Chapter 16 - Employees and the corporation. Learning objectives of this chapter: Understanding workers’ rights to organize unions and bargain collectively, knowing how government regulations assure occupational safety and health and what business must do to protect workers, evaluating the limits of employers’ duty to provide job security to their workers,…
Chapter 16 Employees and the Corporation McGrawHill/Irwin Copyright © 2014 by The McGrawHill Companies, Inc. All rights reserved Ch 16: Key Learning Objectives Understanding workers’ rights to organize unions and bargain collectively Knowing how government regulations assure occupational safety and health and what business must to protect workers Evaluating the limits of employers’ duty to provide job security to their workers Appraising the extent of employees’ right to privacy, when businesses monitor employee communications, police romance in the office, test for drugs or alcohol, or subject employees to honesty tests Debating if employees have a duty to blow the whistle on corporate misconduct, or if employees should always be loyal to their employer Assessing the obligations of transnational corporations to their employees around the world 162 The Employment Relationship Employees are an important market stakeholder group Employees are responsible for carrying out the work of the company At the same time, employees are dependent on the company for their livelihood Nature of the employment relationship conveys rights and duties on both sides 163 Figure 16.1 Rights and Duties of Employees and Employers 164 Workplace Rights Employees in the United States enjoy important legal guarantees They have the right to: organize and bargain collectively have a safe and healthy workplace, and to some degree, job security 165 Right to Organize and Bargain Collectively In the United States, and in most other nations, employees have a fundamental legal right to organize labor unions and to bargain collectively with employers Workers have a right to hold an election to decide which union will represent them Labor unions have the right to negotiate wages, working conditions, and other terms of employment Employers are required to bargain with unions in good faith If agreement cannot be reached, a strike might occur 166 Right to Organize and Bargain Collectively Influence of labor unions has varied during periods in U.S history: During the 1930s New Deal period unions were very popular Since the mid-1950s, there has been a decline in union membership In 2011, only about 12% of all U.S workers were members of a union The percentage was higher, 37%, in government employment In the wake of the Great Recession, elected officials in several states sought to weaken unions by limiting the rights of public sector workers Some unions have departed from adversarial approach to work cooperatively with management (e.g Kaiser 167 Right to Safe and Healthy Workplace Annually, more than million workers in private industry are injured or become ill while on the job, according to the U.S Department of Labor Occupational Safety and Health Act, passed in 1970, gives workers the right to a job “free from recognized hazards that are causing or likely to cause death or serious physical harm” This law is administered by the Occupational Health and Safety Administration (OSHA) Since the agency’s creation in 1970 the overall workplace death rate has been halved 168 Right to Safe and Healthy Workplace Working conditions remain very dangerous in many developing countries For example: In 2010, an electrical fire at a sportswear factory in Dhaka, Bangladesh killed 29 workers and injured more than 100 more, many of whom had jumped from upper-story windows to escape the flames Managers had intentionally locked exits to prevent theft and had not conducted fire safety drills In 2012, PVH Corporation—the parent of such brands as Tommy Hilfiger, Calvin Klein, and DKNY—partnered with a group of NGOs and trade unions to provide worker training and push for stronger government enforcement of safety laws 169 The Right to a Secure Job In the United States, since the late 1800s, the legal basis for the employment relationship has been employment-at-will Employment at will is a legal doctrine that means employees are hired and retain their jobs “at the will of” (i.e at the sole discretion of) the employer The equal employment and other laws prevent discriminatory terminations as well as those that would constitute a violation of public policy 1610 The Right to a Secure Job The commitments that employers and employees make to each other go beyond mere legal obligations Cultural values, traditions, and norms of behavior also play important roles The term social contract refers to the implied understanding between an organization and its stakeholders This is not a legal contract, but rather a set of shared expectations Should companies have strong or weak bonds with their employees? 