1. Ethics and the Conduct of Business
Eighth edition
Chapter 8
Employment Rights
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2. Modules Introduction: Employment Rights 8.1: Employment at Will
8.2: Right to Due Process
8.3: Freedom of Expression
8.4: Workplace Democracy
8.5: Worker Compensation
8.6: Executive Compensation
Conclusion: Employment Rights
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3. Learning Objectives (1 of 2)
8.1: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal
8.2: Describe the main arguments and principles of the Model Employment Termination Act that support the right of employees to due process in employment decisions
8.3: Explain the significance of freedom of expression for employees, the extent to which it is protected by law, and the arguments for and against this right in the workplace
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4. Learning Objectives (2 of 2)
8.4: Analyze the correlation between worker participation and workplace democracy and how Dahl's argument supports workplace democracy as a right
8.5: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage
8.6: Evaluate the reasoning underlying criticisms and justifications of the compensation for top executives
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5. Introduction: Employment Rights
Case Study: The Firing of Robert Greeley
Examining at-will employment
Employers’ rights vs. Employee rights
Due process
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6. Figure 8.1: Arguments Used to Justify Employment at Will
Property rights argument
Freedom of contract argument
Efficiency argument
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7. 8.1: Employment at Will (1 of 3)
Objective: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal
8.1.1: Property Rights Argument
Employers and employees own property
Exchange of property between the parties
Downside
8.1.2: Freedom of Contract Argument
Overview
8.1.1: Property Rights Argument
Point 1- Employers and employees own property
Employers own machinery, raw materials, and money for wages
Employees own labor, or productive power
Point 2- Exchange of property between the parties
Employer is free to utilize productive power
Employee is free to accept work under the conditions or seek job elsewhere
Restrictions on this agreement is violation of property rights
Point 3- Downside
Limited when in conflict with each other’s right
Impoverishes workers
Employers benefit more
8.1.2: Freedom of Contract Argument
Point 1- Overview
Employment is a contractual agreement between employers and employees
Restrictions on the agreements that can be made between the parties means violation of freedom of contract
Point 2- Downside
Difference in bargaining power between employers and employees
Employers take advantage
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8. 8.1: Employment at Will (2 of 3)
Objective: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal
8.1.3: Efficiency Argument
Employers granted freedom to choose workers
Employee benefits
Consequences of job immobility
8.1.3: Suitability
Point 1- Employers granted freedom to choose workers
To decide the number of workers required
To choose best workers
To assign jobs to workers
To dismiss workers who perform poorly
Benefits employer more
Point 2- Employee benefits
Better compensation
Job mobility
Point 3- Consequences of job immobility
Employers can abuse employee
Choice of first job becomes critical
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9. Table 8.1: Arguments Supporting Employment at Will
Premise
Application
Property Rights Argument
Both employers and employees have “property” of some economic value and the right to determine what they do with their own property.
Employers have wages and employees have labor. They are free to buy and sell this “property” or accept and refuse offers for it.
Freedom of Contract Argument
Employment is a contractual arrangement between employers and employees. Both have the right to contract as they choose.
Excessive limits on the agreements that can be made between employers and employees violate their freedom of contract.
Efficiency Argument
This utilitarian argument relies on the importance of employment at will for the efficient operation of business, which benefits employers, employees, and society.
Many employers and employees agree to employment at will, so it benefits both parties and allows the most efficient use of all resources.
