Corporate Compliance

Practice Areas

 

Join our skilled legal professionals for a detailed video overview of corporate compliance, including:

  • What corporate compliance entails.
  • Why your company needs a compliance program.
  • What your compliance program should include.
  • Filing requirements.
  • And more.

What is Corporate Compliance?

Corporate compliance is the process of making sure your company and employees meet legal standards, regulations, and ethical practices for your organization and industry. Corporate leadership will need to ensure that its internal policies and procedures are compliant with state and federal law to avoid serious financial risk and legal troubles.

It is important to have a formal, ongoing compliance process or program to help your company avoid and catch compliance errors over time. Contact your trusted Chugh, LLP legal team for help developing a corporate compliance plan.

Why Should Companies Have Corporate Compliance Programs?

Corporate compliance is essential to protecting your business. But further, you may be able to avoid waste, fraud, abuse, discrimination, and other practices that put your business at risk and disrupt regular operations.

Companies must design implement, and monitor corporate compliance policies, employee trainings, and on the ground procedures and practices.

What to Include in your Compliance Program

A good corporate compliance program should be integrated with compliance efforts in the entire firm, from managing external regulations and internal policies to employee training. When all staff work together to maintain compliance standards, you can mitigate your company’s risk.

Additionally, compliance programs require processes to create, update, disseminate, and track compliance policies. That way, employees understand how to comply with applicable rules and regulations.

Your corporate compliance program should include standards that help all your employees comply, including:

  • A code of conduct: This document helps set the tone for your company’s ethical and general business principles.
  • Compliance standards: This document should list the expectations and rules for employees in each of your company’s compliance areas.
  • Compliance procedures: These are the daily requirements and practices that employees use to implement, follow, and enforce compliance standards.

Because a good compliance program is comprehensive, businesses should ensure that their upper leadership and staff can easily communicate.

Components of an Effective Compliance Program

Together with a trusted attorney, companies should develop a compliance program that is effective at helping employees meet necessary standards. Companies should begin with the following:

  • Implement policies, procedures, and standards of conduct.
  • Designate a compliance officer and committee.
  • Develop and deliver training and education to staff and subcontractors.
  • Encourage and support effective communication between staff members.
  • Create a monitoring and auditing plan to effectively detect risk.
  • Write and enforce disciplinary guidelines.
  • Detect offenses and take corrective action.

What is a Compliance Audit?

A compliance audit is an external process carried out by independent auditors to determine whether an organization is meeting specific standards or rules. These audits usually gauge how well an organization adheres to external rules, regulations, and standards.

Internal audits are conducted by staff or employees to gauge overall risks to compliance and security, and to determine if the company is following its internal compliance guidelines. These audits can also be used to measure whether a subsidiary company is following its parent company’s procedures and policies.

Compliance Areas

While this list is not comprehensive, and compliance requirements may vary by business entity type, companies will need to address some major compliance areas.

  1. Filing Requirements
  • Annual or biennial report or statement and filing fees: Companies must file these reports to keep their local Secretary of State or similar office updated on their business information. This also helps the state track current and operational businesses. The due date varies by state. Filing fees are normally due with the statement and can be more than $300.
  • Initial reports: Ten US states require initial reports and fees shortly after incorporation. These states include Alabama, Alaska, California, Connecticut, Georgia, Missouri, Nevada, New Mexico, Oklahoma, and Washington.
  • Amendment of articles of incorporation/formation: If you’ve made important changes to your company — like address, name, new shares, or membership — report it with Articles of Amendment.
  • Franchise tax: Certain states charge a franchise tax for businesses that operate there. These taxes are levied in addition to state and federal taxes.
  • Federal tax: Make sure that you meet all federal tax obligations, including income and employer taxes.
  • The Affordable Care Act: The Act requires businesses with 50 or more employees to report to the IRS that they provide health coverage.
  • Keeping licenses and permits current: If the business has any federal licenses, permits, or certificates, these must be kept up to date. Due dates and fees vary based on your local government bodies. 
  1. Reviewing contracts, invoices, and agreements:

Meet with your trusted attorney to ensuring all the contracts and agreements entered by your business contain provisions that protect your interests, information on the venue for dispute adjudication, and an attorney fee provision. 

  • Specific provisions you will want to look for include: 
    • Confidentiality.
    • Remedies.
    • Termination of contract. 
    • Termination of contract.
    • Resolution.
  1. Employment law compliance:

Businesses should not overlook their employment law compliance requirements, and should ensure:

  • Their employee handbook is current and compliant with state and federal laws. 
  • They meet all laws and regulations regarding independent contractors.
  • They correctly distinguish between exempt and non-exempt employees. 
  • They provide and document adequate meal periods.
  • Their paid time off policy is up to date.
  • All required employment laws and regulations pamphlets are posted in office.
  1. Intellectual property:
  • Are all important logos, advertising slogans, and business name trademarked?
  • Are the existing trademarks live and current? 
  • Are the renewal filings made timely? 
  • Are all registered patents of the business safeguarded?
  • Are nondisclosure agreements (NDA) entered when initiating business with other parties?
  1. COVID-19-related compliance: 
  • Social distancing, mask mandates, updated and concise sick leave and paid leave policies. 
  • Health screening of employees.
  • Mandating COVID-19 vaccination.
  • Ensuring reasonable accommodations are provided to employees, if required.
  • Providing sanitation materials and routine cleaning of workplace.

Staying Compliant and Preparing for a Compliance Audit

  • Prevent and minimize potential workplace litigation. 
  • Ensure compliance regulations.  
  • Seek quality HR guidance. 
  • Ensure correct paperwork administration. 
  • Coordinate HR processes. 
  • Require annual training of all personnel members—including upper management. 
  • Implement a comprehensive system for the monitoring, recording, and documentation of corporate information. 

Conclusion

Ensure your company stays on top of its legal responsibilities. Consult with your Chugh, LLP attorney for help developing a corporate compliance program, or other case-specific advice.

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