Paula Deen

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Sexual Harassment and Discrimination Laws – Part 1

Published September 23, 2013 by Mayrbear's Lair



Business leaders face many challenges and issues in the work place and are required to manage them effectively as they surface in order to maintain a successful and comfortably safe working environment. Clarkson and Miller (2012) recommend that organizational leaders become educated in business law in order to function in the modern world citing that anyone who embarks on a professional career, whether in medicine, science, entertainment, government, or accounting, will benefit from knowledge of contracts, real and intellectual property law, landlord-tenant partnerships as well as other significant legal matters (Clarkson & Miller, 2012). For example, when a manager invites a new employee to join the organization and makes it clear the candidate was chosen because of their credentials and top performance levels, rather than being welcomed or embraced, the new hire discovers many are jealous and exclude the individual from participating in significant meetings or social events. Soon, the new recruit starts to feel alone and isolated. This is an example of one form of discrimination that takes place in the business world. One of the most difficult forms of discrimination employers can face, however, is sexual discrimination, if and when they are forced to deal with a complaint that is filed. Seaquist (2012) suggests that although many of these cases can be settled out of court or through mediation, charges of sexual discrimination are a very serious matter that continues to present problems businesses and women confront on a daily basis in the modern world (Seaquist, 2012). The focus of this research is centered on the analysis of the legal and ethical situations relating to sexual discrimination and harassment issues in a business environment. The analysis will include a brief explanation to offer a more concise definition as well as provide a brief background on the subject. In addition, it will include a discussion on the ethical concerns and how discrimination laws are applied citing examples to support the study. The research will also include a look at the liability exposure employers can face as well as provide recommendations for improvement and suggest prevention plans that leaders can implement to avoid facing litigation and costly damages. The study will conclude that even though it takes an enormous amount of energy, understanding the legalities and complexities of business law with respect to discrimination and sexual harassment situations can help employers avoid litigation and maintain a safe working environment.


Analysis of Sexual Discrimination and Harassment

The Backstory

Smart business leaders recognize that knowledge in discrimination law puts them in a better position to create and enforce a climate that will prevent occurrences and behavior that encourages discrimination or sexual harassment because it can lead to costly lawsuits. For example, when women initially entered into the workforce, they began to experience a variety of discrimination issues.  In fact, many were discouraged from working outside of the household and often chastised. This attitude reflected the culture of that time, in that women had been conditioned to accept their role in society as the primary caretaker of the home and family while providing support toward their husbands careers. Once women entered the labor force, however, they were introduced to more kinds of discrimination including lower wages, exclusion from participating in certain occupations, and many were exposed to intimate violation in the form of sexual discrimination, harassment, and abuse at their job. In fact, not only are women victims of this behavior, they are often subjected to society’s failure to recognize that sexual harassment is another form of abuse like bullying and generally accepted as taboo. In other words, this behavior is typical in a patriarchal society that accepts this conduct as boys being boys, while the women are left to confront the traumatic experiences of the effects from it, as well as process and examine their own perceptions, which for the most part, were usually not supported. Today, many women still feel humiliated, ashamed, and fearful to come forward to avoid ridicule and further stress because the system does not provide adequate support systems to defend these victims.

Dating co-workers is not a new concept. People work long hours together, overcome challenges and share victories. As a result, they develop bonds and friendships that can lead to romantic relationships. This can bring great joy and fulfillment as well as create a hostile atmosphere. Many companies have policies against romantic liaisons for those reasons. In fact, it is not uncommon to hear executives spewing remarks like, “We don’t fish off the company pier,” from those resolved to comply with corporate mandates. MacKinnon’s (1979) studies reveal that the intimate violation of both women and men is common in American society and concludes that the behavior is typically contained by a patriarchal structure of power that works diligently to keep the topic nearly inaudible. In addition, men’s control over women’s material survival, education, and occupational advancements for example, have become institutionalized in many patriarchal systems (MacKinnon, 1979). Unfortunately, these patterns have been enforced for thousands of years and slow to change because of the complexities associated with them.