1611 Privacy in the Workplace An important right in the workplace as elsewhere, is privacy In the business context, privacy rights refer to primarily protecting an individual's personal life from an unwarranted intrusion by the employer Key workplace issues where privacy dilemmas often emerge include electronic monitoring, office romance, drug and alcohol abuse, and honesty testing 1612 Privacy in the Workplace Electronic monitoring New technologies enable companies to gather, store, and monitor information about employees’ activities A company’s need for information, particularly about its workers, may be at odds with an employee’s right to privacy Management justifies the increase in employee monitoring for a number of reasons: • • Employee efficiency Fear of lawsuits if employees act inappropriately 1613 Privacy in the Workplace Office romance – requires careful balancing between legitimate employer concerns and employee privacy A 2011 survey showed that 38 percent of workers said they had dated a co-worker at least once during their careers, and of these relationships almost a third had led to marriage Today most companies try to manage office relationships rather than ban them outright Sometimes consensual relationship agreements are required to protect against possible harassment lawsuits if the people involved later break up 1614 Privacy in the Workplace Drug and alcohol testing Drug abuse costs U.S industry and tax payers an estimated $181 billion a year Drug-Free Workplace Act (1988) – required federal contractors to establish and maintain a workplace free of drugs About two-thirds of companies test employees or job applicants for illegal substances, according to a 2011 study Drug testing is typically used on three different occasions: Pre-employment screening Random testing of employees Testing for cause 1615 Figure 16.2 Pros and Cons of Employee Drug Testing 1616 Privacy in the Workplace Alcohol use and addiction causes twice the problems of all illegal drugs combined About percent of full-time employees are heavy drinkers Up to 40 percent of all industrial fatalities and 47 percent of industrial injuries are linked to alcohol U.S businesses lose an estimated $88 billion per year in reduced productivity directly related to alcohol abuse Employee Assistance Programs (EAPs) – offer counseling, rehabilitation programs, and follow-up 1617 Privacy in the Workplace Employee Theft and Honesty testing Employee theft has emerged as a significant economic, social, and ethical problem in the workplace Employee Polygraph Protection Act (1988) – severely limited polygraph testing for employers and prohibited approximately 85 percent of all such test previously administered in the U.S Although controversial, many companies have switched to written psychological tests 1618 Whistle-blowing and Free Speech in the Workplace Free speech in the workplace Another area where employer and employee rights and duties sometimes conflict U.S Constitution protects free speech; however, does not specifically protect freedom of expression in the workplace Employees are not generally allowed to speak out against their employers, due to legitimate interests of the business When society’s interests override those of the individual business, employee may feel the need to speak out or “blow the whistle” 1619 Whistle-blowing and Free Speech in the Workplace Whistle-blowing – when an employee believes his/her employer has done something that is wrong or harmful to the public, and he/she reports the alleged misconduct to the media, government, or high-level company officials conditions must be satisfied to justify whistle-blowing Organization is doing (or will do) something that seriously harms others Employee has tried and failed to resolve the problem internally Reporting the problem publicly will probably stop or prevent the harm The harm is serious enough to justify the probable costs of disclosure to the whistle-blower 1620 Working Conditions around the World Laws and practices that establish fair wages, acceptable working conditions, and employee rights vary greatly around the world One very public issue is sweatshops Factories where employees, sometimes including children, are forced to work long hours at low wages, often under unsafe working conditions Number of well-known companies have been criticized for poor working conditions in overseas factories (e.g Nike, Walmart, Disney, McDonald’s) 1621 Fair Labor Standards Labor standards refers to the conditions under which a company’s employees, or the employees of its suppliers, subcontractors, or others in its commercial chain, work Universal rules or standards related to these are called fair labor standards 1622 Fair Labor Standards In the face of growing concerns over working conditions overseas, a debate has developed over how to best establish fair labor standards for multinational corporations: Voluntary corporate codes of conduct Nongovernmental organizations labor codes Industry-wide labor codes Whatever the approach, certain common questions emerge in any attempt to define and enforce fair labor standards 1623 Common Questions Regarding Fair Labor Standards What wage level is fair? Should market set the standards? Do multinationals have a responsibility to provide a wage that supports decent standard of living? Should standards apply to just the firm’s own employees or all workers having a hand in making the product? Responsibility of firm to its own employees is clear, responsibility to subcontractors employees is indirect How should fair labor standards be enforced? Who should be responsible for monitoring? The company or an independent body? 1624 ... occasions: Pre-employment screening Random testing of employees Testing for cause 16 15 Figure 16. 2 Pros and Cons of Employee Drug Testing 16 16 Privacy in the Workplace Alcohol use and addiction... Nature of the employment relationship conveys rights and duties on both sides 16 3 Figure 16. 1 Rights and Duties of Employees and Employers 16 4 Workplace Rights Employees in the United States... organize and bargain collectively have a safe and healthy workplace, and to some degree, job security 16 5 Right to Organize and Bargain Collectively In the United States, and in most