Questions: JT is a staff accountant for Rose and Sonny, a local CPA firm. For the past ten (10) years, the firm has given employees a year-end bonus equal to two weeks' salary. On November 15, the firm's management team announced that there would be no annual bonus this year. Because of the firm's long history of giving a year-end bonus, JT and the co-workers had come to expect the bonus and felt that Rose and Sonny had breached an implicit agreement by discontinuing the bonus. As a result, JT decided to make up for the lost bonus by working an extra six (6) hours of overtime per week for the rest of the year. Rose and Sonny's policy is to pay overtime at 150% of straight time. JT's supervisor was surprised to see overtime being reported because there are generally very little additional or unusual client service demands at the end of the calendar year. However, the overtime was not questioned because employees are on the "honor system" when reporting their work hours. Are Rose and Sonny acting in an ethical manner by eliminating the bonus? Why? Explain your answer. Is JT behaving ethically by making up the bonus with unnecessary overtime? Why? Explain your answer.

To determine whether Rose and Sonny are acting ethically by eliminating the bonus, and whether JT is behaving ethically by making up the bonus with unnecessary overtime, we need to consider several factors, including business ethics principles, fairness, transparency, and the impact on stakeholders.

1. Business Ethics Principles: Ethical business practices often emphasize fairness, transparency, and the well-being of employees. If Rose and Sonny eliminated the bonus without a valid reason or without communicating effectively with their employees, it could be considered unethical. However, if the decision was made due to financial constraints or to ensure the long-term sustainability of the company, and if it was communicated transparently, it might be justified.

2. Fairness and Transparency: If the bonus was a part of the employees' expected compensation and was eliminated without prior notice or discussion, it could be seen as unfair. Ethical management would involve discussing the reasons for the elimination and exploring alternative solutions with employees.

3. Impact on Employees: The decision's impact on employee morale and financial well-being should be considered. If the bonus was a significant part of employees' income, its removal could have adverse effects, making the decision ethically questionable unless justified by compelling reasons.

1. Ethical Work Practices: JT's decision to work unnecessary overtime to make up for the lost bonus raises ethical concerns. It may involve misrepresenting work hours, which is dishonest and could violate company policies or labor laws.

2. Impact on Company Resources: Unnecessary overtime can strain company resources and affect productivity. If JT's actions lead to inefficiencies or increased costs, it could be considered unethical.

3. Personal Integrity: JT's actions reflect on personal integrity. While the intention to make up for lost income is understandable, doing so through dishonest means undermines ethical standards.

• Rose and Sonny: Their decision to eliminate the bonus can be ethical if it is justified by legitimate business needs, communicated transparently, and handled with consideration for employees' well-being. Otherwise, it may be seen as unethical.

• JT: Making up the bonus with unnecessary overtime is generally unethical due to the dishonesty involved and potential negative impact on the company. A more ethical approach would be to discuss concerns with management or seek alternative solutions.

In both cases, ethical behavior involves transparency, honesty, and consideration for the impact on all stakeholders involved.