Business Ethics II

7/18/2019 Business Ethics II

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Jewish Business Ethics II:

Case Studies in Jewish Business Ethics

In the frst Morasha class on business ethics we discussed thecentral role Judaism plays in guiding our business dealings. Judaism is not limited to one’s home or synagogue; the entirety oour lives should be inused with spirituality. Consequently !ust asone approaches prayer or "orah study as opportunities or spiritualdevelopment so too should one view the plethora o businessinteractions ## buying selling investing hiring advertising etc. $as a ramewor% or spiritual growth and ethical ortitude.

In this second class on Jewish &usiness 'thics we will e(plore how"orah or Jewish )aw deals with a variety o commerce#related

issues. *aturally we will only be able to touch some o the aspectso "orah monetary law; the ull range o details would occupy many volumes. +et we will outline some o the principles that underlie Jewish monetary law and demonstrate how "orah monetary lawprovides a ramewor% or elevating the e(perience o the businessworld to a higher level.

In certain areas a air comparison can be made between "orah lawand the corresponding treatment o other legal systems. In somematters such as ona'ah ,overcharging and underpaying-dierences are ar more stri%ing than similarities. /hen

comparing it is worth bearing in mind that the "orah system has,remar%ably- been e(tant or thousands o years and remains ullyoperative today.

In this class we e(plore the ollowing questions0

• How much proft is a merchant allowed to make?

• When does an agreement become binding?

• When is it permitted to set up a competing business?

• What are m non!contractual responsibilities to m

emploer?• Is it permitted to dela the pament o" emploees#

wages?

Class $utline:

Section I% &raud ' $(ercharging and )nderpaing1art 2. "a%ing advantage1art &. 3elling the &roo%lyn &ridge

Section II% *ransactions ' When is it $+ to Back $ut o" a ,eal?

1



1art 2. *on#verbal 2greements1art &. 4erbal 2greements1art C. Conventional 2greements

Section III% &ree Entr in the -arketplace ' When to

Compete and When .ot?1art 2. "he "almudic 5ight to 6ree 'ntry1art &. Inringement

Section I/% Working "or Hire ' Whose *ime is it 0nwa?1art 2. 2 "ime to /or% a "ime or 7nesel 1art &. 2ll or the &oss

Section /% 1a ,a ' *imel Compensation o" Workers1art 2. 8is )ie 9epends on It1art &. 6alling 3hort

2



Section I% &raud: $(ercharging or )nderpaing

6or most people the main purpose o business is to ma%e moneyand the more the merrier. In selling goods money is made by

ma%ing a proft0 selling items or more than what they cost tomanuacture or purchase rom a supplier. It may also entail ma%ingsuch items more attractive through mar%eting. :uestions inevitablyarise then as to what is a air price and what is not. 8ow muchproft is reasonable 2t what point has a retailer crossed the linebetween honest business and raudulent activity 7r consider theollowing question0

I have a standard price list, but I'm pretty liberal aboutgiving discounts when I need to make a sale. Is this aproblem?

1art 0% *aking 0d(antage

2% /aikra 34e(iticus5 67:28 ' *he *orah prohibits takingad(antage o" another person%/hen you buy or sell to yourneighbor do not cheat oneanother.

וכי תמכרו ממכר עמיתך ו קנה מיד עמיתך

תונו יש ת חיו:

6% *almud9 Ba(a -etiah 7;b ' *he conte<t o" the (erse tells

us that it is talking about monetar "raud%</hen you buy or sell to yourneighbor< # the verse reers tomonetary raud.

- הרי וכי תמכרו ממכר עמיתך ו קנה מיד עמיתך

ונ ת ממון מור.

=% >ambam9 Hilchot -echirah 26:2 !! *he prohibition againsttaking ad(antage# applies to swindling one another9 whether seller or buer%It is orbidden or the buyer orseller to swindle another personas it is written =when you sellsomething to your ellow or buysomething rom your ellow donot ta%e advantage o oneanother.>

סור מוכר ו קונה הונות ת חבירו, שנ מר

עמיתך

מיד

קנה

ו

,ממכר עמיתך

תמכרו

וכי

"

יש ת חיו" תונו,

8ow much is considered an overcharge 8ow are we supposed tomeasure it

8% -ishnah9 Ba(a -etiah 8:= ' *he percentage consideredo(ercharge is 2@A9 or 2A%

6raud is constituted by ?anovercharge o@ our silver coins

,כסף ס ע

ו רבעה

מעשרים

כסף

ה ונ ה רבעה

.שתות מקח

3



in twenty our ?hence@ a si(th o the purchase.

It should be noted however that the base price rom which tomeasure the overcharge is not based on the absolute value o the

product. 5ather it is measured based on the going retail mar%et value. "hat means that the "orah does not place limits on theamount o proft that can be made on any particular product onlythat a merchant should not charge too much more than whateverthe going rate happens to be.

1art B% Selling the Brookln Bridge

'ven when conorming to the mar%et value a merchant must notpretend that his goods are better than they really are ,as ruled bythe Shulchan Aruch Choshen ishpat AAB-.

2% -esilat esharim9 Chapter 22 ' $ne ma demonstrate thegood Dualities o" his merchandise but not co(er up itsde"ects%

2nything that one does in orderto demonstrate the good qualityo the ob!ect is good and

appropriate. 8owever whatsomeone does to conceal thedeects o what he is trying tosell constitutes tric%ery and isorbidden. "his is an importantgeneral rule in business ethics.

טוב הקונים מיתת שהו הר ות ת מה כ

ך רשיו בוט הח! וי!יו, הנה ההשתד ות ההו

הונ ה

ינו

,ו

#!ח

מומי

שהו כסות

מה

.ומתן

המש

ב מונת

דו

$כ

ה

%ו

.ו סור

6% >abbi Shaul Wagschal9 *orah uide "or the Businessman9pg% = ' 0 merchant should "ollow a sales integrit checklist%

2 person can gauge what is considered misleading by as%inghimsel the ollowing questions beore oering goods or sale0- 2m I trying to hide anything rom the buyer such as any hiddenaultsA- Is the price correctD- 9oes the quality o the goods match up to their description

3uppose someone oers to sell you goods or what you realiEe is agiveaway price. 2re you obligated to let the seller %now the true value o the items so as to avoid transgressing the prohibitionagainst underpaying 7r perhaps that prohibition only applieswhen you initiated the deal by oering a low price

&



=% >abbi echiel -ichel Epstein9 0ruch HaShulchan9 Choshen-ishpat 66F:2 ! 0lerting the seller or buer to the real priceis mandator%I the seller doesn’t %now the realprice and the buyer realiEes that

he is unintentionally being oeredan unreasonably low price hemust alert the seller otherwise hetransgresses a negativecommandment.

