Ethical Bases for Laws

BCS-LEB-1: The student summarizes the ethical responsibilities of business owners. BCS-LEB-2: The student summarizes the effects of diverse cultures and customs on business. BCS-LEB-3: The student determines ethical issues directly related to government regulations.

Ethics and the Law

An ethical decision is 1) reasonable and 2) impartial.

Ethical decisions are reasoned out typically by referring to an established authority that provides consistency. The law is such an authority. Religious texts are also an authority.

The Bible says “Thou shall not lie” so believers view it as wrong / unethical to lie.

Impartiality

Making decisions that treat everyone the same

Business Ethics

Ethics are often not considered in business decisions to increase profit maximization. Moving factories

and/or skilled jobs overseas to save money instead of creating U.S. jobs

Ethics

Determining what is a right or wrong action in a reasoned, impartial manner

Why are they important?

Ethics are good for the individual and society.

They apply to human life in many ways To affirm our human dignity Promote the well-being and happiness

of the individual Serve the common good Define our rights and obligations

Ethical Judgment

Ethical judgment promotes: Trustworthiness Respect Responsibility Fairness

Unethical Business Practices

Procedures used by a firm or business that do not conform to the standards of society.

Examples of unethical business practices are:•Toxic waste dumping

deteriorates the environment, the water supply, and has a direct effect on the public

•Over-treating patients to boost income

• Insider Trading

Insider Trading

The illegal buying or selling of securities on the basis of information that is unavailable to the public.

An example is the purchase by a director of shares or his or her firm’s stock just before the release of surprisingly good earnings information.

Results of Unethical Businesses

Jail FineHigh BailLose right to

run your business

Responsibilities

To be honestTo be fairTo represent

your company well

Good quality work

Two Basic Forms of Ethical Reasoning

Consequences Based1. Looks for alternative

ways to alter the current situation

2. Attempts to forecast the consequences of the alternatives

3. Select the alternative that generates the greatest good.

Fundamental Ethical Rule Based The acts themselves

are judged as right or wrong

The standard for judging comes from a recognized authority or human reasoning

Consequence-Based Reasoning

Ethics that evaluate the results of an action

Fundamental Ethical Rules

Ethical decisions evaluate the act and not its consequences

Ethics Reflected in Laws Armed with the

Constitution, the government ensures federal law making provides:1. The greatest good for

the greatest number of people.

2. Protection of minorities from the majority’s wrong doing (Bill of Rights)

Unethical, lawbreaking often occurs when individuals do not respect &/or obey even minor laws

They assess the risk of being punished against the benefits of obeying the law They lack personal

integrity.

Ethics Reflected in Laws Cont’d People who care

passionately about human rights are sometimes compelled to violate unjust laws that conflict with ethical reasoning. They engage in

civil disobedience.

MLK, Jr. used public yet, non violent civil disobedience to get minority groups human rights when: Political methods didn’t

change the unjust law Personal/ Self interests

weren’t promoted Violators were willingly to

accept the punishment

The Good

Standard for judging right and wrong

Scofflaw

A person who does not respect the law

Integrity

Doing what is right even under pressure to act otherwise

Civil Disobedience

Open, peaceful conduct in violation of an alleged unjust law

Civil Rights

Personal, human rights recognized and guaranteed by our consitution

Moral Rights

Legitimate claims on other people, which flow from each person’s status as a human being

Business and Social Responsibility

The duty to do what is best for the good of society

Businesses have a responsibility to do good for Their Customers Their Employees Society Creditors and Owners

Responsibility to Customers

Businesses should offer a good, safe product or service at a reasonable price.

The Food and Drug Administration (FDA) is a federal government agency that protects consumers from dangerous or falsely advertised products. Example: mass product recall

Responsibility to Employees1. Some businesses provide

work experience for people to develop the skills & confidence levels. For example, bad

working conditions, like a sweatshop, are unethical and illegal.

1. Volunteerism - Some companies allow employees to take one or more paid days off during the year to work on community projects.

2. Businesses must provide employees with safe conditions, equal treatment, and fair pay.

The Occupational Safety and Health Administration (OSHA) is a division of the U.S. Department of Labor that sets and enforces work-related health and safety rules.

The Equal Pay Act requires that men and women be paid the same wages for doing equal work.

The Americans with Disabilities Act bans discrimination against people with physical and mental disability.

Responsibility to Employees (cont.)

Responsibility to Society

One of the biggest social issues facing business today is environmental responsibility.

The U.S. government created the Environmental Protection Agency (EPA) which enforces rules that protect the environment and control pollution.

Responsibility to Creditors and Owners

Major corporations kept inaccurate accounting records that showed lower profits than they actually make.

Such behaviors are harmful to creditors (those who loan money) and outside shareholders (those who are owners but do not work in the business).

The Sarbanes-Oxley Act mandates truthful reporting and makes the CEO more accountable for the actions of the financial managers of a firm.