Legal and Ethical Issues in the Work Environment


Business ethics concerns rules, standards, and moral principles that govern business relationships and practices. They guide professionals on the appropriate approaches to be implemented to resolve ethical issues and difficulties in their workplace. Unfortunately, even in the presence of many professional standards, unethical practices still exist due to gray areas. In the absence of law, moral decisions become a subjective matter. What is considered legal is not always ethical and what is considered ethical is not always legal. The purpose of this paper is to describe how discrimination relates to law and ethics. Discrimination can result in both negative ethical and legal repercussions.

Description of Business Situation

An employee in a former workplace had an outstanding sales record and was one of its best-performing workers. However, the team member’s religious beliefs were a major drawback to the company. He would refuse to do anything she believed was against her religious beliefs. Once, she refused to give service to gay couples because she thought it was sinful. Furthermore, he would deliberately miss her Sunday shifts because it was considered a Sabbath day in her religion. Being a vocal person, she was very expressive of her religious beliefs. More times than often, the employee would convey her thoughts or viewpoints in a manner that was considered verbally abusive, demeaning, judgmental, and discriminative to other co-workers. Her religious beliefs negatively affected her relationship with other team members. Other members of the workforce would actively avoid her because of her religious fanaticism, isolating her from most of the casual and informal team gatherings.

A significant event, which is the focus of this paper, occurred during an annual Christmas party. This function was held for several reasons, including team building and bonding, honoring company values, and motivating employees. At the party, the company would award the best performing workforce members and appreciate other team members for their hard work throughout the year. Workers were expected to wear Christmas garments to create a festive environment. However, during one of those get-togethers, the team member refused to oblige with the company’s provisions. According to the team member, celebrating Christmastime was unreligious and rooted in a paganism tradition. Despite the management’s attempts to convince her that the jamboree was more than just a Christmastide function to the company, the employee would not concede to their request. Her refusal to participate in the festivities led to her contract’s termination based on not being a good fit for the company.

The “not a good fit termination” is supported by the law of “employment at will” that states that an employee can be fired at any given time for no reason, explanation, or warning unless otherwise indicated by the contract. A cultural mismatch is a legitimate reason for terminating a worker’s contract (Loerke, 2016). It refers to a situation where a team member’s beliefs and values are incompatible with that of the company. Technically, if an employee does not relate well with team members or the company’s culture, then he/she can be fired (Loerke, 2016). On the other hand, terminating an workforce member’s contract for their religious beliefs is considered unlawful.

Ethical Concerns

Ethics resolve conflicts in human morality by defining the concepts of right and wrong or good and evil. On the other hand, business ethics govern business situations and relationships (Byars & Stanberry, 2018). However, ethical conduct is not a concept that should exist theoretically. Instead, it should be integrated with all aspects of the company’s culture. Businesses are expected to consider every part of morality in their practices, strategies, and policies. A common justification for applying ethics principles is that an ethical company will generate loyalty from stakeholders, which will improve its overall performance (Byars & Stanberry, 2018). For example, a study conducted by Byars and Stanberry (2018) revealed a correlation between a company’s integrity and its financial performance. However, discrimination can trigger severe legal and reputational consequences for both individuals and businesses. Given that companies operate in highly dynamic environments, they must establish strong stakeholder relationships to retain their market share in a highly competitive market.

The first moral concern stems from the fact that discrimination violates fundamental human rights. Treating people with dignity and respect regardless of their race, gender, age, or religious background is a fundamental human right that does not need any instrumental justification. Ethically, it is wrong to violate or be complicit in acts that abuse human rights. Fundamental human rights applicable to this law are the right to equality and freedom from discrimination (Flowers, n.d.). The right to equality stipulates that we ought to recognize the intrinsic honorability and the absolute entitlement of all individuals within the human family (Flowers, n.d.). Identifying these concepts is the rudiments of peace, freedom, and justice globally (Flowers, n.d.). The “freedom from discrimination” concept, on the other hand, refers to the responsibility of every individual and entity in the society to teach, educate, and promote the rights and freedoms that are stipulated by human rights provisions (Flowers, n.d.). It is the ethical responsibility of leaders to respect the innate worth, uniqueness, and the collective feeling and identity of people working in the organization. Recognizing and promoting individuals’ rights in business is an ethical responsibility. Failure to do so is infringing upon the fundamental human rights of an individual.

