W.E. Cheatham and Co.’s Decision and Ethical Implications

Subject: Business Ethics
Pages: 4
Words: 1160
Reading time:
5 min
Study level: Bachelor

W.E. Cheatham and Co. have to consider the ethical implications of their decision to lay off workers amid the annual loss. Even though with the unprecedented economic times, like the COVID-19 pandemic, the company may be overwhelmed and consider layoffs as a potential solution to the financial constraints. However, for the firm to make such a decision, particular laws should be considered. For example, the selection of the 500 employees to be laid off should be defensible under the Worker Adjustment and Retraining Notification (WARN) Act. Even if the employer is obliged under the WARN Act, it should consider the number of employees to be affected and the size of the firm. Through the bright-line rule, the company can let go 499 workers but WARN indicates that written notice should be issued. As a manmade law, WARN Act has some positive obligations in ethical organizational decision-making that is comparable to the Ten Commandments in the Bible (Lantos, 2021). In such regard, this paper explores the ethical considerations involved in laying off W.E. Cheatham and Co. employees based on the theories.

Under the WARN Act, the employees, their families, and the community are protected from layoffs without notice. Such consideration counteracts the CFO’s decision to send home 500 employees without issuing the 60-day advance notice. William’s, the CFO’s, perspective refutes Immanuel Kant’s Golden Rule that implies that an individual should do as he would also want. Kantian principle compels the company to reevaluate its decision (Monhollon, 2021). The 60-day notification will enable the workers to prepare psychologically and financially since it serves as a transition period to the prospective employment loss. During the 60 days, the affected workers can seek other alternative opportunities to ensure job progression or be involved in retraining to boost their qualifications in the job market. William appears to have trouble in knowing when the rights of the employees are violated, though he might acknowledge his instinctively. He asserted that retrenching 499 workers do not require informed consent, even though he is not among the affected group or imagines how they will feel. Such a move shows William’s lack of instinctive guidance in decision-making.

Smith, the W.E. Cheatham, and Co. President’s perspective on the 500 employees’ layoffs is unethical. He questions the contribution of the affected workers over the period they serve the contribution. Smith does not obey the Aristotelian theory of justice because selecting 500 employees out of 3000 does not show fairness since the process is not voluntary (Monhollon, 2021). Smith’s contemplation is not morally guided because arguing not to give a notice for layoff will lead to a significant dispute.

Not giving the affected workers time to think about how they will handle the job loss is unreasonable, disproportionate, and unjust, in addition to being a violation of the WARN Act. This illustration refutes the company president’s idea that notifying the employees in advance questions their productivity for the last two months since they will have diverse thoughts. In such regard, honoring the decision attracts philosophical and legal implications. For instance, the Bible urges people to love their neighbors as they love themselves (Lantos, 2021). Laying off the workers without informing their consent is the worst scenario based on this religious underpinning since it shows that the firm’s management had no love for the affected employees.

As a vice-president responsible for human resource management, Sarah Jenkins engaged in ethical thinking in line with WARN Act. She seems to be having a dissimilar opinion about the mass layoff and whether there is a need for such a decision. However, WARN Act should be amended to make it impossible for large companies to dismiss their workers without notifying them (Goodpaster, 1991). Such review should be extended to small and medium-sized enterprises with few employees. Sarah claimed the company owed the employees and sending them away without being notified, or even the act itself was an overreaction and needed to be reviewed. From her point of view, sending home 500 employees seems irrational and not well thought in addressing the organizational challenges.

However, if such a decision is supposed to have arrived, Sarah supported that the affected workers need to be informed to impact their financial decisions, such as not buying new cars or big appliances during the 60-day notice. Sarah urged the management that laying off 500 or more full-time employees was going to reduce the morale of the remaining employees (Monhollon, 2021). In such regard, Sarah’s concern over the potentially affected and retained workers does not justify the annual losses incurred by the company. Nonetheless, business decisions should not rely entirely on ethics but also incorporate legality (Goodpaster, 1991). Therefore, the decision was going to have either short-term and long-term effects on the company.

Based on the scenario, W.E. Cheatham and Co. is in an ethical dilemma and could succeed in laying off its workers without notice since the employer might take advantage of the law by applying the no-duty-aid rule. The law does not ask more of what the employer should do with the employees, unlike in the case of parents and their children (Lecture 2021). For instance, if the employees do not enjoy their rights as provided by the WARN Act, the employer will take advantage of them. Carr (1968) urged that managing a business is like playing poker, and if the player does not utilize their opportunity, the opponent will. In such consideration, the standards of right or wrong appear to contrast the prevailing traditions of morality in society. On the other hand, William and Smith can take advantage of the stress-ridden opportunities that will create conflict between their ethical sense and business realities. The affected employees’ judgments will be clouded by the tension inhibiting their reasoning capacity. Even though the actions of the employer are against the accepted code of conduct of society, they are permissible in business.

Overall, ethical decision-making in business is challenging due to the different factors the executive has to consider. However, business ethics seem to take a different approach to that of society. Business ethics or conscience of the executive seem to take a different path from those of the community and can be equated to playing poker. For example, the adverse impact of the layoff will be hard on the affected employees and their families and the community at large since their purchasing power will be significantly reduced. If W.E. Cheatham and Co. proceed with the decision of laying off its staff, it will attract WARN Act penalties. The company will have to pay the unnotified workers an amount equal to the 60 days or conditioned payments based on the court ruling. If it cannot be avoided, notifying the affected employees of the potential layoff becomes the best option. Foreseeable business circumstances, such as the annual loss, do not qualify as an exception to WARN Act provisions. Therefore, the employer should provide a full 60-day notice to workers likely to be affected by the layoffs.


Carr, A. Z. (1968). Is business bluffing ethical? Harvard Business Publishing, pp.143-52.

Goodpaster, K. E. (1991). Business ethics and stakeholder analysis. Business Ethics Quarterly, 1(01), 53-73. Web.

Lantos, G.P. (2021). Advanced instructional module: Ethics. Stonehill College

Lecture (2021). No duty to aid rule. [Microsoft Word]

Monhollon, M. L. (2021). Ethics: Some philosophical and religious underpinnings. [Microsoft Word].