Unfair Labor Practices - Case Study Example

Ethical Decisions: Unfair Labor Practices 2007 "It is essential that tomorrows managers know how to recognise and cope with the ethical dilemmas theywill all face in the course of their careers. Business ethics teaching on management courses is vitally important." Sir Peter Walters, former Chairman of BP and president of IBE. The paper studies the issue of unfair labor practices and examines six steps of making and implementing relevant ethical decisions. Ethical decisions acquire the major role in HR management and creating of corporate success. 1. Defining the issue In law the term ‘unfair labor practices’ refers to the case of employer’s or union violation of the national Labor Relations Act (NLRA), the main federal labor law regulating employer and union relations in the private sector. The public sector employees are protected by the analogous Civil Service Reform Act, while railroad and airline workers are covered by the Railway Labor Act. Employees experiencing unfair labor practices singled out by these laws have the right to file charges (Employees Issues. Com. 2007; FLRA Authority 2007). However, in the given work the term ‘unfair labor practices’ has a broader meaning and includes all the possible violations of the workers’ rights under any labor law or regulation at the federal, state or local level. Equal Employment Opportunity (EEO) laws protect individuals from discriminatory practices on the bases of race, ethnicity or color (African American, Native American, Hispanic, Asian), gender (female, pregnant), age (over 40), disabilities (mental and physical), sexual orientation, military experience or religion, and ensure that all the individuals have equal opportunities for getting a job and being promoted. The Equal Employment Opportunity Commission (EEOC) established by Title VII of the 1964 Civil Rights Act has the major enforcement authority for protective and affirmative actions for a number of laws. These are: Civil Rights Act of 1964 (discrimination on the basis of race, color, national origin, religion, or sex); Civil Rights Act of 1991; Equal Pay Act of 1963 (pay differences based on sex for equal work); Pregnancy Discrimination Act of 1978 (discrimination or dismissal of women because of pregnancy alone, job security during maternity leaves); American with Disabilities Act (discrimination against individuals with physical or mental disabilities, “reasonable accommodations” for the disabled); Vocational Rehabilitation Act (discrimination on the basis of physical or mental disabilities, employees should be informed about Affirmative Action plans). The EEOC also enforces charges of sexual harassment (Cliffs Notes 2007). Fair Labor Standards Act of 1938 (FLSA) is a federal law applying to employees engaged in and producing goods for interstate commerce. It establishes a national minimum wage, guarantees time and a half for overtime and prohibits most employment of minors in "oppressive child labor". Under the FLSA employees who are underpaid can recover not only their minimum wages and overtime payment, but also get an equal amount as liquidated damages and reasonable attorney fees. The employer must keep records of hours worked by all the employees and cannot retaliate against employees making complaints (Find U.S. Law 2007). Other Federal Laws that shape HRM practices include: Age Discrimination in Employment Act (1967, 1978, 1986), Occupational Safety and Health Act (1870), Vietnam-Era Veterans Readjustment Assistance Act (1974), Mandatory Retirement Act (1978), Immigration Reform and Control Act (1986, 2007), Worker Adjustment and Retraining Notification Act (1988), Employee Polygraph Protection Act (1988), Family and Medical Leave Act (1993) (Cliffs Notes 2007) Unfair labor practices are non-ethical, while they mean violation of the U.S laws and depriving individuals of their legit rights. All of them can be sued, causing huge pays off. Unfair labor practices concern not only the employer-employee relationships. They undermine the reputation of the organization, diminish customers’, investors’ and business partners’ trust. Being unethical unfair labor practices harm all the stakeholders, resulting in impossibility to develop for the company, financial difficulties or even collapse of an organization. 2. Identifying the stakeholders The followers of the Stakeholder Theory view business as “the creation of value for stakeholders and the trading of that value with free consenting adults” (Freeman, Wicks, Parmar 2004, p. 6). In the last two decades of the twentieth century the word stakeholder started meaning a person or an organization having some legitimate interests in a project or an organization. The decision–making process for such institutions as business corporations, non-profit organizations or government agencies should be based on the principles of the stakeholder fairness, declared by Freeman, Post, Preston, Sachs, Phillips, and other author. Stakeholder theory is contrasted to the stockholder approach to business, stating that an organization can maximize its value only through common benefits of all the relevant persons and groups. The theory proves that not only stockholders should complete control over a firm, while investors, employees and suppliers also take part and risks in creation of the business’s success. The