The application of discipline is a key aspect of any best-in-class compliance program, enshrined in the ten hallmarks of an effective compliance program found in the FCPA Guide. Department of Justice officials too in public remarks almost always mention discipline as a key component of remediation. It was also articulated in the guidance to the FCPA Pilot Program.
Yet, many companies have never disciplined any employees for ethical violations. One of the easiest questions for a Justice Department or SEC lawyer to ask is whether there is any evidence that any employee have ever been fired for a Code of Conduct violation or other compliance or ethical violation.
This drives home three questions: Are you actually doing compliance or do you simply have in place a paper compliance program? Secondly, have you documented the discipline that you have delivered to employees, so that you can substantiate your program effectiveness? Finally, have you communicated to your employees when terminations occur for such violations?
The types of discipline within a company are standard. Generally, it is any negative consequence, up to and including termination. Key to employee discipline is procedural fairness, and this will help to bring credibility to your compliance program. Procedural fairness also goes by the moniker of the Fair Process Doctrine, which generally recognizes that there are fair procedures, not arbitrary ones, in processes involving rights.
Discipline must not only be administered fairly, but also uniformly across the company for the violation of any compliance policy. Simply put, if you are going to fire employees in South America for lying on their expense reports, you have to fire them in North America for the same offense. It cannot matter that the North American employee is a friend of yours or, worse yet, a high producer. Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.
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