Guidance for Regulatory Compliance
What is regulatory compliance?
Regulatory compliance is a broad term, making it challenging to understand the scope of regulations with which your business must comply. First, you need to understand your company’s unique compliance landscape. While your goal should be to fully abide by the policies, regulations, and laws relevant to your company’s specific business practices, competing priorities and limited budgets make this a difficult goal to achieve. These regulations can be in place to protect sensitive information, ensure human safety, preserve the environment, and more. Regulatory compliance is especially important in an industry where strong oversight is the norm. This includes banking and financial services, healthcare, and information technology providers, among others. We can help small business owners triage regulatory burdens, set priorities, make a comprehensive compliance plan, and establish compliance programs.
What areas does compliance cover?
Regulations cover an extensive scope of potential problems. Environmental statutes exist to control how businesses dispose of waste, emit pollutants, and use natural resources. Financial regulations establish how businesses raise and invest capital, and protect consumers and stakeholders from financial fraud. Data protection statutes control the collection, use, and storage of personal data. Health and safety regulations provide guidance to ensure a safe and healthy workplace for employees. Brick-and-mortar businesses likely must comply with regulations based on the Americans with Disabilities Act. Employers must comply with regulations related to discrimination, wages, work hours and conditions, and family leave.
Who sets these regulations?
Legislatures such as Congress (at the federal level), Virginia’s General Assembly (at the state level), or Richmond, Virginia’s City Council (at the local level) pass laws that authorize the executive branches of these governments (the President, Governor, or Mayor) to create regulations that give teeth to the law. Laws are written without the granular detail essential to making them applicable to daily life. Those granular details are found in the regulations drafted and approved by the executive branch agencies such as the U.S Department of Agriculture, Virginia’s Department of Agriculture and Consumer Services, and Richmond’s Department of Parks, Recreation and Community Facilities. These regulating bodies study their various subject matters and use that research in drafting regulations that they then publish for public review and comment before the regulations become final. Often, in response to proposed but not-yet-final regulations, business owners may choose to file formal comments that may influence the regulatory body’s final version. The business attorneys at Dunlap Law can draft comments that clearly express your concerns in compelling language.
Aside from government regulations, some industries are also impacted by the self-governing work of private trade or industry associations. While these regulations do not have the force of law, failing to comply can generate adverse consequences. One example of this is well-known to any business owner who accepts debit or credit card payments: “PCI Compliance” is the short-hand name for regulations created by a private organization, the Payment Card Industry Security Standards Council. Failure to complete and pass PCI Compliance testing will cause your company to lose its ability to accept card payments.
Many entities define regulations and enforce them. Here are some examples:
- Healthcare. The healthcare industry follows regulatory and compliance rules set forth under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This federal law created national standards to protect sensitive patient health information from being disclosed without the patient’s consent or knowledge. In addition, healthcare facilities are accredited by The Joint Commission, a nonprofit organization that accredits more than 20,000 US healthcare programs that ensure quality healthcare for patients and improve patient advocacy.
- Food and beverage. The Hazard Analysis and Critical Control Point (HACCP) rule set governs this industry. The National Advisory Committee on Microbiological Criteria for Foods (Committee) offers the HACCP as an effective and rational means of assuring food safety from harvest to consumption. Seven basic principles employed in HACCP include hazard analysis, identification of areas of sanitation control, establishing critical limits, monitoring procedures, corrective actions, verification procedures, and record-keeping and documentation. Under the direction of the FDA, compliance with HACCP means a safer food supply for handlers and consumers.
- Cybersecurity. Nonstop technology in our cloud-based world means strict regulatory compliance regulations to protect companies and individuals. The National Institute of Standards Technology (NIST) Special Publication 800-53 is a federal government-approved guideline focusing on security protocols. U.S. federal agencies commonly implement NIST frameworks for security compliance and implementation of their information security management systems. Control Objectives for Information and Related Technology (COBIT) is managed by the Information Systems Audit and Control Association (ISACA) and provides policies and procedures across strategy, innovation, risk management, asset management, and more. It is a globally accepted standard used by major corporations and small businesses alike.
You must be able to answer this question: What is regulatory compliance for my company? The regulatory landscape varies for each company. It is your responsibility to identify those regulations and oversee adherence to those rules that apply to your business. Dunlap Law’s business attorneys can help.
What are the advantages of proper regulatory compliance for organizations?
A business with strong regulatory compliance practices reaps many rewards:
- You avoid the negative consequences of government enforcement actions.
- You are less likely to suffer business disruptions.
- Odds of harming employees or other stakeholders go down. As a result, your liability and reputational damage risks go down too.
- You won’t have to break down and rebuild systems in the future in order to bring them into compliance.
- Your business is a cleaner prospect for acquisition and, likely, has a higher value.
Compliance statutes are not intended to hinder business. Adherence to compliance requirements may actually increase the efficiency of your organization. This can be achieved with streamlined processes, standardized operating procedures, and structured data storage that controls access. These can all work together to increase productivity and reduce costs over time.
