HR Care - HR Classroom White Paper Why Must Organizations Utilize Compliance Training

 
Friday, May 9, 2014
 

Section 1 Compliance Training

I. Compliance Training in areas such as Discrimination and Harassment Prevention, Sexual Harassment Prevention, Code of Business Conduct and Ethics, Fair Labor Standards Act, etc. is important to organizations at several levels.

A. Who should be concerned about Compliance Training?

  1. Board of Directors
  2. Executives
  3. Salaried and Hourly Employees
  4. Shareholders/Stakeholders
  5. Vendors

1. 2. Board of Directors and Executives:

Executives and Board Members have a liability to the shareholders/stakeholders of the company to protect the company’s Good Will, shareholder/stakeholder value, and the employees. Specifically Board Members can be found liable under the Federal Sentencing Guidelines and Sarbanes-Oxley which are both provided later in this document.

  1. The Federal Sentencing Guidelines are rules that set out a uniform sentencing policy for convicted defendants. They were amended in November of 2004 to include critical training requirements.
  2. Sarbanes-Oxley mandates compliance standards and procedures that will facilitate effective operation of the Code. These procedures are largely interpreted to include training and education.

3. Salaried and Hourly Employees:

Most litigation originates from wrongful termination of employees or from former employees. It is clear from settlements and judgments that most lawsuits involve:

  1. employees that did not understand a company policy,
  2. did not know who to report problems to,
  3. employees felt that they would be retaliated against by the employer or they were retaliated against by the employer.

Typically the settlements or judgments order the affected organization to conduct compliance training.  For example, “Target Corporation, the Minneapolis-based retail sales giant, has agreed to pay $775,000 to a group of black workers as part of a litigation settlement of a race discrimination and retaliation case brought by U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced. The settlement also includes employer training and other remedial relief….” Click to Read More

Examples:

* GLC Restaurants to Pay $550,000 for Sexual Harassment of Teen Workers by Male Boss  Click Here to Read More

The U.S. Equal Employment Opportunity Commission (EEOC) announced the settlement of a discrimination lawsuit against GLC Restaurants, Inc. (GLC) for $550,000 and substantial remedial relief on behalf of a class of teenage workers who were sexually harassed by a middle-aged male supervisor, including unwanted touching and lewd comments. Flagstaff based GLC is a franchisee doing business as McDonald's Restaurants in Arizona and California…. Click Here to Read More

* Long Island Restaurants Ordered to Pay More than $980,000 to Resolve Wage and Hour Suits  Click Here to Read More

Five commonly operated restaurants located throughout Long Island, N.Y., and seven officers of the companies have been ordered to pay 192 employees a total of $966,046 in overtime back wages, and to pay the U.S. Department of Labor civil money penalties totaling $14,773 to resolve lawsuits filed by the department alleging violations of the federal Fair Labor Standards Act (FLSA)…. Click Here to Read More

* Court Bars Immigration Queries in Job Bias Case Against Perkins Restaurant  Click Here to Read More

The U.S. Equal Employment Opportunity Commission (EEOC) announced that it has secured another federal court ruling sharply limiting the ability of employers sued for harassment and other forms of employment discrimination to make an issue of the victims' immigration status….   Click Here to Read More

4. Shareholders/Stakeholders

Often Shareholders/Stakeholders are negatively impacted by the effects of a decrease in share price and business performance due to the loss of Customer Good Will, and/or a decrease in revenue from the derogatory press generated from litigation from a government agency or an employee.

Examples:  

* Guidance on Exercising Shareholder Rights and Investing in Economically Targeted Investments   Click Here to Read More

The U.S. Department of Labor announced the issuance of new guidance under the Employee Retirement Income Security Act (ERISA) clarifying the obligations of plan fiduciaries when considering shareholder rights and investments in economically targeted investments…   Click Here to Read More

* OSHA Publishes Final Rule on Whistleblower Procedures under the Sarbanes-Oxley Act of 2002   Click Here to Read More

The Occupational Safety and Health Administration has published in the 
Federal Register a final rule establishing procedures for handling whistleblower
complaints under the Corporate and Criminal Fraud Accountability Act of 2002…   Click Here to Read More

5. Vendors

There exists requirements for vendors to government entities, sub-contractors serving government entities, to certify that they are providing Compliance Training to their employees.