שבטעות

יודע

וה וקח

בקי

כשהמוכר ינו

הקבוע מהמקח ב!חות מוכר ו ידיעה וחסרון

.ב ו

עובר

ו ם ו

יד ו

$ריך ה

#

/hat i the seller says <7ther stores sell this ob!ect or ten dollarsbut I wonFt sell it or less than AG< is there raud here or not)i%ewise i a customer tells the seller <7ther stores are selling thisitem or ten dollars but IFm only willing to give you fve< is this

illegal underpaying or does transparency ma%e it 7H

8% Shulchan 0ruch9 Choshen -ishpat 66F:6F ' 0s long as oneis transparent9 he ma ask whate(er price he wants%3omeone who deals honestly isnot sub!ect to the prohibition o raud. 6or e(ample ?i the sellersays@ <I bought this ob!ect orsuch and such an amount andsuch and such an amount is myproft< he is not guilty o raud.

,ד

#כי

.ע יו ונ ה

ין ו

,ב מונה

ונותן

הנוש

ח!% ה בכך וכך קחתיו כך וכך ני משתכר בו,

ין ו ע יו ונ ה.

3ince the prohibition is contingent on the buyerFs reasonablee(pectations and can be waived we see that the main emphasis ison transparency. /e may now appreciate the answer to our originalquery0

In !the case o" o#ering selected discounts$, there is noproblem i" you generally charge a particular price but once ina while you show %e&ibility "or someone who is needy or particularly stubborn, etc. he average customer is (ustifedin believing that he is paying the going price. Assuming thelaw allows it, you can also decide to give discounts to aparticular class o" customers) local residents, collegestudents, soldiers, etc. I" you publici*e these discounts, thenanyone who "re+uents your place o" business knows thescore.

he problem is i" the e&ception becomes the rule and youmake so many discounts- that the list price is only "or thenaive. I was once in a clothing store with a prominent signsaying that all prices are nonnegotiable. he sign should

have made me suspicious, because typically, stores with nonnegotiable prices don't have signs like that.

'



Anyway, it turned out that even without any negotiation onmy part the salesman o#ered me /discounts/ on everything I bought 0 discounts that still le"t the prices a bit above whatwas accepted in other stores. Anyone who paid the label

price would have been ripped o# not only relative to other stores, but even in relation to what other customers werepaying in the same store.

So it is okay "or you to o#er an occasional discount to make asale, but you should try to make sure that they remain truly occasional 1because when the discount becomes the rule, the buyer who pays

full price is being overcharged). 12abbi 3r. Asher eir, he 4ewish 5thicist "rom www.aish.com6

+e *hemes o" Section I:

• *he *orah tells us that we are not allowed takead(antage o" people monetaril b either charging toomuch or paing too little%

• *he benchmark "or determining the (alue o" an particular item is the current market (alue% Hence9there is theoreticall no limit on the amount o" proft amerchant is allowed to make%

• E(en charging too much or paing too little ispermissible as long as it is not done deceit"ull% I" the

deal is conducted candidl9 with transparenc9 then it is"air no matter what the price%

1art B% *ransactions: When is it $+ to Back $ut o" a ,eal?

&usiness is based on trust. 2greements are made and we e(pectour partners clients or sellers to stic% to their word. &ut howmuch is this actually binding Is it ever permissible to bac% out o adeal Consider the ollowing scenario0

I'm selling my car on e7ay. A potential buyer o#ered me cashoutside o" e7ay, which would cut out e7ay's "ee o" nearly 89::. I would basically break even on this transaction;but I think it would dishonor the agreement with e7ay. <hat do you think is the right thing to do in this case?

1art 0% .on!(erbal 0greements

Jewish )aw tells us to honor our agreements even when they are

*7" legally binding as the ollowing sources demonstrate0

(



2% *ehillim 27:2!6 ' *he righteous speak truth in their heart%#

2 song o 9avid; 7 )ord whowill so!ourn in +our tent whowill dwell upon +our holy

mount 8e who wal%s uprightlyand wor%s righteousness andspea%s truth in his heart.

בהר ישכן מי ב ה ך י$ור מי יקוק מ%מור דוד

#דק ודבר מת ב בבו: קדשך:הו ך תמים ו!ע

/hat does it mean to spea% truth <in his heart< "he "almud ma%esit clear that the heart here is meant as a metaphor or thought. 2ssuch the verse is telling us to remain true even to things we onlymentally agree upon.

6% -akkot 68a ' $ne should honor e(en commitments that

were not (erbaliedG - כ$ון רב ס!ר . ודובר מת ב בבו

!ח ו היה דרב ס!ר רש"י ( והכי הוה עובד

שהיה

בשעה

ניו

! וב דם חד

חד מכור

ק"ש ו מר ו תן י הח! בכך וכך דמים קור

ש

ה

%כסבור

ש

"ק

קור

שהיה

ני

!מ

ענהו

ו

היה רו#ה יתנו בדמים ה ו והוסיף מר תנהו י

!חה יותר חר שסיים ק"ש מר ו טו בכך

דעתי

היה

דמים

שב ותן

בר שונה

ש מרת

בדמים

.יתנם ך

=and spea%s truth in his heart> ##"his reers to 5abbi 3ara.

