to boost productivity than large ones, because firms that introduce large ESOPs are often troubled ones trying to conserve cash by substituting shares for pay, or seeking to fend off hostile takeovers by giving shares to friendly insiders. They also argue that ESOPs are much more likely to work in smaller firms than larger ones because employee-owners can more easily monitor each other and thereby boost overall productivity.

There is plenty to be said for employee ownership. It can sharpen workers’ motivation and go some way to healing a potentially dangerous divide between the working class and the boss class. But if politicians are serious about the idea, they need to think harder about how to make it work in practice. They should pay closer attention to how schemes are designed, and look for ways to tailor regulations and tax incentives so as to encourage well-designed schemes. They also need to deal with the problem of concentrating risk in a single company’s shares. Given that the average life expectancy of Fortune 500 companies has fallen from 75 years in the 1930s to perhaps just 15 years today, encouraging employees to invest their savings with the companies that employ them is a recipe for miserable retirements.

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3/27/2021 Schumpeter - When workers are owners | Business | The Economist

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3/27/2021 Schumpeter - When workers are owners | Business | The Economist

https://www.economist.com/business/2015/08/20/when-workers-are-owners 5/5

This article appeared in the Business section of the print edition under the headline "When workers are owners"

3/27/2021 How Can Hooters Hire Only Women

https://www.businessinsider.com/how-can-hooters-hire-only-women-2015-9 1/4

The strange loophole that lets Hooters hire only female servers

Jacob Shamsian  Sep 13, 2015, 10:00 AM

Provided by Hooters

If you've been to a Hooters lately, you've probably noticed something about the servers.

It's pretty obvious: They're all women. Hooters doesn't hire any men as servers.

3/27/2021 How Can Hooters Hire Only Women

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The practice flies in the face of conventional job-hiring: Based on the 14th Amendment and the Civil Rights Act of

1964, discriminatory hiring is supposed to be illegal, right? A man has the right to be a Hooters server if he wants to, so

the thinking goes.

That's just what a few men thought in 1997. They were turned down by Hooters for server jobs and filed two lawsuits

that were eventually combined into a class-action lawsuit in Chicago, the Chicago Tribune reported at the time.

Hooters settled the litigation for $3.75 million and agreed to open up some "gender-neutral" positions to men,

according to the Tribune. Hooters did not agree to let men work as servers, and it had a legitimate legal argument for

refusing to do so.

"Hooters argued BFOQ [bona fide occupational qualification] under essence of the business," David Sherwyn, a law

professor at Cornell University’s School of Hotel Administration, told Business Insider.

Title VII of the Civil Rights Act lets companies discriminate on the basis of "religion, sex, or national origin in those

instances where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the

normal operation of the particular business or enterprise."

Hooters is what has been called a "breastaurant," a dining establishment that often features scantily clad women to

cater to a male clientele. As such, the "Hooters Girl," the company argues, is an essential part of its business.

From its website:

We’re proud of who we are. Yes, we have a pretty face. And sex appeal is part of our thing, but it’s not the only thing

... There will always be those out there looking to take a shot at us, or have the government dictate what we can or

can’t do, but we’ll just take it in stride and continue our quest to provide a fun, enlightened atmosphere where you

can enjoy the finer things in life. And really, what is so offensive about an owl, anyway?

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"The Hooters Girl that customers think of when they go to Hooters is still alive and well," Brenda Feis, an attorney who

represented Hooters in the 1997 lawsuits, told the Chicago Tribune in 1997.

In a statement to Business Insider, Hooters confirmed its argument that its hiring of women-only servers complies

with BFOQ requirements:

Typically, gender based hiring is not permitted ... The law allows the discrimination when it is necessary for the

purpose of authenticity or genuineness as for an actor or fashion model. While we offer world famous wings and

burgers, the essence of our business is the Hooters Girl and the experience she provides to our customers. Hooters

Girls are entertainers. They audition for their roles and, once hired, they must maintain a glamorous appearance,

and sing, dance and engage the customers to provide a unique Hooters experience.

Hooters was sued again in 2009 over the same issue and settled again with its hiring practices intact.

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Not every company can successfully argue that it's okay to discriminate against men.

