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Incorrect.
And that is HER choice.
It's not necessarily HER choice. You don't get as many choices when you have hungry mouths to feed, school clothes to buy, medicine to pick up at the pharmacy, etc. There are employers who leverage that need for the paycheck as a means to lord unwarranted authority and diminish the boundaries of professionalism.
And that is HIS choice.
In his case, you may be right. But what circumstances lead him to stay in that small town?
No, it should not be tolerated by management. The government need not be involved.
Well that's all well and good if management is proactive about taking care of it. However, most of the time, management is the problem.