>ashi0 "his is what happenedwith 5abbi 3ara. 8e had acertain ob!ect or sale. 3omeonecame to him to purchase it and5abbi 3ara happened to be inthe middle o reciting 3hema."he man made an oer to which

5abbi 3ara did not respond,because he could not interrupthis recitation-. "he buyer thoughthis oer must have been too lowand he thereore raised his bid./hen 5abbi 3ara fnished hesaid =1ay what you had oeredoriginally or I had decided tosell it to you or that price.>

"he "almud does not mean to imply that 5abbi 3ara’s mentalagreement was legally binding; it was not. *evertheless hisactions are to be praised and aspired to as he was a man o theutmost truth. "his attitude to the integrity o our words and evenour thoughts has been enshrined in Jewish law.

1art B% /erbal 0greements

2% -ishnah9 Ba(a -etiah 8:6 ' *he court curses one whobacks out o" a non!binding (erbal agreement%I 2 drew into his possession &Fs

produce without paying him themoney he cannot retract. I he

יכו

ינו

-מעות

נתן ו

ו

ירות

!הימנו

משך

-ירות

!הימנו

משך

ו

מעות

נתן ו

,בו

ור

%ח

דור

מ נשי

רע

!ש

מי

:ב מרו

.בו

ור

%יכו ח

*



paid him the money but did notdraw into his possession hisproduce he can withdraw. &ut?the 3ages@ said0 8e whopunished the generation o the

ood and the generation o thedispersion will ta%e vengeancerom whoever does not stand byhis word.

עתיד ה!רע ממי ש ינו ומדור ה! $ה הו המבו

.בדבורו

עומד

"he FcurseF that the 3ages apply to somebody who bac%s out o adeal is only stated with regard to a purchase that has already beenpaid or by the buyer. 8owever even when no such purchase hasbeen made the 3ages advise parties not to bac% out o agreements.

6% Shulchan 0ruch9 Choshen -ishpat 68:F ' Words alone are

not legall binding9 but one should keep one#s word in an respect%I one conducted a transaction verbally it is appropriate or himto %eep his word even though heneither too% any money nor wroteanything down and anyonewho bac%s out o such a deal isconsidered lac%ing in integrity

ר וי ו עמוד

ה

%הרי

ב בד

בדברים

ונותן

הנוש

רשם בדיבורו ע"! ש קח מהדמים כ ום ו

%ה ממחוסרי מנה... החו%ר בו... הרי וכ

=% >emah9 Shulchan 0ruch9 Choshen -ishpat 68:22 op% cit%

' *his law applies e(en when one fnds a better deal%"he correct opinion is that even i someone agreed to one price andis then oered another he shouldnot bac% out o the original dealand i he does he is consideredlac%ing in integrity.

ר

%ח

ו ם

בו

ור

%תרעי סור ח

בתרי

י ו

!ד

"וי

.יש בו משום מחוסרי מנה וכן עיקר

8% >abbi Shaul Wagschal9 *orah uide &or the Businessman9pg% 22 ' $ne should keep one#s word e(en at the cost o" fnancial loss%

2 verbal agreement is not legally binding according to "orah law.8owever brea%ing a verbal agreement is considered a breach o trust. 2 promise to buy or sell should be upheld even i it will causefnancial loss.

1art C% Con(entional 0greements

2s noted above verbal agreement and even the transer o moneysdo not eect binding agreements in Jewish )aw. &ut what i such atransaction is considered binding by the business community Can

one rely on Jewish law to be Fe(ibleF or is the general practice alsobinding even according to Jewish law as well

+



2% Shulchan 0ruch9 Choshen -ishpat 62:2!6! 0ctionscommonl used to fnalie a deal carr Halachic weight as

well%I one stri%es a deal verbally to

ma%e a sale and the price isagreed between them and theprospective buyer signs hisinitials upon the item i theaccepted practice in that regionis that by writing initials oneacquires the ob!ect then the itemhas been acquired and neitherone o them can bac% out o thedeal. "his is true o any act whichis accepted by merchants asbinding such as a handsha%eetc.

ה וקח

ורשם

הדמים

סקו

!ו

ב בד

בדברים

מכר ו

שיקנה

הו

המדינה

$מנה

ם

...המקח

ע

רושם

יכו

מהם

ו ין חד

המקח

נקנה

מור

$קנין

הרושם

דבר כ וכן הדמים. %ה יתן וחייב בו ח%ור

שנה$ו הת$רים קנות בו כ$ון... תקיעת כף וכן כ

בו .כיו#

&ased on the above we can ormulate the answer to our initialquestion as ollows0

Although =alachah sets down specifc criteria "or determining whether an act is binding as a method o" fnali*ing a transaction, anything that is accepted as fnal by the general public is accepted as fnal by the =alachah aswell. It stands to reason, then, that the agreement to pay commission made with e7ay is binding and should not besidestepped.

+e *hemes o" Section II:

• E(en agreements that are not binding according to Jewish laws should be kept% *his is a matter o" personalintegrit and honest%

• Backing out o" a deal9 e(en a non!binding one9 is soserious an in"raction that Sages warned that such aperson9 under certain circumstances9 would beaccountable to od Himsel"%

• Con(entional methods o" "ormaliing agreements are

recognied as binding in Jewish law as well%

Section III% &ree Entr in the -arketplace: When to Compete

and When .ot?



In the spirit o competition many economists today concernthemselves with the value o ree entry into the mar%etplace andwith the legal conditions that acilitate new production and sales incurrent mar%ets. "he problem however is that the reedom tocompete oten has collateral damage as the ollowing question

highlights0

Is it permitted to open a business in a neighborhood thatalready has a similar store, i" by doing so a loss o" revenuewill be caused to the owner o" the original store?

