250-759 Social Responsibility of Business

250-759 Social Responsibility of Business Prepared by W. L. Dougan

Chapter ThreeThe Ethical Treatment of Employees Ethical Theory and Business, 8th Edition Tom L. Beauchamp, Norman E. Bowie and Denis Arnold

Topics for Chapter 3 • Employment at Will • Risk information and workplace hazards • Whistle-blowing

Werhane and Radin • Principle of EAW • IN absence of law or contract, employers have right to hire, promote, demote or fire whomever and whenever they please • Prima facie hiring at will • In US for employees not covered by union agreement, legal statute, public policy or contract, employers may dismiss employees “for good cause, for no cause or for causes morally wrong without being guilty of legal wrong

Principle of EAW • Difference between public sectior employees and private sector employees

Due process • Means by which an employee can appeal a decision in order to get an explanation of the action and an opportunity to argue against it

Reasons for EAW • Proprietary rights of employers would be violate by elimination of EAW • EAW treats employee and employer rights equally • When taking a job, an employee commits to many conditions including loyalty and at-will conditions • Extending due-process rights to the workplace interferes with efficiency and productivity • Legislation and/or regulation of employment relationships undermine an overregulated economy

Proprietary rights of employers would be violated by elimination of EAW • Difference between persons and labor • Productivity as property • However persons can be distinguished between their possessions (a corporation) but persons cannot be separated from their working • Also, treating an employee in an at-will fashion is similar to treating that employee as property

EAW treats employee and employer rights equally • Freedom of contract • EAW limits freedom of contract • However, freedom of contract violates BOTH employee and employer rights

An employee commits to many conditions including at-will conditions • However, the conditions of loyalty, trust and respect, to be valid, should pertain to both parties • Equal obligation and mutual restriction

Extending due-process rights to the workplace interferes with efficiency and productivity • Employer must have ability to fire inefficient employees • Due process is costly and time-consuming • Workers can give up some basic rights for money • Workers implicitly agree in exchange for higher wages • However, this assumes that two previous points are true

Legislation and/or regulation of employment relationships undermine an overregulated economy • However, procedural and substantive due process are consistent with the ability to fire employees

Due process in public versus private employees • Public employees have need to due process because of the political influences on their jobs • EAW could undermine public welfare in case of a public employee • SO, if public employees should have these rights, why wouldn’t private employees have them as well?

Richard Epstein • “In Defense of Contract at Will” • Public action in favor of protection of employees is increasing • EAW works to the mutual benefit of employer and employee

Three dominant standards for evaluation of a doctrine • Intrinsic fairness • Effects on utility or wealth • Distributional consequences

Intrinsic fairness of EAW • Freedom to contract as an end in itself • Desire to determine conditions of employment is as basic as marriage or religion • We should not limit freedom to engage in any of these without explicit justification • Limits on freedom of contract already protect a large number of conditions • Force • Fraud • Diminished capacity

Effects OF EAW on utility or wealth • Difficult to assume that employees would typically enter into contracts that are not beneficial to them • Employee can use contractual rights to control firm, too. • Real issue is not how to minimize employer abuse, but to how to maximize the gain from the relationship

Effects of EAW on utility or wealth (continued) • EAW helps firm to bear the risk of inappropriate employee behavior • Firm use of EAW is controlled by the risk of loss of reputation, this is not as much an issue for employees • Employee is given a right to many choices with EAW • EAW allows employee to sample employment conditions • EAW is cheap to administer

Distributional consequences • Difficult to imagine how changes in EAW can more equitably distribute value • Diminishing of EAW would have negative consequences on employee shareholders (pension plans)

Source: Canadian Labour Congress Worker Safety Bill of Rights • The right to know. • The right to be warned. • The right to independent expertise. • The right to refuse unsafe work. • The right to shutdown unsafe operations. • The right to refuse to pollute. • The right to participate equally in occupational health and safety matters through joint committees with trained representatives.

