Code of Conduct Policy
Author: Marta Moakley, XpertHR Legal Editor
When to Use This Policy
An employer may clearly communicate its emphasis on high standards of ethics and on overall compliance with applicable laws and regulations by implementing an organizational code of conduct.
Employers should strongly consider implementing an organizational ethics program in order to minimize liability risks. The US Sentencing Guidelines for Organizations, which were first issued by the US Sentencing Commission in 1991, are used by federal judges to determine the appropriate level of sanctions for violations of federal law. The guidelines provide for greater leniency (i.e., avoidance of up to 95 percent of potential fines) to employers that not only adopt a code of conduct, but also implement ethics training programs.
For employers that are covered by the Sarbanes-Oxley Act of 2002 (SOX), Section 406 of the law promotes adoption of a code of ethics or conduct designed to deter financial wrongdoing, and outlines specific requirements for senior officers and executives.
Instilling a culture of integrity in an organization demonstrates to employees that senior management values ethical and moral behavior. In addition, the code informs employees about resources at their disposal when confronted with a complex compliance issue. Finally, it communicates to employees that there will be consequences for any deviation from the code.
Code of Conduct
[OPTIONAL: Include a statement from CEO, President or other executive explaining specific internal corporate goals for integrity and ethics, or governing principles.]
[Enter Employer Name] is committed to the highest standards of business conduct. Therefore, all employees, officers, directors and business partners must be committed to the highest standards of business conduct while doing their jobs for [Enter Employer Name].
[Enter Employer Name] values honest and ethical conduct and behavior. An employee should personally observe high standards of conduct so that the integrity of the [Enter Employer Name] is preserved and the employee's office reflects ethical conduct.
While this Code may not address all possible ethical and compliance concerns that an employee, officer, director or business partner may encounter in the workplace, it should be considered the primary source of information regarding conduct and ethics. All decision-making should be made in the spirit of the goals of integrity and ethics set forth in this Code.
This Code of Conduct applies to all employees of [Enter Employer Name], including interns, externs and other volunteers. Contractors and other nonemployees are not covered by this Code, but [Enter Employer Name] may impose similar ethical standards on such nonemployees, as appropriate. Employees should require adherence to such standards by personnel subject to their direction and control.
The standards of this Code do not affect or preclude other, more stringent standards required by law, by court order, or by the appointing authority.
An individual who becomes aware of a violation of this Code of Conduct, or any other policies, laws or regulations, must report the violation immediately to any of the contacts listed below under "Resources for Raising Concerns."
The framework of this Code is based on ethics and [Enter Employer Name]'s deep regard for a culture of integrity.
[Enter Employer Name] commits to:
- Honest and ethical conduct;
- Using good judgment;
- Taking responsibility for any mistakes and ensuring that these are corrected or addressed;
- Avoiding actual or potential conflicts of interest;
- Full, fair, accurate, timely and understandable financial disclosure in reports and documents; and
- Compliance with any and all applicable laws, rules and regulations.
Any individual covered by this Code of Conduct makes these same commitments by signing the acknowledgement form set forth below.
When making a difficult decision, an employee needs to consider the legal and ethical implications of an action or inaction. But the employee is not alone: a supervisor, manager, Compliance Officer, in-house counsel or HR is always available and ready to provide guidance and support. If an employee is confronted with an issue or problem and is unsure of what to do, then that employee must contact one of the contacts listed in Resources for Raising Concerns.
In addition, any interpretation or waiver of this Code's provisions must be discussed in advance with the contacts listed in Resources for Raising Concerns.
Failure to adhere to this Code may constitute grounds for disciplinary action for misconduct up to and including termination. Violations include:
- Failing to adhere to the provisions of the Code;
- Failing to report promptly a suspected violation of the Code;
- Encouraging another to commit a violation of the Code;
- Retaliating against another employee for reporting a concern; and
- Failing to implement the provisions of the Code according to one's role and responsibilities.
