The Federal Sentencing Guidelines & How to Use Them to Create an Effective Compliance Program

July 26, 2021

There are many reasons to make compliance a priority in your company.

You need to comply with some standards to keep your employees safe at work. Compliance can help your businesses maintain a good reputation with the public. A compliant company culture can even raise your standing within your industry, which can help you attract hire-quality professionals and improve your company as a whole.

However, the biggest reason why most companies adhere to compliance standards is this: they want to avoid the consequences of non-compliance.

Non-compliant companies can be subject to lawsuits, regulatory fines, and even criminal sentencing. But what exactly is in store for you if your company commits wrongdoing? Here’s what you need to know about the U.S. Federal Sentencing Guidelines.

What are the Federal Sentencing Guidelines?

The United States Federal Sentencing Guidelines are a set of standards federal courts use to determine the appropriate sentence for anyone convicted of a felony or Class A misdemeanor. What’s important to note is that an organization can be held criminally liable for the actions of an employee which can impact your entire business.

The guidelines assign each type of crime a “base offense level” based on its severity. For example, trespassing is a level 4 offense, while kidnapping is a level 32 offense (though it’s important to note that offense levels can increase if a crime is particularly heinous).

While these standards are common practice for criminal cases, it is important to note that they are not mandatory. The Supreme Court ruled in 2005 (United States v. Booker) that mandatory sentences violate the right to a trial by jury. However, if you or your organization is convicted of a felony or Class A misdemeanor, it’s safe to say that you’ll probably receive a sentence within the range suggested by the FSG.

How does the FSGO Relate to Your Compliance Program?

If you’re designing a compliance program for your business, you’ll want to pay special attention to the Federal Sentencing Guidelines for Organizations (FSGO). This set of guidelines provides sentencing ranges that are specific to crimes committed by organizations, and it also tells organizations how to qualify for reduced sentences.

According to the FSGO, companies that have “an effective compliance program” will face reduced consequences if they’re convicted of an offense. This is reason enough to put real thought and effort into your compliance program — but how do you know if the FSGO will consider your program “effective.” Don’t worry: it’s all spelled out for you in the guidelines.    

Criteria for an FSGO Compliance & Ethics Program

When a business designs its compliance program, it’s very important to review the FSGO standards and make sure your program aligns with each one. If your compliance program is going to be “effective” you need to have all the following criteria:

Preventative Procedures

The best way to comply with federal and industry standards is to avoid wrongdoing altogether. Your compliance program should have standards and procedures in place that deter bad actors and prevents your company from committing an offense.

Program Oversight

Every compliance program needs to fall under the jurisdiction of some oversight committee. Ideally, your oversight committee should be made up of high-level management, or even the company Board.

Careful Authority Appointments

Who has the authority over your compliance program? You should be very careful about to whom you delegate this power — and perhaps more importantly, you must show in your compliance program that you’ve taken “due care” to appoint this position.

Effective Training

A compliance program can never be effective if your employees don’t remember their training. This is why it’s wise to consult a third-party vendor when creating your compliance training curriculum. Their tried and tested methods can help you engage your team and make that training stick.

Effective Auditing and Reporting

A good training module demonstrates that your company can “talk the talk” regarding compliance. However, your program can’t be effective until you also “walk the walk.” Make sure there are measures in place to evaluate and update your training curriculum, and always have some sort of reporting method (like an anonymous ethics hotline) where employees can report misconduct.

Company-wide Compliance Culture

Another way to “walk the walk” is simply to demonstrate ethical behavior and promote a compliance-based culture. Once you have those auditing and reporting methods in place, you must make sure that your workforce knows about them! Take the time to listen to employees when they have something to say — and always investigate reports of non-compliance when they occur.

Fast Response

When you do hear of an incident in your workplace, it is absolutely vital that you act quickly. Take the appropriate steps to respond to the report. Then, make a thorough assessment of your compliance program and adjust it to prevent the incident from happening again. This is the best way to ensure that your compliance program is thorough, up-to-date, and tailored to your company.

How to Design & Implement an FSGO Compliance-Based Ethics Program

We’ll admit, reading over that list of criteria can be overwhelming. How are you supposed to fit all those requirements into your compliance program? For some, the answer is simply to call in the experts — also known as the third-party vendor.

Compliance companies can be incredibly useful for designing training programs, establishing hotlines, checking licenses (if necessary), and much more. With help from these professionals, a business can be confident that its compliance program is effective enough to satisfy the FSGO and also prevent non-compliance overall.

But if you decide to create your compliance program on your own, you can still come up with something that’s effective. Your company should create a compliance committee to work on the program together — and if your organization is large enough, you’ll probably need to hire a compliance officer. Then, you’re going to dedicate time, resources, and man-hours to this important project.

Must-Haves in Your Compliance Program

As you design your compliance program, be sure to analyze each element, from the committee appointees to the signage you post in the office break room. Make sure that they all meet the FSGO standards and are helping deter or prevent non-compliance. Whether you work with an outside vendor or keel your compliance program in house, the finished product needs to have the following:

  •     High-level personnel who exercise oversight
  •     Clear written policies and procedures
  •     A training curriculum
  •     Multiple lines of communication
  •     Well-publicized disciplinary guidelines
  •     Internal compliance monitoring
  •     A team trained and appointed to respond quickly and appropriately to detected offenses
  •     Regular risk assessments and audits

If you can check each of these boxes, congratulations! Your company has an effective compliance program and is on its way to being an organization rooted in ethics.

How to Get Started

If you want to learn more about designing a compliance program — or if you’re looking for a team of professionals who can help you — contact ComplianceLine today. Our services and expert staff can help you create the perfect program for your organization.