1art 0% *he *almudic >ight o" &ree Entr

2% *almud9 Ba(a Batra 62b ' *he *almud debated whether or not it is permissible to initiate competiti(e businesspractices%5av 8unah said0 I a resident o an alley sets up a hand mill andanother resident o the alleywants to set up one ne(t to himthe frst has the right to stophim because he can say to him<+ou are interering with mylivelihood<

3aid 5abina to 5aba0 9oes this

mean that 5av 8unah adopts thesame principle as 5abbi +ehudah,i.e. a minority opinion- 6or wehave learnt0 5abbi +ehudah saysthat a shop%eeper should notgive presents o parched cornand nuts to children because hethus entices them to come bac% to him. "he 3ages howeverallow this ,so how then could heargue with the ma!ority view-K

2ctually he may very well be inagreement with the 5abbis orthe ground on which the 5abbisallowed the shop%eeper to dothis was because he can say tohis rival <Just as I ma%epresents o nuts so you canma%e presents o almonds< butin this case perhaps the 5abbis

would agree that the frst mancan say to the other. <+ou are

ה י בר מבו ה ד וקי ריחי , ו ת מר רב הונ :

דמעכב הו $ביה, דינ בר מבו ה חבריה וקמוקי

...סקת יה חיותי

!ק

:

"ד

,עי ויה

כרבי

ד מר

הונ

רב

,ימ

:רבינ רב

"

חנוני יח ק יהודה ומר: רבי דתנן, הדוהי

,ו

# י ן

$שמר

ני

!מ

,ין תינוקות

%ו

$ו

ק יות

מתירין

וחכמים

י$י רבנן ע יה דרבי ! רבנן, עד כ ן !י תימ

ינ

$

!קמ

נ

:ד מר יה

-התם

יהודה

רבנן !י ו הכ ב שיוסקי, ו$ ! ת מ$ו%י,

.סקת יה חיותי

!ק

:

"ד

,מודו

1/



interering with my livelihood.<

2ll that can be determined rom the "almud at this point is that twoe&isting businesses have the right to use advertising gimmic%s totry to attract customers. /hat is not yet clear is the permissibility

o setting up shop in competition with a pree&isting business. "he"almudic discussion continues0

6% Ibid% *he debate continues% 2n ob!ection was raised ?against5av 8unahFs ruling rom theollowing source0@ L2 man mayopen a shop ne(t to anothermanFs shop or a bathhouse ne(tto another manFs bathhouse and

the latter cannot ob!ect becausehe can say to him <+ou do what you li%e in your property and I’lldo what I li%e in mineK<

,חבירו

ש

חנותו

ד

#ב

חנות

עושה דם

:מיתיבי

יכו מחות ו ינו חבירו, ומרח ב#ד מרח#ו ש

ש ך

בתוך

עושה

תה

:שיכו ומר ו

ני

!מ

,בידו

י ש ךותב השוע ינ ו

/hich claim wins0 that o the incumbent businessman ## that hislivelihood is being inringed upon or that o his would#becompetitor ## that he has a right to use his property in whicheverway he pleases

"he "almudic debate ends unresolved but only as concerns

residents o the same shared alleyway. 2ll sides agree howeverthat in general one is permitted to open a competing business inthe same city as an e(isting one ,provided that at least one suchbusiness pays ta(es in that city-.

&ased on the "almudic discussion above the consensus o theclassical commentators is that in most cases it is actually legal toopen a competing business. 3uch is enshrined in Jewish law0

=% Shulchan 0ruch9 Choshen -ishpat 27A:7 ' Starting acompeting business is permissible to those "rom the samecit%I there is a practitioner o someproession in one alleyway ora store and another personcomes and wishes to set up shopthere selling the same items hemay do so; the frst storeownercannot stand in his way byclaiming <you are depriving meo a livelihood.< "his applies

even i the second person comesrom a dierent alleyway in the

שהיה

ו

...מבוי ומן

מבני

במבוי חד

שם

היה

ועשה חרת כנ$דו ינו חבירו וב חנות... שם...

היה

י ו

!ו

...וסק חיי

!ו ומר ו תה

יכו מנעו

.מבני מבוי חר ינם יכו ים מנעו

11



same city.

"he reasoning behind this right to ree entry is as ollows0

8% ad >ama to Ba(a Batra 62b ' We need to be as concernedabout other people#s prospects "or li(elihood as our ownadditionall9 we must recognie that regardless o" our eorts9 all that we will earn is decreed "rom 0bo(e%<8e can say to him F+ou do what you li%e in your property and I’lldo what I li%e in mineF < i.e.why are you only concerned

about your own livelihood andnot about mine

2lternatively since each o themis wor%ing only or himsel eachone only deserves that whichhas been apportioned him or hislivelihood rom 8eaven andneither is really inringing onthe other.

ו ני

ש ך

בתוך

עושה

יכו ומר ו תה

שהו

דידך ו עושה בתוך ש י, ומ"ש דחישת חיות

דידי0 חישת חיות

בדנ!שיה כ עביד חד מינן י נמי כיון דכ

דמטי יה ד הו מ י ד!סקו יה משמי חד וחד

.דחבריה

מינן חיות

חד

סיק

!מ

2re businessmen rom other cities allowed to compete orcustomers in =our> city

7% >ema9 Shulchan 0ruch9 Choshen -ishpat 27A:7 'Businessmen "rom other cities ma compete inneighborhoods in KourL cit where there are not similar businesses and the pa ta<es to the cit%)ocal merchants may preventthe entrance o businessmanrom other cities romestablishing businesses in =our>immediate neighborhood i theydirectly compete with the localmerchants. 8owever theoutside businessmen may set upshop in a dierent neighborhoodwhere they do not compete withlocal merchants as long as theypay ta(es to the city.

,בני ומנתו

שם

שיש

רשות יכנס מבוי

ין ו

...

יכו עכב ע יו ש יכנס מבוי ה ומנות דבע

במבוי חר ינו ב מעיר חרת. והו ש ו, הו י

.מס

ונותן

הו י

,בו

יכו מחות

1art B% In"ringement

12



2s we have seen Jewish law recogniEes the right o ree entry inmany instances. In the interest o air play everyone is allowed tosee% his livelihood however he sees ft. *evertheless it is stillbetter to avoid inringement upon another person’s livelihood.Competition is allowed but not or the sa%e o competition alone.

2s such the "almud has strong words or those who purposelyinringe upon the livelihood o others.

2% -akkot 68a ' In"ringing upon someone elseMs li(elihood isconsidered an act o" wickedness%

2 song o 9avid; 7 )ord whowill so!ourn in +our tent whowill dwell upon +our holymount 8e who did notslander with his tongue who didhis neighbor no harm ,"ehillim0#D-

</ho did his neighbor no harm<$ this reers to one who does notinringe upon the livelihood o his riend.