In addition, any deviation from performance standards or internal policies may result in disciplinary action.
Employee Rights and Communications
This Code in no way prohibits, limits or restricts employees from exercising any rights provided by law, including but not limited to any activity that is protected under Section 7 of the National Labor Relations act, which includes the right of employees to speak with others about the terms and conditions of their employment.
[Enter Employer Name] commits to protect and respect the privacy of its employees, clients, suppliers and contractors. In addition [Enter Employer Name] commits to compliance with all applicable privacy laws, including international requirements.
[Enter Employer Name] will maintain confidentiality of any reported concerns to the extent possible by law. The information will be shared on a "need-to-know" basis and will be investigated thoroughly and promptly.
Employees have the right to be free from retaliation and should receive support when taking any actions in furtherance of this Code's provisions.
Fair Employment Practices
[Enter Employer Name] values a culture of diversity, inclusion, dignity and respect.
[Enter Employer Name] commits to providing an environment free of discrimination, harassment and retaliation. In addition, [Enter Employer Name] commits to complying with all applicable labor and employment rules and regulations, at the federal, state and municipal level.
[Enter Employer Name] prohibits any unlawful behavior, including discriminatory, harassing or retaliatory conduct, on the part of its employees, officers, directors or business partners.
Health and Safety
[Enter Employer Name] commits to providing a safe and healthy workplace for all of its employees. [Enter Employer Name] will provide leadership and resources to employees in order to prevent hazards of any kind in the workplace.
In addition, the [Enter Employer Name] commits to engage in practices that will contribute to the health and safety of the community in which the business operates.
[Enter Employer Name] commits to protect the environment in which the business operates. [Enter Employer Name] pledges to engage in sustainable growth operations, conserve resources and reduce waste wherever possible.
Employees acknowledge that it is their responsibility to read, understand and comply with the Code of Conduct and to implement [Enter Employer Name]'s vision of an honest and ethical workplace with a culture of integrity.
Conflicts of Interest
Employees have a duty of loyalty to [Enter Employer Name]. Employees commit to acting in the interest of [Enter Employer Name] and avoiding any activities or relationships that would lead to a potential or actual conflict of interest, or to the appearance of a conflict of interest.
This includes the promotion or advancement of any [Enter Employer Name] business activities with outside parties in which an employee or an employee's family member or close personal friend has an ownership or financial interest.
Gifts, Entertainment and Payments
Employees have an ethical obligation to conduct business on competitive terms, and not based on any advantage procured by offering, making or receiving business amenities, gifts, entertainment and/or payments. Business amenities are anything of value or anything that provides value. Gifts include anything of tangible or intangible value, including cash, discounts and promotional items. Entertainment includes meals, event tickets or passes.
Offering valuable business amenities may create the appearance that business decisions are made on factors other than the terms and conditions of a contract, and could subject to the employee and the [Enter Employer Name] to liability for violating local, state, US and international laws regulating bribery and corruption.
Employees commit to follow all internal policies and practices on offering, making and receiving gifts, entertainment and payments, including all procedures regarding prior authorization for making gifts and offering entertainment on behalf of [Enter Employer Name].
Employees will exercise extreme caution when making any offers of business amenities to government officials and public sector employees. Employees commit to comply with federal, state and local laws with respect to off-duty political activities, including canvassing, fundraising and campaigning.
Use of [Enter Employer Name] Resources
Employees commit to using [Enter Employer Name] resources in a responsible and ethical manner. Employees pledge to protect [Enter Employer Name] resources from misuse, damage or theft. Employees commit to using social media during working time in compliance with all applicable laws, corporate policies and internal work rules.
Employees should follow security protocols, be aware of their surroundings and report any suspicious activity to [insert designated department, e.g., Security].
Employees commit to refrain from using [Enter Employer Name] resources for personal benefit or to promote a personal outside activity or interest. Employees should receive authorization prior to engaging in any outside activities, such as lecturing or writing, which could draw on [Enter Employer Name] proprietary or confidential information.