Identifying Sexual Discrimination and Harassment

Discrimination and harassment issues are difficult to manage because it makes people have to confront the the topic of inequality. The first step business leaders can take to prevent sexual discrimination and harassment is to have a clear understanding of what it means. For example, in a sex discrimination case, if an employer deliberately discriminates against a female in the work place, it is called disparate treatment. Should the claim go to court there is a three step process the plaintiff must go through to present the burdens of proof. Should the defendant succeed in convincing the court there was a legitimate nondiscriminatory reason, the burden then shifts back to the plaintiff to prove the defendant’s position is false and inaccurate. According to Title VII and the equal protection clause of the 14th Amendment, the plaintiff must demonstrate a preponderance of evidence that supports the following criteria: (a) the individual is a member of a protected class; (b) the plaintiff was meeting the employer’s expectations; (c) the plaintiff suffered from the experience, (d) other workers of equal status outside the protected class were exposed to differential treatment. Furthermore, MacKinnon (1979) stated that the Equal Protection Clause of the Constitution guarantees that no state shall deny an individual equal protection of the law. According to the inequality approach, sexual harassment is viewed as sexual discrimination and seen as a disadvantage to women as a gender within a social context in which a female’s sexuality and material survival depends on, to the woman’s detriment (MacKinnon, 1979). In simple terms sexual discrimination can be defined as the unwanted acts and imposition individuals experience that is based on sexual requirements that takes place in a business relationship of unequal power.


People have been fighting for equality since they discovered what that term meant. Fredman (2011) however, contends that equality is an ideal whose meaning shifts the closer it is scrutinized. In the meantime, the legal system recognizes and acknowledges two general types of sexual discrimination and harassment issues: (a) quid pro quo harassment, which can translate into the form of a promotion, hiring, or salary hike in exchange for intimate favors; and (b) an environment that promotes sexual harassment where workers are exposed to behavior including unwanted sexual advances, lewd comments, innuendos, or jokes (Fredman, 2011). For example, in the Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986) court case, the plaintiff was required to provide evidence that discrimination had transpired, was based on sex, and created a hostile or abusive environment (Seaquist, 2012). This situation occurs when supervisors and managers have failed to take steps to implement programs and enforce policies that discourage inappropriate actions or have not successfully educated employees to refrain from engaging in this type of ethical misconduct.

Identifying discrimination laws also protects employees. For example, workers educated in sexual discrimination are better suited to identify it, or come forward to support others they suspect are being exposed to harassment from supervisors or other figures of authority who coercively initiate unwanted advances, favors, or pressures. Furthermore, employees that are not aware of their rights are susceptible to becoming harassment victims themselves, especially in situations where they lack or do not reciprocate feelings towards the individual making the advances.

Many victims are also silent when these events occur, because they are fearful of losing their job or facing other serious repercussions.  Gordon (2007) suggests that there are laws that prohibit sexual harassment in the workplace. They require that staff members identify and separate different kinds of sexual interactions. Although the theory seems simple, often it is not easy to approach because there are a variety of effective solutions individuals can take when they are approached by a direct supervisor or an influential authoritative figure that has control over their career (Gordon, 2007). For example, an individual with a history of abuse that enters the workplace may have challenges identifying boundary issues because of the abhorrent conditions and acts of violation from their own past experiences. Most victims of abuse are uneducated and ignorant of their rights. Unfortunately, many out of fear and survival protect their abusers and remain silent. Other individuals with self-esteem issues that typically result from the complexities of a fatherless upbringing can bond and develop affection towards their violators and even protect them. In short, many individuals that have been sexually victimized do not have the effective tools, knowledge, and self-esteem to rely on as a defense mechanism. Many experience anxiety over the possibility of termination from the supervisor that initiated the sexual advances or pressured them using their position of power to do so. People that are not empowered are not only vulnerable to abusers, but are defenseless because they lack the confidence, courage, and support to come forward.


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Regulatory Measures

Published July 12, 2013 by Mayrbear's Lair


It seems like practically every day a new scandal is spotlighted in the media regarding ethical misconduct. For example, recently celebrity chef Paula Deen quickly lost several corporate endorsement deals because of revelations that she engaged in behavior that reflected views of bigotry and discrimination. Other scandals, like Enron on the other hand, were just as shocking because what appeared as a highly ethical organization was, in fact, quite the opposite. It is not clear whether Deen will survive her scandal, but because of Enron, regulatory measures were implemented to prevent another occurrence of this nature. Ferrell et al. (1998) suggested that because of events like Enron, the federal government intervened to help guide the ethical conduct of organizations and institutionalized ethics as a preventative measure to prevent corporate legal violations (Ferrell, LeClair, & Ferrell, 1998). This research is focused on three significant regulatory measures: (a) The Federal Sentencing Guidelines for Organizations (FSGO), (b) The Sarbanes-Oxley Act of 2002, and (c) the Consumer Financial Protection Bureau (CFPB). This study identifies the events that led to the development of these measures and scrutinizes the impact these directives played on business ethics. In addition, case examples are included to highlight how these mandates affect ethics in business. The results of these findings conclude that in a business arena, leaders who navigate without regulations are conducive to ethical misconduct.

