Code of Conduct Policy
Author: Marta Moakley, XpertHR Legal Editor
When to Use
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.