Employees must safeguard [Employer's] intellectual property, including copyrights, trademarks, patents, confidential business information, client lists and other valuable assets. Employees should use caution in everyday workplace activities, taking care to follow security protocols, refrain from discussing confidential business information in public areas and from sharing or transferring secured information to unsecured resources or to unauthorized third parties.
Employees have a responsibility to safeguard data and information privacy in accordance with applicable law and contracts, corporate policies and practices and internal work rules. Employees should access, use, share, transfer and retain any data or information only for legitimate business purposes and in a secure manner.
All employees have a responsibility to report potential violations of the Code in good faith.
In addition, employees should communicate any relevant suggestions including, for example:
- Ways that processes may be improved;
- Ethical issues that may be emerging and need to be included; or
- Possible additions to the Code based on factors such as business development or organizational change.
[Enter Employer Name] commits to full, fair, accurate, timely and understandable disclosures in periodic reports and compliance with all applicable rules and regulations.
Specifically, [Enter Employer Name] commits to comply with all applicable competition laws, anti-corruption laws, international trade controls and other applicable regulations. In addition, [Enter Employer Name] commits to implement money-laundering prevention methods in its business practices.
Employees commit to exercising prudence and responsibility when keeping financial records, preparing financial statements, submitting reimbursement forms and making public disclosures. Employees commit to following all applicable laws, regulations and accounting principles and to execute all duties and responsibilities with integrity and care.
[Publicly traded companies should include a reference to internal insider trading and stock tipping policies, with an introductory statement such as: [Enter Employer Name] commits to conducting business in an ethical manner in order to safeguard value for shareholders. [Enter Employer Name] and its employees take responsibility for individual actions by engaging in honest reporting practices, promoting transparency and prohibiting unethical and/or unlawful trading practices.]
Resources for Raising Concerns
Individuals who need guidance may contact any of the following numbers for assistance. If anyone is ever in doubt as to how to approach a business transaction or decision, he or she should contact the below individuals or entities for assistance. In addition, if any employee is in doubt concerning the proper application of this policy, he or she should promptly discuss the matter with any of the below contacts or departments.
[Include Compliance Committee information, hotline number and list of contacts within the organization (e.g., HR, Legal and other relevant departments.]
Acknowledgement and Consent Form
I acknowledge receipt of the Code of Conduct. I understand that it is my responsibility to comply with the requirements in this Code and any revisions made to it by [Enter Employer Name]. I agree to comply with the principles and standards set forth in the Code.
Employers may wish to consider adding links to other relevant sources of information for employees, such as an intranet site containing contacts or policies, or an online employee handbook.
For global employers, information on applicable international laws and regulations, foreign currencies or foreign accounting principles should be referenced in the code of conduct.
Training programs on the code of conduct should be comprehensive. Employers should invest in training on the code as part of new hire onboarding as well as in conjunction with regular ethics training. In this manner, employees and supervisors may become more adept at identifying potentially conflicted situations. Recognizing situations that may trigger ethical concerns (e.g., misuse of confidential business information or competitor relationships) may lead to more robust compliance with applicable laws. Activity-based training often proves more effective than passive learning modules.
An employer may wish to have employees review the code and execute the acknowledgement form on an annual basis.
An employer should assess its own risks with respect to ethical issues and include provisions in its code of conduct that specifically reference those risks. For example, an employer with operations in technology should emphasize information security and data privacy. Those in financial services may wish to stress fiduciary duties.
Employers should be particularly mindful of the following:
- Organizational changes and subsidiary relationships that may alter applicable legal or ethical obligations, or lead to more complex organizational conflicts of interest;
- Third-party activities that may lead to ethical concerns or liability risks, such as gifts and entertainment practices, differing confidentiality practices or potential human trafficking concerns; and
- Emerging risks that may affect a particular industry or organization, and the entity's innate risk tolerance.