Three Significant Regulatory Measures


The Federal Sentencing Guidelines for Organizations (FSGO)

When regulatory measures are implemented, they have a great impact on the ethical manner in which organizations behave and operate. Ethical compliance programs are more of a process and a commitment from organizations to practice ethical behavior than they are specific blueprints for the direction of ethical conduct. In this context, regulatory measures serve to help leaders achieve positive outcomes with social awareness and accountability. Ferrell et al. (1998) pointed out that today’s leaders are dealing with complex issues that require effective leadership skills. For example, managers are required to identify, comprehend, and implement the acceptable use of corporate funds; recognize the falsification of important documents and account records and pinpoint controversial techniques sales representatives use for closing deals. These are some of the common challenges managers face in the modern workplace. In addition, competition, political pressure, and different value systems also influence ethical conduct (Ferrell, LeClair, & Ferrell, 1998). Organizational ethics programs are established, therefore, to outline the parameters of accountability and responsibility with respect to acceptable business conduct. For instance, news reports revealed unethical practices in the grocery industry where, in some cases, managers will re-date food products to extend a product’s shelf life. This kind of ethical misconduct is identified as a white collar crime (WCC) and as a result, the government responded by issuing the Federal Sentencing Guidelines (FSG).


The goal of these mandates was to reward organizations for implementing legal and ethical compliance programs. They were created to encourage corporations to monitor internal control systems by decreeing punishment and restitution should the systems fail. For example, to demonstrate compliance, a company is required to create and document an internal conformity program by demonstrating their ethical culture. In addition, the legal standards are communicated throughout the entire organization to make sure violations do not occur. If and when they do occur, management must provide evidence that a proactive compliance program was implemented. In short, the main objectives of the FSGO are to take aggressive actions to police and self-monitor an organization’s ethical behavior to avoid unethical acts and punish perpetrators that are engaged in WCC and misconduct. The penalties for violating these mandates include the remedy of any harmed caused, are subject to stiff fines, and include any further actions required to reduce future criminal misconduct.

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The Sarbanes – Oxley Act of 2002 (SOX)

When corporations display unethical conduct that affects the public on a grand scale, the government is forced to step in to enforce penalties that will influence social responsibility. For example, the Enron financial disaster was one of the most significant events that occurred to rattle the modern business world. It revealed a level of corruption in the business arena on an unprecedented scale. For example, to many individuals, business ethics are considered different than individual ethics. Because of this perception, Enron staffers that were cognizant of the firm’s off-balance partnerships accepted these practices as part of doing business in a competitive market. Because they were informed these partnerships were legal, employees did not perceive this conduct as an issue of ethics. Bredeson & Prentice (2010) explained that in order to avoid this happening again, the Sarbanes-Oxley Act (SOX) was developed and imposed the most important security mandates since the great stock market crash of 1929, which led Congress to pass the original federal securities laws. SOX consists of provisions that: (a) created a new federal agency, (b) restructured the entire accounting industry, (c) implemented Wall Street practice reforms, (c) created extreme alterations in corporate governance practices nationally and internationally, and (d) attacked insider trading and obstruction of justice (Bredeson & Prentice, 2010). Since then, to support these laws, the Public Company Accounting and Oversight Board (PCAOB) was developed and, together with the SEC, issued additional rules and policies to implement SOX’s many regulations.

In addition to enforcing corporate giants to revamp their governance practices, the PCAOB was also designed to protect whistleblowers. Boatright (2009) suggested that protection to private sector employees who acted as whistleblowers was a significant issue that SOX addressed for the first time. In other words, as a result of the massive fraud events from Enron, WorldComm, and other conglomerates, this reform prevents the retaliation from corporate institutions against any employees that provide law enforcement evidence which relates to the exposure of trade commission offenses (Boatright, 2009). However, the immediate purpose for SOX was to restore stakeholder confidence in the securities market once again. Experts contend the only significant complaint leaders have about SOX is that post-Enron, SEC accounting rules require market to market estimations. This practice forces financial institutions to revalue assets in situations where the value is not easily ascertainable due to pricing fluctuations. All in all, most leaders agree that despite the additional costs and extra energy required to ensure big corporations adhere to these provisions, SOX effectively enforces best practice policies in both the corporate and accounting worlds.