Arguments supporting employment at will
Three arguments supporting employment at will
Underlying principles
How those arguments support the doctrine
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10. 8.1: Employment at Will (3 of 3)
Objective: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal
8.1.4: Exceptions
Restrictions to employment-at-will
8.1.4: Exceptions
Point 1- Restrictions to employment-at-will
Public policy
Implied contract
Bad faith and malice
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11. Figure 8.2: An Acceptable Employment at Will Doctrine
Supporting arguments
Necessary restrictions
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12. 8.2: Right to Due Process 8.2.1: Support for Due Process
Objective: Describe the main arguments and principles of the Model Employment Termination Act that support the right of employees to due process in employment decisions
8.2.1: Support for Due Process
Three arguments to support due process
8.2.2: Law of Due Process
Features
Model Employment Termination Act
8.2.1: Support for Due Process
Point 1- Three arguments to support due process
Terminated employees suffer substantial harm
Respect for the dignity of workers
Good management practice
8.2.2: Law of Due Process
Point 1- Features
Introduce the legal right not to be dismissed without cause
Introduce a fair hearing into every employment relation
Point 2- Model Employment Termination Act
Forbids employers from terminating employee without good cause
Arbitration and reinstatement are remedies for unjust termination
Does not cover all employees
Protects employers from litigation
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13. 8.3 Freedom of Expression (1 of 2)
Objective: Explain the significance of freedom of expression for employees, the extent to which it is protected by law, and the arguments for and against this right in the workplace
8.3.1: Defining Freedom of Expression
Four elements
Definition
8.3.2: Legal Protection for Expression
American law
Two provisions
8.3.1: Defining Freedom of Expression
Point 1- Four elements
Nature of expression
Subject of expression
Location of expression
Audience of expression
Point 2- Definition
Can be defined narrowly or broadly
It might be restricted to the expression of views about the workplace in the workplace
8.3.2: Legal Protection for Expression
Point 1- American law
No restriction on actions of private business
Public and private employees treated differently
Point 2- Two provisions
First Amendment guarantee of free speech
Doctrine of employment at will
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14. 8.3 Freedom of Expression (2 of 2)
Objective: Explain the significance of freedom of expression for employees, the extent to which it is protected by law, and the arguments for and against this right in the workplace
8.3.3: Arguments over Expression
Two arguments
Just grounds for dismissal
8.3.3: Arguments over Expression
Point 1- Two arguments
Individualist justification
The social argument
Point 2- Just grounds for dismissal
Derogatory insults
Disruptive criticism
Disclosure of confidential information
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15. 8.4 Workplace Democracy 8.4.1: Participation and Democracy
Objective: Analyze the correlation between worker participation and workplace democracy and how Dahl's argument supports workplace democracy as a right
8.4.1: Participation and Democracy
Overview
8.4.2: Arguments for Democracy
Two moral arguments
Dahl’s argument
8.4.1: Participation and Democracy
Point 1- Overview
Worker participation
Workplace democracy
8.4.2: Arguments for Democracy
Increases organizational effectiveness
Increases productivity
Point 2- Two moral arguments
Contribution to political democracy
Need to legitimize authority
Point 3- Dahl’s argument 
Democracy is necessary in corporations
Members are like citizens
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16. 8.5 Worker Compensation (1 of 2)
Objective: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage
8.5.1: Setting Wages
Overview
Factors that determine pay
Correction of unequal distribution of wealth
8.5.2: Market Outcomes
Economist view of wages
Efficient markets
Market justice
8.5.1: Setting Wages
Point 1- Overview
Pay determined by market force
Employers must consider both level and form of pay
Point 2- Factors that determine pay
Production
Company strategy
Point 3- Correction of unequal distribution of wealth
Placing legal limits
Provide basic needs
Redistribute wealth through government programs
8.5.2: Market Outcomes
Point 1- Economist view of wages
Reflection of market price of labor
Function of supply and demand
Point 2- Efficient markets
Market-clearing price
All workers receive market-clearing price
Wages equal marginal product of labor
Point 3- Market justice
Arguments for justifying wage setting
Challenges to market justice
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17. 8.5 Worker Compensation (2 of 2)
Objective: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage
8.5.3: Minimum Wage
Rationales for minimum wage legislation
8.5.3: Minimum Wage
Point 1- Rationales for minimum wage legislation
Exploitation
Redistribution
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18. 8.6 Executive Compensation
Objective: Evaluate the reasoning underlying criticisms and justifications of the compensation for top executives
8.6.1: Criticism of CEO Pay
Condemnation of CEO pay
8.6.2: Justifying CEO Pay
Justifying CEO pay
8.6.3: Problems with Justification
Bebchuk and Fried thesis
8.6.1: Criticism of CEO Pay
Point 1- Condemnation of CEO pay
Pay unrelated to performance
Lack of proportion between executive pay and pay of low- level employees
Unintended consequences
8.6.2: Justifying CEO Pay
Point 1- Justifying CEO pay
Set by board of directors
Marginal product
Motivation to perform
Induce to become a loyal agent
8.6.3: Problems with Justification
Point 1- Bebchuk and Fried thesis
CEOs have excessive influence over the process
Board members are linked to CEO
Board is advised by compensation consultant who works for the company
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19. Conclusion: Employment Rights
Employee rights are important
Workers are sensitive to unjust treatment
Due process in termination has moral grounding
Labor law ensures just treatment of workers
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