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Employment-At-Will Doctrine
Ayesha Kapoor
LEG-500 – Law, Ethics and Corporate Governance
Dr. Angelina Audrey
28th July 2012

Employment-At-Will Doctrine:
At-Will employment is a doctrine of American Law, that defines an employment relationship in which either party can immediately terminate the relationship at any time with or without any advance warning and with no subsequent liability, provided there was no express contract for a definite term governing the employment relationship and that the employer does not belong to a collective bargaining group.
In USA, any hiring is presumed to be “At-Will” that is the employer is free to discharge individuals for good cause or bad cause or no cause at all and the employee too is equally fit to quit, strike or otherwise cease work.
In this assignment in capacity of the Chief operating Officer of the company, I would like to address some of the personnel problems that require immediate attention before the Initial Public Offering (IPO) of the company.
Scenario 1.In this scenario John’s action of posting a negative statement on Facebook is truly unprofessional and unethical. According to the National Labour Relations Board, criticism by the employee over social networking sites is a protected activity that employers should not violate by punishing workers for such statements. Hence it prohibits employers to retaliate against employees for communicating with each other online or in person. John cannot be legally fired. This action will surely impact the operations of the company, and hence to limit the liability and impact on the company as a COO of the company I would simply organise a training to revive the code of ethics and conduct for the individuals working in the company. This will expain the employees the character that they should maintain and the corporate governance. The theory of virtue ethics supports this decision.
Scenario-2: In this scenario Jim is trying to protest against a change in commission schedules and bonuses. It is a right of every employee to exercise freedom of speech in the organization. Hence this action of Jim is not punishable. Jim is also trying to influence other subordinate employees to join the protest. “Under employment-at-will doctrine, as per the exception to the rule, the employees cannot be punished for organizing themselves into unions. Although at this writing only a fairly narrow slice of the U.S. workforce is unionized, collective bargaining agreements typically cut against employment-at-will protecting workers from being fired except for “good cause” (Law & Ethics in Business Environment, Terry Halbert & Elaine Ingulli, 14th ed.). Hence employee will not be fired and the board will refrain from interfering between Jim and his other colleagues, but will continue their meeting as per schedule with the present staff for the meeting. Operations will be disturbed due to such protests hence as a COO I will try to negotiate on the demands of the employee on a quick basis.
Scenario-3: Employees who are professional owe a special duty to abide not only by federal law but also recognized code of ethics of their profession. While entering into an organization the employees generally read and sign a code of conduct and ethics statement and promise to follow the same till their termination date from work. Ellen has failed to follow the code of ethics. Decisions related to bonuses are totally at the discretion of the board. If Ellen has a problem with the decision she should visit the board and if necessary the National Labour Relations Board. Hence depending upon the company rules and regulations, Ellen can be fired. The impact of this act is such that other employees feel encouraged and take the company for granted in such matters. For this purpose as a COO of the company I take full authority to fire such employees that do not respect the decisions and influence others.
Scenario-4: A company issues a device or equipment for the convenience of the employees and for the benefit to the company too. Such equipments issued by the company are for the sole purpose of carrying out company related work. If Bill is using the Blackberry issued to him by the company for his personal business the company cannot fire the employee, but at the same time it is our duty to be able to keep a track on the work done by Bill on the phone. As a COO, I would instead of firing the employee I would rather help install software by the company that is protected by a pass-code or limit the hours available on blackberry for Bill. Bill’s action may influence other employees too and hence the company will have to incur a cost for the software installing and protecting the company equipments when issued to employees.
Scenario-5: America lacks a comprehensive and uniform legal standard protecting privacy. Employers should be able to point out a legitimate purpose for monitoring the work performed by the employees. Electronic Communication Privacy Act, 1986, makes it illegal to access or disclose messages without authorization. The ECPA also allows employers to listen in on communications made in ordinary course of business. Hence the protest from the employees is their right to privacy at work. Constant monitoring on the performance of the employees can demotivate them and can affect their productivity. Hence they will not be fired but the company will have to re-think on their decision about installing the key-logger system in the company.
Scenario-6: As per the Laws of privacy, an employer is restricted in intruding the emails and electronic conversations. Also if they are doing so, the employees should be made aware of the policy of the company to monitor their work. Businesses justify electronic surveillance in a number of ways. But countering that all employees claim that constant electronic monitoring puts them under dehumanizing pressure with computers instead of people judging their performance. As a COO, it is my duty to monitor the work of the employee in a timely manner. As far as the company is not interfering in the personal conversations the employee too should understand that it is the right of the organization to monitor the work of their employee to measure their performance. Protecting the integrity of the clients is the primary objective and duty of any company. Hence the employee cannot sue the company and if he does the company holds complete right to fir the employee under Employment-at-will
Scenario-7: In the mentioned scenario, the employee cannot be fired. The employee has on the contrary played a honest role of whistleblower. The Sarbanes-Oxley Act prohibits any public company from discriminating against any employee who lawfully provides information or otherwise assists in any investigation of conduct that the employee “reasonably believes” constitutes a violation of the federal securities laws. The legislation protects an employee from retaliation by an employer for testifying before Congress or a federal regulatory agency or giving evidence to law enforcement of possible securities fraud violation. Hence as a COO, under the Sarbanes-Oxley Act the employee will not be fired. (Duty of Loyalty, Whistleblowing, Terry Halbert & Elaine Ingulli, 14th ed.)
Scenario-8: In Anna’s case, as an exception to the rule of Employment-at-will, the employer cannot fire her for taking a leave in spite of refusal of leave. Federal law does not address an employer’s obligation to an employee regarding jury duty. The matter has been reserved for states to address. Most states have laws prohibiting employers from discharging or otherwise penalizing employees for responding to a jury summons or serving on a jury. Employees are granted leave with pay to satisfy jury duty obligations within their civic jurisdiction Civil Service employees shall request jury duty leave from their appropriate supervisor. Employees are expected to report to work whenever their services are not required by the court during their normally scheduled workday and call their supervisors for report-to-work instructions unless earlier arrangements were approved.
Adopting a Whistleblower policy:
Whistleblower can be a valuable source of information regarding problems within an organization and the type of information gleaned from whistleblowers can far exceed the details uncovered through internal and external audits or regulatory examinations. Whistleblower’s report also creates legal risks as to the status of the whistleblower and requires a process that can separate the wheat from the chaff. There are always benefits of adopting a whistleblower policy, so long as the policy is implemented correctly with proper internal and external support. Hence I would recommend the Chief Executive officer of the company to adopt a Whistleblower policy.
Whistleblowers are employees who make a report whether to their supervisors or to the government agencies about violations of law or gross mismanagement or abuse of authority within a business. An employee who makes such a report is generally protected by law from being retaliated against by the business or other company employees. The purpose of implementing whistleblower policies are to comply with the various protections granted to whistleblowers and to minimize a business’s liability from regulators and from employees who have been terminated or retaliated against. Employees who allege they have been wrongfully terminated after reporting wrongdoing can bring an action against a company seeking reinstatement and money damages, and both state and federal regulators can impose fines, sanctions, or even criminal penalties against businesses or individuals who take retaliatory action against a whistleblower. Whistleblower policies, when applied properly, encourage employees to report wrongdoing and simultaneously protect the business and its employees by reducing the likelihood that a whistleblower can bring a successful retaliation claim. The procedure by which a business must address reports of wrongdoing depends on several factors. For example, companies which are also subject to Sarbanes-Oxley requirements and the Securities and Exchange Commission regulations promulgated there under must establish an independent audit committee of the board of directors to review and investigate claims made by whistleblowers. Most audit committees turn to third-parties to handle incoming claims; employees who suspect wrongdoing can call or write to an independent company with which the company contracts to process such reports. That third-party contractor then forwards the reports to the audit committee for review and investigation. A business should also adopt a code of ethics and conduct which enumerates the protections an employee will receive when making a report, and the procedures other employees must follow in order to ensure that no retaliatory action will be taken against the whistleblower. Many whistleblower reports involve allegations of fraud or theft by a company employee, the investigation of which requires an examination of the employee’s personal financial transactions and access to the company’s accounts. It is important that any such examination occur pursuant to applicable financial privacy laws, and legal guidance should be obtained before such examination occurs. While the best practice is to obtain permission from the employee to access their financial records such as credit reports, either at the time of employment or at the initiation of any investigation, there is an exception from Fair Credit Reporting Act compliance requirements for certain companies which permit review of an employee’s bank records. Any inquiry into those records should be done by personnel assigned to the audit committee so as to support the independence and confidentiality of the whistle blowing process, and confidentiality should be maintained in all stages of the investigation process.

