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Is Ethics Training Really Necessary?

By Carolyn Worthington and Carol Rovello

A question often asked by employers of all types is "Are we required to provide employee training on Ethics?" If your organization is a publicly held company or federal contractor, the answer is an unequivocal YES! The American Competitiveness and Corporate Accountability Act of 2002 (Sarbanes-Oxley) and Federal Acquisition Regulations govern ethics requirements for publicly held and federal contractors, respectively. In addition, at least two Sarbanes-Oxley criminal provisions apply to nonprofit organizations: provisions prohibiting retaliation against whistleblowers and prohibiting the destruction, alteration or concealment of certain documents or the impediment of investigations. These regulations require ethics training and communications as part of a comprehensive ethics program.

At SWS, we strongly recommend a comprehensive ethics program for all organizations in order to protect both their assets and reputation. While it can be argued that training may not actually be required for these other organizations, the threat of a potential fine and penalty has made ethics/code of conduct training an imperative for most organizations.

The Federal Sentencing Guidelines (FSGs) apply to "all organizations, whether publicly or privately held, and of whatever nature, such as corporations, partnerships, labor unions, pension funds, trusts, nonprofit entities, and government units." (1)  It should be noted that the U. S. Sentencing Commission is set to submit an amendment to the Fair Sentencing Act to Congress by May 1, 2011. Look for an update from us on this in the Spring.

It was recently reported that while 86% of employers surveyed have an ethics or code of conduct policy, many remain unaware of the need for ethics and compliance training. And, although employers can be held liable for illegal conduct by their employees, an effective ethics and compliance program, including training, can substantially reduce potential fines and penalties for criminal violations.Fines against employers have grown dramatically in recent years, with the average sanction now at $49 million.

For more detailed information about ethics programs, refer to our previous article on Building an Ethical Organization. Business Owners Article or HR Professionals Article

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Carolyn Worthington serves as a Senior Consultant for Human Resources on the Strategic Workplace Solutions Team.



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Carol Rovello is the President of Strategic Workplace Solutions, Inc.




  2. 2. Webinar by ELT, Inc, in partnership with SHRM, entitled Is Employee Ethics Training Mandatory? October 6,2010.

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