Training for Compliance
Russ Knight, CEAP, CACII, SAP

As a result of several U.S. Supreme Court cases in 1998 and more recently, the Sarbanes-Oxley Act of 2002 And the Federal Sentencing Guidelines of 2004, there are two areas of training that is required of all employers.  In each case, not providing the training results in leaving the organization open to liability that could have been minimized or eliminated by establishing an affirmative defense.  The two areas of ethics and harassment both have provisions for an affirmative defense that require effective, periodic training for all employees. 

Ethics

The Federal Sentencing Guidelines were amended in 2004 to require all employers to adopt comprehensive ethics and compliance programs and to train all employees on the components of those programs. The Federal Sentencing Guidelines apply to all organizations, whether private or publicly held. 

The Sarbanes-Oxley Act of 2002 strongly encourages publicly traded companies to have an ethics program with a code of conduct and training on the code for all employees. These companies are required to disclose whether or not it has adopted a written code of conduct that is reasonably designed to deter wrongdoing and promote:

• Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.
• Full, fair, accurate, timely and understandable disclosure in reports and documents that a company files or submits to the SEC and in other public communications made by the company.
• Compliance with applicable governmental laws, rules and regulations.
• The prompt internal reporting of any violations co the code of ethics.
• Accountability for adherence to the code of ethics.

If a company has not adopted such a code, it must disclose why. 

Harassment

The U.S. Supreme Court pushed training to the forefront of liability prevention in 1998 when it decided Faragher and Ellerth. These two sexual harassment cases focused not on what constituted sexual harassment, but on who was liable for it, under what circumstances and why. 

The Supreme Court held that an employer is strictly liable under Title VII for any gender-based harassment by a supervisor that results in a tangible job detriment. If a tangible job detriment does not occur, the employer is still strictly liable. However, under those circumstances the employer can raise an affirmative defense if (1) it used "reasonable care" to prevent and correct any harassment, and (2) the employee "unreasonably" failed to complain. 

The Supreme Court, thus, sent a clear message: the failure to adequately train employees regarding all appropriate aspects of sexual harassment creates Title VII liability and may deprive the employer of its best defense. 

The requirement to train was made explicit at the federal level by the Equal Employment Opportunity Commission's 1999 Guidelines on establishing an affirmative defense. The Commission stated: 
The employer should provide training to all employees to ensure that they understand their rights and responsibilities under the law prohibiting harassment. An employer should ensure that its supervisors and managers understand their responsibilities under the organization's anti-harassment policy and complaint procedures. Periodic training can help achieve that result...

Every employer can be held liable for their employees’ illegal conduct.  If employers take proactive steps to prevent unethical and illegal conduct through an effective ethics and compliance program, which includes training for all employees, the employer can mitigate their fines and punishments for criminal violations. The absence of and effective ethics and compliance program can be used to increase fines and punishment.

Does the quality of the training really matter?

Yes, the Federal Sentencing Guidelines specifically reference the need to proactively the organizations compliance programs with periodic, effective training to all employees. 
The term periodic is not specifically defined in the U. S. Supreme Court, EEOC or the Federal Sentencing Guidelines but case law shows that periodic is generally interpreted as every 12-24 months. To be effective, the courts have clearly ruled that distributing a policy is not enough. Effective training will:

• Be interactive and interesting
• Be understood by every employee
• Establish clear mechanisms for reporting and protection for reporters 
• Be based on the specific ethics and anti-harassment policies of the organization
• Have the complete endorsement of the highest levels in the organization