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
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.
Employers seeking to ensure proper handling of media requests and communicate how such requests should be handled by employees should consider including this model policy statement in their handbook.
Employers seeking to inform employees what may constitute a conflict of interest and that they have an obligation to disclose potential conflicts of interest and avoid financial dealings that present a conflict 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.
A unanimous Supreme Court in Fifth Third Bancorp v. Dudenhoeffer has reversed the 6th Circuit Court of Appeals - with ramifications for employers that offer a defined-contribution retirement savings plan with investment options in an "employee stock ownership plan" (ESOP). In its decision, the Supreme Court resolves a split among the federal circuits by eliminating the special presumption of prudence to which ESOP fiduciaries had been entitled.
Whistleblowing is the act of informing an employer, government agency or other authority about fraud, misconduct or other illegal acts occurring in an organization. With proper procedures in place, an employer can create an environment of integrity that allows employees' concerns to be addressed, well in advance of employees reporting their concerns to an external entity. To promote integrity in the workplace and avoid the need for external whistleblowing, employers should take the steps in this How To.
Pharmaceutical giant Johnson & Johnson and three of its subsidiaries have agreed to pay more than $2.2 billion in a global settlement of multiple criminal charges, civil claims and state probes relating to the false marketing of prescription drugs and the paying of kickbacks to physicians and pharmacies for prescribing and promoting the drugs.
The Dodd-Frank Act's retaliation protections do not apply to activities outside of the United States, a federal district court has ruled, dismissing a case against German multinational corporation Siemens AG.
Employers may wish to revisit ethics and conflict of interest policies to ensure their application to all married employees in the wake of the Supreme Court's recent decision addressing same-sex marriage. In August, the US Office of Government Ethics (OGE) issued guidance regarding the effect of Windsor on the Executive Branch Ethics Program.
Recent reports of employee misconduct at annual conferences have led to negative media reports citing employer mismanagement, compliance issues and ethics quandaries. Employers sponsoring or participating in regional and national conferences in the coming months should ensure that internal travel, attendance, ethics and discipline policies address employer concerns and further business goals.
HR guidance regarding ethics in the workplace.