ה

!וחר

רעה

עשה רעהו

ע שונו

$ר

קרבו: ע נש

ירד ומנות חבירו. - ש עשה רעהו רעה

"he logical conclusion rom this discussion is that while Judaismallows or competition there are limits placed upon the right o ree entry when the collateral damage is too high. &asically Jewishlaw draws the line when the competition will not merely decrease

the incumbent merchant’s business but rather will eectivelydestroy it.

6% 1itchei *eshu(ah ibid% N= ' It is "orbidden to completel take o(er someone else#s clientele%I one person has a store at theend o a cul#de#sac he canprevent another rom setting upa store at the entrance to the cul#de#sac since is it impossible orcustomers to reach the originalstore without passing the newone and he is in eect drainingall o the customers away.

מבוי הסתום מ$# דדין רק ב#ד חד יכנסו ו ודר

כנ$ד שמעון דור וב הסתום ה#ד # ר ובן

י ך קודם ש ין יכו ים יכנס ם ה#ד ה!תוח

י

"שע

...ע יו

דיכו עכב

נר ה

שמעון

תח

!ני

!

שיקב ו ש " $מרי מדחהו דיורד ומנותו

שניהם...

8ow do we defne loss o livelihood

=% >abbi Chaim Jachter9 Hasagat Gevul: EconomicCompetition in Jewish 4aw "rom www%Olaw%com ' 4oss o" li(elihood is defned b the socioeconomic norm%5av Moshe 6einstein ,eshuvot Igrot oshe, Choshen

ishpat 0DN- rules that one may not open a business i it willdestroy someone elseFs livelihood. 5av Moshe rules that a loss o

13



livelihood is not defned by a loss o oneFs home or his ability to putood on the table. Instead he claims ta%ing away oneFs ability toaord as much as the average person in his socioeconomic classconstitutes destroying his livelihood.

"o answer our original question we can say as ollows0

It is permitted "or a person to open a store across "romanother store even though it will be selling the sameproducts as the frst store. his applies likewise to any service provider, such as a law frm, a travel agency, etc. heowner o" the store that was there frst is not permitted totake any action that is not halachically permitted to try to putthe newcomer out o" business.

A store owner is permitted to take steps to attract customersto his store, such as having sales, to o#er "ree gi"ts to newcustomers, and to launch a ma(or advertising campaign, eventhough it is clear that the new customers will come at thee&pense o" the competing store. he reason this is permittedis because the other store owner is capable o" doing thesame.

It is prohibited "or a merchant to try to put his competitionout o" business by o#ering goods or services at prices thatother merchants are unable to match without going

bankrupt. , 2abbi *vi Shpit*, 7usiness =alachah "romwww.torah.org6

+e *hemes o" Section III:

• Establishing a "air competiti(e business is permissibledepending on the e<tent that it might in"ringe onanother#s income%

• *he reason "or permitting competition is that e(erone

has a right to pursue a li(elihood and we should all beconcerned about the importance o" others to earnsustenance% &urthermore9 competition helps usacknowledge that ultimatel it is od who pro(ides% Inthat sense9 competition is (iewed as being a positi(einPuence%

• .e(ertheless9 in"ringing on someone else#s li(elihood tothe e<tent that it can cause him to go out o" business isprohibited%

Section I/% Working "or Hire !! Whose *ime is it 0nwa?

1&



/hen one is hired to perorm a service or someone his time is nolonger his own but that o his employer. 8ow ar does this conceptgo "o what e(tent does an employee have to avoid non#wor% related activity during oice hours or thereater "his can be a very practical issue as the ollowing questions demonstrate0

Is it permitted "or an employee to go on a diet to lose weight,i" the diet will cause him to be weak and will a#ect his (obper"ormance?

Is it permitted "or an employee to /moonlight/ at another (obi" he will be too tired to e#ectively per"orm his (ob the ne&tday "or his regular employer?

1art 0% 0 *ime to Work9 a *ime "or $nesel"

Jewish law is highly concerned about FstealingF the time o anemployer by misusing it or non#wor%#related items.

2% -akkot 68a ' $ne o" the *almudic Sages was the epitomeo" a righteous worker%

2 song o 9avid; 7 )ord whowill so!ourn in +our tent whowill dwell upon +our holymount 8e who wal%s uprightlyand wor%s righteousness and

spea%s truth in his heart.

/or%s righteousnessOli%e 2baChil%iyah.

בהר ישכן מי ב ה ך י$ור מי יקוק מ%מור דוד

#דק ודבר מת ב בבו: :הו ך תמים ו!וע קדשך

ח קיהו. כ$ון ב #דק !וע

6% *aanit 6=a!b ' 0ba Chilkiah re"used to interrupt his work e(en to greet (isitors%/hen there was a rain shortagethe 5abbis would sendmessengers to 2ba Chil%iyah whowould in turn pray or rainwhereupon rain would all. 7ncea pair o scholars was sent to himor this purpose. "hey ound himwor%ing in the felds. "heygreeted him but he did notrespond in %ind. )ater theyas%ed him </hy did you notrespond appropriately when wegreeted you> 8e replied0 <I am ahired employee and I did not wish

to squander my employer’s time.<

וכי

הוה

$המע

דחוני

בריה

בר

ח קיה

ב

$ביה הוו משדרי רבנן מ#טריך ע מ מיטר

חד י#טריך %ימנ מיטר ו תי רחמי ובעי

$ביה דרבנן %ו$ רבנן שדור ע מ מיטר

בדבר

ו

%

...מיטר

דניתי

רחמי

מבעי

ש מ

יהבו יה

.יק

!ר

ק

דהוה

ו ו שכחוהו

יהיבנ מר כי טעמ מ י !יה... סבר הו

מר הו שכיר !יה0 ש מ סבר ן מר

יום הו י ו מינ י!$ר.

1'



"he "almud and 8alachah address the issue o a wor%er’s time inthe conte(t o ta%ing time o to pray during wor%. 1raying andsaying blessings over ood are mitEvot ,commandments- but awor%er’s time is not his own. 8ow is this issue resolved

=% *almud9 Berachot 2Aa ' -a one take time to pra on hisemploer#s time?/or%ers who are wor%ing or anemployer should recite the3hema and pray. /hen they eatbread they should not recite theblessing beore eating andshould only recite the ater#blessing in an abridged orm.

