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How Does This Apply to Companies Trying To Avoid Employment Lawsuits?
Strange as it may seem, the answer to that question begins with the Federal Sentencing Commission, which establishes the criteria which dictate the length of sentences for federal crimes.
In 1991, the Commission began to focus on “organizational compliance efforts” – that is, corporate efforts designed to prevent violations of the law, instead of ferreting them out only after it’s too late. The Commission stressed the idea that a corporation accused of a crime should be treated more leniently if it had, prior to the offense, implemented a compliance program in the effort to prevent wrongdoing. General pronouncements were issued to the effect that the more and better the preventive efforts, the less culpable a corporation would be deemed for sentencing purposes.
Between then and now, the headlines have been dominated by accusations of corporate misconduct, leading to the conclusion, however unsupported by data, that the Commission’s 1991 efforts did not go far enough. Thus, in December 2003, an Advisory Group empowered to make recommendations to the Sentencing Commission significantly increased the focus on corporate compliance, demanding that corporations be required, from the top down, to implement a “culture of compliance” through specific, sometimes draconian measures.
This seemingly unrelated edict has raised the collective corporate blood pressure of those who understand the regulatory process, in the employment law as well as other contexts. What’s the big deal?
Historically, the reach of these sentencing guidelines has extended way beyond anything to do with crimes and prison terms: the compliance practices endorsed by these sentencing guidelines have become the standard imposed upon companies generally, in all sorts of contexts. The logic has been this: if doing “X” gets you a lighter sentence and not doing “X” increases your sentence, then doing “X” should be a hallmark of good corporate practice and not doing “X” a hallmark of bad corporate practice.
The Advisory Group acknowledged this tendency for legal and business standards to piggyback on the sentencing guidelines in its December 2003 report:
Over the last twelve years legal standards in a remarkably diverse range of fields have recognized organizational law compliance programs as important features of responsible organizational conduct. The legal standards which have emerged are often built upon the original organizational sentencing guidelines model.
The Advisory Group knew full well that what it was doing would affect the way in which businesses would be required to conduct themselves in the future.
These proposed changes … are also designed to respond to the lessons learned through the experience of national corporate scandals over the last two years and to synchronize the organizational sentencing guidelines with new federal legislation and emerging public and private regulatory requirements.
Counsel Consulting Group LLC helps companies throughout the United States avoid employment and HR-related claims and liabilities. CCG assesses existing policies, procedures and problem areas; it provides customized liability-avoidance training to managers and executives; and it designs and implements business techniques that reduce employment liability risks on a long term basis. CCG also offers specialized workshops for managers and HR executives, customized consulting in focused employment-related areas, and CD-ROM and web-based training alternatives. For more information, contact us at info@powelltrachtman.com and visit our website at www.counselconsulting.com.
Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.
