With the globalization of integral business and corporation expansion, has come the increased focus on corporate compliance. Companies cannot do as they please; there are regulatory factors that balance ethics with rationality. For example, simply because a company can make a product cheaper by polluting the environment, does not give it the right to do so. Compliance simply means following the law. The law for corporations comes in many forms: federal laws, state laws, agency law, and industry standards. Breaking any of these regulations could have disastrous consequences for a company. According to Gentiva “The initial purpose of compliance was to act as a mitigating factor to reduce liability under the law. Over the years, compliance has evolved into a more integral business component with its focus on maintaining the company’s status as a good corporate citizen.” This emphasis and new standard has caused many companies to create a corporate compliance officer position where the sole duty of this individual is to maintain and monitor the company’s state of compliance. Some of the main concerns with corporate compliance are ethics, financial statements, equal opportunity / fair hiring practices, sexual harassment, and environmental preservation. Company’s that maintain vigilance on these fronts are normally safe when it comes to compliance issues. Maintaining a good record of compliance is not only beneficial, but more times than not will make or destroy a company. The main point is that non-compliance can affect a company’s bottom line.
Sexual Harassment: Civil Rights Act of 1964
Sexual Harassment is part of the Civil Rights Act of 1964 and applies to companies with 15 or more associates. It is defined as “Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment” ([http://www.eeoc.gov/types/sexual_harassment.html]).The circumstances include but are not limited to:
• The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.
• The harasser can be the victim’s supervisor, an agent of the employer, a supervisor in another area, a co-worker, or a non-employee.
• The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.
• Unlawful sexual harassment may occur without economic injury to or discharge of the victim.
• The harasser’s conduct must be unwelcome. ([http://www.eeoc.gov/types/sexual_harassment.html]).
Sarbanes-Oxley Act
Passed in 2002, Sarbanes Oxley (SOX) was enacted to help win back the public trust in companies after the disasters of such companies as Enron and WorldCom. The first part of the act was to create the Public Company Accounting Oversight Board, which is charged with “overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies” (http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act).
EPA (Environmental Protection Agency)
The EPA comprises 18,000 people in headquarters program offices, 10 regional offices, and 17 laboratories across the country. The EPA employs a highly educated, technically trained staff, more than half of whom are engineers, scientists, and environmental protection specialists. A large number of employees are legal, public affairs, financial, and computer specialists.
The EPA provides leadership in the nation’s environmental science, research, education, and assessment efforts. The EPA works closely with other federal agencies, state and local governments, and Native American tribes to develop and enforce regulations under existing environmental laws. The EPA is responsible for researching and setting national standards for a variety of environmental programs and delegates to states and tribes responsibility for issuing permits, and monitoring and enforcing compliance. Where national standards are not met, the EPA can issue sanctions and take other steps to assist the states and tribes in reaching the desired levels of environmental quality. The Agency also works with industries and all levels of government in a wide variety of voluntary pollution prevention programs and energy conservation efforts.
In July of 1970, the law that established the EPA was passed in response to the growing public demand for cleaner water, air and land, spurred by such scandals as the 1969 Cuyahoga River fire. Prior to the establishment of the EPA, the federal government was not structured to make a coordinated attack on the pollutants which harm human health and degrade the environment. The EPA was assigned the task of repairing the damage already done to the natural environment and to establish new criteria to guide Americans in making a cleaner environment a reality
Compare Company’s Researched
Toyota North America Inc and Denny’s Inc.
Both company’s, Toyota Motor North America Corporation and Denny’s Inc. were cited in a lawsuit claiming sexual harassment against a female employee. Involvement by the EEOC helping both employees with their claim helped with changing the mindsets of both company and employees. The size of the company did not play a fact in the lawsuits but showed that any type of discrimination or sexual harassment will not be tolerated.
According to the Civil Rights Act of 1964, Title VII, it states:
“Harassment is a form of employment discrimination that violates Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, (ADEA), and the Americans with Disabilities Act of 1990, (ADA).”
Harassment is unwelcome conduct that is based on race, color, sex, religion, national origin, disability, and/or age. Harassment becomes unlawful where 1) enduring the offensive conduct becomes a condition of continued employment, or 2) the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive. Anti-discrimination laws also prohibit harassment against individuals in retaliation for filing a discrimination charge, testifying, or participating in any way in an investigation, proceeding, or lawsuit under these laws; or opposing employment practices that they reasonably believe discriminate against individuals, in violation of these laws.
Petty slights, annoyances, and isolated incidents (unless extremely serious) will not rise to the level of illegality. To be unlawful, the conduct must create a work environment that would be intimidating, hostile, or offensive to reasonable people.
([http://www.eeoc.gov/types/harassment.html])
Both company’s tried to silence the acquisations by either terminating the employee as in the lawsuit against Denny’s, Inc. or relocating the employee to a different department then termination as in the lawsuite against Toyota North America Corporation. In either lawsuit, the person in charge was in the wrong.
Apple Computers
The first company looked at in violation of the SOX was Apple Computers in which an internal investigation showed that there was backdating of stock options. The results for Apple Computers were developing a special committee to investigate the allegations. Though the investigation found no fault on the part of Apple Computers there were some serious concerns raised. The end results for Apple Computers would proactively report to the SEC as well as providing non-cash charges for compensation relating to past stock option grants.
Wind River Systems
Next were Wind River Systems the international software company was found itself non-compliance with the regulations of the Sarbanes-Oxley with managing financial risk. The problem was solved Wind River streamlining its fragmented accounting teams in to three regional teams as well as closing unnecessary bank accounts. This reduced the risk of fraud as well as saving Wind River Systems thousands of dollars in unnecessary banking fees.
MSN and AOL
Another phase of protection that the SOX offer corporations as well as their customers and investors is requiring internal security. With the age of computer the latest form of communication known as IM raises new security issues. A great deal of corporations in the corporate world is finding that they are more reliant on these sorts of technological advances. Two major providers MSN and AOL rely heavily on their corporate partners as well as staying compliant with the SOX. Therefore they partnered up with a software provider known as Akonix that provides the real-time requirements and internal controls required by the SOX for these IM services.
Conclusion
The importance of a compliance program in avoiding anti-competitive conduct under the Act, and in detecting and dealing with such behavior, should not be underestimated. The procedures put in place as the result of a compliance program serve not only to identify unlawful or questionable conduct, but also to promote awareness that will result in ethical standards of conduct.
Implementing an effective compliance program which addresses both criminal behavior and civil reviewable conduct is good business. It can help a company avoid the adverse publicity and financial costs associated with contraventions of the Act. A compliance program will also enhance understanding of what is acceptable behavior so that legitimate competitive practices can be vigorously pursued without unwarranted concerns of contravening the Act.
Steven Brown, MBA is a loving husband and father of two boys. He enjoys his time with his family by providing a strong family foundation of Christian Faith. After completing his Bachelors degree, Steven wanted to further his ability to teach and share to others his mindset that they can do anything if they would believe in themselves.