הבית בע # מ כה עושים שהיו ה!וע ים

ו ין !תן ו וכ ין ין ומת! שמע קרי ת קורין

ד

#כי

שתים

מברכין חריה

ניה ב

! מברכים

ר ה בברכת !ותח ברכה ר שונה כתקונה שניה

.ה ר

בברכת

ירוש ים

בונה

וכו ין

/hat i the employer doesn’t mind /hat i everyone does it 9oesthat change things

8% Shulchan 0ruch9 $rach Chaim 22:6 ' Emploers areaware that their emploees will pra and hence the areallowed to%In today’s world most people arenot as particular about theiremployeesF time so theassumption is that the wor%er is

hired with the understanding thathe may recite the 2midah prayer.

ומסתמ דעת

בכך

יד

!דרך הק

וה ידנ ין

ו י"ח. דהכי משכירין ותם שית!

7% -ishnah Berurah9 Shulchan 0ruch9 $rach Chaim 22:26 ' 0 worker ma pra the entire praer ser(ice at the snagogueunless the emploer reDuires him to abridge the time%*owadays a wor%er is allowed topray the entire prayer service !ust li%e anyone. "he >echemChemudot writes that the wor%ermay also go the synagogue and !oin the minyan. 5eer to the agen Avraham who writes thatthis specifcally applies whenemployers are not particularabout wor%ers ta%ing o the timeor the ull prayer service.

וכתב

,כ דם

כש ר

י ה

!הת

נוסח

כ

ה

"וה

שמותרים י ך בהכ"נ דה"ה חמודות ה חם

במקום

דוק

ה

%ד

"במ

ועיין

,בעשרה

!הת

ש ין דרך בע י בתים הק!יד בכך.

/e see thereore that certain stringencies in time managementcan be waived i they are the norm or i one %nows that his bossFdoesn’t mind.F &ut while the stringency against prayer no longer

applies it is perhaps the e(ception that proves the rule0 a wor%ermust be careul how he uses his boss’s time.

1(



A% >abbi echiel -ichel Epstein9 0ruch HaShulchan Choshen-ishpat ==2:=! 0n emploee still needs to watch the clock%?2lthough the "almud’se(emption o wor%ers rom

prayer is no longer applicable@this law shows us how careul anemployee must be with hisemployerFs time. 7ne must ta%egreat care with this. )et anemployee not become unsettledbecause o these stringencies orwor% done with integrity is a lotyideal.

וע עשות

!ה

ע

חיוב

כמה

ה

%מ

מדנו

!"ועכ

ה!וע ים #ריכין מ ד ומ ד ב מונה מ כתו

דו ה

$ד

ע יו

וע

!ה

ו ב

!י

ו

ה

%ב

הר

%ה

...ב מונה

שעושה ותה

מי

מ כה

F% -esilat esharim Ch% 22 ' -isuse o" an emploer#s time isthe"t%"he 3ages e(empted wor%ersrom reciting blessings over theirood and ordained that they mustnot stop wor%ing even or therecitation o the 3hema e(ceptor the frst paragraph. Certainlythen does this apply with regardto wasting wor%#time on non#mitEvah activitiesK 2ba Chil%iyah

did not even respond to thegreetings given him by the "orahscholars so as not to waste hisemployer’s time. 2nd ouroreather +aa%ov stated e(plicitly<I was consumed by heat duringthe day and rost by night; and I%ept sleep away rom my eyesK</hat will a person say whoinvolved himsel in his ownleisurely activity while he wassupposed to be wor%ing orsomeone elseK

"he bottom line is0 /hen someoneis hired or anotherFs wor% all o the involved time is actually soldto the employerK /hatever heta%es rom them or himsel issimply thet. 'ven i he perorms amitEvah during that time it will

not be considered righteousnessbut rather a transgression. Pod

הבית בע # !טרו ת ה!וע ים העושים וכבר

ומברכות חרונות דברכת המ%ון, מברכת המו#י

חייבום יבט

שמע

בקרי ת

י ו

!ו

וחומר ב!רשה ר שונה ב בד. ק ממ כתן

שכיר וחומר דברי הרשות, שכ ק בן בנו ש

בעה"ב מ כתו ש יום סור בהן ש בט

!י ו ח קיה ן. הנה ב %$ %ה הרי ו ם עבר

,ש ום

שנתנו ו

חכמים

השיב ת מידי

ש ום

ממ כת רעהו. ויעקב בינו ע"ה ש יבט

וקרח

חרב

ביום כ ני

היתי

"ו ומר

יו

!ב

מב ר

ב י ה ותידד שנתי מעיני". מה יענו י!ו

העוסקים בהנ ותיהם בשעת מ כה ובט ים

0עו

#יהם יש ב

#!בח

יעסקו

כי

ממנה ו

מ כה

ה

%חבירו י

# השכור

:דבר

ש

כ ו

שעותיו מכורות הן ו יומו... שתהיה, הנה כ

מה שיקח מהן הנ ת ע#מו ב י%ה ו!ן וכ

עוד

ו

...מור

$ %$ינו

,שיהיה

#דקה ש !י ו ם עשה מ#וה ב%מן מ כתו,

עבירה

ש ין

,בידו

הי

עבירה

,תחשב ו

ב מונה, וכן הו !ח ה"בקה ןי ו ...הו#מ

שבת עמדי... ר ינמ נב יניע ,רמו

1*



is interested only in integrity as itis written ,"ehillim G- =My eyesare trained upon those o the landwith integrity; they shall sit withMe.>

1art B% 0ll "or the Boss

"he standards o integrity or a wor%er are not limited to his use o time; they apply equally to other matters that might aect hisproductivity.

