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Consequences of NonCompliance in Business

What is compliance?
Compliance is HR-speak which basically means observing all federal, state, local and even international law that applies to your company. The goal of compliance is to keep your company in good standing in the locations it conducts business.

Who are at risk from noncompliance?


Everyone! From corporations to self-employed individuals, everyone is subject to a state or countrys regulatory setting. However, smaller companies are at more risk as compared to their larger counterparts because of lack of resources and access to regulatory experts. ClearRisk

Overview of Non-Compliance for Companies


1. State or country may revoke your operational license, penalize your company or even dissolve it 2. In the case of LLCs, business owners who fail to maintain their limited liability protection may face the risk of piercing the corporate veil, which means the owners personal assets can be sequestered by the state to pay off penalties. (Think George Bluth of cult comedy sitcom Arrested Development.)

Laws to Observe to Keep Your Organization in Compliance


1. Federal and State Discrimination Acts 2. Fair Credit Reporting Act 3. OSH Act 4. Family and Medical Leave Act (FMLA) of 1993

1. Federal and State Discrimination Acts


The US Equal Employment Opportunity Commissions enforces the following laws to protect US citizens from employment discrimination:

Title VII of the Civil Rights Act of 1964 (Title VII) - Law against discriminations relating to race, gender, citizenship and religion

Equal Pay Act of 1963 (EPA)


Law governing fair compensation

Age Discrimination in Employment Act of 1967 (ADEA)


Law that protects workers 40 years and above from not getting the promotions and opportunities that are due them

Title I and Title V of the Americans with Disabilities Act of 1990


Law that protects applicants from discrimination for their disabilities and medical histories

Sections 501 and 505 of the Rehabilitation Act of 1973


These two sections refer to providing equal work opportunities for people with disabilities for federal positions.

Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA)


This law refers to providing people with genetic disabilities endemic to their ethnicity equal recruitment and employment opportunities.

Civil Rights Act of 1991


The act that protects employees who have sued previous employers for discriminatory work practices.

Fair Labor Standards Act


The act that refers to fair labor practices, especially in terms of work hours, breaks, overtime and salary rates for adults, as well as work limits for minors.

2. Fair Credit Reporting Act


A law that mandates HR generalists to inform applicants and workers to inform that they have been denied employment due to data provided by a consumer reporting agency. To remain in compliance, it is your duty to provide said applicant or employee the contact details of the agency that provided the data.

3. OSHA Act
The Occupational Safety and Health Administration, which was established under the OSH Act of 1970, had created standards governing a number of industries that include the Construction, General and Maritime industries. Through these standards, the agency ensures that American workers are working in a safe and healthful environment.

4. Family and Medical Leave Act (FMLA) of 1993


This act protects eligible workers to take leave for medical reasons or to care for sick family members with undisrupted fringe benefits for a 12 work week or 26 work week leave in a year.

Examples of Non-Compliance
Failure to incorporate overtime pay for overtime work hours, or completely not paying workers who work overtime. Failure to provide an employee a handbook that explicitly states conditions of a certain regulation, then suspending or terminating an employee for that regulation.

During the screening process, a worker was asked if he or she has kids and responded he or she does. The worker wasnt hired supposedly because of it.

When female workers were mistreated and verbally and physically abused in the case of Mitsubishi workers, which still remains as one of the biggest sexual harassment class action cases in the United States.

When eligible employees are prevented from taking advantage of a companys pension plans
Exposing to workers to hazards because shop equipment werent repaired/maintained.

GNA Partners

How to Address Non-Compliance


Completely reevaluating existing compliance laws, and if needed, an overhaul of existing HR compliance programs; Hiring a business coach to help you manage and mitigate risks.

Sources:
http://www.gnapartners.com/news/poor-workplace-complianceproduces-serious-consequences-10

https://manager.clearrisk.com/Resources/RiskTool/Regulatory_Ri sk_-_Consequences_of_Non-Compliance
http://www.eeoc.gov/facts/qanda.html http://static.bdo.uk.com/imported/2010/3/Consequences_of_noncompliance.pdf www.legalzoom.com/legal-headlines/corporate-lawsuits/fivebiggest-sexual-harassment-cases