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6 Employees

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Learning Objectives

After reading this chapter, you should be able to:

• Understand integrity issues involved in the hiring process.

• Discuss the relationship between minimum wage and a living wage.

• Examine the problems of employee working conditions.

• Discuss various concerns regarding employee privacy.

• Examine the challenges of whistleblowing.

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Chapter Outline Introduction

6.1 Hiring

Criminal Background Checks

Credit Checks

Social Media Information and Job Application Screening

Interviews

6.2 Wages and Benefits

Market Wage

Minimum Wage and a Living Wage

6.3 Workplace Safety

OSHA

Safety Culture

6.4 Worker Privacy

Electronic Monitoring

Data Breach

Searches

Drug and Alcohol Testing

6.5 Whistleblowing

Types of Whistleblowing

Whistleblowing Guidelines

Whistleblowing Laws

Conclusion

Introduction In 1911, the Triangle Shirtwaist Factory caught fire, killing 146 workers, one of the deadli- est industrial disasters in U.S. history. The fire started in a container of fabric scraps, perhaps ignited by a lit cigarette, and quickly spread. As was common at the time, each day the owners locked the factory doors and stairwells to keep employees from stealing merchandise or taking unauthorized breaks. The workers were therefore trapped when the fire started, and the few who made it to the factory’s single rickety fire escape fell to their deaths as it collapsed beneath their weight. After the tragedy, New York’s state legislature authorized a commission to study the conditions of factories throughout the state, and, on the basis of their report, the state passed 60 laws pertaining to job safety, building cleanliness, and working hours. These reform

Introduction

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Section 6.1 Hiring

efforts were monumental for the time and influenced laws throughout the country, which are foundational to many of our current expectations of employee working conditions.

Job environments for employees today in the United States are infinitely better than in 1911, but there are still many areas of ethical concern. As businesses seek to maximize profit, there remains the risk of doing so at the expense of employee interests. They may not be as callous as locking all exit doors, which was a quick fix to the problem of employee theft in earlier times, but serious problems still arise. In this chapter, we explore some of the more notable areas of con- cern for employees. We will begin with the integrity of the hiring process, then move to questions of fair wages, workplace safety, worker privacy, and whistleblowing protection.

6.1 Hiring An employee’s experience with a company begins with the hiring process. As employers seek to find the best candidate for a position, the two most important moral and legal obligations they have are non-discrimination and due diligence. Chapter 5 covered employment discrimination— that is, the prejudicial treatment of people in hiring, promotion, and termination decisions—and laws that aim to combat this. Due diligence in hiring involves an employer thoroughly research- ing a job candidate before hiring him or her. Without exercising due diligence, an employer may inadvertently hire someone completely unsuited for the job or, worse, someone who is a danger- ous psychopath. Failure to exercise due diligence may result in negligent hiring—that is, when an employer knew or should have known about an employee’s untrustworthy character upon first hiring him or her. In addition, sometimes due diligence can run off track. In this section, we will consider the ethical and legal problems that can arise in the hiring process with regard to criminal background checks, credit checks, social media access, and interviews.

Criminal Background Checks

One step in the due diligence process is consideration of the candidate’s application and résumé. However, around half of all job applicants commit some form of résumé fraud. Figure 6.1 lists the most common lies found on résumés.

Because employers cannot trust the information provided by applicants, due diligence requires fact checking to see that the material contained on applications is accurate, and also that relevant information has not been left out. Many third-party companies specialize in verifying the contents of résumés and conducting background checks, and large corpora- tions often rely on these specialized companies. Criminal background checks are one type of pre-employment background check that companies can perform. In fact, such checks are conducted by around two-thirds of organizations in the United States. Companies conduct criminal background checks to both decrease the legal risks of negligent hiring and to better ensure a safe work environment for their employees.

What happens if a criminal background check reveals something about a potential employee that may risk his or her employment chances? Over half of all organizations permit potential employ- ees to explain the details of their criminal background checks before the organization makes a final hiring decision. However, workers with even minor criminal histories often face challenges

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10.

Stretching work dates.

Inflating past accomplishments and skills.

Enhancing job titles and responsibilities.

Exaggerating educational background.

Inventing periods of "self-employment" to cover up unemployment.

Omitting past employment.

Faking credentials.

Falsifying reasons for leaving prior employment.

Providing false references.

Misrepresenting a military record.

Section 6.1 Hiring

in hiring and promotion situations. This especially affects Black and Hispanic groups, who are convicted of crimes more often than Whites; this, in turn, raises issues of hiring discrimination.

For example, a class action lawsuit was filed against the Washington Metropolitan Area Tran- sit Authority for recent changes to its criminal background screening policies on the grounds that they discriminate against Black workers. According to the lawsuit, the new policy “goes far beyond any legitimate public safety concerns, to permanently stigmatize and bar from employment well-qualified individuals, a disproportionate number of whom are African- Americans.” The policy would disqualify workers for positions if they were convicted of two misdemeanor drug possession offenses in the past five years, or a crime of violence at any point in their past. The policy directly affects the hiring of new employees, but it also applies to current employees who could be fired for their past criminal histories, even if they revealed them at the time of their employment (Rogers, 2014).

Credit Checks Another form of background screening for some organizations is a credit check. In fact, almost half of all employers in the United States run credit checks on applicants and con- sider such checks another relevant source of information on a candidate’s credentials. Why do employers run credit checks? The following are just a few of the arguments employers put forth for why they believe such checks are helpful in making hiring decisions:

• Applicants who are financially responsible will also be responsible on the job. • Applicants who are struggling with debt will focus more on their financial problems

than their job responsibilities.

Figure 6.1: Top 10 résumé lies

Fact checking is part of the interview process. Employers should verify the accuracy of information presented in an applicant’s résumé.

Source: Adapted from Resume Fraud: The Top 10 Lies, by Christopher T. Marquet, CEO, Marquet International Ltd. and Lisa J.B. Peterson. Copyright (2005) Marquet International. Retrieved from http://www.marquetinternational.com/pdf/Resume%20Fraud-Top%20 Ten%20Lies.pdf

10.

Stretching work dates.

Inflating past accomplishments and skills.

Enhancing job titles and responsibilities.

Exaggerating educational background.

Inventing periods of "self-employment" to cover up unemployment.

Omitting past employment.

Faking credentials.

Falsifying reasons for leaving prior employment.

Providing false references.

Misrepresenting a military record.

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Section 6.1 Hiring

• Personal credit history is directly relevant for jobs in banking, accounting, and other financial areas.

At the same time, however, critics of applicant credit checking argue the following:

• Studies show that there is little or no connection between credit rating and success- ful job performance.

• Errors in credit reports are common and often difficult to correct. • It traps applicants into a cycle of unemployment. • It has a discriminatory impact on minorities. • It is unfair because a perfect credit score can be quickly ruined by family medical

issues, divorce, or job layoffs.

Because of these problems, several states have laws limiting the use of credit checks, and con- gressional bills have been proposed that would prohibit employers from requiring credit checks for job applicants and prevent employers from rejecting applicants based on poor credit rating. According to Senator Elizabeth Warren, author of one of the bills, “It makes no sense to make it harder for people to get jobs because of a system of credit reporting that has no correlation with job performance and that can be riddled with inaccuracies” (Warren, 2013).

Companies that do use credit reports for hiring must follow precise guidelines as laid out in the Fair Credit Reporting Act (FCRA), and businesses are sometimes brought to court for violating them. One such guideline is that, if the person is not hired because of bad credit, the company is obligated to send them the report. The transportation company Uber was sued by a former driver after it fired him and failed to notify him of problems with his credit report (Mohamed v. Uber, 2014). The craft store chain Michaels was sued for failing to inform applicants that their credit report might be obtained during the hiring process, as required by FCRA (Castro v. Michaels, 2015). Similar lawsuits were brought against Whole Foods, Dollar General, and Publix Super Markets for violating technical points in FCRA.

The moral of this story is that job seekers should check their credit reports for negative items and correct them when possible, and employers should stay current with credit reporting laws such as FCRA.