In 1981, a federal court found that Southwest Airline's policy of hiring only women flight attendants and ticket

agents violated the Civil Rights Act. The court also found the airline's practice of capping flight attendants' height at

5 feet 9 inches effectively discriminated against men.

Read the original article on INSIDER. Copyright 2015.

Follow INSIDER on Facebook.

Follow INSIDER on Twitter.

3/27/2021 Employee Rights When Working for Multinational Employers | U.S. Equal Employment Opportunity Commission

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Employee Rights When Working for Multinational Employers

This guidance document was issued upon approval of the Chair of the U.S.

Equal Employment Opportunity Commission.

OLC Control Number

EEOC-NVTA-2003-2

Concise Display Name

Employee Rights When Working for Multinational Employers

Issue Date

04-23-2003

General Topics

Threshold Issues

Summary

This document addresses common questions about how the EEO laws apply to U.S. workers on international assignments and to all employees working in the U.S. for multinational companies.

Citation

Title VII, EPA, ADEA, ADA, GINA, 29 CFR Part 1601, 29 CFR Part 1620, 29 CFR Part 1626

Document Applicant

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Employees, Applicants

Previous Revision

No

The contents of this document do not have the force and effect of law and

are not meant to bind the public in any way. This document is intended only

to provide clarity to the public regarding existing requirements under the law

or agency policies.

As the workplace grows more global and mobile, increased numbers of

employers have international operations, resulting in more international

assignments of their employees. The following provides general guidance

concerning employees' rights under the United States' equal employment

opportunity laws (U.S. EEO laws) when working for multinational employers.

Work in the United States and U.S. Territories All employeeswho work in the U.S. or its territories -- American Samoa, Guam,

the Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S.

Virgin Islands -- for covered employersare protected by EEO laws, regardless of

their citizenship or work authorization status. Employees who work in the U.S. or

its territories are protected whether they work for a U.S. or foreign employer.

Example: Kim is a Chinese citizen working in the Commonwealth of the Northern

Mariana Islands for a Chinese manufacturer of women's attire. Kim's manager

threatens Kim with losing her job if she does not comply with his sexual

demands. Kim is protected by U.S. EEO laws because she works in a U.S.

territory. The employer can be held liable for sexual harassment.

Working for Non-U.S. Employers in the U.S

The only exception to the rule that employees working in the U.S. are covered by

federal EEO laws occurs when the employer is not a U.S. employer and is

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subject to a treaty or other binding international agreementthat permits the

company to prefer its own nationals for certain positions.

Example: ABC Communications is an Egyptian Company doing business in the

U.S. Under a "friendship, commerce and navigation treaty" ("FCN") between the

U.S. and Egypt, Egyptian companies operating in the U.S. are authorized to hire

Egyptian citizens for executive positions. Thomas, a U.S. citizen, alleges that he

was subjected to national origin discrimination when he was denied a position as

Vice President of Legislative Affairs in favor of Menkure, who is an Egyptian

citizen. ABC Communications admits that it favored Menkure because he is an

Egyptian citizen and can successfully assert the FCN treaty as a defense.

However, if Menkure were not an Egyptian citizen but a citizen of the U.S. or a

third country, ABC would not have the treaty as a defense because the treaty

authorizes a preference only for Egyptian citizens.

Work Outside the United States Individuals who are not U.S. citizens are not protected by U.S. EEO laws when

employed outside the U.S. or its territories. Consult your embassy to determine

whether EEO laws for other countries exist and whether they apply to your

situation.

U.S. citizens who are employed outside the U.S. by a U.S. employer - or a

foreign company controlled by an U.S. employer - are protected by Title VII, the

ADEA, and the ADA.

Example: Isaac is an African-American U.S. citizen working in Africa for a U.S.

employer as a customer service manager. Isaac alleges race discrimination after

he was transferred to a less desirable and less public position. The new position

involved a loss of pay and lack of upward career mobility opportunities. The

employer admitted that it transferred Isaac because its predominantly white

customers did not want to deal directly with non-whites. Customer preference is

never a defense to violations of U.S. EEO law. The transfer violates Title VII.

Whether a Company is a U.S. Employer or Controlled By a U.S.

