Business, Ethics & Society Research Paper Starter

Business, Ethics & Society

(Research Starters)

This article focuses on how corporations and the government have responded to unethical behavior by employees. There will be a discussion of the role of whistleblowers as well as how regulations such as the False Claims Act, Sarbanes-Oxley Act and the Lloyd-La Follette Act have been implemented in order to encourage employees to report acts of misconduct. In addition, there will be a review of how employees use organizational justice as a factor in the whistle blowing process.

Keywords Cynthia Cooper; Ethics; Enron; False Claims Act; Lloyd-La Follette Act; Organizational Justice; Sarbanes-Oxley Act; Securities and Exchange Commission (SEC); Sherron Watkins; Whistleblowers; WorldCom



Given the competitiveness in the world today, many people are tempted to go outside of the rules and regulations of society in order to get ahead. Although many would argue that traits such as honesty and credibility are valued, temptations have lured some to act irresponsibly. Actions such as cheating, stealing, lying and bribing have become common in the workplace. Good moral values and actions are becoming the exception rather than the rule. How can the trend turn? Organizations must put policies in place that will encourage employees to do the right thing and inform the proper authorities when illegal actions and dishonesty take place.

Unfortunately, when employees step forward and alert the organization of wrongdoings, they are labeled whistleblowers and negative labels are applied to them. Instead of being considered heroes for doing the right thing, they tend to be chastised and some never fully recover from the experience. For many of these individuals, there is a lost of trust in fellow employees and the organizations in which they work.

For some, the earth moves when they discover that people in authority routinely lie and that those who work for them routinely cover up. Once one knows this, or rather once one feels this knowledge in one's bones one lives in a new world. Some people remain aliens in the new world forever. Maybe they like it that way. Maybe they don't have a choice (Alford, 2001, p. 52).

This can be a devastating moment for many. Everything that they have believed and trusted is turned upside down. In some cases, these employees may have been friends with the culprits outside of the workplace, which may place an additional burden on the potential whistleblower. It is unfortunate that society has come to a point where individuals with moral values and a sense of right and wrong are treated as outsiders of societal norms. Whistleblowers have been ostracized, reprimanded, forced to transfer, referred to receive psychiatric care, assigned to menial duties, dismissed and blacklisted. There are reports of where they have been unable to seek employment at other companies because there is a fear that the same situation will occur. Organizations respond to whistle blowers with hostility and fear.

The federal government and some states have passed legislation to protect employees who decide to become whistleblowers. According to Sheeder (2006), the federal False Claims Act provides protection for:

Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated in the terms and conditions of employment by his or her employment because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section (i.e. a whistleblower action) shall be entitled to all relief necessary to make the employee whole (p. 39).

Many courts will provide protection when:

• An employee becomes a participant in a "protected activity" (i.e. when an employee decides to confront an employer about illegal activities such as fraud). • The employer becomes aware of the "protected activity."
  • The employee is penalized as a result of coming forth about the "protected activity" (i.e. termination, harassment). When it has been determined that an employee is a victim of retaliation, he or she may petition for:
• Reinstatement with the same seniority that he/she would have had if the adverse action did not occur. • Two times back pay • Interest on the back pay • Special damages (i.e. compensation for emotional distress, recovery of litigation costs, and reasonable attorney's fees)
  • Any type of relief that will assist the employee in becoming a whole person again (Sheeder, 2006, p. 39-40). An employee is entitled to all of the relief listed above as well as any recovery obtained by the government based on the regulations of the False Claims Act. Given the financial penalties for acts of wrongdoing, employers are encouraged to monitor the activities of their organization so that these fines are not imposed.

In order to avoid the costly expenses of these types of situations, many organizations are encouraged to draft policies that will assist employees in feeling comfortable about coming forward to advise the senior management team and the outside world of fraudulent behavior occurring in companies today. Tennebaum provided four elements of a good whistleblower policy. The four elements are:

  • A policy that has a clear purpose and a statement of intent to protect whistleblowers to the fullest extent possible. The purpose may include creating an environment where the whistleblower can feel safe.
  • Guidelines that provide a detailed explanation of how the organization will attempt to protect the whistleblower.
  • Procedures on who, when and how to contact the organization in order to report unethical and/or illegal behavior.
  • A statement declaring what the organization will do as a result of the whistle-blowing activity (Associations Now, 2007, p. 12).
  • In addition, employers should be proactive and see if they can determine (1) the types of behaviors or situations that encourage employees to participate in unethical behavior and (2) the types of actions that encourage employees to step up and become whistleblowers. Sheeder (2006) identified six common factors that have encouraged employees to become whistleblowers. In most cases, the lack of organizational support was enough for the employee to seek external assistance in correcting improper behavior. Each of the mentioned scenarios is based on a real life case study.

    • Expect employees to participate in fraudulent conduct. There have been many situations where senior managers are the culprits. In an effort to improve the organization's image and financial records, some executives have encouraged and mandated employees to participate in unethical behavior. Excuses such as "it's really not hurting anyone", "we are getting what we deserve," "be a team player," and "this action offsets the system" have been used in order to justify the organization's behavior. When an employee refuses to play the game, he/she may be terminated, which forces the former employee to file a retaliation lawsuit.
    • Dismiss employee concerns or complaints. Some employees have attempted to alert the appropriate officials only to find out their concerns have been ignored. Once they have worked through the appropriate channels within the organization, they may feel as though their only recourse is to go externally and hire an attorney to champion their cause.
    • Forget about a professional's ethical duty to report. Some employees may feel that they are obligated to report unethical practices in order to maintain the image of their profession. For example, a police officer may become aware of the fact that his partner is working with criminals. After attempting to reason with the partner, the police officer may feel a need to alert internal affairs in order to (1) maintain a positive image of police officers in the eyes of the community and (2) protect the public from criminal activities.
    • Don't give "Public Duty" enough respect. There have been cases where an organization may be over billing another entity and the employee may not be able to support the deception. For example, some hospitals have been accused of overcharging Medicare programs. There may be an employee who believes that the process is unethical and innocent people may suffer as a result of the deceptive actions. Therefore, the employee feels obligated to turn the hospital in to the proper authorities. The employee may believe that it is their civic and public duty to do so.
    • Fail to take prompt and proper action correction. Many employees have followed the company's policy on reporting fraudulent activity only to find out that their good deed has...

(The entire section is 4088 words.)