What are the 3 general categories of unethical and illegal behavior?

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In 2002, Congress passed the Sarbanes-Oxley Act, which established new laws to protect investors against rampant corporate fraud. However, as subsequent events made clear, hearing the law isn't the same as obeying the law. Dozens of possible categories of unethical business conduct exist, but most fall within three broad areas.

The Sarbanes-Oxley Act

Congress passed the Sarbanes-Oxley Act in 2002 in response to public outrage over the corporate scandals that rocked the nation at the time. The overall intent of Sarbanes-Oxley, or SOX, was to protect investors and to make it harder for corporations to get away with financial fraud. SOX applies to all publicly traded companies in the U.S. It requires CEOS and CFOs to sign an attestation that they have read their quarterly and annual reports and personally vouch for their accuracy; requires businesses to establish a code of ethics or explain why they have not; and established the Public Company Accounting Oversight Board, which now regulates auditors and accounting firms.

Mistreating Employees and Other Workers

Many examples exist of unethical corporate conduct toward employees or other workers in the supply chain. Many U.S. corporations used Third World sweatshops to produce their goods; some have even been found to use child labor. Every year, lawsuits are filed against employers who are accused of sexual harassment or discrimination against their employees. Some employers have been sued for threatening or firing whistle-blowers, or employees who point out illegal practices or safety violations in the workplace. Some U.S. businesses use undocumented workers because they can pay them less than minimum wage.

Financial Misconduct and Fraud

Examples of financial misconduct include price-fixing, or an illegal agreement between industry competitors to "fix" the price of a product at an artificially inflated level; physicians who refuse to treat non-insured patients, or perform unnecessary procedures to make more money; tax evasion; tax fraud; and "cooking the books" to make the company look more profitable than it is. Other possibilities include paying unjustifiable salaries and bonuses to top officials regardless of work performance – sometimes in spite of it – and chasing short-term profit by placing investor's money in questionable investments.

Misrepresentation and Falsification

Corporate misrepresentation can take many forms. It can be as simple as a salesman who lies about his company's products, or it can be false or misleading advertising. Misrepresentation can involve a coverup of illegal workplace conditions or transactions; falsified data in a shareholder report; lying to a union about corporate profits; or hiding or denying safety problems with a product. Other examples include corporate board members with conflict of interests, doctors who push the most expensive drugs rather than the most effective ones, and brokers who recommend stocks that they own in an effort to drive up the price.

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In order to understand the difference between something being ‘illegal’ or being ‘unethical’, we have to understand what these terms mean. ‘Unethical’ defines as something that is morally wrong, whilst something being ‘illegal’ means it is against the law. In an illegal act, the decision-making factor is the law. For an unethical act, the deciding agent is the man’s own conscience. An unethical deed may be against morality but not against the law. An illegal deed is always unethical while an unethical action may or may not be illegal. Illegal behaviour is much easier to detect because of the clean-cut side to the law. Comparably, unethical behaviour is tough to detect because people can have different opinions on whether something is ethical or not. Ethics can differ from person-to-person, but the law is the law, and everyone must follow the same rules. Organisations need to be clear with their employees what the difference is, and what they expect in their workforce. This can be detailed in company policy to avoid any confusion.

Understanding unethical business practices

Unethical behaviour, simply put, is failing to do the right thing. In the workplace, unethical behaviour can include any deeds that violate the law like theft or violence, but unethical behaviour can involve much broader areas as well. These unethical actions could be deliberate violations of company policies or using hard-sell sales practices – both of these actions are legal, but they take advantage of human frailties for the personal advantage which means it goes against the ethics of a lot of people. Examples of unethical behaviour can be found in all types of businesses and in many different areas. Some more examples of unethical business practices are:

• Deliberate deception – This could mean taking the credit of someone else’s work, ‘pulling a sicky’, sabotaging the work of someone else, or misrepresenting a product all with the aim of getting a sale. These actions are seen as unethical by many because it exploits the trust of others in order to better yourself.
• Violation of conscience – If your boss forces you to do something you know is wrong, they are the ones showing unethical behaviour, and causing you to violate your conscience.
• Failure to honour commitments – If your boss promises you something and then goes back on that promise, they have acted unethically. The result of this can be that they have lost your trust and respect, potentially leading to a workforce filled with discontent.

All these examples show how problems can be caused in the workplace even if no laws are broken. The results may not be as serious as prison and fines, but they lead to anger and frustration in the workplace – something that impacts the business badly too.

Understanding illegal business practices

Illegal business practices are much more obvious to label. If it is against the law, it is illegal and unethical, and as a result, hold lead to serious consequences such as prison and heavy fines. Some examples of illegal business practices are:

• Discrimination or Harassment – This could be based on age, gender, sexual orientation, or race (just to name a few of many). If you discriminate people unfairly you are breaking the law, and you need to be aware of it in your business.
• Theft – If your business is stealing, they are breaking the law. This is a simple one and doesn’t really need more explaining.
• Employee Treatment – One way a business can break the law is if it fails to pay its employees the correct way. This can refer to meeting minimum wage, maternity leave, redundancy, and pensions. The way you treat your workers is extremely important, and if neglected then you could be breaking the law.
• Environmental – It might not be the first thing that comes to mind, but more and more companies are having to pay fines for breaking environmental laws. One example of this was Northumbrian Water being fined £375,000 for pumping raw sewage into the River Tyne.
• Health and Safety – Almost two-thirds of UK businesses fail to abide by basic health and safety laws, leaving their employees in danger as a result. This worry means that the majority of workers don’t feel they are equipped to deal with hazardous situation. Failure to supply workers with information and guidance on health and safety policies could land employers with a hefty fine, or even a prison sentence if the case is extreme enough.

The severity of illegal and unethical business practices cannot be stressed enough. Everyone shares the responsibility for promoting a positive workplace and conducting business ethically and legally.

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