UML Business Law Nuts & Bolts Essay

Read the fact pattern for the assignment. Then answer the questions. The first section asks for you to analyze ethical issues related to the case. The second part applies employment law issues. Be sure to answer both Parts.

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The typed answers should be no smaller than 12 point font, single spaced with one inch margins.

NUTS & BOLTS
Nuts & Bolts Inc. is a manufacturer of industrial fasteners, mostly nuts and bolts. It has a
total of 500 employees, the majority of whom work in its manufacturing plant and the rest of whom
perform standard business functions such as accounting, sales and marketing, human resources
etc. The company’s operations are all located in the United States, and the majority of its sales are
domestic with a limited number of international customers. For the last two years, competition
has been increasing in the industry, and profit margins for the company have been shrinking. The
company is still profitable, but top management is concerned with the trends and sees a real
possibility of a net loss next year. Because of this, the CEO and the President are discussing the
need for layoffs.
Company turnover is low, and most employees stay with the company for five or more
years. The company has a history of treating its employees well, and there is no labor union
representation. The company is considering expanding its international business, but fears that it
does not have either the time or the money to do this before financial results turn from profit to
loss. After some discussion, the CEO and the President agree that a labor force reduction of about
ten percent would be sufficient to keep the company profitable for the foreseeable future. The
company has no history of layoffs, so they are exploring uncharted territory for them.
They feel that the layoffs must be done quickly to have the desired effect, so reducing staff
by attrition will take too long, and they have rejected this option. After reviewing what other
companies in similar situations have done, they have reduced their action plan to two options.
Option 1 is to carry out all the layoffs on the first working day of the next month. Fifty
employees will be told that their employment is being terminated on that day. Each terminated
employee will receive two weeks’ severance pay, and have their health insurance continued for
one month. Layoffs will be effective immediately: for these employees the day that they are told
will be their last day at work. The layoffs will be proportional by work division: that is, the number
of layoffs in each division will be ten percent of the number of employees in that division. Division
heads will be informed of the plan one week before the layoffs take place. Each division head will
determine which specific employees will be laid off.
Option 2 is the same as option 1 with the following exceptions. In order to avoid any
possible legal entanglements based on discrimination, employees to be laid off will be selected
alphabetically by last name. All those whose last name begins with “A” will be laid off, then “B”
and so on until the required number of employees has been reached. This approach will assure
randomness and prevent even accidental bias. In addition to two weeks’ severance pay and one
month’s health insurance, an employment service will be retained and each employee terminated
will receive up to three hours’ free counseling and help from this service.
Part I
Ethical Analysis
A. Answer the following questions relating to ethical issues (each answer should be
between 1/4 and 1/2 page long):
1. Is it ethical for the company’s management to lay off ten percent of the employees
while the company is still profitable, regardless of which method is used to identify
those who will lose their jobs?
2. Assuming that it has been established that layoffs are needed and that the good to be
accomplished justifies removing some satisfactory employees from their jobs, is the
manner of proceeding outlined in Option 1 ethical? Why or why not?
3. Assuming that it has been established that layoffs are needed, that the good to be
accomplished justifies removing some satisfactory employees, is the manner of
proceeding in Option 2 ethical? Why or why not?
Part II
Legal Analysis
B. Answer the following questions relating to legal issues (each answer should be
between 1/4 and 1/2 page long):
1. Does Nuts & Bolts, Inc. have a potential legal duty to inform the workers that there
will be layoffs?
2. The Nuts & Bolts layoff Option 1 calls for each division head to determine which
specific employees will be laid off. Some of these employees will almost certainly fall
into various classifications, such as race, color, religion, national origin, sex, disability
and age, which are protected under federal law, most notably Title VII of the Civil
Rights of 1964 which protects the first five. It is quite likely that some of these workers
will feel they are being laid off not because of their lack of skills and abilities, which
is presumably what the division heads will say (and quite likely are applying) is their
criteria, but are in fact being laid off because of their race etc. How would these
workers make their case that they being intentionally fired for such an illegal act?
3. The Nuts & Bolts layoff Option 2 calls for employees to be terminated by alphabetical
order beginning with the letter “A” until the desired number is reached. This approach
would be applying facially neutral criteria since all people have names and thus, on the
surface this does not appear to be illegally discriminatory. However, under Title VII
even using facially neutral criteria is illegal if it has a disparate impact on protected
groups. Give an example of disparate impact analysis, and then discuss whether this is
likely to occur in this scenario.