Example:

* Government Contractors Now Must Create Written Codes of Business Ethics and Display Required Posters  Click Here to Read More

The Federal Acquisition Regulation (FAR) contains the uniform policies and procedures for acquisitions by the U.S. Government. The FAR represents an effort to create a uniform framework for contracting with…   Click Here to Read More


Section 2 Laws and Regulations

I. Laws Requiring Code of Conduct and Ethics Training  Click Here to Read More

A. Federal Sentencing Guidelines: The Federal Sentencing Guidelines are rules that set out a uniform sentencing policy for convicted defendants. They were amended in November of 2004 to include critical training requirements. The Guidelines now require employers to adopt comprehensive ethics and compliance programs, and to train everyone on the fundamental components of those programs.

The Guidelines make clear that employers can be held liable for their employees' illegal conduct. If employers take proactive steps to prevent unethical and illegal conduct through an effective ethics and compliance training program, employers can substantially mitigate potential fines and punishment for criminal violations. The Federal Sentencing Guidelines apply to all employers.

B. Federal Acquisition Regulations: Amendments to the Federal Acquisition Regulations (FAR) now affirmatively require most companies doing business directly or indirectly with the federal government to: (1) adopt a code of business ethics and conduct ("Code"), and (2) educate all employees on its provisions.

FAR regulations make clear that training must be periodic, and appropriate to each individual's duties; and it must go to all "principals and employees" and where appropriate, to all "agents and subcontractors."

FAR requires companies to have an anonymous internal "hotline" or other reporting mechanism. Companies must also provide for disciplinary action for improper conduct or for failing to take reasonable steps to prevent or detect improper conduct.

The December 2008 Amendments also create a new "self-reporting" obligation for contractors. Specifically, the new amendments require contractors to disclose in writing to the Office of Inspector General of the federal government whenever they have reasonable grounds to believe that a principal, employee, agent or subcontractor has violated the False Claims Act or other provisions of federal law relating to the award or performance of a government contract including fraud, conflict of interest, bribery or gratuity rules. FAR regulations apply to government contracts of at least $5,000,000, and which require at least 120 days to perform.

C. Sarbanes-Oxley: Section 406 of The Sarbanes-Oxley Act of 2002 (SOX) requires disclosure of whether a code of ethics has been adopted.

Expanding upon the Section 406 concept, the SEC approved new NYSE and NASDAQ Governance Standards. Both exchanges require a "Code of Business Conduct and Ethics" covering all employees, officers and directors. Each listed company must make its Code available to the public.

The NYSE requires CEO's to certify compliance with these listing standards on an annual basis. The NYSE requires more than a Code. It mandates compliance standards and procedures that will facilitate effective operation of the Code. These procedures are largely interpreted to include training and education.

II. Laws Requiring Discrimination and Harassment Training  Click Here to Read More

A. U.S. Supreme Court Rules on Vicarious Liability of Employers in Two 1998 Sexual Harassment Cases: The U.S. Supreme Court ruled on June 26, 1998, in two cases, Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth. Employers now have more reason to be diligent in their efforts to prevent sex harassment in the workplace. The Court clarified employers' liability under Title VII for the actions of their supervisors after the U.S. Circuit Courts had reached a variety of conclusions.

* Employers Liable for Supervisors' Actions. The Supreme Court held in both cases that an employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate (or successively higher) authority over the employee. The liability of the employer is automatic when the supervisor's harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment. However, when no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages.

* Affirmative Defense Available to Employers. The affirmative defense available to employers comprises two necessary elements: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. No affirmative defense is available, however, when the supervisor's harassment culminates in a tangible employment action.

The Supreme Court also held in both cases that while proof that an employer had promulgated an anti-harassment policy with complaint procedure is not necessary in every instance as a matter of law, the need for a stated policy suitable to the employment circumstances may be addressed when litigating the first element of the defense. 

The Court also stated in both cases that while an employee's failure to fulfill the corresponding obligation of reasonable care to avoid harm is not limited to showing an unreasonable failure to use an employer's complaint procedure, a demonstration of such failure will normally suffice to satisfy the employer's burden under the second element of the defense.

* Anti-harassment Policy With Complaint Procedure, Communication and Training Necessary. As a result of these cases, employers must have a well written anti-harassment policy with an appropriate complaint procedure, must communicate the policy and complaint procedures to its employees regularly, and must have a regular training program for supervisors and employees. 

Prior to these decisions of the Supreme Court it was always recommended that employers create these types of preventive programs. Now the U.S. Supreme Court has made it necessary to have such programs in place.

