No matter the industry, all companies have a series of laws and regulations they need to adhere to. These cover all sorts of topics including health, safety, finance, security and more. All companies need to adhere to these or else they risk facing fines, regulatory action, or worse. By making sure that your business is adhering to these you are making sure that you are in compliance. This is called compliance management, and it is important for all companies to institute. There is a lot that goes into compliance management – let us look into the specifics of it.
What is Compliance Management
Being in compliance is when your business is adhering to all the rules assigned to it. These can come from state/federal legislations, regulatory bodies, and contracts that you have with other organizations. As a broad definition, compliance management is all the processes and steps that your company follows to keep compliance. Compliance management is made up of a variety of procedures, policies, audits, security controls, documentation, and tech enforcement. These are all used to track what employees in your company are doing and whether your company is remaining in compliance. As a rule, your company should have a detailed and structured plan for ensuring that all aspects of your business are compliant. This includes looking into and updating said plan in regards to changes in laws, new contracts, and new regulations from the following regulatory bodies (depending on your industry/field):
- The International Standards Organization (ISO): The ISO sets the standards for companies in a variety of industries like manufacturing, healthcare, and transportation. Whiles these guidelines are not mandated by law, they are expected industry practice. To become ISO compliant your company must go through external audits by a third party on a regular basis.
- Committee of Sponsoring Organizations of the Treadway Commission (COSO): The COSO creates a framework for enacting internal financial control. This meant to help companies avoid fraudulent activities such as bribery and campaign finance law violations.
- The Occupational Safety and Health Administration (OSHA): OSHA is the federal agency under the US Department of Labor. OSHA sets and enforces the standards for employers to supply a safe, hazard-free environment.
- The Food and Drug Administration (FDA): The FDA is under the US Health and Human Services Department. This agency handles protecting public health through the regulation drugs, food, and medical devices.
- Health Information Portability and Accountability Act (HIPAA): While not a regulatory body, HIPAA is the law that regulates, enforces, and administrates fines when parties violate the usage and storage of medical information.
Why Do Businesses Need Compliance Management?
First, businesses need compliance management so they can continue running. If your business is found to be noncompliant enough times it might get shut down. While that is an extreme example, it is not an unthinkable one. What usually happens when a business is found to be out of compliance is that they face fines or fees (whether they are out of compliance with regulatory bodies or contracts) of varying amounts. These fines can have varying levels of impact on your business but all of them spell bad news. Having to pay fines and fees can hurt your company’s ability to function and cause damage to your reputation. It should be pretty apparent that your company needs to avoid this.
Being compliant is important, but it can be difficult at times. Your business needs to invest in comprehensive compliance management to keep on top of everything. There are so many aspects of compliance that you need to keep track of. If you are not actively keeping up with the different areas, you need to be compliant in you will quickly find yourself falling out of compliance. Let’s look at some of the more common compliance issues your company might face to show you why you need compliance management.
Common Compliance Issues
Wage and Hour Laws
The Federal Labor Standards Act lays down a series of strict requirements for worker hours and wages. These are mandatory minimums for hours worked, overtimes, wages, child labor, mealtimes, and more. Individual states also have minimums and standards for wages and hours. While most companies don’t have to worry about this, larger companies should keep this in mind as they work and operate across state lines.
It should not be hard to remain compliant with anti-discrimination laws. These prevent employers from discriminating against people based on age, gender, race, disability, or ethnicity. These laws are incredibly strict. Violating them can open your company up to a myriad of fines, fees, and lawsuits. That is why it is vital that your company remain compliant with anti-discrimination laws.
Many companies are working on increasing diversity in the workplace. For some businesses this includes hiring immigrant workers. It is important that your company is adhering to the proper laws when it comes to hiring immigrant workers or overseas professionals. There are multiple laws and acts that you need to follow about this.
This is one of the major compliance issues that your company should be concerned with. Over the years government agencies and regulatory bodies have created a wide range of rules and regulations for keeping your employees safe. It is incredibly important that your company adhere to these rules so employees do not get hurt and your company does not face any major issues such as lawsuits and regulatory action.
Compliance management is an important part of your company’s ability to function. Without investing the time and effort into tools and resources to maintain compliance your company might face major issues. That’s where a compliance management system comes in. A compliance management tool can help your company stay compliant so you don’t face regulatory action.
Written by Quentin Russell
Quentin Russell is a Content Specialist with knowledge of Content Marketing and Social Media Marketing.