CHAPTER 18

Employees and the Corporation

McGraw-Hill/Irwin

Copyright 2014 by The McGraw-Hill 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 do 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

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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

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Rights and Duties of

Employees and Employers

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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.

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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.
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What is collective
bargaining?
Collective bargaining refers to the negotiation
process between a union (on behalf of the
bargaining unit it represents) and an employer to
work out an agreement that will govern the
terms and conditions of the workers'
employment. The agreement reached through
this negotiating process is called a collective
bargaining agreement (CBA). E.g. PIA
http://tribune.com.pk/story/604372/emergencybrakes-pia-unions-set-eyes-on-employee-buyout/
2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 7

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

Permanente)
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Right to Safe and Healthy

Workplace
Annually, more than 3 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 agencys creation in 1970 the overall workplace

death rate has been halved

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OHS issues in Pakistan

Children and OHS issues
Children work in carpet making, garages, welding,
shoeshine, garbage collecting, fresh flower sales,
and the chemical sector. Most children working in
garages use petrol as the solvent to clean auto parts.
This poses numerous hazards to their health,
specially because petrol is highly inflammable.
Welding is often carried out near their work stations,
and results in burns to children. Inhalation and skin
absorption of petrol fumes pose multiple health
hazards such as depression, low red cell counts, defatting of skin and even cancer due to benzene in the
petrol. Breathing petrol fumes can also be addictive.
2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 10

OHS issues in Pakistan Contd

Agriculture
Pesticides also harm soil and plants. In south Punjab and
Sindh Provinces during the cotton-picking season, many
women reported a variety of diseases; some even died due
to pesticide poisoning. This claim is supported by at least
one non-governmental organization.
Pesticides also weaken the immune system making workers
more liable to diseases like cancer, gastrointestinal
infection, and tuberculosis. Despite advances in medicine
during the last two decades, the general health of farm
workers has worsened.
http://www.amrc.org.hk/alu_article/occupational_health_and_safety/occupational_hea
lth_and_safety_in_pakistan

2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 11

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 Corporationthe parent of such brands
as Tommy Hilfiger, Calvin Klein, and DKNYpartnered
with a group of NGOs and trade unions to provide
worker training and push for stronger government
enforcement of safety laws .
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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.

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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?

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Emploeyement discrimination
I have seen and personally faced serious discrimination in
favour of the fair sex whenever there has been a chance for
vertical movement, said Mahir Khan, who has been in the
advertising industry for about a decade. Even with an MBA
against his name and a reasonable track record of success as a
client service person, he grumbles about relative newcomers
getting the nod ahead of him for reasons, which, according to
him, are obvious.
He blames the general psyche prevailing within fields like
marketing, sales, advertising and public relations which favours
the hiring of female staff even at the cost of better qualified
male counterparts.
The views expressed by him are also echoed by those in the
hospitality business, like, for instance, hotels, hospitals, airlines
and such other entities where customer relations is a key area
of activity. Even the banking sector is not immune to such
preferences. http://www.dawn.com/news/838704/workplace18 discrimination 2014 The McGraw-Hill Companies, Inc. All rights reserved.
15

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

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Privacy in the Workplace

Electronic monitoring
New technologies enable companies to gather,

store, and monitor information about employees

activities. A companys need for information,
particularly about its workers, may be at odds
with an employees right to privacy

Management justifies the increase in employee

monitoring for a number of reasons:

Employee efficiency
Fear of lawsuits if employees act inappropriately

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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

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Appropriate?

2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 19

Office Romance
So is it love actually, or mere fatal attraction? "It is not just
the physical attraction, but an emotional bond that brings
two individuals together at the workplace," says Ritesh K, a
software engineer. "The girl I dated in my previous office, was
more than just a pretty thing. We bonded over a common
love for movies and eventually found that we shared a lot of
other interests too. But, somehow, it never worked out and
things got so awkward that I finally quit," he says poignantly.
The bigger problem regarding romance in the workplace may
be what appears to be a growing trend relationships that
are blossoming among employees who are married to
someone else. "I fell in love with a married man who I worked
with and it was disastrous," admits Reshma, a designer and
single mother. "Even though I knew I was being foolish, I
couldn't help but continue the relationship. Eventually, I had
to be treated for severe depression and I put in my papers".
2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 20

 In some cases, however, it doesn't merely end with one of the

two involved quitting the present workplace. "Even if one of
them happens to be in a powerful position in the
organization, the partner will make full use of the opportunity
to cash in on the courtship and climb the ranks," opines
Sheriff Ansari, a HR manager. And most often, it is the men in
powerful positions who face the music. "Even when the
relationship ends, these men would be forced to agree to the
terms posed by their ex, primarily to hush up the whole
affair," he adds.
Women, it seems, have it easier. "It is a tad easier for women
to play victim," observes Mridula Shankar, a merchandiser, "I
have seen many of my friends getting sympathy and
attention this way." The bottom line is, there is nothing
fundamentally wrong with seeing someone from your
workplace. However, remember that you will be playing with
fire. Be cautious and try to maintain professionalism and
integrity. You never know when things will spin out of control.
2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 21

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
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Aren't I Entitled to Workplace Privacy Rights?

Your employer might be spying on you in several ways.
Recording your office phone conversations
Videotaping your every move throughout your workplace
Searching through your office computer files
Monitoring your office computer keystrokes
Reading your incoming and outgoing email
Tracking your location through your company cell phone, security
badge or both
The American Management Association (AMA) conducted such a
study, entitled the "2005 Electronic Monitoring & Surveillance Survey".
Of the 526 employers that the AMA surveyed, most conduct some
type of electronic surveillance on employees. For example, among
surveilling employers surveyed:
76 percent monitor Website visits
55 percent monitor email messages
50 percent monitor computer files
http://jobsearchtech.about.com/od/laborlaws/a/work_privacy.htm
2014 The McGraw-Hill Companies, Inc. All rights reserved.

18 23

Pros and Cons of

Employee Drug Testing

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Privacy in the Workplace

Alcohol use and addiction causes twice the problems
of all illegal drugs combined
About 9 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
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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

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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 societys interests override those of the individual
business, employee may feel the need to speak out or
blow the whistle
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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

4 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
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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, McDonalds)
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Fair Labor Standards

Labor standards refers to the conditions

under which a companys 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

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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
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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 firms 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?
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