Senator Lasker has proposed legislation requiring that employers

arvind910619, we don't have to worry about moral obligation here. All the wrong answers are wrong for clear grammatical reasons! Also, we don't need to restrict "should" to moral cases. Consider these: "Anyone who lives in the area should know where the stadium is." "One should expect some side effects during the first week of treatment." "A good theory should create testable predictions."

Anyway . . .

Answer A is wrong because we can't mix "require" with "should." We can't require that someone should do something. We can only require that they actually do it!

B fixed the problem above, correctly applying the command subjunctive ("require that X be done"). However, it creates a huge meaning problem. We're requiring that older workers "be retained . . . or show just cause." It's not the workers who have to show just cause. Yes, there's a shift here from passive to active, but that can be okay if the meaning makes sense. ("He will either leave the room voluntarily or be escorted out by guards.") However, since the meaning is off (the employees must be retained unless the employers can show just cause), this is out. A simple way to sum this up is that we've put our verb with the wrong subject.

C is not parallel at all. It matches a noun with a verb: "requires the retaining . . . or show just cause." This is no good, even if we accept the odd "requires the retaining" at the beginning.

D has the same problem: it tries to make "the retention" parallel to "show."

E finally has good structure. The legislation requires employers to "retain . . . or show."