The Consumer Financial Protection Bureau (CFPB)

The mortgage and loan crisis of 2008, where lenders failed to educate brokers about the disastrous consequences of falsifying financial data to help people secure loans, contributed to organizational misconduct in the financial services industry. As a result, the government stepped in once again to take more regulatory measures by outlining the legal framework to help guide ethical practices in the financial service industry. Carpenter (2012) contended that as a result of that crisis, Congress was forced to pass significant reforms through a new regulatory system called the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act entitled stakeholders financial protection and established the Financial Protection Act of 2010 (CFP Act). The CFP Act in turn served to help establish the Consumer Financial Protection Bureau (CFPB or Bureau) within the Federal Reserve System  (Carpenter, 2012). The Bureau was designed to oversee and provide the rulemaking, enforcement, and supervisory powers over a wide range of consumer financial products and services as well as the institutions that sell them.

The laws also enable the Bureau principal rulemaking authority over many federal consumer protection laws that were enacted prior to the Dodd-Frank Act. Among the numerous consumer protection laws developed were the Truth in Lending Act and the Real Estate Settlement Procedures Act. These directives were designed to help stakeholders comprehend the complicated lending transactions they engage in with more transparency and accountability. In short, the Bureau serves as a system for bank supervision to ensure corporations are in compliance with federal consumer financial protection laws and make sure the markets work for families rather than bankrupt them. In 2011, the Bureau reported their operations included the assessment of each institution’s internal ability to detect, prevent, and remedy violations that may harm consumers by examining the corporation’s internal procedures (CFPB Public Affairs, 2011). These mandates and regulatory measures serve to insure that corporate moguls follow ethical governance practices to avoid further financial disasters from occurring in financial service industries.



The law is ubiquitous. It enables, prohibits, and regulates practically every activity of a human being directly or indirectly in some way. Mann & Roberts (2013) purported that in an effort to resolve moral issues, experts have struggled for years to fine tune various ethical behavioral systems. Laws were created to help define relations between individuals and corporations. These relations have an effect on the economic and social order and are the products of civilization’s governance practices. In this respect, the law is designed to reflect the social, political, economic, religious, and moral principles of a society (Mann & Roberts, 2013). In other words, laws are used as tools for social control. Their function is to regulate and guide conduct in human relations.

When corporate leaders misuse their power, government agencies step in to create mandates that outline acceptable and ethical conduct which protects people and keeps the public safe. Ferrell et al. (2013) contended that these regulatory measures provide motivation for organizations to develop core practices throughout their organizations to ensure ethical and legal compliance and are designed to move emphasis away from an individual’s moral obligations. Instead, focus is put on the development of structurally sound organizational core practices and structural integrity for both financial performance and nonfinancial performance purposes. These methodologies include access to communications, compensation, social responsibility, corporate culture, leadership, risk, stakeholder perceptions, and the more subjective aspects of earnings, corporate governance, technology, and other significant areas (Ferrell, Fraedrich, & Ferrell, 2013). The findings of this research deduce that regulatory measures implemented by the federal government have played a significant role in the development of ethical behavior in organizations because time and time again, history proves that many influential leaders who are motivated to achieve high levels of success, and operate without regulations, are unable to avoid the temptation to engage in ethical misconduct when the stakes, profits – especially when competition in the marketplace is extraordinarily high.


Boatright, J. (2009). Ethics and the Conduct of Business (Sixth ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Bredeson, D., & Prentice, R. (2010). Student guide to the Sarbanes-Oxley Act. Mason, OH, USA: Cengage Learning.

Carpenter, D. (2012). The consumer financial protection bureau. Washington, DC, USA: CreateSpace Independent Publishing Platform.

CFPB Public Affairs. (2011, July 12). Consumer financial protection bureau outlines bank supervision approach. Treasury Department Documents and Publications. Latham, US: Federal Information and News Dispatch, Inc. Retrieved June 26, 2013, from

Ferrell, Fraedrich, & Ferrell. (2013). Business ethics and social responsibility (9th ed.). Mason, OH: Cengage Learning.

Ferrell, O., LeClair, D., & Ferrell, L. (1998, March). The federal sentencing guidelines for organizations: A framework for ethical compliance. Journal of Business Ethics. Dordrecht, Netherlands: Springer Science & Business Media. Retrieved June 26, 2013, from

Mann, R., & Roberts, B. (2013). Business law and the regulatoin of business. Mason, OH, USA: Cengage.