2% Shulchan 0ruch9 Choshen -ishpat ==F:2Q!6 ' 0 worker must be scrupulous in gi(ing his all "or his emploer%

2 wor%er is not permitted to

wor% at night and hire himsel out during the day. 8e may notstarve or torture himsel ,through ood deprivation- andeed the ood ,that he has thussaved- to his son because this isthet o the wor% o hisemployer since he will bephysically and mentallywea%ened and will be unable todo the wor% or his employer

with strength. Just as anemployer is warned that he mustnot steal his employeeFs wagesnor may he delay paying themso too the wor%er is warned thathe may not steal the wor% o hisemployer and rela( a little hereand a little there. 5ather he isobligated to be e(acting o himsel to wor% during theentire time allotted or wor%ingwith his ull strength as +aa%ovstated ,&ereishit D0Q- <... withall o my strength I have wor%edor your ather< and we fnd thathe was not only rewarded in the/orld to Come or this but evenin this /orld as it says ,ibid.DG0RD- <2nd the man became very prosperous ...<

ו השכיר רש י עשות מ כה ב י ה ה!וע ין

ונותיו

%מ

וי כי

מו

#ע

ף

$ויס

ירעיב

ו

.ביום

מו

#ע

שהרי

,הבית

בע

ש

מ כתו

ביטו

ני

!מ

,בניו

הבית מ כת בע יוכ עשות ש מח יש כחו

,כ ן

ומעט

כ ן

מעט

יבט

ש

וע

!ה

הר

%מו

.בכח

ע#מו ב%מן, שהרי הק!ידו ע חייב דקדק ע

התו ךרבי המ%ון ש ברכת ברכה רביעית ש

:דיק מר

#ה

יעקב

שהרי

,כחו

בכ

חייב עבוד

וכן

ו , בר שית עבדתי ת ביכן כחי בכ כי

רו

!וי

:שנ מר

,ה

%ה

בעו ם

שכרו ף

נט

יכך

!

.$מ , תיש רב ה יש מ ד מ ד

&ased on the above the answers to our initial questions are asollows0

1+



It is permitted "or an employee to go on a diet even "or cosmetic purposes. =owever, i" the employee sees that it ispreventing him "rom "ulflling his duties to his employer 1whether because o" physical weakness or an inability to

mentally "ocus on the work6, he must check with hisemployer to make sure that the employer does not mind.

It is prohibited "or a worker to take e&tra (obs a"ter hecompletes working "or his regular employer i" this will resultin his not being able to per"orm his (ob properly the "ollowingday. bviously, i" the employer agrees, or i" he is workingovertime "or the same employer, he is permitted to do soeven i" his daytime per"ormance will be a#ected. 12abbi *viShpit* in @7usiness =alachah "rom www.torah.org.6

+e *hemes o" Section I/:

• 0n emploee must be e<ceedingl scrupulous to use histime producti(el "or the sake "or which he was hired%

• While the law is lenient in cases where the emploersthemsel(es don#t mind9 the basic standard demandsthat emploees be care"ul to a(oid MstealingM time "romtheir emploers%

• *his standard applies not onl to a workerMs time but toanthing that aects his producti(it on the Oob%

Section /% 1a ,a ' *imel Compensation o" Workers

In the previous section we discussed the obligations o theemployee. &ut employers have obligations too the most basic o which is to pay their employees or the wor% that they do. "he"orah is very concerned that employers should pay their wor%erson time. &ut what is a boss to do i he !ust does not have enoughmoney to pay his employees and still %eep the business running

Sometimes there is (ust not enough cash "or everything thebusiness needs. Can I delay paying my workers?

1art 0% His 4i"e ,epends on It

2% /aikra 2Q:2= ' *he *orah places a prohibition on delainga worker#s wages%9o not withhold that which isdue your neighbor. 9o not let awor%erFs wages remain with youovernight until morning.

!ע ת שכיר ת ין ת$% תעשק ת רעך ו

בקר

עד

תך

.

1

http://www.torah.org/

http://www.torah.org/



6% ,e(arim 3,euteronom5 68:28!27 !! *he *orah obligatesan emploer to pa a worker on time%9o not withhold the wages dueto your poor or destitute hiredhand whether he is one o your

brethren or a proselyte living ina settlement in your land. +oumust give him his wage on theday it is due and not let the sunset with him waiting or it. 3incehe is a poor man and his liedepends on it do not let him callout to Pod causing you to havea transgression.

תעשק שכיר עני ו ביון מ חיך ו מ$רך שר

ב ר#ך בשעריך:

ע יו השמש כי עני הו תבו ביומו תתן שכרו ו

יקוק

ע יך

יקר

ו

שו

!נ

נש ת

הו

ו יו

והיה בך חט :

/e see that the "orah ma%es it a positive mitEvah to pay a wor%eron time as well as declaring a prohibition against delaying hiswages. "here are several reasons oered to e(plain why the "orahis so concerned about this0

=% Ba(a -etiah 226a ' *he worker risks his li"e in order toearn his wages%=and his lie depends on it> $/hy did this man ?the laborer@ascend a ladder suspend himsel rom the tree and ris% death

itsel; was it not that you shouldpay him his wages

נ נשהוו יו

!מ

,שו

!ע מנ

%בכב

ע-מיתע#מ ומסב י ונת ה

שכרו0

8% Se"er HaChinuch9 -it(ah 6= ' *he worker needs his wages to sur(i(e%"he reason behind this mitEvah?not to delay a wor%er’s wages@is that Pod desires the continuede(istence o the people 8ecreated. 8e %nows that delayingwages leads to physicaldiminution. 8e commanded usto give an employee his wagesor the wor%er needs thosewages in order to sustainhimsel. It seems that this is whythe "orah places a limit o oneday ?or a day laborer@ and nomore or people can sometimesast or a day. "he "orah istelling us this e(plicitly when it

writes <and his lie depends onit.<

משרשי

!

,וה

#הוברושהשהמ

!בקיוח

וידושה דם י בהמ%ונוב יחוכבר ,

וע הויכשכישכת#יונכה$וף,

ש נוש

!רננ

!הת

!ו

.עבו

,כהנר ה

דבנדרכיותוחיו%מנ$בושם

ירוחיוהתענות

!וב

,עמים

!הכתוהודי

נושהוט"ו 5ו י4שם, שב מרהדבטעם

נ!שו.ת

2/



*ote that the mitEvah is not limited to poor wor%ers who need theirwages or their daily sustenance. 5ather it applies to all wor%ersand even to contractors who must be paid upon the completion o the !ob ,or according to the personal arrangement made with the

contractor-.

