Consequences of Non-comliance in Business

Consequences of Non-Compliance in Business

What is compliance?Compliance is HR-speak which basically means observing all federal, state, local and even international law that applies to your company.

The goal of compliance is to

keep your company in good

standing in the locations it

conducts business.

Who are at risk from non-compliance?

Everyone! From corporations to self-employed individuals, everyone is subject to a state or country’s regulatory setting. However, smaller companies

are at more risk as compared

to their larger counterparts

because of lack of resources

and access to regulatory experts.

ClearRisk

Overview of Non-Compliance for Companies1. State or country may revoke your operational license,

penalize your company or even dissolve it

2. In the case of LLCs, business owners who fail to maintain their limited liability protection may face the risk of “piercing the corporate veil,” which means the owner’s personal assets can be sequestered by the state to pay off penalties. (Think George Bluth of cult comedy sitcom Arrested Development.)

Laws to Observe to Keep Your Organization in Compliance

1. Federal and State Discrimination Acts

2. Fair Credit Reporting Act

3. OSH Act

4. Family and Medical Leave Act (FMLA) of 1993

1. Federal and State Discrimination ActsThe US Equal Employment Opportunity Commissions enforces the following laws to protect US citizens from employment discrimination:

Title VII of the Civil Rights Act

of 1964 (Title VII)

- Law against discriminations

relating to race, gender,

citizenship and religion

Equal Pay Act of 1963 (EPA)

Law governing fair compensation

Age Discrimination in Employment Act of 1967 (ADEA)

• Law that protects workers 40 years and above from not getting the promotions and opportunities that are due them

Title I and Title V of the Americans with Disabilities Act of 1990

• Law that protects applicants from discrimination for their disabilities and medical histories

Sections 501 and 505 of the Rehabilitation Act of 1973

• These two sections refer to providing equal work opportunities for people with disabilities for federal positions.

Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA)

• This law refers to providing people with genetic disabilities endemic to their ethnicity equal recruitment and employment opportunities.

Civil Rights Act of 1991

• The act that protects employees who have sued previous employers for discriminatory work practices.

Fair Labor Standards Act

• The act that refers to fair labor practices, especially in terms of work hours, breaks, overtime and salary rates for adults, as well as work limits for minors.

2. Fair Credit Reporting Act• A law that mandates HR generalists to inform

applicants and workers to inform that they have been denied employment due to data provided by a consumer reporting agency. To remain in compliance, it is your duty to provide said applicant or employee the contact details of the agency that provided the data.

3. OSHA Act • The Occupational Safety and Health

Administration, which was established under the OSH Act of 1970, had created standards governing a number of industries that include the Construction, General and Maritime industries. Through these standards, the agency ensures that American workers are working in a safe and healthful environment.

4. Family and Medical Leave Act (FMLA) of 1993• This act protects eligible workers to take

leave for medical reasons or to care for sick family members with undisrupted fringe benefits for a 12 work week or 26 work week leave in a year.

Examples of Non-Compliance• Failure to incorporate overtime pay for

overtime work hours, or completely not paying workers who work overtime.

• Failure to provide an employee a handbook that explicitly states conditions of a certain regulation, then suspending or terminating an employee for that regulation.

• During the screening process, a worker was asked if he or she has kids and responded he or she does. The worker wasn’t hired supposedly because of it.

• When female workers were mistreated and verbally and physically abused in the case of Mitsubishi workers, which still remains as one of the biggest sexual harassment class action cases in the United States.

• Exposing to workers to hazards because shop equipment weren’t repaired/maintained.

GNA Partners

• When eligible employees are prevented from taking advantage of a company’s pension plans

How to Address Non-Compliance

• Completely reevaluating existing compliance laws, and if needed, an overhaul of existing HR compliance programs;

• Hiring a business coach to

help you manage and

mitigate risks.

Sources:• http://

www.gnapartners.com/news/poor-workplace-compliance-produces-serious-consequences-10

• https://manager.clearrisk.com/Resources/RiskTool/Regulatory_Risk_-_Consequences_of_Non-Compliance

• http://www.eeoc.gov/facts/qanda.html

• http://static.bdo.uk.com/imported/2010/3/Consequences_of_non-compliance.pdf

• www.legalzoom.com/legal-headlines/corporate-lawsuits/five-biggest-sexual-harassment-cases