B. California AB 1825 (California Code Section 12950.1) Required California Supervisor Training Regarding Sexual Harassment Click Here to Read More

“12950.1. (a) By January 1, 2006, an employer having 50 or more employees shall provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment to all supervisory employees who are employed as of July 1, 2005, and to all new supervisory employees within six months of their assumption of a supervisory position. Any employer who has provided this training and education to a supervisory employee after January 1, 2003, is not required to provide training and education by the January 1, 2006, deadline. After January 1, 2006, each employer covered by this section shall provide sexual harassment training and education to each supervisory employee once every two years. The training and education required by this section shall include information and practical guidance regarding the federal and state statutory provisions concerning the prohibition against and the prevention and correction of sexual harassment and the remedies available to victims of sexual harassment in employment. The training and education shall also include practical examples aimed at instructing supervisors in the prevention of harassment, discrimination, and retaliation, and shall be presented by trainers or educators with knowledge and expertise in the prevention of harassment, discrimination, and retaliation.

(b) The state shall incorporate the training required by subdivision (a) into the 80 hours of training provided to all new supervisory employees pursuant to subdivision (b) of Section 19995.4 of the Government Code, using existing resources.

(c) For purposes of this section only, ‘‘employer’’ means any person regularly employing 50 or more persons or regularly receiving the services of 50 or more persons providing services pursuant to a contract, or any person acting as an agent of an employer, directly or indirectly, the state, or any political or civil subdivision of the state, and cities.

(d) Notwithstanding subdivisions (j) and (k) of Section 12940, a claim that the training and education required by this section did not reach a particular individual or individuals shall not in and of itself result in the liability of any employer to any present or former employee or applicant in any action alleging sexual harassment. Conversely, an employer’s compliance with this section does not insulate the employer from liability for sexual harassment of any current or former employee or applicant.

(e) If an employer violates the requirements of this section, the commission shall issue an order requiring the employer to comply with these requirements.

(f) The training and education required by this section is intended to establish a minimum threshold and should not discourage or relieve any employer from providing for longer, more frequent, or more elaborate training and education regarding workplace harassment or other forms of unlawful discrimination in order to meet its obligations to take all reasonable steps necessary to prevent and correct harassment and discrimination.”

C. Required Training of Connecticut Supervisors Regarding Sexual Harassment, Sec. 46a-54. Click Here to Read More  (Formerly Sec. 31-125). Commission powers. The commission shall have the following powers and duties:

“(15) (A) To require an employer having three or more employees to post in a prominent and accessible location information concerning the illegality of sexual harassment and remedies available to victims of sexual harassment; and (B) to require an employer having fifty or more employees to provide two hours of training and education to all supervisory employees within one year of October 1, 1992, and to all new supervisory employees within six months of their assumption of a supervisory position, provided any employer who has provided such training and education to any such employees after October 1, 1991, shall not be required to provide such training and education a second time. Such training and education shall include information concerning the federal and state statutory provisions concerning sexual harassment and remedies available to victims of sexual harassment. As used in this subdivision, "sexual harassment" shall have the same meaning as set forth in subdivision (8) of subsection (a) of section 46a-60, and "employer" shall include the General Assembly;

Sec. 46a-54-204. Posting and requirements for employers having fifty or more employees training

(a) An employer having fifty (50) or more employees shall comply with the posting requirements set forth in sections 46a-54-200 through 46a-54-207, inclusive.

(b) An employer having fifty (50) or more employees must also provide two hours of training and education to all supervisory employees of employees in the State of Connecticut no later than October 1, 1993 and to all new supervisory employees of employees in the State of Connecticut within six months of their assumption of a supervisory position. Nothing in these regulations shall prohibit an employer from providing more than two hours of training and education.

(c) Such training and education shall be conducted in a classroom-like setting, using clear and understandable language and in a format that allows participants to ask questions and receive answers. Audio, video and other teaching aides may be utilized to increase comprehension or to otherwise enhance the training process.

(1) The content of the training shall include the following:

A) Describing all federal and state statutory provisions prohibiting sexual harassment in the work place with which the employer is required to comply, including, but not limited to, the Connecticut discriminatory employment practices statute (section 46a-60 of the Connecticut General Statutes) and Title VII of the Civil Rights Act of 1964, as amended (42 U.S.C. section 2000e, and following sections);

(B) Defining sexual harassment as explicitly set forth in subdivision (8) of subsection (a) of section 46a-60 of the Connecticut General Statutes and as distinguished from other forms of illegal harassment prohibited by subsection (a) of section 46a- 60 of the Connecticut General Statutes and section 3 of Public Act 91-58;

(C) Discussing the types of conduct that may constitute sexual harassment under the law, including the fact that the harasser or the victim of harassment may be either a man or a woman and that harassment can occur involving persons of the same or opposite sex;

(D) Describing the remedies available in sexual harassment cases, including, but not limited to, cease and desist orders; hiring, promotion or reinstatement; compensatory damages and back pay;

(E) Advising employees that individuals who commit acts of sexual harassment may be subject to both civil and criminal penalties; and

(F) Discussing strategies to prevent sexual harassment in the work place.