The second moral concern of the presented situation is that it creates an unsafe working environment. A safe work environment extends beyond physical safety and embodies emotional and cultural security as well. It relates to creating positive environments where individuals feel safe, respected, and valued. The Society of Human Resource Management (SHRM) directs HR professionals to develop and maintain working environments and business conditions to encourage individuals to attain their full potential (“Bylaws & Code of Ethics,” n.d.). According to SHRM, the company can create and enforce policies and practices that foster equitable treatment. The SHRM Code of Ethics demonstrates the importance of a safe environment in an employee’s performance (“Bylaws & Code of Ethics,” n.d.). Ideally, safe working environments should be free from unlawful discrimination, intimidation, and harassment. Equality is a tool that can motivate individuals and inspire loyalty from employees.

Ethical Theories

Business ethics extend beyond the obligation to comply with legal regulations. Byars and Stanberry (2018) noted that legal compliance and ethical compliance are different concepts. A company complying with legal regulations does not automatically translate into its ethicality. Complying with laws is mandatory, and violations of these laws can result in legal repercussions and punishment. In businesses, codes of ethics provide a legal and moral framework of what constitutes right and wrong during professional practice. They guide decision-making, justify moral decisions and judgments, and lay a foundation for disciplinary action. They set the standards of behavior and guide professionals during ethical dilemmas.

On the other hand, ethics are voluntary actions to comply with what one believes to be right or wrong. It refers to the extent to which a business is willing to safeguard the entitlements of individuals. In the absence of law, moral decisions and choices become a subjective matter. However, various philosophical schools provide us with a framework that will assess whether our options are morally right or wrong. The presented business situation can be analyzed from two ethical perspectives: utilitarianism and deontological approach.

Utilitarianism or Consequentialist Approach

The utilitarianism approach calls for analyzing the morality of an action based on its end or consequences. The approach suggests that an action is ethical only if it produces more pleasure and benefits than pain and harm. Utilitarianism solely focuses on the end-results of the action and not the means through which the action was achieved (Byars & Stanberry, 2018). Therefore, to judge whether an action is right or not, an individual ought to ask if the act will result in more benefits or more harm. Acts that result in more benefits are ethical, while those that do not are unethical.

Deontological or Kantian Approach

The deontological approach is a non-consequential theory that presumes that an action is either inherently right or wrong. This approach examines the means rather than the ends of an action. Deontology argues that every person has a moral entitlement to receive equal treatment. Similarly, every individual has a reciprocal ethical obligation to treat others simultaneously (Byars & Stanberry, 2018). Emmanuel Kant, a deontologist, focused on the motives and the willingness of an individual to act for another’s benefit. According to Kant, it is moral to do something purely because it is the right thing. Adherence to duty surpasses the superiority of the outcomes of an action. The deontological view contains two major suppositions: first, every individual’s moral responsibility is to act for the pure reason of goodwill. Second, we should never treat others as a means to an end. Treating someone as a means connotes using people to achieve the desired goal without considering their needs.

Ethical Outcomes

From an ethical perspective, there are two possible outcomes of the presented situation. The first outcome is that termination of the employee’s contract was right and, therefore, ethical. The second outcome is that the employment termination was wrong; hence, unethical. The utilitarian view demands that we weigh the balance between the harms and benefits to determine the rightness or wrongness. The harms presented in the depicted case include reputational risks and a lawsuit that could translate into financial costs.

On the other hand, the benefits have a safe working environment for co-workers and a possible new entry that would fit into the company’s culture. Going by the SHRM definitions of a safe work environment, the co-workers will enjoy an environment free from judgment, harassment (verbal harassment), and having their uniqueness, values, and identities respected. Had the company’s management chosen to retain the employee, she could have created a hostile work environment for the rest of the team. At this point, the business manager can weigh between keeping the co-workers at the employee’s expense and retaining the employee at the co-workers’ cost. Thus, based on the Utilitarian view, it was ethical to terminate the employee’s contract because it would benefit more than harm the company.

