New Regulation Requires Extensive Ethics, Compliance Training

November 5, 2004 ( - Employers must now provide employees and company agents at all levels with compliance and ethics training under amended federal law.

>Under new Federal Sentencing Guidelines (FSG) effective November 1, employers must demonstrate that they have an effective compliance and ethics program. Before November 1, training was not a required element of an effective compliance program, according to

>After the Sarbanes-Oxley Act of 2002 directed the Federal Sentencing Commission to reassess the FSG in relation to organizations, the group amended the rules. The focus was on preventing crime and punishing criminal conduct in business. Although a business can be held liable for an employee’s misconduct, businesses can reduce potential fines by up to 90% by creating an extensive compliance and ethics training program, according to

>There are seven requirements to an effective ethics programs, the new rules state. They are:

  • an organization must establish standard and procedures to prevent crime.
  • it must have knowledgeable high-level personnel overseeing the program.
  • it must avoid giving substantial power to a person who the organization knew or should have known had engaged in criminal activity.
  • it must take reasonable measures to periodically have training programs.
  • it must monitor and audit criminal activity and have procedures for reporting crime.
  • it must provide incentives to comply with the program and enforce disciplinary measures.
  • it must respond to criminal activity and modify compliance and ethics programs, if needed, to prevent crime.