Social Media Information and Job Application Screening

Social media sites are playing a larger role in the hiring process; the most commonly con- sulted ones are Facebook, Twitter, and LinkedIn. Surveys show that 77% of employers use social media for recruiting candidates (Segal, 2014), and, while survey results vary, up to 90% use it for screening applicants (Macleod, 2011). A few years ago, there was a movement among employers to ask job candidates for their Facebook passwords to more closely scruti- nize their personalities. However, this practice has since been banned in about a dozen states, and Congress is considering nationwide laws on the issue (Noguchi, 2014).

A recent survey shows that around half of the companies who use social media reject appli- cants based on unflattering information that they uncover about them, such as the items listed in Figure 6.2. At the same time, however, 33% of these employers said that they were more likely to hire an applicant because of favorable impressions they get from social media sites about the candidate’s personality, qualifications, professional image, range of interests, communication skills, creativity, and awards (CareerBuilder, 2014).

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10%

20%

30%

40%

50%

Provocative or inappropriate photographs or information

Information about them drinking or using drugs

Bad-mouthed their previous company or fellow employee

Poor communication skills

Discriminatory comments related to race, gender, religion, etc.

Lied about qualifications

Shared confidential information from previous employers

Linked to criminal behavior

Screen name was unprofessional

Lied about an absence

Section 6.1 Hiring

When employers first began using social media to screen applicants, they were accused of snooping in the candidate’s private affairs and making decisions about them based on irrele- vant information. Now that this practice is commonplace, social media is considered a helpful hiring tool, and, as the survey results in Figure 6.2 show, employers are mainly looking for information that is relevant to job performance. Nevertheless, employers should be careful with social media because finding information about a candidate’s race, gender, age, or other protected characteristics puts the company at risk of discrimination litigation. The advice for job candidates is simple: Be careful about what you post.

Figure 6.2: Social media information that leads to rejected employment

applications

Social media can play a role in the job seeking and hiring processes. Candidates should use good judgment when posting information, and employers should be mindful to evaluate only information relevant to job performance.

Source: Adapted from CareerBuilder. (2014, June 26). Number of employers passing on applicants due to social media posts continues to rise, according to new CareerBuilder survey. Retrieved from www.careerbuilder.com/share/aboutus/pressreleasesdetail. aspx?sd=6/26/2014&siteid=cbpr&sc_cmp1=cb_pr829_&id=pr829&ed=12/31/2014

10%

20%

30%

40%

50%

Provocative or inappropriate photographs or information

Information about them drinking or using drugs

Bad-mouthed their previous company or fellow employee

Poor communication skills

Discriminatory comments related to race, gender, religion, etc.

Lied about qualifications

Shared confidential information from previous employers

Linked to criminal behavior

Screen name was unprofessional

Lied about an absence

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Section 6.1 Hiring

Interviews

The most visible part of the hiring process is the interview, and, like pre-employment screen- ing, it presents many opportunities for ethical and legal missteps. Two interview method- ologies are used in employment hiring: structured and unstructured. Structured interviews involve carefully written questions that are directly connected with measurable skills. In addition:

• All candidates are asked the same questions in the same order. • All candidates are evaluated using a common rating scale. • Interviewers are in agreement on acceptable answers.

Unstructured interviews, by contrast, are a more spontaneous interview environment in which questions are not prearranged. These types of interviews have the following features:

• Candidates may be asked different questions. • A standardized rating scale is not required. • Interviewers do not need to agree on acceptable answers.

Unstructured job interviews suffer from three key problems. First, unstructured interviews are not very effective in predicting job performance. One study (Lawyer Metrics, n.d.) sug- gested that they were only half as effective as structured interviews. Another study (Dana, Dawes, & Peterson, 2012) concluded that an employer could more accurately predict perfor- mance with no interview at all as compared to unstructured interviews.

What Would You Do?

Martin Gaskell, an astronomy professor at the University of Nebraska, applied for a job at the University of Kentucky to head its new observatory, which included public outreach and education. During the pre-employment screening process, members of the search committee found information on the Internet suggesting that Gaskell was religiously conservative, possibly creationist, and had posted notes on the compatibility between the Bible and modern astronomy. At his interview, he was asked to clarify his views on the relation between religion and science. When Gaskell did not get the job, he filed a religious discrimination suit against the university; he later settled out of court for $125,000.

1. If you were on the search committee, would you have used the Internet to research suspicions about conflicts between Gaskell’s religious beliefs and the job responsibilities? Why or why not?

2. Suppose that the case went to court and you were the judge. Would you have considered it discriminatory or appropriate to the job to investigate Gaskell’s religious views either online or in the interview? Explain your answer.

3. Suppose that Gaskell’s religious views were relevant to the job duties. If you were on the job search committee, would you have played it safe and not investigated those issues? Why or why not?

4. If you were on the job search committee, would you have privately discussed the religious issue among committee members and then rejected his application before even offering him an interview? Why or why not?

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Section 6.2 Wages and Benefits

A second problem is with interviewer bias. Biases easily and imperceptibly influence inter- viewers, and common ones are the applicant’s physical attractiveness, gender, race, and simi- larity to the interviewer. Interviewers are wrongly influenced by common stereotypes, first impressions, and comparisons with previously interviewed candidates (contrast effect). They allow one strong or weak point of the candidate to overshadow everything else (halo/horn effect). Studies regularly reveal an almost endless variety of possible negative biases, such as ethnic-sounding names, non-heterosexual orientation, motherhood, obesity, shortness, bald- ness, long hair, tattoos, body piercing, soft voice, and high-pitched laughter. Structured inter- views are more effective at suppressing these biases.

The third problem with unstructured interviews is that, with the smallest mistake in wording, employers risk violating employment discrimination laws and therefore becoming subject to discrimination lawsuits. The Internet abounds with lists of “illegal” interview questions. These include overt ones, such as “What religion do you practice?” and more subtle ones, such as “Do you belong to a club or social organization?” Many of these questions pry into informa- tion about protected classes—that is, specific groups that are protected from discrimination by law. Structured interviews are much less vulnerable to this hazard because they are care- fully crafted and interviewers stick to the script.

Despite these flaws, the majority of job interviews in the United States today are still unstruc- tured. While the methodology for structured interviews has been around for decades, organi- zations are reluctant to adopt that approach. This may be, as some have speculated, because of a false sense of confidence in the interviewer’s intuitive ability to find the right person for a job. Whatever the reason, the integrity of most interview processes today is questionable.

6.2 Wages and Benefits People typically do not seek employment for their personal amusement but rather do so to earn a paycheck. The higher the paycheck, the more it is worth their while to submit to the demands of an employer. But what determines reasonable compensation for an employee’s efforts? In this section, we will look at issues surrounding market wage, minimum wage, and a living wage.

Market Wage

The starting point for any discussion of establishing wage standards is the market wage, which is the lowest wage that an employer can offer to attract an employee. Imagine that a group of unskilled laborers are standing on a street corner where employers routinely show up in mini- vans to offer a day of work. One drives up and shouts out “$2 an hour!” No one gets in, so the employer drives on. Another one shows up and says “$10 an hour!” and the van is mobbed. A third shows up and says “$7 an hour” and about half of the remaining crowd shows an interest. In each case, the laborers are thinking about how badly they need the money and whether the offer is worth their effort. In this scenario, $7 an hour would be the market wage—the amount at which the employer could get the workers that he needed for the least amount of money.

However, just because you are willing to get into one of those vans does not necessar- ily mean that the wage is sufficient to meet your needs. There are three other wage considerations:

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Section 6.2 Wages and Benefits

• Subsistence wage: a wage that is sufficient to provide only the bare necessities of life. • Living wage: a wage that is sufficient to meet basic needs beyond mere subsistence. • Opulence wage: a wage that supports a luxury lifestyle beyond basic needs.