The Kantian view focuses on one primary side of business ethics: the personal. The Kantian view provides an opportunity to nurture individual morality by emphasizing that individuals are morally obligated to act right with the right intention and treat people with their interests in mind. A fundamental weakness of this view is that it is illogical for companies dealing with different cultures’ stakeholders. The theory is categorical; it mandates moral behavior regardless of external circumstances.

The Kantian view appeals to humans to act purely out of goodwill without considering how their actions will benefit the individual. Because it emphasizes the business’s side, our case’s moral question is simply a subjective matter. The employer would need to question his real intentions and motives for firing the employee. They would also ask if they would want to be treated the same way if they were in the employee’s shoes. This approach is based on the moral duty to reciprocate ethical treatment. If the answers to these questions are affirmative, then the employer’s decision to terminate the contract was ethical.

Ethical Outlook with the Best Legal Outcome

The Kantian perspective will result in the best legal outlook for this situation. The utilitarian theory rejects moral codes and commands tied to an individual’s customs, culture, and traditions (Nathanson, n.d.). On the other hand, the constitution celebrates cultural diversity and emphasizes respecting and upholding these cultural differences (Anemone, 2019). Because the view has a substantial moral value grounded on duty, it resonates with most legal provisions. Additionally, making a decision solely from a cost-benefit analysis proposed by the Utilitarian theory may not have a strong justification in law. The law does not facilitate the attainment of profits; instead, it protects individual rights. Therefore, the Kantian view will have the best legal outlook.

Areas of Law Relevant to the Situation

Business law is a vast law that consists of legal disciplines such as tax law, contract law, real estate, employment law, corporate law, contracts, and intellectual property. The rules that apply to this business situation include employment law, constitutional law, and contract law.

Constitutional Law

Civil rights refer to the privileges accorded to an individual regardless of their characteristics, such as race and religion. Civil rights in the United States include the right to equal protection, free speech, protection from discrimination, due process, etc. The fourteenth amendment of the U.S. constitution made it illegal for states to enact laws that curtail the privileges, life, or property accorded to an individual without the due process of law (“Title VII of the Civil Rights,” n.d.). Through the Civil Rights Act of 1964, discrimination based on color, race, or religion in any public establishment such as restaurants, gas stations, public schools, and bars supported by the state is unlawful.

Title VI of the legislation prohibits discrimination in programs funded by the federal government. On the other hand, Title VII prohibits discrimination in employment settings (“Title VII of the Civil Rights,” n.d.). Section 1981 of the civil law states that every individual in the United States has the same right in every region and state to benefit from the full utility or welfare and privileges promised by a contractual relationship (“Title VII of the Civil Rights,” n.d.). Violations of these provisions can result in penalties or punishment as stipulated by the law. This law applies to our case because it forbids racialism based on one’s ethnicity, religion, nationality, age, and sex. The alleged discrimination of the employee is covered under “protection from discrimination” and, therefore, can form a basis for determination in court.

Employment Law

Employment relationships in the U.S. are not guided by a single legal code. The legal sources that guide employment practices within the U.S. include constitutional law, the common law, and administrative regulations. The legal codes that guide employment relationships are derived from legislation such as the Labor Management Relations Act, the National Labor Relations Act, and Federal Labor Standards Act (“Title VII of the Civil Rights,” n.d.). For example, code 29 C.F.R., Chapt. XIV of the Civil Rights Act established the EOCC (Equal Employment Opportunity Commission) to regulate and impose several employment laws.

The EOCC administers Title VII of the Civil Rights Act of 1964, which proscribes illicit treatment of workers in relation to their nationality, ethnicity, complexion, nationality, religion, or sex. The legislation stipulates that it is illegal for an employer to refuse to hire, discharge, or discriminate against an employee for the characteristics mentioned above. The law also prescribes the constraining, isolation, or categorization of employees or candidates using approaches that deprive them of employment opportunities (“Title VII of the Civil Rights,” n.d.). This law applies to the business situation because it directly deals with discrimination in the workplace. Suppose the court uncovers that the employer deliberately took part in illicit employment-related practices, then the worker in the presented business situation will be entitled to equitable relief.

