Scenario 1 - Ethical Dilemma - ReclassifyEmployees

You are on the management team of Crystal Clear Electronics(CCE) Inc., a company that specializes in high-quality home theatersystems. In addition to selling these systems, CCE provides custominstallation on all purchases and is known for the professionalismof its installation staff. This reputation is due to the rigorouspolicies its home installation staff must follow. All employees arerequired to attend bi-monthly training sessions, wear CCE uniforms,observe the installation dates and times agreed on by CCE and thecustomer, and follow any instructions given by CCE as to how toperform the installation.

Faced with shrinking margins and cash flow problems, CCE islooking to cut costs and increase cash flows. You realize that byreclassifying the installation staff as independent contractors,CCE will be able to accomplish both objectives. Because theinstallation staff would be independent contractors, the companywould not have to pay payroll taxes, social security, and Medicareexpenses. The reduction in these costs and the correspondingincrease in cash flow would certainly help the company's liquidity.Furthermore, such a change would not affect the quality of theservice provided and would be virtually invisible to customers.

Question: Discuss the ethical implications of thisreclassification.