Is Employee Code of Conduct Training a Requirement?
Large corporations spend an enormous amount of time and money these days providing training on their expectations for behavior on a range of issues including interactions between employees and customers, compliance with regulations, use of company resources and acting in an upstanding manner. The expectations are detailed in the company's code of conduct. Aside from showing everyone that they are good corporate citizens, why is this deemed an important initiative?
There is a regulatory basis for the training:
The Sarbanes-Oxley Act of 2002 (SOX). Highly publicized corporate fraud that occurred with companies like Enron Corporation prompted swift passage of this legislation. The requirements call for more accountability by management and others for company activities. It applies to public companies and the Securities and Exchange Commission (SEC) promulgates rules to comply with SOX. With respect to training, companies are encouraged to establish codes of conduct and provide training.
Federal Sentencing Guidelines. The United States Federal Sentencing Guidelines (FSG) lay out uniform guidelines for sentencing defendants convicted of federal crimes. The FSG were amended in 2004 to require employers to adopt ethics and compliance programs which include a training component. Essentially, employers can be held responsible for illegal actions of their employees. However, if effective compliance and ethics programs are in place, responsibility is mitigated. An effective program has to cover important topics and be provided periodically to all employees. The training must be formalized for companies with more than 200 employees, but applies to smaller companies as well.
Federal Acquisition Regulations (FAR). Similar to the FSG, both public and private companies that do business with the federal government are subject to FAR. (Note that there may be a partial exception for some small contractors.) Requirements include establishing a code of conduct or ethics program and providing training.
In addition to complying with federal requirements, most larger companies find it makes good business sense to set forth a unifying code of behavior. It inspires everyone to act in the same legal, moral and ethical way and helps to set a positive company culture. It also sets forth a clear mechanism for reporting criminal acts. If inappropriate actions do occur, there is a legal argument that the perpetrators knew the rules and the consequences.