Personal and business risk: criminalization of business law and the use of attorneys

Most managers are aware of the legal dangers facing sales and marketing employees because triple damage awards and criminal convictions for price-fixing and market division are easily remembered. Similarly, Enron and other recent stock scandals remind businesspeople of the dangers of false financial reporting. HR professionals, however, are less aware of the legal risk in their area. For example:
  • The secretary of labor can institute criminal prosecution for willful violations of the FLSA, and repeat offenders may be imprisoned for up to six months.
  • The Immigration Reform and Control Act provides for fines, and repeat offenders again risk prison sentences.
  • Criminal charges frequently grow out of workplace safety violations that result in employee deaths, and even resisting or blocking EEOC agents can be criminally prosecuted.
  • Even agreements among HR professionals about hiring standards and starting pay may be both civil and criminal violations, false filings can violate the U.S. mail fraud statute, and so on.
The U.S. Sentencing Commission issued amended sentencing guidelines this summer with the goal of encouraging companies and their employees to recognize and avoid criminal violations before they occur. It also encourages employees to voluntarily report violations to the appropriate authorities. Self-policing and self-reporting, however, also carry risks and benefits. The higher the level of self-policing and self-reporting, the greater likelihood of a reduced sentence for the reporter.

Finally, corporate executives are now required to certify the accuracy of financial reports, which are often drawn from reports from various areas of the company, including HR. In short, HR is no longer a haven from personal legal risk. Read More...