As an employer, you must be wondering what is compliance in the workplace and why is it important. Well you see, a safe, fair, and healthy work environment is conducive to maintaining a productive workforce. Conversely, an unsafe, unfair, and unhealthy workplace leads to miserable employees, reduced/hampered productivity, and no end of legal troubles for the employer.
For these reasons, everyone from small businesses to huge corporations needs a solid protocol of workplace compliance requirements to keep order, maintain a favorable workplace environment, and have both preventative compliance policies and disciplinary compliance procedures and processes in place.
This is not just a suggestion: there are federal and state laws, enforced by federal and state agencies, that protect employees from discriminatory and dangerous workplace practices and behaviors -- and the employer is very much legally liable for failing to prevent employee rights violations on the company premises.
In this article, you will read about:
- what constitutes "compliance in the workplace"
- why it is important and necessary to ensure compliance at the place of work
- federal and state laws and agencies enforcing workplace compliance
- how to create a robust corporate compliance program
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Workplace Compliance: What Is It And Why Is It Necessary?
Workplace compliance is, essentially, risk management on behalf of the employer, which comes in two parts:
- Regulatory compliance: what the organization/business does to comply with external laws/regulations applicable to their industry.
- Corporate compliance: the actions/policies an organization/business institutes to ensure that everyone within the company complies with both internal and external rules, policies, and definitions of what constitutes appropriate behavior and a safe working environment.
Ensuring maximum efficient workplace compliance involves designing, implementing, and monitoring company policies and practices at the place of business, as well as properly educating the workforce and management.
What Areas Of Compliance Are There?
Violations of proper behaviors/safe conditions at work can take a variety of forms, such as:
- unlawful discrimination
- sexual harassment
- corrupt personnel practices
- unfair business practices/policies
- wage/benefit/payroll problems
- compromised worker safety or privacy
While workplace discrimination and harassment happen across all types of jobs, certain industries are extra vulnerable to other kinds of worker rights violations and require extra compliance measures, safety procedures, and educational instruction for industry-specific hazards.
For example, in the factory and construction industries, workplace safety is a higher concern than at, say, the financial sector that's mostly office work. The financial industry, on the other hand, is more prone to a privacy invasion like a data breach: therefore, corporate compliance in a financial institution calls for more cybersecurity training.
Roughly speaking, corporate compliance falls under three categories:
- Regulatory/Legal Compliance: laws are always changing, and industry bodies are always tightening niche regulations and practices; the compliance officer keeps the company compliance program updated to most recent standards and changes in law.
- Financial Sector Compliance: the financial industry's weak spots tend to be in financial crime which necessitates compliance laws that target violations like fraud, bribery, money laundering, inside trading, and other instances of criminal corruption affecting employees.
- Information Technologies Sector Compliance: The IT field must build extra strong compliance around data privacy/protection, with specific protocols/limitations for how employees are allowed to view, interact with, and store personal (potentially highly sensitive) data of coworkers and customers. This is where the training for employees on data privacy comes in handy.
The Importance Of Workplace Compliance
Every organization requires bylaws for how to operate, prevent disasters, and handle problems. Workplace compliance regulations enforce two main conditions:
- That companies are responsible for safety in the workplace and providing secure environments for their workers (which requires providing appropriate workplace training and taking swift action in response to employee claims of their rights being violated).
- That workers do not take inappropriate liberties with each other in the form of discriminatory or abusive conduct -- from superiors to subordinates as well as among colleagues of equal standing (once again, this is a question of preventative training and fostering a healthy culture by the employer).
The fact is: employees are not going to simply govern themselves. They need rules and regulations that come with positive and negative reinforcement for policy compliance and defiance.
Compliance pro tip: when it comes to attempts to ensure compliance, positive reinforcement beats negative reinforcement. In other words: rewarding employees for doing the right thing works better than punishing them for doing the wrong thing.
Creating A Solid Corporate Compliance Program
Every business with employees needs a strong corporate compliance program that:
- Prevents unlawful/unethical behaviors/actions from being committed by employees
- Encourages the reporting of such actions from coworkers, supervisors, administrators and other "bosses" (this means that employees must feel safe from work retaliation for exercising their right to complain.