company’s image being its greatest value, it is possible to prevent damage of the image fulfilling the needs of all the stakeholders, ranging from local community and customers to the employees and owners. As we can see the term stakeholders refers to all the individuals or organizations that will or may be affected by the firm’s actions, be they involved (managers, employees, suppliers, customers) or not (local population, associates, contractors, partners, governments, political groups), as well as those who have interests in the firm’s success, and those who may be influenced by the firm’s approach to pollution prevention, environmental regulation, energy conservation (Wade and Schneberger 2006; Phillips 2004). Precisely, the interests of stakeholders may include the following: profit, performance and possibilities for the development for the owners and shareholders; performance and targets achievement for the top management; rates of payment and job security for the employees; observance of fair labor standards and affirmation plan for the unions; taxes, VAT and legislation for the government; quality, value, service for the customer; credit scores, liquidity and new contracts for the creditors, employment opportunities, environmental issues and the like for the local communities. 3. Clarifying the ethical issues In the conditions of the enlarged focus on the ethical corporate responsibility codes of ethics have become an integral part of corporate documentation. This document “embodies the ethical commitments of your organization” telling the world “who you are, what you stand for, and what to expect when conducting business with you” (MacDonald 2006). Simon Webley (2001) recommends that Preface or Introduction, signed by the Chairman or Chief Executive Officer or both, should set the purpose of the code, mentioning core values important for the top management, including integrity, responsibility and reputation and describing “the leadership commitment in maintaining high standards both within the organization and in its dealings with others”, as well as “seting out the role of the company in the community and end with a personal endorsement of the code and the expectation that the standard set out in it will be maintained by all involved in the organization”. Key areas to include are: A. The Purpose and Values of the Business (financial objectives and the business role in society as the company sees it); B. Employees (the companys policies on: recruitment, working conditions, development and training, health, safety & security, rewards, equal opportunities, diversity, retirement, redundancy, discrimination and harassment, use of company assets by employees); C. Customer Relations (the importance of customer satisfaction and good faith in all agreements, quality, fair pricing and after-sales service); D. Shareholders or other providers of money (protection of investments and proper return, commitment to accurate and timely reports on achievements and prospect); E. Suppliers (accurate settling of bills, cooperation, no bribery, etc); F. Society or the wider community (compliance with laws and regulations, environmental responsibility, the company’s involvement in local affairs, the corporate policy on sponsorship, education and charity); G. Implementation (how the code is issued and used, means to obtain advice, awareness raising examples and training programs for all staff); H. Assurance, reporting and reviews (suggestions on how to know if the code is effective, reporting to the board at least annually, the procedures of reviewing and updating the code) (Webley 2001, Content). 4. Resolving the issue After the organization has created a written personnel handbook or policy, which is regularly reviewed and updated, and a) describes recruitment, hiring termination and working standards for all staff and b) maintains the compliance with the regulations named, it is necessary to apply those standards in daily work. McNamara (2007) recommends the following checklist of HRM indicators. The organization follows nondiscriminatory hiring practices and provides obligatory training and re-training on the policy knowledge among all staff members, gathering their confirmation signatures. When hiring people the organization provides precise description of the job, including duties, qualification, reporting relationships and key indicators. Top management salaries are established in compliance with the general compensation plan. The employees’ performance appraisals, a compensation plan, salary ranges and benefits are reviewed and documented regularly. The process for filling vacant positions is timely and prevents an interruption of program services or disruption to organization operations. The organization maintains the process of reviewing and responding to ideas, request, comments, perceptions and suggestions from all staff members. The organization provides opportunities for employees’ professional development and training, in the areas of their job skills, personal development and cultural sensitivity. Contemporaneous records documenting staff time is maintained in program allocations (McNamara 2007). The proper organization of the working process is beneficial for everybody. The employees feel satisfied and secured, they are motivated to fulfill their work better and follow the ethical standards. The management has strict guidance how to cope with difficult situation and has better chances to achieve targets and improve the performance. Then they will satisfy the requirement of the shareholders, business associates, investors, suppliers, and customers. Moreover, the organization that successfully implements its moral standards will have fewer problems with law, local governments and communities. 