Thus, a market wage in and of itself will not guarantee you a subsistence wage, a living wage, or an opulence wage. Sometimes the market wage for a highly skilled job will in fact result in opulence, such as with physi- cians’ incomes. Even with unskilled work- ers, this is possible: In medieval times, the plague reduced the unskilled workforce to the point that labor costs temporarily sky- rocketed. But in normal situations, mar- ket wages are near a subsistence level for many unskilled jobs—and also for some skilled ones, as starving artists will testify.

At this stage in the discussion, the issue shifts from an economic one to an ethical and political one. Do we want to live in a society where a responsible and intelligent worker in an unskilled job gets only a subsistence income? For hundreds of years, advocates of minimum wage have answered “no” to this ques- tion and argued that governments or labor unions must step in to set higher wage standards. A minimum wage, then, is the lowest wage permitted by law or by a special agreement, such as with a labor union.

Minimum Wage and a Living Wage

In the United States and most countries around the world, the question is not whether there should be a minimum wage, but how high should it be on the scale between subsistence and opulence. The debate resurfaces every few years when governments consider minimum wage increases to keep pace with inflation. Lawmakers who seek to keep it unchanged commonly offer these economic and moral justifications:

• Increasing it will raise unemployment because some businesses will be forced to hire fewer employees.

• Increasing it undermines a critical economic balance between supply and demand. • Increasing it causes price inflation because businesses will increase prices to com-

pensate for higher wages. • Increasing it discourages further education of the poor.

By contrast, lawmakers who seek to increase minimum wage give these reasons:

• It increases the standard of living and keeps people out of poverty. • It ensures that low-income workers are not underpaid because of their gender or race. • It encourages people to work rather than get money by illegal means, such as steal-

ing or drug dealing. • By giving workers more money, it stimulates spending and thereby puts more

money into the economy.

Kris Tripplaar/Sipa USA/Associated Press

Many people believe that minimum wage should be increased above its current level to the point at which it provides a living wage.

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$10

$15

$20

Canada United Kingdom

Germany Netherlands France Australia

$9.71 $10.16

$11.33 $11.50

$12.71

$16.22

Section 6.2 Wages and Benefits

Many advocates of minimum wage increases contend that, not only should wages keep pace with inflation, they should be raised to the level of a living wage. Activists routinely protest in front of giant chain stores like Walmart to generate media attention about how difficult it is for their employees to get by on their incomes.

But how much is a “living wage” today? This differs from country to country and city to city. To test what a living wage is any U.S. city, MIT has an online Living Wage Calculator (2015). Based on MIT’s tool, a living wage in Springfield, Missouri (one of the country’s cheapest cit- ies, according to Kiplinger magazine, 2013) is $9.30 per hour for a single person, and $29.42 per hour for a family of four with a single earner.

Clearly, this is above the current $7.25 minimum wage set by the U.S. Federal government. The United States first established a nationwide minimum wage with the U.S. Wages and the Fair Labor Standards Act (FLSA) in 1938; this set not only a minimum wage (initially at 25 cents) but also the 40-hour work week, time-and-a-half for overtime, and youth employ- ment standards. At its current $7.25, the United States does better than most countries world- wide but is significantly lower than the top contenders, as Figure 6.3 indicates.

Figure 6.3: High minimum wages (per hour) in selected countries

The minimum wage amount can vary by country and, as in the United States, can vary within a single country.

$10

$15

$20

Canada United Kingdom

Germany Netherlands France Australia

$9.71 $10.16

$11.33 $11.50

$12.71

$16.22

Source: Wikipedia, List of Minimum Wages by Country

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40% Transportation

accidents

16% Falls, slips, trips

16% Equipment, struck by or caught in

7% Electrical,

temperature, chemical

6% Suicide

3% Other

3% Fires and explosions

9% Homicide

Section 6.3 Workplace Safety

To address the deficiencies of the Federal minimum wage, state and local governments sometimes create their own. As of 2015, 29 states have minimum wages above the Federal one, with Washington the highest, at $9.47. The cities with the highest minimum wages are Seattle at $15 and San Francisco at $12.25. Debates about minimum wage and a living wage will undoubtedly continue, but the message for low-income employees is that it is social conscience more than economics that determines how much they will earn beyond a market wage.

6.3 Workplace Safety In 2013, 4,485 workplace deaths took place (Occupational Safety & Health Administration, n.d.b). Although this number is discouragingly high, it is down 25% over the past decade. Figure 6.4 shows the main causes of such occupational fatalities, with the largest percentage being from transportation accidents.

Figure 6.4: Occupational deaths in the United States, 2012–2013

Accidents happen, but the goal of worker safety is to minimize the risks as much as possible.

Source: U.S. Bureau of Labor Statistics. (2014, September 11). Economic news release: Table 1. Fatal occupational injuries by event or exposure, 2012–2013. Retrieved from http://www.bls.gov/news.release/cfoi.t01.htm

40% Transportation

accidents

16% Falls, slips, trips

16% Equipment, struck by or caught in

7% Electrical,

temperature, chemical

6% Suicide

3% Other

3% Fires and explosions

9% Homicide

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10.

Fall protection

Hazard communication

Scaffolding

Respiratory protection

Powered industrial trucks

Lockout/tagout

Ladders

Electrical: wiring

Machine guarding

Electrical: systems design

Section 6.3 Workplace Safety

For the same year, around 3 million nonfatal workplace injuries and illnesses were reported, which is roughly 3.3 cases per 100 workers (U.S. Bureau of Labor Statistics, 2014b). It would be impossible to create a work environment that is free of all employee risk of injury or death. Equipment sometimes breaks, and malfunctions cannot always be foreseen. Human beings commit murder in every conceivable setting, and work environments are no exception. The goal of worker safety is to minimize these risks as much as possible, even if their complete elimination is unrealistic. In this section, we will look at the Federal agency that oversees workplace safety and how companies can develop effective safety cultures.

OSHA

In the United States, the governmental body responsible for monitoring workplace safety is the Occupational Safety and Health Administration (OSHA), a branch of the Department of Labor. Formed in 1971, OSHA sets workplace safety standards across many industries, con- ducts unannounced inspections, imposes fines on negligent companies, and requires com- panies to report injuries. Its website (https://www.osha.gov) contains a scrolling banner describing recent fatalities, such as these:

• Two workers struck and killed by buoy that fell from crane. • Worker refinishing bathtub died

from exposure to methylene chloride.

• Worker died from carbon monox- ide asphyxiation.

• Worker fatally engulfed in grain storage bin.

• Worker killed in fall from scissor lift.

According to an OSHA administrator, “Making a living shouldn’t have to cost you your life. Workplace fatalities, injuries, and illnesses are preventable. Safe jobs happen because employers make the choice to ful- fill their responsibilities and protect their workers” (OSHA, n.d.b). Figure 6.5 shows the top 10 most frequently cited OSHA vio- lations in 2014.

There are levels of violations and pun- ishments that OSHA administers to offenders. At the lower end lie the “other than serious” violations that usually result in a verbal warning from OSHA. At the upper end are the “willful vio- lations” that are intentional and can carry a fine of $5,000 to $70,000 and

Figure 6.5: OSHA’s 2014 top 10 most

frequently cited violations

Some OSHA violations are more serious than others. Employers should make the choice to protect their workers.

Source: Occupational Safety and Health Administration (OSHA). (2014). Top 10 most frequently cited standards for fiscal 2014. Retrieved from https://www.osha.gov/Top_Ten _Standards.html

10.

Fall protection

Hazard communication

Scaffolding

Respiratory protection

Powered industrial trucks

Lockout/tagout

Ladders

Electrical: wiring

Machine guarding

Electrical: systems design

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Section 6.3 Workplace Safety

up to $250,000 if the incident results in a death. In 2015, OSHA fined Ashley Furniture $1.76 million for violations that resulted in over 1,000 injuries during a three-and-a-half- year period at a factory with 4,500 workers. Twelve of these violations were classified as willful.

