UNIT 7
AGENCY AND EMPLOYMENT
ANSWERS TO DISCUSSION QUESTIONS
1. The answer to this question is yes—an employee’s ethical standards override the
employee’s duty of loyalty to his or her employer. In other words, an employee should abide by his or
her won ethical standards when the employer acts, or asks the employee to act, in a manner contrary to
those standards.
The nature of the principal-agent relationship is trust. Because of this fiduciary relationship, an
agent owes certain duties to the principal. These duties include loyalty and obedience, as well as
informing the principal of material facts concerning the agency, accounting for property or funds
But the duty of loyalty has limits. An employee is not expected to violate his or her own personal
ethical standards by blindly doing what he or she is ordered to do. This is also true when those personal
standards include the duty of loyalty. A person should act in accord with his or her conscience, even if—
or perhaps especially when—that requires acting against the demands of an employer.
2. Most courts have ruled that an agent’s authority continues, even when there is a breach
314 UNIT SEVEN: AGENCY AND EMPLOYMENT
3. An employer should be required to assume responsibility for the wrongful actions of an
agent or employee. If one of two innocent parties must suffer a loss, the party in the better position to
prevent that loss should bear the burden. In an employment relationship, the employer has more
4. Unauthorized workers make up a small, but significant, percentage of the U.S. workforce,
particularly in the construction trade. Enforcement action against the workers and their employers leads
to the deportation of many immigrant workers and prison terms for some managers. Consequences also
include family separations, and business disruptions and other negative economic results. Many U.S.
5. Some states have laws that specifically ban discrimination based on gender identity, and
there are those who advocate that federal law—Title VII of the Civil Rights Act of 1964—should protect