Equitable relief includes, but is not limited to, reinstatement, back pay, financial compensation, etc. Back pay refers to the salary or bonus an employee can claim from an employer for wrongful termination. The employer can be ordered to pay back pay for an accumulative period of two years before the complaint was filed or the unlawful employment practise occurred (“Title VII of the Civil Rights,” n.d.). The provisions of this law apply to local, federal, and state governments. It also covers recruitment, training programs, transfer and promotions, layoff, recall, and retirement plans.

Contract Law

Contractual agreements can contain implicit or explicit terms and conditions. An implied contract agreement, for example, can be found in documents produced by employers, such as codes of conduct or employee handbooks. An employee’s handbook, policy statement, or code of conduct creates an enforceable contract between an employee and an employer. Even in the absence of collective or individual agreement, an employer is obligated through the implication of these documents. An example of an enforceable act through the implication of Codes of Conduct can be demonstrated by the case of Poliquin v. Devon Canada Corp., 2009 ABCA 216 (“Civil rights,” n.d.). Mr. Poliquin had violated the company’s policies and the code of conduct when he used the company’s computer to share racist and pornographic material.

The court ruled that the conduct code was a vital stipulation in Poliquin’s employment agreement and that he had contravened both the set of standards and the common statute related to duty. Similarly, the codes of ethics set by professional organizations in business are legally binding. H.R. professionals, for example, are obligated to uphold the professional standards that are stipulated in the SHRM code of ethics (Anstey, 2017). However, professional codes of ethics are not always legally binding. They must satisfy certain conditions, including consideration, offer & acceptance, intention to create a legal relationship, and competency.

Contractual relationships guide employer-employee relationships in the workplace. In our business situation, if the company had a code of conduct that satisfies the aforementioned conditions, then the terms and conditions of the codes of ethics can be used to determine the case in court. The professional codes of conduct underpinning the H.R.’s relationship can also be legally binding. For example, the SHRM code of ethics prohibits H.R. professionals from discriminating against employees in all contexts of H.R. practice. Suppose the court determines that the H.R. professional intentionally committed a discriminatory act. In that case, SHRM can take disciplinary actions against the H.R., including terminating his/her contract or membership to the organization (“Bylaws & Code of Ethics,” n.d.). Two types of liability can occur in instances linked to discrimination: vicarious and direct liability. The latter occurs when an employer actively engages in promoting bigotry. In contrast, vicarious liability occurs when an employee discriminates against another, and the employer fails to take the necessary steps to prevent discrimination from occurring.


The company can reduce the exposure to liability by taking the appropriate steps to ensure that employees are trained in the business environment’s ethicality. Articulating and communicating company values to employees can foster ethical learning. The training aimed at enhancing an employee’s awareness of unethical behaviors can create an ethical work environment. The company can integrate lessons on ethics as part of their career development to nurture an ethical climate in the company. A study conducted by Pope (2015) showed that learning was an effective strategy for nurturing organizational ethics. The ethical principle of accountability supports this recommendation. Since training increases awareness, the company can hold employees accountable for their conduct and ethical decisions.


For businesses to retain their competitiveness, they must establish strong stakeholder relationships. During the day to day business, individuals are often required to make decisions. Professional codes of conduct provide a legal and ethical decision-making framework while ethical theories provide a philosophical perspective of what constitutes right and wrong. Discrimination is a basic human right violation; it nurtures an unsafe working environment for employees. Discriminatory decisions and practices in the workplace can result in legal liabilities.


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Loerke, K. (2016). Can you fire someone because they’re not a good “fit” for your culture? The Business Journals.

Nathanson, S. (n.d.). Act and rule utilitarianism. Internet Encyclopedia of Philosophy.

Pope, K. S. (2015). Steps to Strengthen Ethics in Organizations: Research Findings, Ethics Placebos, and What Works. Journal of Trauma & Dissociation, 16(2), 139–152.

Title VII of the Civil Rights Act of 1964 (n.d.). U.S Equal Employment Opportunity Commission.

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