OSHA is caught in a political battle. Conservatives, on the one hand, criticize it for setting expensive yet ineffective standards that force small companies out of busi- ness. Liberals, on the other hand, criticize it for not performing enough inspections, focusing mainly on large corporations, and setting fines so low that large companies have no incentive to make the needed safety changes. Nevertheless, one study, pub- lished in the top journal Science, confirms OSHA’s effectiveness, suggesting that their inspections do prevent workers from on-the-job injury and save employers billions of dollars through reduced workers’ compensation costs (Levine, Toffel, & Johnson, 2012).

A famous OSHA case involved the death of an animal trainer by a killer whale at SeaWorld in Florida. OSHA fined the company $12,000 and set new safety standards for trainers that removed them from the water during shows. Another case involved a lawsuit against AT&T for firing 13 workers who reported on-the-job injuries. OSHA stated, “It is against the law for employers to discipline or suspend employees for reporting injuries. . . . AT&T must understand that by discouraging workers from reporting injuries, it increases the likelihood of more workers being injured in the future” (U.S. Department of Labor, 2014).

Safety Culture

To address on-the-job safety problems, many companies adopt a safety culture—that is, a set of shared attitudes within an organization that emphasizes the high priority of safety. OSHA maintains that, in its experience and in independent research, a company’s adoption of a safety culture has “the single greatest impact on accident reduction of any process” (OSHA, n.d.a).Concern with occupational safety dates back hundreds, if not thousands, of years. What is new is the broadly disseminated message that safety is a non-overridable priority, one that trumps all other business concerns. The U.S. Nuclear Regulatory Com- mission’s (2011) safety culture policy statement emphasizes precisely this point in the following definition, which has become a model for similar policy statements by other organizations:

Nuclear safety culture is the core values and behaviors resulting from a collective commitment by leaders and individuals to emphasize safety over competing goals to ensure protection of people and the environment.

Organizations creating a safety culture face the same challenges as when they introduce any new type of ethical corporate culture, such as honesty, integrity, and transparency. It often starts with top leaders openly endorsing a set of values, discussing it in meetings at every corporate level, and publicizing it throughout the company in memos and brochures. Judy Agnew, a safety culture consultant, suggests seven components to a successful safety culture, listed in Figure 6.6.

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The entire workforce relentlessly pursues the identification and

remediation of hazards.

Employees at all levels are equally comfortable stopping each other

when at-risk behavior is observed and recognizing each other when

safe behavior is observed.

No one is blamed for near misses or incidents.

The fear of discipline which drives under-reporting and stifles

involvement has been driven out of the culture.

The workforce is characterized by good relationships at all levels.

Safety is integrated into day-to-day work.

Successes are celebrated along the way.

Section 6.4 Worker Privacy

6.4 Worker Privacy Worker privacy concerns an employee’s expectations for work environment that is free from unnecessary intrusions into their person, behavior, or information. The issue involves a ten- sion between competing expectations of employers and employees. Employers are paying employees to do specific tasks and rightfully expect that workers will do them efficiently and honestly. Employees, on the other hand, are devoting a large portion of their lives to their jobs and rightfully do not want to feel like caged animals during that time. Balancing the respective expectations of employers and employees is a challenge, and in this section we will look at the privacy issues that arise with electronic monitoring, data breach, searches, and drug testing.

Electronic Monitoring

Maintaining employee privacy is becoming a losing battle, due in large part to technological advances that make monitoring inexpensive and effective. The prevailing rule is that if the employer owns an electronic device, it can monitor it as it sees fit. Figure 6.7 shows the wide range of electronic monitoring that businesses can and regularly do engage in. Occasional exceptions to these permitted uses of monitoring have been tested in specific situations by court cases, and companies may intentionally establish rules that allow for a wider range of privacy, such as that employees will be notified prior to any phone monitoring. But it is safe for all employees to assume that all of their office activities are being monitored.

Figure 6.6: Seven components to a successful safety culture

Top leaders should openly endorse the values that help create a safety culture in their organizations.

Source: Agnew, J. (2013, January 23). 7 keys for creating a safety culture. © 2015 Aubrey Daniels International, Inc. Atlanta, GA USA. Reprinted with permission. http://aubreydaniels.com/blog/2013/01/23/7-keys-for-creating-a-safety-culture/ www.aubreydaniels.com

The entire workforce relentlessly pursues the identification and

remediation of hazards.

Employees at all levels are equally comfortable stopping each other

when at-risk behavior is observed and recognizing each other when

safe behavior is observed.

No one is blamed for near misses or incidents.

The fear of discipline which drives under-reporting and stifles

involvement has been driven out of the culture.

The workforce is characterized by good relationships at all levels.

Safety is integrated into day-to-day work.

Successes are celebrated along the way.

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• Office Telephones: can record business and personal calls.

• Office Headsets: can record conversations with clients and office workers.

• Computers: can record keystrokes, computer idle time, screenshots,

hard drive content, website visits, and web searches.

• Employer-Issued Cell Phones: can use secret monitoring apps for all

talk, text, and web data, even in off-hours.

• Personal Cell Phones: can monitor talk, text, and data on company Wi-Fi.

• GPS: can track company vehicles and employer-issued cell phones.

• Postal Mail: can open mail delivered to the office.

• Social Media: can monitor postings for both job-related and personal

information.

• Video Camera: can monitor and record for both security and employee

productivity.

• Tracking Sensors: can record employee work-time movements through

sensors worn on lanyards or ID badges.

Section 6.4 Worker Privacy

Today, over 90% of employers in the United States have policies that allow reasonable per- sonal use of company computers, but this does not prevent the company from accessing them. An important Supreme Court case shows the limits of employee privacy with per- sonal electronic communication. The police department in Ontario, California, issued text message pagers to its officers and told them that only “light personal communications” were permitted during work and that inappropriate language on them was not allowed. When some officers routinely went over the permitted character limit, the department requested transcripts of the text messages. These transcripts revealed that one officer, Jeff Quon, had a large number of personal messages, including sexually explicit ones to his girlfriend, and in one month, only 8% of the messages were work-related. Quon and oth- ers involved sued the city for invasion of privacy; the case made its way to the Supreme Court, which ultimately sided with the city. The Court concluded that, even if Quon had a reasonable expectation of privacy, “the employer had a legitimate reason for the search, and that the search was not excessively intrusive in light of that justification” (Ontario v. Quon, 2010).

Figure 6.7: Permitted employer use of electronic monitoring in the

United States

Electronic monitoring is a frequent part of business. Employers and employees should be mindful of which forms are legal and which are not.

• Office Telephones: can record business and personal calls.

• Office Headsets: can record conversations with clients and office workers.

• Computers: can record keystrokes, computer idle time, screenshots,

hard drive content, website visits, and web searches.

• Employer-Issued Cell Phones: can use secret monitoring apps for all

talk, text, and web data, even in off-hours.

• Personal Cell Phones: can monitor talk, text, and data on company Wi-Fi.

• GPS: can track company vehicles and employer-issued cell phones.

• Postal Mail: can open mail delivered to the office.

• Social Media: can monitor postings for both job-related and personal

information.

• Video Camera: can monitor and record for both security and employee

productivity.

• Tracking Sensors: can record employee work-time movements through

sensors worn on lanyards or ID badges.

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The Quon case involved the privacy of personal communication on an employer-issued device. The reverse arrangement, a policy sometimes called bring-your-own-device (BYOD), allows employees to use their privately owned computer or cell phone for business purposes. There are benefits to both sides: The employees get to use the device that they are most comfort- able with, and the employer benefits by avoiding the cost of both the device and the service plan. But BYOD also raises special privacy issues. Employees worry that their employers may access personal data from their devices, and employers worry that sensitive information on employees’ devices may be breached. To prevent data breaches, employers feel that they have the right to wipe data stored on BYOD devices, but unselective wiping may result in perma- nent loss of the employee’s personal data. BYOD policies are on the rise in the business world, and the privacy problems associated with traditional employer-issued devices will inevitably be transferred over to BYODs.