Employer

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An employer will be considered a U.S. employer if it is incorporated or based in

the United States or if it has sufficient connections with the United States. Several

factors help determine whether a company has sufficient connections with the

U.S., including the company's principal place of business and the nationality of its

dominant shareholders and management. Whether a foreign company is

controlled by a U.S. employer will depend on the interrelation of operations,

common management, centralized control of labor relations, and common

ownership or financial control of the two entities. For more information,

see https://www.eeoc.gov/laws/guidance/section-2-threshold-issues

Foreign Laws Defense

U.S. employers are not required to comply with the requirements of Title VII, the

ADEA, or the ADA if adherence to that requirement would violate a law of the

country where the workplace is located.

Example: Sarah is a U.S. citizen. She works as an assistant manager for an U.S.

employer located in a Middle Eastern Country. Sarah applies for the branch

manager position. Although Sarah is the most qualified person for the position,

the employer informs her that it cannot promote her because that country's laws

forbid women from supervising men. Sarah files a charge alleging sex

discrimination. The employer would have a "Foreign Laws" defense for its actions

if the law does contain that prohibition.

An American employer cannot transfer an employee to another country in order

to disadvantage the employee because of race, color, sex, religion, national

origin, age, or disability. For example, an employer may not transfer an older

worker to a country with a mandatory retirement age for the purpose of forcing

the employee's retirement.

What U.S. EEO Laws Cover The federal EEO laws enforced by the EEOC are Title VII of the Civil Rights

Act of 1964(Title VII), the Age Discrimination in Employment Act(ADEA),

the Americans with Disabilities Act(ADA), and the Equal Pay Act(EPA). These

laws prohibit covered employers from discriminating on the bases of race, color,

sex, national origin, religion, age, and disability. Examples of conduct prohibited

include:

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Discriminatory Employment Decisions

Title VII, the ADEA, and the ADA prohibit discrimination in all aspects of the

employment relationship, including recruitment, hiring, assignment,

transfer, firing, layoffs, and other conditions or privileges of employment.

Discrimination in Compensationand Benefits

Title VII, the ADEA, and the ADA prohibit discrimination in compensation

based on race, color, sex, national origin, religion, age, and disability. In

addition, the EPA prohibits pay discrimination between men and women who

are performing substantially equal work. Although the EPA does not apply

outside the United States, such claims are covered by Title VII, which also

prohibits discrimination in compensation on the basis of sex.

Harassment

Title VII, the ADEA, and the ADA also prohibit offensive conduct that creates

a hostile work environment based on race, color, sex, national origin, religion,

age, and disability. Employers are required to take appropriate steps

to prevent and correct unlawful harassment and employees are

responsible for reporting harassment at an early stage to prevent its

escalation.

Retaliation

Title VII, the ADEA, the ADA, and the EPA prohibit employers from retaliating

against employees because they have opposed unlawful discrimination or

participated in a discrimination related proceeding.

Filing a Charge If you believe that you have been discriminated against, you may file a charge

with the EEOC. An individual alleging an EEO violation outside the U.S. should

file a charge with the district office closest to his or her employer's headquarters.

However, if you are unsure where to file, you may file a charge with any EEOC

office. For information on filing a charge of discrimination see How To File A

Charge of Employment Discrimination. Charges may be filed in person, or by

phone, mail, or facsimile.

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Example: Isaiah is a U.S. citizen working in Canada for a U.S. employer that is

headquartered in New York and has an office in Detroit, Michigan. Isaiah alleges

a failure to accommodate his religious beliefs. Although the charge will be

processed by the New York District Office because it is closest to his employer's

headquarters, Isaiah may file the charge in any convenient EEOC office.

Need More Information? For more detailed information, including a comprehensive discussion of these

and other issues, please see:

EEOC's website at www.eeoc.govfor detailed information on EEO laws. Go

to Laws, Regulations and Policy Guidancefor Compliance Manual Sections

and Enforcement Guidance.

EEOC's Compliance Manual Section on Threshold Issues.

EEOC Enforcement Guidance, Application of Title VII and the Americans

with Disabilities Act to Conduct Overseas and to Foreign Employers

Discriminating ...(1993).

EEOC Policy Guidance, Application of the Age Discrimination

Employment Act of 1967 Equal Pay Act of 1963 to American Firms

Overseas, Their Oversea....(1989)

EEOC Policy Guidance: Analysis of the sec. 4(f)(1) 'foreign laws' defense

of the Age Discrimination in Employment Act of 1967.