- Increases productivity and promotes business growth (employees who feel safe and secure do better work than those working in unsafe/hostile conditions)
- Reduces corruption/fraud/abuse/waste/discrimination
- Supports company mission and sets employee expectations
- Prevents corporate failure
- Secures a good reputation for being a legally compliant business that treats its employees right -- within the industry, with employees, with customers, and by the community at large
Essential Components Of A Corporate Compliance Program
To be strong, a company's compliance plan should include the following elements:
Hiring A Corporate Compliance Officer
Some larger businesses have an entire compliance department, while others hire corporate compliance officers (and sometimes set up compliance teams/committees) to establish a corporate compliance program and to execute and monitor the company policies outlined in it.
Investing Into Training
Everyone within the company must receive relevant educational instruction on workplace compliance:
- Top administrators/management must be educated on updated ethical standards and business laws, as well as the value of corporate compliance in leadership.
- The general workforce must be educated on federal, state, and local laws as well as on corporate policies for keeping the workplace a respectful and safe environment. Even more importantly, the general workforce deserves coaching that helps them see the common benefits behind corporate and regulatory compliance policies and procedures (as opposed to feeling confused and oppressed by them): this makes their training stick.
Facilitating Communication Between Employees And Higher-Ups
Employees must be provided with an established (non-intimidating!) way to report non-compliant behaviors at work -- and without fear of retaliation from the higher-ups.
Reevaluating Internal Policies
Rules and regulations are always changing: the compliance officer should systematically review the existing policies and update them in accordance with shifting laws and industry standards.
Conducting Annual Risk Assessments
Businesses should always strive to zero in on their worst risk area(s) by annually reviewing recent litigation, audit results, employee claims, compliance complaints in order to see whether or not the key policies in place are serving the business well.
The employer must consistently apply the rules outlined in the corporate compliance plan to all cases and complaints -- to avert preferential treatment and keep things fair.
Boosting Worker Commitment To/Respect For Compliance Regulations
In addition to training, every business should make the relevant laws, rules, policies and procedures be readily available and easily accessible for all employees to familiarize themselves with at leisure. There are federal laws requiring that anti-discrimination laws are posted in various spaces online and around the place of work. Likewise, the internal compliance policies and procedures should be made clear and easy-to-locate for employees, which is where the staff handbook comes in.
The Employee Handbook
The employee guidebook aggregates all of the above-mentioned company rules, policies and procedures in a single document where each employee can read about their rights/entitlements and responsibilities/obligations within the company.
It also serves as a compliance device to ensure employees make an educated commitment to a company culture of compliance. For example, asking workers to sign off on receiving their copy of the handbook creates a formal (and a psychological) acknowledgment that the information and instructions within the guide are understood and accepted.
Compliance pro tip: create procedural checklists for employees to use to make sure they don't miss anything and know exactly what to do.
How Is Compliance Enforced?
If a company fails to take every protective measure as well as provide quality, appropriate training for the workforce, it will be plagued with discrimination, corruption, accidents, and legal problems (which is unacceptable.) Not all companies are motivated to do what is right on their own: therefore the government steps in with laws, regulations, and hefty financial disincentives from breaking them.
Internal Measures
It costs less time and hassle for the employee and less money for the employer to resolve any non-compliance claims through lodging an internal complaint to the employee's supervisor or HR department.
The employer has a right to discipline or terminate the offending employee if the employee fails to cease/correct their offensive behavior immediately (in cases of violent or sexual assault the police should be brought in).
External Controls
If the employer fails to resolve/put a stop to problematic behaviors/hazardous conditions to the complaining employee's satisfaction (in a timely manner), the victimized employee can proceed to file a complaint with a state agency that handles workplace compliance.
If no state laws/agencies exist in their state, the employee can file a complaint with a federal agency handing workplace compliance violations, such as the U.S. Occupational Safety and Health Administration (OSHA) and the U.S. Equal Employment Opportunity Commission (EEOC). The OSHA writes and enforces standards for workplace safety, while the EEOC oversees violations of equal opportunity employment rights such as workplace discrimination. If such an agency finds the complaint legitimate, they will proceed to fine the employer and, in severe cases, help the employee take the employer to court to seek additional damages.
Compliance Training Is The Best Preventative Measure Against Non-Compliance
Preventing legal disasters is significantly easier (and cheaper) than cleaning up their fallout. And we know that the best prevention lies in education.
Compliance policies are essential, but they cannot exist in a vacuum -- they must be reinforced with robust compliance training!
EasyLlama's e-learning compliance modules are easy (and dare we say fun) for employees to complete. These programs are designed to leave each trainee with a lasting understanding of why compliance matters and needs their support and cooperation. Let EasyLlama help your business build a culture of mutual respect and support for rules and practices that benefit everyone!
Written by: Maria Malyk