Data Breach

Just as technology has broadened the scope of employee monitoring, it has also created vul- nerabilities for securing employee personal data. Employees provide their employers with some of the most sensitive data that they have, such as their Social Security numbers, bank account numbers, health information, and family member information. Employees have a rea- sonable expectation that this information will be kept confidential and stored securely. Prior to electronic data storage, this data would be on paper forms tucked away in filing cabinets where it would be very difficult for outsiders to access. With electronic data storage, however, one data breach could put at risk the personal information of every employee in a large cor- poration. Two-thirds of data breaches are internal to companies and result from human and system errors that accidentally make data publicly available; only one-third of data breaches are from external hackers (Symantec, 2013).

Whether internal or external, data breaches pose serious risks to employees’ privacy. An example of an internal breach is a 2014 incident with Mozilla Corporation, makers of the Firefox web browser. During a data sanitization process, the company accidentally exposed a database dump file that contained the email addresses of around 76,000 members of its Developer Network, along with around 4,000 encrypted passwords. A spokesperson for Mozilla said that the company removed the dump file as soon as it learned of the issue and sent notices to all who were affected by it.

An example of an external breach is the hacking of Sony Pictures Entertainment by North Korea in response to its production of the comedy film The Interview, which depicts a plot to assassinate North Korean leader Kim Jong-un. Accessing Sony’s computer system, the hackers made publically available confidential email messages of employees, over 47,000 Social Security numbers, and employment files that included salaries and medical information. Several employee class action lawsuits were subsequently filed against Sony. One of them stated that Sony “failed to secure its computer systems, servers and databases despite weaknesses it has known about for years”; during this time, according to the suit, “Sony made a business decision to accept the risk of losses associated with being hacked” (BigClassAction, 2014).

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• 41% of inventory losses are from employee theft, which in one year

totaled $18 billion.

• 19% of employee theft involves collusion with a non-employee.

• Dishonest employees typically work for one year before being detected.

• Employee theft rates are above average with businesses that extensively

use part-time employees.

• The average monetary loss of per incident of employee theft is five

times that higher than per incident of shoplifting.

• Employee theft is particularly high with liquor, wine, beer, or tobacco

products.

• 26.5% of gift card losses are attributable to employee theft.

Section 6.4 Worker Privacy

Searches

There is an anecdote about a worker at a brickyard who stole two bricks each day by plac- ing them in his lunch box, and after 20 years he had enough bricks to build his own home. Employee theft is a major problem in all businesses, large and small, and Figure 6.8 shows some alarming statistics about its prevalence.

What Would You Do?

Consider the facts in the Sony class action lawsuit described above.

1. Suppose that no identity theft took place or will ever take place as a result of this data breach. If you were a Sony employee, would you participate in the lawsuit anyway? Why or why not?

2. If you were filing the suit, what kind of compensation would you expect the court to award you if you won the case? Explain your answer.

3. If you were Sony’s CEO, what kind of out-of-court settlement might you offer to make the lawsuit go away? Explain your answer.

4. Suppose that, upon investigation, it turned out that the security of Sony’s computer system was about the same as that of any big corporation, and that all companies are vulnerable to some weaknesses. If you were the judge in the case, would this influence your decision? Why or why not?

Figure 6.8: Prevalence of employee theft in the United States

All businesses must deal with the possibility of employee theft.

Source: Hollinger, R. C., & Adams, A. (2014, February 20). 2012 national retail security survey final report. University of Florida’s Security Research Project. Retrieved from https://soccrim.clas.ufl.edu/2014/02/20/2012-national-retail-security-survey-has-been-released/

• 41% of inventory losses are from employee theft, which in one year

totaled $18 billion.

• 19% of employee theft involves collusion with a non-employee.

• Dishonest employees typically work for one year before being detected.

• Employee theft rates are above average with businesses that extensively

use part-time employees.

• The average monetary loss of per incident of employee theft is five

times that higher than per incident of shoplifting.

• Employee theft is particularly high with liquor, wine, beer, or tobacco

products.

• 26.5% of gift card losses are attributable to employee theft.

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There are precautions that employers can take to reduce employee theft, such as background checks before hiring, regularly informing employees of zero tolerance for theft, or sched- uling surprise audits. But the most overt precaution is to conduct searches of employees’ handbags, desks, lockers, lunch boxes, cars, or any other area where an employee might hide something.

While searches may be effective ways of reducing employee theft, they can be intrusive and demoralizing for employees. They can also be time consuming. In a 2014 class action lawsuit that reached the U.S. Supreme Court, a former employee working at an Amazon warehouse sued his temp agency for the unpaid time spent passing through metal detectors, which took as long as 25 minutes. The court ruled unanimously against the worker. As stipulated in pre- vious Supreme Court decisions, employers do not have to pay for activities before and after a workday, such as driving to and from work, unless they are “integral and indispensable” to the job. In this case, the court ruled that the searches were not an “integral and indispensable” part of the Amazon worker’s job. A similar class action lawsuit was filed against Apple by former employees who stood in lines for up to a half hour each shift waiting for supervisors to search their bags. The judge dismissed the case based on the Supreme Court ruling in the Amazon case.

Searches may unfortunately be a necessary evil in the work environment, but to reduce con- flicts with employees’ legitimate expectations of privacy, employers should avoid or mini- mize the types of searches that bother employees the most. These include searches that are groundless, random, bodily, against the employee’s will, or in any area of space that an employee would consider private.

Drug and Alcohol Testing

Drug and alcohol abuse among workers can result in costly problems for employers, such as theft, injury, absenteeism, lower productivity, and increases in healthcare and worker’s compensation costs. Drug and alcohol testing in the workplace began in earnest in the 1980s and was met with a wave of lawsuits that questioned its validity and argued that it under- mined employees’ rights. Testing is now common in the workplace, with 90% of organiza- tions screening job candidates and 71% screening current employees (Maurer, 2013). Even so, the practice still has its critics. First, there are few rigorous studies that show how effective drug and alcohol screening have been in deterring employee drug use or reducing workplace injury. Second, even if drug screening is now a given, there are still privacy challenges to how the tests are performed.

One problem occurs in forcing a drug test upon someone. A middle school teacher in Las Vegas sued her school district for holding her against her will in a room and forcing her to take what she described as an “invasive” drug test. The night before, she had been arrested for driving under the influence of alcohol and marijuana; at her job the next day, she was called to the administrator’s office to be given a drug test. When she told the school administrator that she wanted to leave, the administrator blocked the door and told staff to call the police to prevent her from leaving. She tested positive for marijuana and was fired, but through her union’s intervention she was reinstated and over the next 11 months was given eight random drug tests, all of which she passed. In her lawsuit, the teacher claimed that her experience was an invasion of privacy and false imprisonment. The court ultimately dismissed her claims

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Section 6.5 Whistleblowing

and found that the drug test was supported by reasonable suspicion (Casillas v. Clark County School District et al., 2013). Nevertheless, the teacher’s claim was strong enough to raise seri- ous questions about her treatment.

Selective drug screening also carries the risk of being discriminatory. In one case, a White and a Black man were fighting with each other on the job, and the supervisor broke it up. The supervisor noticed that the Black man had unusual behavior and speech, the company tested him for drugs, and the results came back positive for cocaine. The Black worker later sued the company for discrimination because only he, and not the White man, was required to take the drug test. The court sided with the company and concluded that the supervisor acted with reasonable suspicion of drug use (Berry v. Arcelormittal, 2013). While in this case the court concluded that the drug test was not discriminatory, it nevertheless shows how individual- ized drug tests risk the accusation of discrimination. Thus, while workplace drug testing is common, it still carries risks of privacy violations and litigation.

6.5 Whistleblowing A whistleblower is a person who informs the public or someone in authority about illegal activities or some other misconduct that has occurred within an organization. The term was coined because whistles are used in law enforcement and sports to draw attention to some infraction.

The two most publicized cases of whistleblowing in recent years have been those of Edward Snowden and the WikiLeaks website. Snowden, a computer programmer who worked as a subcontractor for the U.S. National Security Agency (NSA), collected hundreds of thousands of documents about NSA programs spying on Americans and released many of them to journalists. The WikiLeaks website, which publishes classified information from anony- mous sources, made headlines by posting hundreds of thousands of military documents detailing civil- ian casualties during the Afghani- stan and Iraq wars.