Fundamental inclusions in Whistleblower Policy:
While framing a whistleblower policy, the below mentioned items should be included fundamentally.
Speak to the Superiors initially: Employees should first discuss their Concern with their immediate supervisor. If, after speaking with his or her supervisor, the individual continues to have reasonable grounds to believe the Concern is valid, the individual should report the Concern to the Director of Human Resources. In addition, if the individual is uncomfortable speaking with his or her supervisor, or the supervisor is a subject of the Concern, the individual should report his or her Concern directly to the Director of Human Resources.
If the Concern was reported verbally to the Director of Human Resources, the reporting individual, with assistance from the Director of Human Resources, shall reduce the Concern to writing. The Director of Human Resources is required to promptly report the Concern to the Chair of the Audit Committee, who has specific and exclusive responsibility to investigate all Concerns. If the Director of Human Resources, for any reason, does not promptly forward the Concern to the Audit Committee, the reporting individual should directly report the Concern to the Chair of the Audit Committee. Contact information for the Chair of the Audit Committee may be obtained through the Human Resources Department. Concerns may be also be submitted anonymously. Such anonymous Concerns should be in writing and sent directly to the Chair of the Audit Committee.
Confidentiality under the Whistleblower Policy: Confidentiality of the reporter should be maintained to the extent practicable within the limitations of the law, company policy and legitimate needs of investigation. In addition employees submitting a report should be aware that their public testimony may be required to prove the case against the suspected employee. Employees should not discuss allegations outside of the reporting and investigation process. Also if the employee self-discloses his or her identity directly or indirectly, the company is then not obligated to maintain confidentiality.
Protection from retaliation: This is a very important point in the whistleblower policy and hence should be included in the policy of the company. An employee who is in good faith reports a suspected violation of law or company policy should not suffer harassments, retaliation or adverse employment consequences from other employees or the company. An employee who retaliates against someone who reports a suspected violation in good faith is suppose to discipline up and can also be terminated from employment. Protection of employee is of utmost importance as this will encourage others to come up when there are illegal activities going on.

References 1) Law & Ethics in Business Environment, Terry Halbert & Elaine Ingulli, 14th ed. 2012 2) Tom Devine & Tarek F. Maassarani, The Corporate Whistleblower’s Survival Guide 3) Privacy at work, A Guide to Privacy Act for employers and employees, Published by the office of Privacy Commissioner, 2008

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