Employee and Manager Rights: Workplace Ethics and the Law

Introduction: Law as the Ethical Guidepost

The American legal system provides a legislative foundation for ethical protection in the workplace. In the constant push-and-pull at the heart of a capitalist economy within a republican regime, the moral equity of protection extends to both the manager and the employee. While changing political tides in Washington offer an ever-shifting interpretation of these laws and a shifting focus on which party is most accommodated, the legal framework remains the primary ethical guidepost for all workplace issues. Frequently, the employee is first to lose protection in the decision-making process — a pattern evidenced most broadly by the ethical failures at play in the Enron/Arthur Andersen scandal.

Constitutional Limits and Workplace Rights

Despite a national awareness that workers need protection against the natural hierarchy of a capitalist workplace, the Constitution has no direct application inside the confines of office halls. When the Bill of Rights amended the Constitution in the 18th century, the government was seen as the real threat to the average American — not an employer. Yet, as the American Civil Liberties Union and other organizations pushing for employee rights' recognition have argued, that threat has changed. No longer does the government pose as great a danger as employers who can whittle away presumed rights in the workplace, degrading the natural liberties of a worker.

"Rights can be seen as claims that individuals have against others to be treated in certain ways or to receive specific goods," and while outside the office walls these rights might be considered inalienable, inside the workplace the juxtaposition of worker and manager puts these liberties into sharp relief. (114) The push for worker protections by labor advocates reflects a growing recognition that legal and ethical standards must evolve alongside the realities of modern employment.

Friedman's Principal-Agent Framework

Milton Friedman synthesizes the relationship between the various hierarchies of the workplace as a series of responsibilities and benefits. He focuses on the requisite deference of a manager to an owner — a relationship that, in turn, defines that manager's relationship to the employee as day-to-day matters are handled within a system of established decision-making.

"In a free-enterprise, private property system a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. This responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom … [T]he key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation … And his primary responsibility is to them." (115)

The Enron case illuminates this view as far too simple. While a business manager is technically an employee of the owner, he also carries professional responsibilities that extend beyond stockholders to the very people who make the creation of that stock possible: the workers. Sharon Watkins embodied this important facet of the workplace ethics paradigm when, as a vice president and accountant, she informed Kenneth Lay that "managerial responsibilities may sometimes conflict with professional responsibilities." (115)

What is clear is that the responsibilities defining employee and employer rights are a product of the nature of the relationship between the two parties. United States law is underlined by Friedman's assertion — a narrow view of employee responsibilities — but American law also extends the responsibilities and rights of the agent-principal concept to guide the construction of an equitable relationship between both parties. Historically, this corollary has established employers as the principal, while employees are hired to perform the responsibilities of that principal. "While this 'fiduciary' relationship creates responsibilities on both sides, the primary responsibilities lie with the employee who owes the employer duties of loyalty, obedience, and confidentiality among others." (115) This simplistic relationship at the heart of American law places the employee in a position of vulnerability — one that historical labor movements, lobby groups, and workers' unions have long sought to amend.

Conclusion: Ethics Beyond the Letter of the Law

When conflicts of interest occur, the ethical guidepost by which the manager should elicit the breadth of his decision-making should steer the principal through the process. When ethical relationships, responsibilities, and rights falter, the result is a clear and universal loss. In the case of Enron, that loss was far-reaching: stockholders lost the value of their ownership, employees lost their jobs and financial security, and even those whose personal interests were most deeply entangled in corruption ultimately lost their freedom, their reputations, and their careers to the glare of scandal.

The relationship between the manager and the employee must exist within an ethical framework that not only meets the provisions of American law but also seeks to embody the spirit of that law — and the liberties provided by the American Constitution to its citizenry outside of the workplace, brought meaningfully inside it. Ethical workplace conduct, as the Enron case demonstrates, demands more than legal compliance; it demands a commitment to the dignity and rights of every party within the corporate structure.