Both of these cases involved the leaking of documents to the public that revealed question- able political and military activities by the U.S. and other governments. However, whistle- blowing in the business world is just as common as governmental whistleblowing, and, for the company, often just as damaging to its public image. In this section, we will review types of whistleblowing, some guidelines for whistleblowers, and some laws that protect whistleblowers.

Matt Dunham/Associated Press

Julian Assange, co-founder of the whistleblowing website WikiLeaks, took refuge in Ecuador’s London Embassy in 2012 to avoid being extradited to Swe- den to face sexual assault charges. After three years, supporters held a vigil for him outside the Embassy.

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Section 6.5 Whistleblowing

Types of Whistleblowing

One case that exhibits many common features of whistleblowing in business involved the British pharmaceutical company GlaxoSmithKline (Thomas & Schmidt, 2012). In 2012, the company agreed to pay a $3 billion fraud settlement for illegally promoting some of its drugs for unapproved uses (so-called off-label marketing). A decade earlier, two Glaxo marketing employees had reported the problem through official channels within the company. The com- pany retaliated against the employees and continued off-label marketing of the drugs. The employees then brought the situation to the attention of the U.S. Federal government, which brought charges against the company that ended in the settlement.

As seen in the Glaxo case, whistleblowing can be either internal or external. Internal whistle- blowing occurs when an employee makes a complaint about a fellow worker or corporate procedure and keeps the complaint within the company. Key to this notion is that the com- plaint takes place within an organization’s established operational structure and thus relies on the organization to correct the problem.

To deal with such problems, companies sometimes have whistleblower systems or hotlines. These are mechanisms that allow for employees to make complaints within the company structure. Some areas of business, such as accounting, have laws that require the implementa- tion of whistleblower systems to collect and resolve employee complaints or concerns. These might include telephone hotlines or websites where complaints can be registered anony- mously. Some companies encourage internal whistleblowing, partly as an effort to eliminate any misconduct on the part of employees and managers in the company and partly to avoid potential legal and public relations problems and thereby protect their image as transparent and responsible companies in the eyes of the public. There are also companies that specialize in whistleblower systems and sell their services to organizations, advertising that their sys- tems are more effective and have a lower risk of costly retaliation claims.

When companies respond properly to internal whistleblowing, the public typically never learns of the problem. What the public hears about are cases where the companies do not take corrective action. As with the Glaxo case, this may lead to external whistleblowing, where the informant goes outside the organization to seek a remedy. Complaints of miscon- duct may be brought to the attention of authorities outside the organization, such as govern- mental oversight offices, attorneys, the media, or special interest groups such as watchdog agencies. Here are two examples:

• In the mid-1990s, Jeffrey Wigand, a former vice president of the Brown and William- son tobacco company, appeared on the CBS news show 60 Minutes and stated that his company was “a nicotine-delivery business” and had intentionally manipulated its tobacco blend to increase the amount of nicotine in cigarette smoke. He went on to provide evidence in a case that resulted in a $246 billion settlement with the tobacco industry. This set a precedent for a succession of similar cases, including one in 2014 in which a jury awarded $23 billion to the widow of a deceased chain smoker. Wigand’s case later became the basis for the 1999 film The Insider.

• In 2013, JPMorganChase reached a $13 billion settlement with the U.S. Department of Justice for its practice of selling bad mortgages to investors, which contributed to the 2008 financial meltdown. Key to the agreement was the whistleblower testi- mony of Alayne Fleischmann, a former diligence manager for the company whose job was to inspect the integrity of potential investments. She initially warned her

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Section 6.5 Whistleblowing

supervisors that they needed to inform investors of the risks attached to these bad mortgages, but she was silenced by them. After two years, she quit the company; she came forward some time later, providing evidence to Federal prosecutors.

Both of these are rather dramatic situ- ations; for the typical whistleblower, appearing on national television or par- ticipating in a billion-dollar lawsuit are not options. In many external whistle- blowing situations, the employee simply complains to a government agency that oversees a particular area of business.

Suppose, for example, that a company violated a health or safety regulation by not providing proper protective gear for employees who work with hazardous material. An employee could bring the situation to the attention of OSHA. In the case of violation of environmental regulations, such as improper disposal of hazardous waste, the employee could notify the Environmental Protection Agency (EPA). With violations of secu- rities regulations such as insider trad- ing, the employee could contact the Securities and Exchange Commission (SEC). For example, a vice president of Enron, Sherron Watkins, blew the whistle on her company when she informed the SEC of the irregular accounting activities at her company. The SEC then investigated Enron, which ultimately led to the company’s bankruptcy.

Whistleblowing Guidelines

External whistleblowing can cause considerable harm to a company because of fines, law- suits, and the tarnishing of its public image. Consequently, employees who blow the whistle are caught in a conflict between loyalty to the company and loyalty to the public and the law. On the one hand, as members of the company, they have a responsibility to look out for the best interest of their employer and avoid causing unnecessary harm. On the other hand, as citizens, they have a responsibility to the public at large to draw attention to especially harm- ful activities of their company.

The act of going public with a complaint is not one to take lightly, and the argument can be made that in most cases it is not justifiable. Sometimes even well-intentioned whistleblowers get their facts wrong and cause a public spectacle even when the company has not committed an infraction (Tongue & Instone, 2006). Some types of whistleblowing can be unjustifiably confrontational, such as creating a website that boldly states, “My company is dumping toxic waste in your backyard.” Also, some whistleblowing may be the consequence of the employ- ee’s strong ideological convictions, which are disproportionate to the actual harm that a com- pany has done. For example, an employee who is especially sensitive about environmental issues may misconstrue a minor environmental infraction as a major one.

Stephan Savoia/Associated Press

Former tobacco industry executive Jeffrey Wigand provided critical information to the government about the deceptive practices of tobacco companies, which resulted in a landmark settlement. In this 2000 photo, Wigand (right) sits with Rhode Island’s Lieu- tenant Governor in a hearing to determine how that state would spend its share of the settlement money.

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Section 6.5 Whistleblowing

Ultimately, there should be guidelines for when external whistleblowing is appropriate. Of the various suggestions that have been made, here are five valuable ones offered by political philosopher Richard T. De George (2006):

1. The firm, through its product or policy, will do serious and considerable harm to the public, whether in the person of the user of its product, an innocent bystander, or the general public.

2. Once an employee identifies a serious threat to the user of a product or to the gen- eral public, the person should report it to an immediate superior and make his or her moral concern known.

3. If an employee’s immediate superior does nothing effective about the concern or complaint, the employee should exhaust the internal procedures and possibilities within the firm. This usually will involve taking the matter up the managerial ladder, and if necessary and possible, to the board of directors.

4. The whistleblower must have, or have access to, documented evidence that would convince a reasonable, impartial observer that one’s view of the situation is correct, and that the company’s product or practice poses a serious and likely danger to the public or to the user of the product.

5. The employee must have good reason to believe that by his or her going public, the necessary changes will be brought about. The chance of being successful must be worth the risk one takes and the danger to which one is exposed.

Whistleblowers such as Jeffrey Wigand are sometimes considered folk heroes for exposing great harm. Other times, however, they are depicted as disloyal snitches or emotionally unbal- anced complainers. In either case, through their efforts, whistleblowers put themselves at risk of employer retaliation through layoffs, pay decreases, hour cutbacks, job reassignments, and even termination. Wigand himself maintained that he was harassed and publicly dis- credited by Brown and Williamson for whistleblowing. Unable to find a corporate job in the aftermath, he worked for a while as a high school teacher, receiving $30,000 a year, which was one tenth of his former salary. The emotional impact on whistleblowers can therefore be very great. Alayne Fleischmann stated, “You can find yourself at odds with a company that has almost limitless resources, lawyers, and influence. If you look at prior whistleblowers, many lose not only their jobs but also their careers” (Burton, 2015).

