If you're in business, you're expected to comply with various government requirements. And being subject to regulation means you're also subject to periodic compliance inspections by the appropriate agency.
"Obviously, it's better to be in compliance before a government audit," says Jon Miller, a labor and employment law attorney with Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone in Irvine, California. "Some government-agency audits may uncover minor violations, which simply lead to a formal order or informal request for modifications. Others may uncover substantial violations, which can threaten the very existence of a business with [corporate] fines and, in some instances, may even involve a threat of [individual] fines or jail time for managers and owners."
Depending on your specific industry, you may need to comply with certain safety regulations, record-keeping requirements, environmental-protection procedures, professional-certification requirements and other operational practices. If you have even one employee, there are a variety of state and federal employment regulations you must follow. The more employees you have, the greater the number of regulations that apply. So the very first step in setting up your own internal compliance audit program is to thoroughly understand all of the various regulations applying to your business.
Jill Solder, founder and principal of ManagEase Inc., a human resources consulting firm in Santa Ana, California, says individuals should join local and national trade and professional organizations related to their industry. "They'll help you stay up-to-date on changes, provide education and also be a vehicle for you to network with other individuals who do what you do," she says. She also suggests contacting the regulatory agencies that have jurisdiction over your operation.
The process is more complicated when it comes to employment regulations. Solder says many states have a clearinghouse for employment-related information; start with your state's department of labor. "Federal regulations aren't in one spot," she says. "They don't make it easy for you." So you've either got to take the time to do the research yourself, retain a consultant or labor attorney to do it for you, or hire a staff person to manage compliance issues.
Once you figure out what you need to do, conduct an internal audit to see where you're complying and where you're not-and put together a plan to correct any shortcomings. Your audit should also verify whether you're complying with your own internal policies-just because you made the rules, doesn't mean you can disregard them whenever you feel like it. For example, if your policy requires you to follow a particular protocol before firing an employee, yet you fail to do that, you're setting yourself up for a wrongful-termination lawsuit-even though you may not have violated state or federal laws.
In developing your compliance program, keep in mind you won't be able to correct everything immediately. Set realistic priorities and make incremental corrections. Says Solder, "If you try to do it all at once, you'll just throw up your hands and say, 'Forget it!' "
Create a checklist and review it periodically. Make sure it covers the important issues in each regulatory category. How often you need to conduct audits depends on the size of your company, how quickly it's growing and your industry's regulatory requirements.
Finally, keep in mind that compliance audits can be more than protective devices; they can also double as marketing and recruiting tools. They send a positive message to customers and the general public by reminding them that you not only know what you're supposed to do, you actually do it. And with the competition for good workers so fierce, says Solder, "Employees like to know that they're coming into an environment that's well-run."
Here's a rich resource to help you develop your own compliance-audit procedures: Many law firms use newsletters and seminars both as marketing tools and to keep their clients informed. Go through your telephone directory and check the listings for employment attorneys and firms that focus on areas of interest to your company. Call them and ask to be placed on their mailing lists. Most will be happy to do so, free of charge.
Jacquelyn Lynn left the corporate world more than 13 years ago and has been writing about business and management from her home office in Winter Park, Florida, ever since.