Overview: Ethics focus on what should be done, in a moral sense, and not necessarily on what must be done, in a legal sense. Sometimes ethics and legal requirements coincide. However, ethical principles, especially in evolving areas of the law or industry, are not always clear. Employers that tend to push ethical boundaries may soon be faced with hefty fines and penalties from evolving case law or from emergent legislation that abruptly outlaws a morally questionable, but previously legal, practice.
The Sarbanes-Oxley Act of 2002 (SOX) grew out of just such a situation. SOX set enhanced standards for public companies, executives and accounting firms in response to the collapse of Enron and other business giants due to questionable corporate practices.
Best practices in ethics encourage employers to adopt an internal ethics program that is consistent throughout all levels of the organization. However, certain employers may be legally required to do so in order to satisfy the Federal Acquisition Regulations mandate to compete for a federal contract, or to satisfy standards under the Federal Sentencing Guidelines. Ethics programs should include a code of ethics and a communications plan, and be accompanied by adequate staff training.
Trends: Regulators have been focusing on global employers' anti-bribery compliance. In addition, various federal and state agencies have created internal Offices of the Whistleblower in order to process complaints and offer rewards. The adoption of adequate corporate ethics programs is essential to managing these organizational risks.
Author: Marta Moakley, JD, Legal Editor
Revised policy to reflect minor edits made as part of a regular review for compliance with the National Labor Relations Board’s opinions regarding employer policies.
To assist employers in complying with ethics obligations and instilling a culture of integrity, XpertHR has added a Code of Conduct to the Policies and Documents tool. The resource establishes expectations regarding gifts, entertainment and payments, intellectual property and financial integrity.
An employer may use this policy to clearly communicate its emphasis on high standards of ethics and on overall compliance with applicable laws and regulations.
Updated policy in light of ongoing scrutiny by the National Labor Relations Board.
Updated to reflect whistleblower immunity protections under the Defend Trade Secrets Act, effective May 11, 2016.
The New Jersey Supreme Court has addressed court remedies for employers in duty of loyalty cases.
This section assists HR professionals in developing a strong organizational ethics program that includes reporting, training and investigation procedures. Ethics focus on conduct that is morally acceptable in a specific sector of society, rather than legally required conduct.
Employers seeking to encourage open communication and effectively resolve disputes or tension in the workplace before they escalate should consider including this model policy statement in their handbook.
The Supreme Court has issued a decision interpreting requirements regarding the administration of an employee stock ownership plan (ESOP) under the Employee Retirement Income Security Act of 1974 (ERISA). In Fifth Third Bancorp v. Dudenhoeffer, the Court eliminated the special presumption of prudence to which ESOP fiduciaries had been entitled.
XpertHR's Financial Services Resource Center for HR helps financial services employers handle their most challenging employment issues by bringing relevant resources together in one place for easy access.
HR guidance regarding ethics in the workplace.