Whistleblowing Laws

Just a few decades ago, whistleblowers had little protection from retaliation by employers, but laws have been passed more recently to safeguard them, and employer retaliation has subsequently been on the decline. We will look at three of the more important laws protecting whistleblowers.

The False Claims Act of 1863 The False Claims Act of 1863 aimed to help the government recover money from compa- nies that defrauded governmental programs. It was signed into law during the Civil War as a mechanism for punishing military contractors who intentionally sold the government faulty weapons and supplies. The law was expanded in 1986 to allow citizens to sue on behalf of

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the government—in essence, to blow the whistle on companies that defraud the government. Most importantly, the law allows for whistleblowers to be rewarded by receiving a percent- age of the money recovered (called a qui tam lawsuit). For example, four employees of Eli Lilly received nearly $80 million in their share of the settlement involving the company’s illegal marketing of the drug Zyprexa to children (U.S. Department of Justice, 2009).

The Whistleblower Protection Act of 1989 Next, at the urging of President Jimmy Carter, Congress passed the Whistleblower Protec- tion Act of 1989, the purpose of which was to protect employees in government jobs from whistleblower retaliation. As the act itself stated, it sought to “strengthen and improve pro- tection for the rights of Federal employees, to prevent reprisals, and to help eliminate wrong- doing within the Government” (Whistleblower Protection Act of 1989, §2(b)).

The No FEAR Act of 2002 A final whistleblower protection law is the Notification and Federal Employee Antidis- crimination and Retaliation Act of 2002, more commonly known as the No FEAR Act, which aimed to discourage supervisors in government agencies from engaging in discrimination and retaliation. The act was sparked by the case of Marsha Coleman-Adebayo, an employee of the EPA, who alerted the agency that a specific U.S. company was engaged in an environ- mental violation. When the EPA did not take action, she reported the violation to external organizations. When she was later denied promotion, she filed suit. The EPA was found guilty of civil rights violations and ordered to compensate her with $600,000. In an effort to reduce the occurrence of similar lawsuits against the government, the No FEAR Act was introduced, which required Federal employers like the EPA to regularly notify employees of their rights and rem- edies regarding discrimination and whistleblower retaliation. The notification must include the follow- ing language relating to whistleblowing:

A Federal employee with authority to take, direct others to take, recommend or approve any personnel action must not use that authority to take or fail to take, or threaten to take or fail to take, a personnel action against an employee or applicant because of disclosure of information by that individual that is reasonably believed to evidence violations of law, rule or reg- ulation; gross mismanagement; gross waste of funds; an abuse of authority; or a substantial and specific danger to public health or safety. (Office of Personnel Man- agement, n.d.)

Deadlines for retaliation complaints range from a few days to several years, depending on the type of

Roland Popp/picture-alliance/dpa/Associated Press

Former prosecutor for the U.S. Justice Department Jesselyn Radack blew the whistle on her department for interro- gating an American terrorism suspect without the suspect’s attorney present.

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Conclusion

retaliation and the governing Federal or state laws. Thus, whistleblowers who wish to com- plain of retaliation need to be alert to these varying timetables. One resolution for retaliation is a “make whole” remedy, whereby the employee is returned to the position and status that he or she held prior to the complaint.

What Would You Do?

Whistleblower lawsuits for Medicare fraud are frequent occurrences. In one case, a nurse for Amedisys, a Louisiana-based home healthcare company, complained to her bosses that the company pressured its healthcare workers to exaggerate patient illnesses to get higher Medicare payment rates. They fired her, and with her help, the Justice Department filed a lawsuit accusing the company of overcharging government over a two-year period, which eventually led to a settlement with the company.

1. If you were the nurse, would you have complained to your bosses, knowing the risk of getting fired? Why or why not?

2. If you were one of the bosses, would you try to change company policy, try to buy the nurse off with a promotion, or fire her? Explain your answer.

3. Suppose that you were the nurse and your attorney told you that the success of a lawsuit against the company was minimal, it would make it difficult for you to work as a nurse again, and it would probably take a decade before a final court decision was made. Would you still go through with the lawsuit? Why or why not?

4. The company settled for $150 million, and the nurse’s share was $15 million. Knowing this, if you were a nurse working for a similar company, would you actively seek out Medicare abuse in hopes of winning a multi-million dollar lawsuit? Why or why not?

Conclusion The treatment of employees has come a long way since the Triangle Fire of 1911, but the ten- sion still exists between the company’s interest in making money and the employee’s inter- est in a decent working environment. Businesses snoop into the personal lives of potential employees, pay unskilled workers as close to market wage as possible, skimp on workplace safety, monitor every movement of an employee, and retaliate against whistleblowers. But employees are no angels either. They lie on their résumés, steal from their employers, cheat on their time cards, put themselves and their co-workers at risk for injuries, and often sue their companies over the tiniest of mistakes.

With so much self-interest and distrust piled up on opposing sides, it is a wonder that the employer–employee arrangement works at all. But strangely it does, due largely to an under- standing of the limits to what each side will tolerate in the other’s conduct. Determining those limits involves trial and error—something like an on-the-job social experiment—that often becomes a matter for courts to decide. Further, there is no reason to think that this social experiment will find finality. Working environments are constantly changing because of tech- nological advances, economic upswings and downswings, and evolving social conscience. Consequently, new employer–employee tensions will always emerge.

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Summary & Resources

Chapter Summary In this chapter, we looked at key ethical concerns in business that specifically relate to employ- ees’ interests. In the hiring process, criminal background checks and credit checks might be discriminatory and irrelevant to particular job descriptions. Social media access is common but puts employers at risk for discrimination lawsuits. Interviews are the most successful predictors of future job performance when they are structured, but most interviews today are unstructured.

On the issue of employee wages, the default price for employee pay is the market wage, which is the lowest wage that an employer can offer to attract an employee. Minimum wage has the effect of pushing employee pay higher, but often not high enough to constitute a living wage that is sufficient to meet basic needs beyond mere subsistence.

On the issue of workplace safety, the Occupational Safety and Health Administration (OSHA) sets workplace safety standards, but it has been criticized for setting fines too low and focus- ing mainly on large companies. An effective way of improving worker safety is for companies to establish a safety culture—that is, a set of shared attitudes within an organization that emphasize the high priority of safety.

Employee privacy is limited by employer security efforts, including electronic monitoring, searches, and drug and alcohol testing. Companies risk employee lawsuits when conducting these indiscriminately. Company data breaches also compromise employee privacy and risk employee lawsuits.

Finally, we looked at the issue of whistleblowing, some guidelines for whistleblowers, and laws that protect whistleblowers from employer retaliation.

Discussion Questions

1. Criminal background checks, credit checks, and social media access are common tools today in pre-employment screening. Does employer use of these tools go too far? Should it be banned? Why or why not?

2. Some social scientists argue that there is a major difference in effectiveness between structured and unstructured interviews, and unstructured ones are next to worth- less. In what kind of scenario might an unstructured interview be better than a structured one? Why do you think this is so?

3. Do you think the minimum wage should be raised to the level of a living wage in your area? Why or why not?

4. Some analysts argue that the idea of a special “safety culture” is unnecessary because all people and all businesses already have a focus on safety. What matters, according to these analysts, is whether a business’s current safety efforts work, not whether there is a culture developed around it. Discuss the merits of this criticism, how OSHA would respond to it, and which side of the issue seems most correct.

5. Electronic monitoring, searches, and drug tests are common ways that employers try to keep employees efficient and honest. Do you think any of these mechanisms are unjustifiable? Why or why not? What other alternatives might employers have?

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Summary & Resources

credit check Inquiry into a person’s finan- cial information by an organization, often for employment purposes.

criminal background check Inquiry into a person’s criminal records by an organiza- tion, often for employment purposes.

due diligence in hiring An employer thor- oughly researching a job candidate before hiring him or her.

external whistleblowing When an employee makes a complaint to an exter- nal authority such as the police, the SEC, or another Federal agency.

