SAN FRANCISCO, CA (5/18/2006) - Ethical scandals continue to plague U.S. employers, resulting in massive penalties, depressed earnings and low employee morale. Just this week, Boeing agreed to pay $615 million under a tentative deal with federal prosecutors to avoid criminal charges relating to alleged ethical breaches by its employees. The company has announced that it will make additional commitments to ongoing compliance, including a new emphasis on training - training that U.S. employers are already required to provide employees under the Federal Sentencing Guidelines. Other companies seeking to avoid such costly settlements are wise to take note, and to comply with these extensive training requirements.
A recent survey of nearly 2,000 legal, ethics, and HR professionals, conducted by ELT (www.elt-inc.com) - a leading provider of online compliance training - found that 70.3 percent of respondents are unaware that ethics and compliance training is mandated for all employers under recent amendments to the Federal Sentencing Guidelines (FSGs). The survey also found that almost 60 percent of employers are currently not offering such training to their employees, which is required for all types of employers, whether public or private, and of whatever nature, including nonprofits and government units.
From the Federal Sentencing Guidelines, §8B2.1(b)(4):
"The organization shall take reasonable steps to communicate periodically and in a practical manner its standards and procedures, and other aspects of the compliance and ethics program, to [members of the governing authority, high-level personnel, substantial authority personnel, the organization's employees,
and, as appropriate, the organization's agents] by conducting effective training programs and otherwise disseminating information appropriate to such individuals' respective roles and responsibilities."
Responding to the survey results, Shanti Atkins, President & CEO of ELT and former employment attorney with Littler Mendelson, commented, "Effective, interactive ethics and compliance training offers employers two key benefits: the first is a reduction in potential fines and damages; the second is behavior modification, which can actually prevent misconduct from occurring in the first place. Employers are starting to pay attention to this tangible ROI, but the broad-scale adoption of mandated ethics and compliance training is still gaining momentum."
The ELT survey also found that of those employers that are conducting training, nearly half (47 percent) are not tracking and archiving training completion records. Under the FSGs, employers can substantially mitigate potential fines and punishment for criminal violations if they can prove that they have an effective ethics and compliance program in place:
"The potential fine range for a criminal conviction can be significantly reduced - in some cases up to 95 percent - if an organization can demonstrate that it had put in place an effective compliance and ethics program and that the criminal violation represented an aberration within an otherwise law-abiding community." UNITED STATES SENTENCING COMMISSION, AN OVERVIEW OF THE ORGANIZATIONAL GUIDELINES (2004).
Also surprising, of the employers that are conducting ethics and compliance training, 26 percent are holding informal training sessions, such as briefly discussing and distributing a Code of Conduct during a staff meeting. The FSGs only permit this kind of informal training for employers with less than 200 employees. Employers with more than 200 employees must provide more formally planned and implemented training programs. (U.S. SENTENCING GUIDELINES, § 8B2.1(b) cmt. background.)
One third (30.4 percent) of respondents surveyed have not published a Code of Conduct or Code of Ethics - something which is required of companies listed on the NYSE and NASDAQ, and strongly encouraged for all publicly traded companies under Sarbanes-Oxley. Many privately held companies are starting to adopt Codes in recognition of the importance and value of more formal governance.
"Employers are coming under increased scrutiny with their ethics and compliance training programs, which must go far beyond a ´check the box´ approach. At the end of the day, this is about so much more than ´training´ - it is the foundation of an employer´s culture and commitment to practiced ethics," Atkins said.
ELT provides employers of all sizes and across multiple industries with online compliance training of unparalleled quality. Featured in the New York Times and Fortune Small Business Magazine as one of the premier online training providers, ELT´s programs are now used by more than 1,000,000 learners in leading companies across the United States. ELT´s courseware is built upon the renowned legal expertise of the global law firms Littler Mendelson and Shearman & Sterling, using Legal EngineeringTM to help establish invaluable defenses to workplace litigation. Programs also feature cutting edge instructional design to provide a training experience that educates, entertains and engages. ELT helps employers to comply with mandatory training laws and regulations, such as California´s new harassment training law (AB 1825) and the recently amended Federal Sentencing Guidelines. Demos of ELT´s courseware can be found at www.elt-inc.com.
For additional information, please contact Rebecca Peterson at rpeterson[at]elt-inc.com or 415-962-3414.