2n added dimension o the mitEvah is that come payday $ wheneverit comes ,monthly wee%ly or when the !ob is completed- $ thewor%er e(pects to be paid and the employer is obligated to meethis e(pectations.

7% >abbi Heekiah ben -anoah9 Hikuni to ,e(arim 68:27 '*he emploer must satis" the emotional need o" hisemploee to be paid on time%<8is lie depends on it< $ his soullongs or it.

שו

!נ

נש ת

הו

.—ו יו

שו

!נ

מת וה

1art B% &alling Short

/hat i the employer simply does not have enough cash on paydayI he simply does not have the money to pay his wor%ers has theemployer transgressed this mitEvah

2% Se"er HaChinuch9 -it(ah 7;; ' *he *orah does not holdto task the emploer who "alls short%"hat which ?our 3ages@ havesaid that the employer has nottransgressed unless he’s as%edor the wage ?and does not pay@but i he wasn’t as%ed orcompensation or i he !ust doesnot have the money then he hasnot transgressed. "he "orah onlyobligates one who has the abilityto pay. &ut i the only way thatthe employer would be able topay on time would be at a greatfnancial loss to himsel itappears that the "orah wouldnot hold him accountable in sucha case.

כשתבעו עובר השוכר ש ין ש מרו ומה

תבעו ו ש ין ו כ ום שי!רע ו ב השכיר,

בביתו

בשיש ו

הכתוב

חייב

ש

,עובר

ינו

!ורעו ב ותו ב ם ינו יכו !ורעו, ו שיכו

חייב הכתוב י בד הרבה מש ו יום ם כן

!י הדומה. ב%ה

It is only e(cusable to all short on payday i it was due to an

unoreseen development. /ith proper planning an employer

21



should be able to ulfll his end o the bargain and his mitEvah aswell.

6% Ibid% !! $ne should alwas plan a strateg to pa emploeesbe"ore hiring them%

*evertheless it is incumbentupon any thin%ing person tohave money at hand beore hehires wor%ers.

בידו

הכסף

דעת היות

בן

ר וי כ

מקום

ומכ

.וע ים

!ה

ישכור

טרם

"he answer to our original question thus goes as ollows0

5veryone understands 1grudgingly6 that i" you don't have any money they are not going to get paid, but i" you do havemoney you must pay your debts frst. In some cases workersare willing to e&tend credit in order to help ensure thecontinued thriving o" their employer, but this kind o" arrangement should always be made through "air negotiation.

Another +uestion is how you got into this situation. Any debtor is "orbidden to take a loan and spend the money waste"ully or recklessly in a way which endangers his ability to repay. 1Shulchan Aruch Choshen ishpat B)D.6 7utregarding a worker, there is a special additional re+uirementto plan cash %ow to avoid problems.

he bottom line is as "ollows) All creditors should be paidpromptly when possible, and it is wrong to turn suppliers or employees into lenders without their in"ormed consent. >ikewise, i" there is no money then obviously everyone can'tbe paid. 7ut there are still several advantages a worker hasover other creditors. he orah has a specifc commandmentto pay them on time, and a prohibition to delayE there is agreater re+uirement to worry in advance that the money willbe availableE and the orah reminds us o" the pain anddisappointment caused by delayed pay, so that our sense o"

empathy should also spur us to fnd all means to pay workerspromptly. 12abbi 3r. Asher eir, he 4ewish 5thicist) Fayingon ime "rom www.Aish.com6

+e *hemes o" Section /:

• *he *orah instructs us with a positi(e mit(ah o" paingon time9 and a negati(e prohibition against delaing a

workerMs wages%• 0mong the reasons oered "or this mit(ah is that the

22



worker risks his li"e "or his Oob9 he needs the mone toli(e9 and he pschologicall e<pects to be paid on time%

• *he prohibition onl applies to one who deliberatel delas wages9 and not to someone who does not ha(ethe mone to pa%

• 0 responsible emploer will plan ahead to make sure he"ulflls the mit(ah o" paing his workers on time%

Class Summar:

How much proft is a merchant allowed to make?

• "echnically spea%ing Jewish law does not place any limit onthe amount o proft that can be made on any particular item.

• *evertheless Jewish law does prohibit deception when itcomes to pricing. &oth buyer and seller are e(pected to %eepwithin the bounds o the mar%et value or the item they aree(changing.

• I the buyer or seller discloses the true mar%et value he canchargeSpay whatever price he can get another to agree upon.

When does an agreement become binding?

• Jewish law has its own standard or ma%ing an agreementbinding. &ut regardless o those standards the "orah e(pects

us to %eep our word and to negotiate in good aith.• It is thereore considered an oense to bac% out o even a

non#binding agreement.

• "he "orah also recogniEes as binding whatever the generalcommunity recogniEes as binding. 7ne cannot stand behind Jewish law to get out o a deal.

When is it $+ to set up a competing business in a pre!e<isting market?

• Competition is permitted when the motivation is to see% alivelihood or success in business but not to put oneFscompetition out o business.

• 2lthough Jewish law saeguards the right o ree entry intoe(isting mar%ets at the same time the Jewish tradition ishighly critical o anyone who inringes on the livelihood o another to the point o destroying his competition. 7ne maycompete but with caution.

What are m non!contractual responsibilities to m emploer?

• 2n employee must adopt the attitude that his time is not his

own. In addition to getting the !ob done he must also beconcerned about not misusing his employer’s time or doing

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anything that might diminish his productivity whether duringoice hours or thereater.

Is it $+ to dela emploees# wages?

• "he "orah is clear about prohibiting the delay o an

employeeFs wages. I there is simply not enough money to paythe wor%er because o an unoreseen development theemployer is not held to tas%.

• *evertheless one who wishes to ulfll the mitEvah o payingwor%ers on time will adopt a strategy rom the outset to ma%esure that he will have the money come payday.

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Business Ethics II