How Ethics and Compliance Applies to the Employee Experience

You don’t have to misuse (or even, have) a million dollar slush fund to violate anti-bribery laws like the Foreign Corrupt Practices Act (FCPA). Nor do you need to be a high rolling corporate exec or a diplomat to be embroiled in a conflict of interest. Federal enforcers don’t care whether you have a fancy title if you violated insider trading laws. Nor do they care whether you’re the chief executive or an account executive if the feds find evidence of antitrust violations.

These laws and ethical standards apply to every employee in their everyday experience. In other words, ethics and compliance applies to you.

Anti-Bribery/FCPA

Avoiding bribery takes more than just common sense. For example, the FCPA defines a bribe as an offer, payment, or promise of “anything of value” to a foreign official in order to obtain or retain business.

The “offer” and “promise” parts mean that just offering or agreeing to bribe someone is illegal — nothing of value needs to change hands.

The “anything of value” part is also complicated; it means that a bribe includes not just money, but things such as gifts, employment, entertainment, and travel. Also, whether the bribe is “of value” depends on the economic standards in the foreign country, not the US.

What might be a modest dinner by US standards could be considered lavish in the foreign country. In that situation, an employee paying for a foreign official’s dinner after talking up your business could be a bribe in violation of the FCPA.

Employees should avoid even the appearance of bribery for the sake of organizational morale and avert the possibility of a federal inquiry.

Conflicts of Interest

Conflicts of interest can arise for any employee who has a private interest that makes it difficult to act in their organization’s best interest. Even employees who think they can set competing interests aside may still be subconsciously influenced to favor their own interests.

Conflicts can include competing financial incentives (e.g., a second job or side business), workplace romances, favoritism in the hiring process, improper business gifts, or the improper use of confidential information (e.g., insider trading). Although conflicts of interest can violate the law, they are just as often ethics violations that don’t rise to the level of illegal conduct.

Insider Trading

Insider trading means trading in the stock of a company while being aware of inside information about the company. Employees at any level can gain inside information about a company, whether it’s your organization or another company that your organization does business with.

When employees become aware of confidential information, they have a duty not to trade in the company’s stock. The law also prohibits them from disclosing the information to someone else so that person can make a trade. This is called “tipping.”

In our “Insider Trading” course we recount a legal case against a railyard worker that the Securities and Exchange Commission (SEC) vigorously pursued. The worker bought as much company stock as he could afford after observing evidence of a pending acquisition, and later profited handsomely when it went through. Although the SEC did not ultimately win a jury verdict against the worker, this case illustrates that any employee can face legal action on insider trading charges. [SEC v. Steffes, Case No. 1:10-cv-06266 (N.D. Ill. Verdict Jan. 27, 2014)]

The US Supreme Court also recently upheld the criminal conviction of a Chicago grocer for insider trading (he had traded based on tips from an investment-banker friend), once again illustrating that you don’t have to be a high-flyer to have your wings clipped for violating the law.

Antitrust

Outside of the finance and legal fields, if the average employee has heard of antitrust law, they probably know that it has something to do with the rarefied realm of mergers and acquisitions. But antitrust law is much broader than that. It prohibits all anti-competitive conduct that unreasonably restrains free trade.

Because the law prohibits anti-competitive agreements, words matter. An antitrust investigation would not bode well if it uncovered sales people emailing one another an intent to “dominate the market” or having discussions with competitors about key aspects of the business such as prices, current bids, customer quotes, marketing plans, or geographic territories.

An unwary employee may jump to the conclusion that cooperation is good. But since antitrust law and the ethical duty of organizational loyalty prohibit collusion with competitors, employees who have the power to make deals on behalf of your organization need training to avoid this kind of costly mistake.

Not Just Common Sense

Yes, common sense helps, but it’s not enough. Applying complex legal mandates and ethical maxims to the often gray areas of the everyday work world is far from intuitive. It takes training — that includes practice navigating situations based on real scenarios — to prepare employees to respond appropriately to nuanced circumstances they may encounter.

Effective training takes ethics and compliance beyond a “gut feeling” something is wrong, and teaches employees to determine the most ethical course of action in the face of conflicting options. Feeling that “something is wrong” is a good start when faced with an ethical or compliance challenge. Knowing the ethical and compliance standards can help translate the feeling into understanding what is wrong, why it is wrong, and what to do about it.

Learn More About Ethics and Compliance Training

EVERFI delivers online ethics and compliance training to help your business meet compliance requirements both dynamically and scalably. In addition to our award-winning online courses, EVERFI delivers a robust, cloud-based learning management system to help you easily deploy and track our growing library of ethics, anti-harassment, data security and employee conduct courses.