Source: Canadian Labour Congress Worker Safety Bill of Rights • The right to expeditious enforcement. • The right to be compensated. • The right to obtain relevant employment data to support valid scientific studies related to health and safety. • The right to open a contract and to strike over health and safety issues. • The right to health and safety training. • The right of unions to have intervenor status in coroner’s inquests and similar tribunals. • The right to first aid in emergencies.

“The Right to Risk Information and the Right to Refuse Workplace Hazards” • Ruth R. Faden and Tom L. Beauchamp • Worker right to information • Be informed about exposure • Medical records • Worker right to refuse hazardous work • Worker right to help determine workplace standards

Right to know • What determines “right to know” standard? • Reasonable person standard • Serious hazards may require individual disclosure • Subjective standard • Idiosyncratic information may require different standard • Combination

Right to Risk Information • Right-to-know balance • Employer perspective • Protection of trade secrets important • Employee perspective • Need to be informed • Right to know has little effect without power to change situations

Right to change situation • Proposed standards for employee exit from a hazardous situation: • Good-faith subjective standard – Requires only that the worker honestly believe that a health hazard exists. • Reasonable person standard – Requires that the belief be reasonable under the circumstances that a health hazard exists. • Objective standard – Requires evidence, usually from an expert, that a threat exists.

Managing Workplace Hazards • TRAINING is important to • Giving the employees the right information so they can make informed decisions • Topics should include: • Education about the workplace hazards present • Employee rights and how to exercise these rights

“The Nature of the Worker’s Right to Know” • Thomas O. McGarity • Employer reluctance to inform employees • Paternalistic concern for the employee’s health and well being. • Lack of employee education or training to put the risk information to use. • Informed employees will likely demand higher wages and/or safer working conditions.

Worker’s Right-to-Know • Competing moral and practical considerations • Autonomy • Fairness • Utility/Efficiency • Innovation • Paternalism

Michael Davis • “Some Paradoxes of Whistle-Blowing” • Standard Theory of Whistle-Blowing • Problems (paradoxes) in standard theory • Less paradoxical theory • Test of new theory

Standard Theory of Whistle-Blowing • Justified acts • Permitted by morality • Required by morality • Morally permitted and required for other reasons • This paper is about moral justification • Definition • Revealing something not known • Intention to prevent something bad • To gain information through being trusted • Doesn’t reveal information for self-benefit • Reveals what organization doesn’t want revealed

Standard Theory of Whistle-Blowing (continued) • Disloyalty is morally permitted when • Organization to which whistleblower belongs will do serious harm • Whistle-blower has identified a threat of serious and considerable harm, reported it and concluded that the report would have no effect • Whistle—blower has exhausted all internal recourse • Whistle-blower has evidence that would convince a reasonable, impartial observer • Whistleblower has reason to believe that revealing the threat will prevent harm at reasonable cost • Based on a moral requirement to prevent harm

Three paradoxes • Cost of whistle-blowing provides no justification for central cases of whistle blowing • Ambiguity in the term “serious and considerable harm” • Prevention of “harm” instead of “moral wrong” means the conditions meeting standards of whistle-blowing are narrow

Complicity theory • Complicity presupposes wrong, not harm • Creates a more compelling obligation

Complicity Theory • There is a moral obligation to reveal information to the public when • What you reveal derives from your work in an organization • You are a voluntary member of that organization • You believe that the organization has engaged in serious moral wrongdoing • You believe that your work for that organization will contribute to the wrong if you do not reveal the information • You are justified in beliefs 3 and 4 • Beliefs 3 and 4 are true

Complicity versus Whistle-blowing • Condition 1 means revealer not a spy • Voluntary participant means revealer is not coerced • Condition 3 means moral wrong, not harm • Condition 4 does not require prevention, only belief that behavior is wrong • Condition 5 requires truth revealer to be justified and correct about moral wrong • Complicity does not require going through channels • No circumstances of morally permitted, but not required with complicity theory

250-759 Social Responsibility of Business