When your business hires Dunlap Law for regulation and compliance management, it indicates to your stakeholders and clients that protecting their investment and welfare is a top priority. It takes time to build the right reputation for your company, and following relevant rules and regulations infuses that reputation with integrity and ethics.
What is regulatory compliance failure or inadequate regulatory compliance?
Failure to comply with established statutes may result in several damaging consequences, including security breaches, license revocations, financial penalties, or harm to employees and the environment that could give rise to civil liability. These consequences can cost millions of dollars, along with irreparable damage to your business reputation. Here are three specific examples of noncompliance repercussions:
- The Occupational Health and Safety Administration (OSHA) fined a Florida construction firm for providing safety instructions in English only to its Spanish-speaking employees. Following a serious onsite injury, the company was fined more than $50,000 for failure to provide adequate training.
- An IT firm fired an employee for excessive absences the day he returned to work following leave approved under the Family Medical Leave Act. The employee sued, and the firm was fined over $100,000 plus damages, attorney fees, and prejudgment interest for FMLA violations.
- The Security and Exchange Commission (SEC) fined Citigroup $285 million for failure to comply with statutes that defrauded investors of about $1 billion in collateralized debt obligations tied to the housing market.
Many factors contribute to noncompliance, including lack of awareness, human error, and intentional disregard. Regulatory compliance is an ongoing process. Unfortunately, it is not an item that can be checked off and put away. Organizations must be vigilant in regulatory compliance efforts. Compliance requirements are constantly changing, and noncompliance is always a threat. Dunlap Law can help you reduce your noncompliance risks and maintain adequate protection for your business and its stakeholders.
How does my business formulate a regulatory compliance policy?
It is essential to seek legal advice when establishing a regulatory compliance program. Missing a step can have real financial and even criminal effects. At Dunlap Law, we partner with our small business clients to:
- Map your compliance needs. What is the regulatory compliance landscape applicable to your business? Your goals may include training your workforce, maintaining safety protocols, reducing risk, or maintaining accreditation.
- Establish parameters. We understand your expectations, determine your limitations, and ascertain how your regulatory compliance policies will apply.
- Draft policies and compliance plans. We will ensure that you have policies and a plan that fits your company’s operations and industry.
Develop compliant and standardized operational practices.
What is the function of a compliance officer in implementing a regulatory compliance policy?
Regulatory compliance is often overseen by a compliance officer. An individual in this role ensures that business operations are in full compliance with legal statutes and industry standards, as well as corporate and internal standards. A compliance officer manages risk to avoid legal or financial consequences, maintains an organization’s reputation for ethics and integrity, and takes responsibility for ongoing compliance policy changes. A compliance officer can be in-house, or a consultant performing these tasks on behalf of your organization. We will work with your compliance officer.
What is the cost of regulatory compliance?
The cost of establishing and maintaining regulatory compliance varies according to industry and business size. For example, the amount spent on healthcare regulatory compliance for an average hospital is $1,200 per patient admission. Firms in the financial industry spend $10,000 per employee annually on regulation and compliance. The cost of compliance, however, is eclipsed by the potential cost of noncompliance. For most small businesses, compliance is nowhere near this costly and it is a fraction of the likely costs from noncompliance. We can help you understand the costs, set priorities, and make a compliance plan that fits your budget.
Why is regulatory compliance important for my business?
Regulatory compliance management from Dunlap Law can maintain the financial health of your business. The financial security of your business is vital. Failure to comply with a regulation can result in fines of a few thousand to a few million dollars. In the Commonwealth of Virginia, OSHA levied nearly $2 million in fines on businesses in 2022 alone. Failure to comply with a regulation can mean lawsuits against your company. In 2019, over 200 local governments in the United States filed suit against businesses for noncompliance with the Americans with Disabilities Act (ADA). U.S. businesses spend over $2 billion dollars annually defending themselves against lawsuits. Dunlap Law can help you avoid these costly mistakes.
Regulatory compliance management from Dunlap Law can cultivate a reputation of integrity and principle. Compliance laws and regulations are created to maintain uniformity and fair competition. Adherence to these laws shows your stakeholders you are serious about their material investment in your success. Compliance offers a sense of security, so your workforce and customers know their data is safe. Your employee morale increases. Your market share increases. Regulatory scrutiny of your company also decreases over time with a continuous record of compliance.
Don’t let the challenge of regulatory and compliance laws get in the way of your business success. Dunlap Law can keep your business on the right side of the law. We help businesses comply with regulations that govern their operations. We can perform a risk assessment and develop and implement a compliance program that helps you avoid costly mistakes. Our clients appreciate our commitment to pursuing the gold standard in regulatory compliance. If you’re looking for answers to what is regulatory compliance, we have the knowledge and resources to lessen the impact of complex regulatory requirements, enabling you to concentrate on your business.
Call Dunlap Law today at 804-931-1158 for proactive solutions to regulatory compliance.