Is It Ethical?
by Howard Freedman
Copyright 2019 Financial Aid Consulting. All rights reserved. No portion of this article may be reproduced mechanically, electronically, by photocopying or by any other means without expressed written permission of the author.
Howard can be reached at email@example.com
This article was written during my days as a payroll director. It deals with some ethical issues and resolutions as examples of deciding between right and wrong. I included it in my library as a means of explaining that it is often extremely challenging to tell clients what they want to hear rather than the truth. Although this article identifies several challenges within the payroll profession, I find similar challenges as a financial aid consultant when I discover red flags based on illogical or inconsistent data that may put a student's financial aid package at risk. As a result, I learned to say "no" to some clients that I know will be subjected to the verification process.
Learning about hidden, income, assets or issues related to child support creates many of these ethical dilemmas. Promising current and would be clients scholarships clients that cannot be guaranteed or appeasing a student who wants to attend an unaffordable college are some examples of what is simply unethical.
Being a financial aid consulting is both an exciting, challenging personally gratifying profession that requires objectivity, honesty and a commitment to doing what is best for those involved. I simply love helping others yet know the difference between right and wrong without compromising my pride and integrity. That's what it is all about. If it is not ethical, I walk away and move on.
The following article is an example of what happens in one profession or life in general. That is why I implore each of you to ask similar questions or scenarios you confront.
If payroll were simply a matter of doing quantitative calculations, our jobs would be pretty straightforward. Not easy, but at least straightforward. Because we deal with complex, overlapping, and often inconsistent sets of federal, state, and local law and regulation, however, ambiguity is often more characteristic of our jobs than clarity. This ambiguity is compounded when we find the specific policies of our employers not always consistent with payroll law and regulation; for example, when the Internal Revenue Code says a benefit is taxable and your employer says don't tax it. The situation is still further complicated by the fact that the internal customers we serve (employees and management) will not welcome decisions we make that are not to their advantage — for example when we tax that popular benefit.
These are the situations in which we must be guided by a clear and consistent set of professional ethics.
What Are Ethics?
The term “ethics” is derived from the Greek ethikos and literally means the study of what is good and bad or right and wrong in the context of moral duty and obligation. Ethics can be applied to personal or professional behavior and should foster a consideration of the consequences of each action as part of a decision-making process. As opposed to the strictly pragmatic approach to decision making, which asks only if a given course of action is the most effective or efficient in a particular situation, the ethical approach requires that we consider whether an action is appropriate or “right” judged against some established standard.
The American Payroll Association's Code of Ethics provides one set of standards against which payroll professionals may judge their actions. The central tenets of this Code require that we exhibit “constant concern” for our fellow employees, strive for “perfect accuracy and timeliness” in all our payroll activities, and maintain “absolute confidentiality.” These are high standards, and in the real world of everyday business trying to meet them can lead us into complex ethical dilemmas.
What Are Some of These Ethical Issues?
How would you handle the following situations I have faced as a manager?
... How do you answer your boss's question “Am I getting the ax?” after you've prepared his final check? ... Do you terminate an employee for cause who was a referral from a senior executive? ... What do you do when employees file exempt from withholding and you know they're not? ... How do you decide who is (and is not) entitled to a manual check?
These scenarios obviously pose several ethical questions. For example, if your soon-to-be-ex boss has been honest with you, should you tell him the truth when you have been pledged to confidentiality? Should a politically hired employees receive special treatment based on who they know rather than on how well they perform their jobs? What are your responsibilities if you suspect an employee is providing incorrect information on a Form W-4? Is it fair that employees receive manual checks for reasons other than financial hardship?
What Is the Solution?
Here are some guidelines for reaching ethical decisions in situations such as I've outlined.
• View the issue objectively (i.e., separate your personal issues from the issue at hand). ...
• Clearly define the problem, including areas of conflicting interest and issues of law.... Identify who will be impacted by your decision. ...
• Define alternatives and evaluate/compare their probable consequences. ...
• Identify ethical issues implicit in these alternatives. ... Choose the course of action that in your view is ethical, compliant with relevant law and regulation, and in the best interests of your employees and employer.
In case you're wondering, this is how I handled the four ethical dilemmas described above.
My boss who was getting the ax. Even though he had treated me well, I was ethically bound to maintain confidentiality in this matter and could not divulge his (or anyone else's) fate. I explained this to him and did not answer his question, hard as that was for me.
Politically hired employee. I terminated the employee based on performance (which I had carefully documented). I told the executive who had sponsored the employee that job performance had to be treated the same for all employees.
Exemption from income tax withholding. The employee was advised of the penalties for filing a fraudulent Form W-4 and that his Form W-4 would be sent to the IRS. The Service has made clear that it is not the employer's responsibility to police its employees in this area, so providing this information to the employee and forwarding his Form W-4 to the IRS fulfilled both my personal and legal obligations.
Who qualifies for a manual check? The company I worked for lacked a formal policy on this issue, so our informal policy that manual checks would be cut only in instances of financial hardship was often overridden by requests from senior management for “one-time-only” exceptions. I strongly recommended that it would be both more equitable and more cost-effective if manual checks were issued only in clearly defined situations. This will probably remain the most painful ethical question payroll professionals have to deal with.