(2) While not exclusive, the training may also include, but is not limited to, the following elements:

(A) Informing training participants that all complaints of sexual harassment must be taken seriously, and that once a complaint is made, supervisory employees should report it immediately to officials designated by the employer, and that the contents of the complaint are personal and confidential and are not to be disclosed except to those persons with a need to know;

(B) Conducting experiential exercises such as role playing, coed group discussions and behavior modeling to facilitate understanding of what constitutes sexual harassment and how to prevent it;

(C) Teachingtheimportanceofinterpersonalskillssuchaslisteningandbringing participants to understand what a person who is sexually harassed may be experiencing;

(D) Advising employees of the importance of preventive strategies to avoid the negative effects sexual harassment has upon both the victim and the overall productivity of the work place due to interpersonal conflicts, poor performance, absentee- ism, turnover and grievances;

(E) Explaining the benefits of learning about and eliminating sexual harassment, which include a more positive work environment with greater productivity and potentially lower exposure to liability, in that employers—and supervisors person- ally—have been held liable when it is shown that they knew or should have known of the harassment;

(F) Explaining the employers’ policy against sexual harassment, including a description of the procedures available for reporting instances of sexual harassment and the types of disciplinary actions which can and will be taken against persons who have been found to have engaged in sexual harassment; and

(G) Discussing the perceptual and communication differences among all persons and, in this context, the concepts of ‘‘reasonable woman’’ and ‘‘reasonable man’’ developed in federal sexual harassment cases.

(d) While not required by these regulations, the Commission encourages an employer having fifty (50) or more employees to provide an update of legal interpretations and related developments concerning sexual harassment to supervisory personnel once every three (3) years.

(Effective February 24, 1993)

Sec. 46a-54-205. Effect of prior training

An employer is not required to train supervisory personnel who have received training after October 1, 1991 that:

(1) substantially complies with the required content of the training set forth in subsection (c) (1) of section 46a-54-204; and

(2) was provided in a classroom setting and lasted at least two hours. (Effective February 24, 1993)

Sec. 46a-54-206. Trainers

An employer required to provide training by these regulations may utilize individuals employed by the employer or other persons who agree to provide the required training, with or without reimbursement.

(Effective February 24, 1993)

Sec. 46a-54-207. Record keeping

(a) The Commission encourages each employer required to conduct training pursuant to Public Act 92-85 to maintain records concerning all training provided.

(b) Such records shall include, but are not limited to:

(1) documents sufficient to show the content of the training given, such as the curriculum;

(2) the names, addresses and qualifications of the personnel conducting the training;

(3) the names and titles of the personnel trained and the date or dates that each individual was trained;

(c) The Commission encourages employers to maintain any such records for a minimum of one year, of if a discriminatory practice complaint is filed involving personnel trained, until such time as such complaint is finally resolved.”

Section 3 Example of a Compliance Training Plan


Example Compliance Training Plan  
Click Here to Read More

It is important that all employers have a plan for complying with the law and annual compliance goals.  Below is the compliance training that we are requiring all employees complete.

Trainings

Staff Trainings
Sexual Harassment Prevention
Discrimination and Harassment Prevention
Code of Business Conduct and Ethics

Supervisor Trainings
Sexual Harassment Prevention
Discrimination and Harassment Prevention
Code of Business Conduct and Ethics
Interviewing and Hiring Practices
Discipline of Employees
Termination of Employees
FMLA (Family and Medical Leave Act)
Hiring and the ADA (Americans with Disabilities Act)
Managing under the ADA Training
Fair Labor Standards Act (FLSA)

Compliance percentage goal:  99%

Time Frame for compliance:  1 year for Sexual Harassment Prevention Training, 1 year for Discrimination and Harassment Prevention Training, and 18 months for the COBC and the Supervisor Trainings.  New hires shall complete the trainings on their first day of work, and the grace period is 60 days for the 18 month and 12 month terms.


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