Business codes of ethics explained

When most people think of business ethics, the first thing that comes to mind is the phrase “the Golden Rule.” This is the principle of doing unto others as you would have them do unto you. But there are many other principles that make up a company’s code of ethics in California, which are all engineered to protect consumers, employees and the general public.

Defining the code of ethics

A code of ethics is a guideline that outlines a company’s responsibilities in various situations, especially when it comes to how they conduct themselves while doing business. Every company should have its own code of ethics as it sets the tone for how the business is run and what the standards are.

Reasons why a company needs a code of ethics

For one, it’s the law. In California, all businesses are required to have a written code of ethics that must be made available to employees upon request. But beyond that, having a code of ethics instills confidence in customers and helps create a positive work environment.

Principles included in the code of ethics

Business law in California requires that a company’s code of ethics includes principles such as the following:

• Not engaging in illegal activities
• Avoiding conflicts of interests
• Upholding its obligations to shareholders, employees, customers and vendors
• Complying with all applicable laws and regulations
• Being honest and ethical in all business dealings

Violating the code of ethics in California may lead to civil or criminal penalties. A civil lawsuit can occur when someone suffers damages because a company violated its code of ethics, such as if an employee is fired for refusing to engage in illegal activity. Meanwhile, a criminal penalty may be imposed if a company is convicted of breaking the law.