To be automatically connected to an EEOC field office, call: 1-800-669-4000;

TTY 1-800-669-6820

For more information on EEO law in other countries, see e.g.,:

Directorate General for Employment and Social Affairs for the European

Union, https://ec.europa.eu/social/home.jsp;

Canadian Human Rights Commission http://www.chrc-ccdp.ca;

UK Equal Opportunities Commission http://www.eoc.org.uk;

UK Disability Rights Commission, https://www.drc.org.uk/;

UK Commission on Racial

Equality, https://www.gov.uk/government/organisations/commission-

for-racial-equality; and

Hong Kong Equal Opportunity Commission http://www.eoc.org.hk

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Employers should also see:

The Equal Employment Opportunity Responsibilities of Multinational

Employers.

Training and Outreach The EEOC engages in widespread training and outreachto educate employees

and employers about their rights and responsibilities under the EEO statutes. For

information about upcoming programs, please contact an EEOC Outreach

Program Coordinator.

3/27/2021 Anne Arundel Medical Center Won't Hire Smokers In The Future | WBAL NewsRadio 1090/FM 101.5

https://www.wbal.com/article/108061/3/anne-arundel-medical-center-wont-hire-smokers-in-the-future 1/2

Thursday, June 19, 2014 WBAL Radio

Anne Arundel Medical Center Won't Hire Smokers

In The Future

      Print

Anne Arundel Medical Center has a new employment policy: it will no longer hire smokers.

The medical center says it's been smoke free since 2007 but wants to provide a safe and healthy environment, and promote the

health and well-being of its employees. The Maryland hospital's new employment policy goes into effect in July of next

year. Officials say the policy won't apply to smokers who are already working for the hospital.

Starting next month, the use of all tobacco products, including e-cigarettes, will be banned at all the hospital's facilities.

Read more from Anne Arundel Medical Center:

(Annapolis, Md. June 18, 2014)—Anne Arundel Medical Center (AAMC) is leading Maryland hospitals by reinforcing its commitment to wellness and the fight against tobacco usage with an expanded tobacco policy.

Effective July 1, 2014, the revised policy prohibits the use of all tobacco products, including e- cigarettes One year later, starting July 1, 2015, Anne Arundel Medical Center will take a leadership position as a major employer in Maryland and stop hiring nicotine users.

While Anne Arundel Medical Center has been “smoke-free” since 2007, the current policy has been primarily focused on the medical park campus has been limited to cigarette use. The expanded policy will apply to all AAMC facilities and tobacco-free zones will include sidewalks, parking lots and garages. There will be no areas designated for smoking or other tobacco use. The policy applies to all employees, physicians, patients, contract staff, vendors, volunteers, students, and visitors at all AAMC facilities.

“Going tobacco-free is a global public health goal. Smoking and tobacco use are the leading cause of preventable death worldwide,” says Stephen Cattaneo, MD, medical director of thoracic oncology in the DeCesaris Cancer Institute at AAMC. “We are not only dedicated to the preservation of health and prevention of disease, but we also want to provide a safe and healthy work environment and promote the health and well-being of our employees, visitors and patients,” he adds.

“As healthcare providers, we have a unique perspective on the issues surrounding chronic disease. We not only treat disease, but we are also role models for good health behaviors in our community. It is only right to practice what we preach,” adds John Martin, MD, AAMC’s medical director of vascular surgery.

The revised policy also means that starting July 1, 2015 the hospital will not hire individuals who use tobacco products. This policy does not apply to current employees who use tobacco. “By adopting this practice, we are joining many other prominent organizations, such as the Cleveland

3/27/2021 Anne Arundel Medical Center Won't Hire Smokers In The Future | WBAL NewsRadio 1090/FM 101.5

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Clinic, Geisinger Health System and the World Health Organization in becoming tobacco-free,” notes Dr. Cattaneo.

AAMC provides tobacco cessation resources to community members—including employees—who want help quitting. Free resources include classes and private one-on-one sessions with tobacco treatment specialists, as well as FDA-approved nicotine replacement therapies at free or reduced cost.