Analyzing the information from the case above, the ideal would be Sarah to schedule a meeting with your boss to expose the facts and seek a solution, as this is an ethical dilemma that she became aware of and as a new manager she will have to deal with it.
She became aware of an illegal practice that has become part of the company's culture and that her boss is aware of this illegality.
Sarah needs to be aware that her talk about the possibility of changing company policy and complying with ethics could jeopardize her job.
But on the other hand, if Sarah's boss does not accept to change the company's ethical parameters, she will also be running the risk of being part of this illegal act and damaging her reputation.
Therefore, the best option for Sarah is to be honest and talk to her boss about the situation.
In this way, it can help workers receive their rights, if their argument is accepted, and transform the company into an ethical place with a culture focused on the development and compliance with ethics and legislation.
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