Although individuals are capable of feeling happiness for others’ positive experiences, management scholars have thus far considered envy to be the sole emotional reaction of employees in response to coworkers’ positive outcomes. In this article, we introduce the concept of positive empathy–the experience of happiness in response to a coworker’s positive experience and the real or imagined happiness in the coworker–as an alternative response to envy and distinguish it from related concepts in the organizational literature. We develop a theoretical framework to explain the psychological processes that underlie envy and positive empathy, and identify individual and contextual contingencies that might incline employees to experience these emotions. Lastly, we discuss individual and organizational outcomes of envy and positive empathy and explain implications for management research and practice. (PsycINFO Database Record (c) 2019 APA, all rights reserved)