5. Addressing objections Undoubtedly, some objections could be raised to the resolution offered. Implementation of the moral standards may seem not that beneficial. Some business people are not accustomed to do business fairly. Some firms try to economize on wages, overtime payment, additional benefits for their employees. It also seems of no benefit to hire disabled people. Discriminatory attitudes are still not rare among many employers. In brief, business is still often built with the out-of-date orientation at profit and shareholder. Everything that is likely to cause expenses of money, labor force and time may be viewed as inappropriate. However, times have changed. The reputation of the firm is its major value, indeed. People tend to pay much attention to the ethical standards of corporations. The slightest shade of mistrust may cause huge losses for the organization. Besides, the governmental organizations have started severe check-ups of all the business and non-profit organizations. In case you are caught to violate any of the U.S. labor regulations, the settlement costs really much. So Jey Schleifer (2006) informs that only in 2003, more than $200 million was paid in Fair Labor Standards Act case settlements. However, a Hewitt Associates survey completed in 2004 “showed only 18% of employers surveyed planned to conduct a FLSA self-audit, an important step that could preclude real trouble if even a single (!) current or ex (!) -employee made a Fair Labor Standards Act complaint”. Obviously, it is better to conduct self-audit and maintain high ethical standards then to be checked and forced by the authorities, losing reputation and money for pay offs. 6. Implementing the resolution To ensure that resolutions become a reality management should keep to simple rules: behave in accordance with the ethical standards themselves, educate the employees, communicate the moral standards to other stakeholders and regularly check their implementation. To implement the code of ethics it is necessary to make sure that it is endorsed by the CEO or Chairman, integrate it into the running of the business, provide all the employees with a copy and listen to their reactions, make management and partners aware of the ethical principles, regularly review and update the code, make staff aware of the consequence of breaching the code, include ethical issues into training programs, reproduce a copy of the code in Annual Report for the shareholders and general public (Webley 2001, Implementation). The outcomes can be monitored through the reactions of the staff members, the rate of customer satisfaction, surveys, and internal reports and self-audits. It is necessary to see if the set targets have been achieved, if all the stakeholders are aware and committed to the ethical standards. References: Cliffs Notes (2007). HR Management Laws and Regulations. Principles of Management. Wiley Publishing, Inc. Retrieved October 20, 2007 from www.cliffsnotes.com/.../HR-Management-Laws-and-Regulations.topicArticleId-8944,articleId-8892.html - 81k EmployeesIsuues. Com. (2007). Unfair Labor Practices. Retrieved October 20, 2007 from employeeissues.com/unfair_labor-practices.htm - 42k FLRA Authority (2007). Unfair Labor Practices. Retrieved October 20, 2007 from www.flra.gov/procedure/filing/ulp.html - 5k Find US Law (2007). Fair Labor Standards Act. Retrieved October 20, 2007 from http://finduslaw.com/fair_labor_standards_act_flsa_29_u_s_code_chapter_8#2 Freeman, R. Edward, Wicks, Andrew C., Parmar, Bidham (2004). Stakeholder Theory and “The Corporate Objective Revisited”. Organization Science, Vol. 15, No. 3, May–June 2004, pp. 364–369 Available at: http://www.thunderbird.edu/wwwfiles/publications/magazine/fall2004/faculty-papers/2Corp-Obj-Freeman-Reply.pdf MacDonald, Chris (2006). Guidance For Writing A Code Of Ethics. Ethicsweb.ca. Retrieved October 20, 2007 from www.ethicsweb.ca/codes/writing-a-code-of-ethics.htm - 9k McNamara (2004). Checklist of Human Resource Management Indicators for Nonprofit Organizations. The Greater Twin Cities United Way. Authenticity Consulting, LLC. Retrieved October 20, 2007 from www.managementhelp.org/org_eval/uw_hr.htm - 25k Schleifer, Jey (2006). Will your overtime payment practices trigger a Fair Labor Standards Act (FLSA) audit? HR daily Advisor. BLR. Thursday June 15. Retrieved October 20, 2007 from hrdailyadvisor.blr.com/archive/2006/06/15/FLSA_overtime_audit.aspx - 30k Phillips, Robert (2004). Some Key questions about Stakeholder Theory. Ivey Business journal March/April. Retrieved October 20, 2007 from http://www.iveybusinessjournal.com/view_article.asp?intArticle_ID=471. Wade, Mike and Schneberger, Scott (2007). Stakeholder Theory. Appalachian State University. Retrieved October 20, 2007 from www.istheory.yorku.ca/stakeholdertheory.htm - 16k Webley, Simon (2001). Codes of Ethics. Institute of Business Ethics. Retrieved October 20, 2007 from http://www.ibe.org.uk/codesofconduct.html Read More