Why It Pays to Make Sure Your Compliance Program Follows the DOJ Guidelines

    

Why It Pays to Make Sure Your Compliance Program Follows the DOJ Guidelines

Developing a comprehensive corporate compliance training program can be an intimidating task. Thankfully, during the past year, the Department of Justice (DOJ) released two guidance documents that businesses can use as a roadmap. Although both documents were developed as internal guidance for DOJ investigators, they function to provide companies in all industries with a blueprint of an effective compliance program, which includes training.

The first, published in April 2019, is entitled Evaluation of Corporate Compliance Programs and is an update to previous guidance that was published to assist prosecutors in making informed decisions as to whether, and to what extent, a corporation’s compliance program is effective at the time of an offense and is effective at the time of a charging decision or resolution.

In July 2019, the Department published Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations to assist division prosecutors in their evaluation of antitrust compliance programs at the charging and sentencing phases of an investigation.

Through its guidance, the DOJ provides best practices that businesses can emulate to increase the efficacy of their training program among other aspects of their entire compliance program. In knowing exactly what will be examined in the case of an offense, a company can head off violations by developing an effective training program that employees can follow. When employees know what is expected of them, they will be more successful at mitigating unacceptable behavior.

Effective Corporate Compliance Program Elements

The DOJ’s April guidance identifies three areas of examination in determining whether a corporation’s compliance program is effective:  

  1. “Is the corporation’s compliance program well designed?“ 
  2. “Is the program being applied earnestly and in good faith?“ In other words, is the program being implemented effectively?  
  3. “Does the corporation’s compliance program work” in practice?       

In determining whether a corporate compliance program is well-designed, an investigator will examine whether the program is effective at preventing and detecting employee misconduct. Further, the program must be enforced by management. Specifically, the DOJ states that a compliance program should ensure “not only a clear message that misconduct is not tolerated, but also policies and procedures – from appropriate assignments of responsibility, to training programs, to systems of incentives and discipline – that ensure the compliance program is well-integrated into the company’s operations and workforce.”

Likewise, whether a corporate compliance program is implemented effectively is measured on whether the program simply exists on paper or is put into practice and successfully implemented, reviewed, and revised on a regular basis. This entails having the staff necessary to “audit, document, analyze, and utilize the results of the corporation’s compliance efforts.” Also, the DOJ’s guidance points out that a program is only effective when employees are aware of its provisions and confident about the company’s commitment to enforcing its terms.

Finally, a corporate compliance program must work in practice. The DOJ’s guidance instructs investigators to determine whether a program has evolved over time in order to address both existing and new compliance risks. If misconduct has occurred, then a business should be able to show that they “undertook an adequate and honest root cause analysis to understand both what contributed to the misconduct and the degree of remediation needed to prevent similar events in the future.” A program must be flexible enough to grow and change as new risks are presented or discovered.

Although the guidance issued in July is specific to antitrust programs, it paints a similar picture to the April guidance. It identifies several factors that division prosecutors should consider when evaluating the effectiveness of an antitrust compliance program, including:

  1. The design and comprehensiveness of the program
  2. The culture of compliance within the company
  3. Responsibility for, and resources dedicated to, antitrust compliance
  4. Antitrust risk assessment techniques
  5. Compliance training and communication to employees
  6. Monitoring and auditing techniques, including continued review, evaluation, and revision of the antitrust compliance program
  7. Reporting mechanisms
  8. Compliance incentives and discipline
  9. Remediation methods

Translating into Training

The guidance itself identifies training as an important element of an effective compliance program, stating, “Ideally, [compliance training] empowers employees to do business confidently insofar as they are clearer on what is and is not permissible, and can resist pressures more effectively (whether these are internal or external).”

Using the DOJ’s guidance helps a business understand what constitutes an effective program. Those same elements can then be used as the driving force in designing a compliance training plan. For example, the training should communicate to employees the provisions of the company’s compliance program, identify consequences of misconduct, and emphasize enforcement of the program.

Both versions of the guidance stress the importance of continually reviewing and updating a corporate compliance program to account for new risks or procedures. Therefore, a business should make certain that, when a compliance program is updated to reflect changes in possible risks or procedures, the training content is also revised accordingly. That may require employees to undergo retraining or supplemental training.

Goals of an Effective Compliance Training Program

Compliance training is essential in ensuring that all employees of an organization are aware of how to properly perform their job so that the company and the employees are not in a position of liability.

Goals of an effective compliance training program include:

  • Avoiding and detecting violations by employees that could lead to legal liability for the organization
  • Creating a more hospitable and respectful workplace
  • Laying the groundwork for a partial or complete defense in the event that employee wrongdoing occurs despite the organization's training efforts
  • Adding business value and a competitive advantage

Depending on the industry involved, establishing effective compliance training can help an organization avoid issues such as:

  • Monetary loss and the financial and legal penalties that result from non-compliance
  • Damage to a company’s reputation
  • Executives spending excessive time investigating and mitigating non-compliance incidents, and repairing reputational damage that can result from them

Staying in Compliance

Though risk can never be completed eliminated, it can be mitigated through effective compliance training. Not only does training show a company’s good faith effort to follow guidelines and regulations, but it also helps prevent an employee, manager, or supervisor from committing a violation unknowingly and putting the business at risk.

A company may opt to develop and update their own in-house training program if they have the budget and staff to maintain compliance and keep abreast of new risks and regulations. But often, working with a trusted, third-party provider can be more cost-effective and can ensure training follows the appropriate guidelines.

Compliance Training Program Guide

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