False Claims Act of 1863 U.S. Federal law to assist the government in retrieving mon- ies from people and corporations who are defrauding it.

internal whistleblowing When an employee makes a complaint about a fellow worker or corporate procedure and keeps the complaint within the company.

living wage A wage that is sufficient to meet basic needs beyond mere subsistence.

market wage The lowest wage that an employer can offer to attract an employee.

minimum wage The lowest wage permit- ted by law or by a special agreement, such as with a labor union.

negligent hiring When an employer knew or should have known about an employee’s untrustworthy character upon first hiring him or her.

Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act) U.S. Federal law designed to stop Federal supervisors from threatening or retaliating against Federal employees who blow the whistle.

Occupational Safety and Health Administration (OSHA) A branch of the Department of Labor formed in 1971 to set workplace safety standards across many industries, conduct unannounced inspec- tions, impose fines on negligent companies, and require companies to report injuries.

opulence wage A wage that supports a luxury lifestyle beyond mere basic needs.

safety culture A set of shared attitudes within an organization that emphasizes the high priority of safety.

structured interview An interview method in which carefully written ques- tions are directly connected with mea- sureable skills and are the same for all interviewees.

subsistence wage A wage that is sufficient to provide only the bare necessities of life.

unstructured interview An interview method in which questions are not prear- ranged and not necessarily the same for each interviewee.

whistleblower A person who informs the public or someone in authority about illegal activities or some other misconduct that has occurred within an organization.

6. Even though there are laws that protect whistleblowers from employer retaliation, some whistleblowers say that they are harassed or marginalized by their employers anyway. Do whistleblowing laws need strengthening or are they sufficient to protect employees from retaliation?

Key Terms

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Whistleblower Protection Act of 1989 U.S. Federal law to protect Federal employees who blow the whistle on fraudu- lent or unsafe practices in Federal agencies.

whistleblower systems or hotlines Sys- tems within a corporation that allow

whistleblowers to make official and some- times anonymous complaints.

worker privacy An employee’s expecta- tions for a work environment that is free from unnecessary intrusions into their per- son, behavior, or information.

Business Ethics Case Study 6.1: Walmart’s Battle Against Unionization

Walmart is regularly in the news for business ethics abuses, such as predatory pricing, sweatshop conditions of its suppliers, its impact on the environment, tax dodging, and deceptive advertising. The principal reason is its sheer size. With more than 5,000 U.S. stores and 1.3 million employees, it is the country’s top retailer, top revenue earner, and top private employer. Because of its exceptionally high public profile, even the smallest ethical infraction is bound to draw widespread attention, and Walmart knows it.

But one area in which the company has been consistently and unapologetically vocal is in its opposition to unions, which is as ingrained in its image as the company’s Great Value brand knockoffs and yellow spark logo. By resisting unionization, Walmart has been able to keep its labor costs among the lowest in the retail industry. Founder Sam Walton held this conviction since the early days of Walmart, and in 1970 he blocked unionization efforts in two Missouri locations.

In place of collective bargaining, the company implemented two plans in the early 1970s. The first was its profit sharing program, in which the company contributed 4% of employees’ pay for retirement—a practice that was eventually replaced in 2010 with a matching 401k retirement program. The second was its “Open Door” policy that allows individual employees to bring an issue to any member of management, on up to the CEO, without fear of retaliation.

These two programs, however, have done little to stop unionization efforts by the United Food and Commercial Workers International Union (UFCW). The UFCW’s stated aim is to “improve wages, benefits, and conditions” in the retail and grocery industry, which in turn, it says, requires making changes at the country’s number one retail store. Common complaints by Walmart workers are low wages, denial of overtime pay, infrequent breaks, and inadequate healthcare coverage. So far the UFCW has been unable to unionize any Walmart store in the United States—a task that requires getting at least 50% of workers at a given store to sign cards stating that they wish to be represented by the union.

U.S. laws about unionization are strict: It is against the law for companies to intimidate or threaten employees who want to unionize, and it is also against the law for unions to intimidate or threaten employees into unionizing. Part of Walmart’s success at avoiding unionization owes to the anti-union training that it gives its managers, as seen in these points from a management training document leaked to the press:

• Walmart employees “can speak for and represent themselves without having to pay someone to do that for them.”

• Walmart managers have a responsibility to “report union activity to the [Walmart] Labor Relations Hotline immediately.”

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• “We simply don’t feel third party representation is right for Walmart.” • Walmart managers are advised against threatening, interrogating, or spying on

employees regarding possible unionization, but managers can share anti-union facts, opinions, and experiences.

• Possible opinions that managers can express include “For a Walmart associate, I think unions are a waste of money. You can speak for yourself.”

Another reason for Walmart’s success at thwarting unionization is that the company comes down hard on stores that move in that direction. At one point, three Walmart stores in Canada unionized with the UFCW, but Walmart subsequently closed one of the locations, and eventually the workers at the other two voted to decertify their union representation. In the United States, Walmart has been accused of firing 19 workers after they participated in pro-union protests on Black Friday. In other incidents, a judge ruled that two California stores threatened to fire workers for their unionization efforts. Most recently, Walmart has been accused of closing down another California store for its unionization efforts under the pretext of plumbing problems. According to a legal complaint, “In order to mask this, Walmart has closed 4 other stores making the same ‘plumbing’ claim. . . . This unprecedented ‘closure’ to fix ‘plumbing’ is part of Walmart’s overall national strategy to punish Associates who stand up and speak out for better working conditions.”

Ironically, Walmart has accepted unionization at its stores in over a dozen foreign countries, including Argentina, Brazil, China, Mexico, South Africa, and the United Kingdom. A Walmart spokesperson stated, “We recognize those rights. In that market, that’s what the associates want, and that’s the prevailing practice.”

With its failure to unionize Walmart in the United States, the UFCW has created a website called “Making Changes at Walmart” that highlights Walmart’s deficiencies as an employer, and it also sponsors a non-union workers’ group called the Organization United for Respect at Walmart—or “OUR Walmart”—that takes some of the tasks of an official union. While “OUR Walmart” cannot negotiate contracts, it can organize discussions and protests among workers. Walmart portrays all of the UFCW’s efforts as motivated by financial gain, since unionization of all U.S. Walmart stores would bring in $500 million a year in union dues. The UFCW, of course, makes the same accusation of financial greed against Walmart for its resistance to unionization.

Beneath the mutual accusations of greed, there is a genuine dispute between competing values. The best reasons for unionization are these:

• Unionizing Walmart is financially beneficial for Walmart workers and families. • Unionizing Walmart will set higher standards for working conditions throughout the

retail industry. • Unionization of all retail stores, including Walmart, will help reduce the continually

growing income gap between the wealthy and poor in the United States.

The best reasons against unionization are these:

• Increased wages will result in increased prices for consumers. • In many stores, Walmart wages are equal to or better than similar retailers.

Business Ethics Case Study 6.1: Walmart’s Battle Against Unionization (continued)

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• Walmart’s wage structure and its overtly anti-union position are legal, and discontent workers are free to seek employment elsewhere.

Walmart has made some significant changes in 2015 in employee wages and benefits, such as increasing workers’ pay to $10 per hour or more. But some questions still remain: Were these changes done to thwart unionization? Are they too little too late? Do the changes mean a union is not necessary?

Discussion Questions

1. Between Walmart and the UFCW, who has the stronger case regarding unionization, and why?

2. Walmart acknowledges the rights of workers to unionize in other countries where unionization is the prevailing practice. Could a case be made that unionization is the prevailing practice in the United States?

3. Whether you are against unions or not, is Walmart either morally or legally justified in closing stores that are moving toward unionization?

4. Under U.S. law, companies can be fined or sued for intimidating workers who seek to unionize. At the same time, it can be more costly for a company if its stores do unionize. Might it be financially worth the legal penalties to stop unionization efforts before they take hold? Discuss justifications one way or the other.

Sources: OccupyWallStreet (2014), “National Labor Relations Board Charge,” (2015), Mui (2001).

Business Ethics Case Study 6.1: Walmart’s Battle Against Unionization (continued)

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