Corporate Compliance Plan

Corporate Compliance Plan for Riordan Manufacturing
Riordan Manufacturing is a highly successful corporation that came into being almost twenty years ago. It has grown to have three locations in the United States and recently acquired a fourth location in Hangzhou, China. Riordan Manufacturing is a wholly owned Fortune 1000 company with revenues of over one billion dollars a year. Because of this rapid growth, it has become necessary to look at the practices and procedures of the company, to be sure that all federal, state and now, international laws and regulations are being properly followed. These laws and regulations can be costly if not adhered to, not only in lost revenues and reputation, but also lost opportunity by not using these same regulations to protect us. What follows is an overview of Riordan Manufacturing??™s processes and what can be done to better insure compliance.
Position of Corporate Compliance Officer:
It is recommended that the position of Corporate Compliance Officer be established, to ensure that all employees are aware of our Code of Ethics and administer the Corporate Compliance Program. This position would report directly to Dr. Riordan, the President of Riordan Manufacturing, and at times to the Board of Directors. The Corporate Compliance Officer would be responsible for overseeing all aspects of the compliance which would include designating the appropriate personnel to administer the program, proper training be given to all employees, investigate any reports of suspected violations, establish and maintain a system to implement and administer the program, and to make recommendations that will further enhance compliance. It is also this office??™s responsibility to remain current on all federal and state regulations and insure that the company is aware of and correctly adhering to code.Legal:
There are three main topics in this area: formation and execution of contracts, litigation, and the legal requirements for the protection of intellectual property. Riordan Manufacturing has been represented by the law firm of Litteral & Finkel since its inception. All contracts have been reviewed and approved by Mr. Bradford of this law firm and this practice has proven successful. It is recommended this course continue to be followed and that we continue to be sure that there are no ambiguities that can later lead to a breach of contract by either party.
It is also strongly recommended that all contracts have Alternative Dispute Resolutions (ADR??™s) built into them whenever possible. The different ADR??™s may include, but not be limited to, negotiation, mediation and arbitration. The procedure for utilizing ADR??™s should be included in every contract. This will save the company a great deal of money that would be lost in litigation through the courts as well as the time and productivity lost through this process.
Riordan Manufacturing has also relied on the services of Litteral & Finkel to file all patent and trademark applications. It is important to continue this practice in that this company has always been on the cutting edge of plastics technology and its intellectual property needs to be protected. Along these same lines patent searches are to be carried out when developing new processes and products to help us avoid any possible patent infringement cases. Employment contracts with employees in Research and Design need to have clauses in them that state the penalties for the sharing of information with others and also the breaking of any security policies the company has instituted. It is also essential that no-compete clauses be included in the employment contracts of those that have access to the company??™s trade secrets. These policies would also apply to some of the employees in the manufacturing sector as well that have access to our intellectual property. It is currently mentioned in the employee hand book that this policy is in place and needs to be continued.
Protection of Tangible and Intellectual Property:
It is very important that Riordan Manufacturing protect both its tangible and intellectual property. All tangible property is to be properly marked with a sequential number and the company logo indentifying company ownership. The numbers are to be properly catalogued showing what the item is, as well as its location. An annual inventory is to be done to ensure that all property is accounted for. As property is moved to another location, sold or otherwise disposed of it is to be properly accounted for and noted in the catalogue.
The current process of manufacturing inventory shall remain at this time. It includes inventorying raw materials as they arrive, keeping an inventory of manufactured products and keeping inventory of products as they are placed on carriers for final delivery.
Intellectual Property (IP) is of particular importance since this company relies on new plastics technology and also the fact that it custom manufactures parts for various industries; therefore the need for security in the R&D department is extremely important. Proper firewalls are to be installed on all company computers. Only authorized employees are permitted on the premises and must show proper company identification. No company computers, software, or software storage device is to be removed from the company??™s physical property. Any employees found not complying with these regulations, or sharing any private company information shall be terminated and prosecuted if deemed necessary.
Protection of intellectual property in China is more difficult. The strongest piece of international legislation is the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIP??™s), which was agreed to by the major industrialized countries to help protect IP rights in lesser developed countries. Since this really lacks any real power in China it is recommended that exposure of any intellectual property be kept to a minimum outside of the United States.
It is also necessary that we when we contract with our customers or outside suppliers that it be included in the agreements that no information that could be construed as Riordan Manufacturing Intellectual property be divulged to any other entity. If such a leak were to occur, then that company would be considered in breach of contract and penalties would follow.
Human Resources:
One of the areas of greatest exposure for litigation is in the area of the recruitment and treatment of employees. It is imperative that Riordan Manufacturing continue to follow Title VII of the Civil Rights Act of 1964, which covers discrimination of employees based on a person??™s race, color, national origin, religion, or gender. The Supreme Court has also found sexual harassment to fall under this act. Pregnancy discrimination was later added as amendment to Title VII. It is also important that all provisions of the Fair Labor Standards Act are followed. One of the primary concerns is that employees are properly categorized so that there is no infraction regarding whether the position was exempt from paying overtime.
The current employee handbook addresses the primary areas that may be of concern. Mention is made that Riordan Manufacturing is an Equal Opportunity Employer and when one examines the employee demographics it is evident that this practice is being followed.
The possibility of medical examinations is also included which as long as the requirement for an examination is made after an offer of employment then the American??™s with Disability Act is being properly followed. It is also current policy that reasonable accommodations are made for those with certain disabilities which also follows the letter of the law.
Mention is also made regarding what constitutes sexual harassment and what is to be done by the employee to report it. It is important that more signifigance be given in this area. There should be a separate section regarding what constitutes sexual harassment and how it is to be reported that is to be signed by each employee. Follow-up training should be given on an annual basis and then signed-off on by each employee., There is enough currently being done to legally protect the company as it is, but it is more important to provide a comfortable work environment in order to get the utmost in productivity from the workforce.
There is also no mention in the employee handbook regarding an employee voice system to report violations of company policy or other concerns an employee may have. If an employee is feeling uncomfortable regarding a certain practice they see occurring, or realize that company policy is not being followed there needs to be a known and comfortable way to report it. It is also the company??™s responsibility to respond to the situation and correct it if necessary. Along these same lines there appears to be no employee dispute resolution system in force. Recommendation of a peer review system for internal dispute resolution should be initiated.
All managers need to be trained as to how the laws impact the decisions they make regarding an employee that could be considered as discrimination, or harassment. All personnel involved with the hiring, promoting, disciplining, or terminating of employees need to be cognizant of the laws and the repercussions that may come to the company if it appears the letter or intent of the law was broken.
The privacy of individuals is a primary concern in today??™s world. One weakness that was found on inspection of the HRIS system is the way employee information and files are kept that could lead to infringement of an employee??™s privacy. Under the current system individual managers, employee relations specialists, and the compensation manager keep employee files. This practice can leave the company liable for the illegal dissemination of private information to outside individuals that can lead to litigation. All hard copies of employee files are to be kept in a centralized area in each of the company??™s four locations. Information may be kept on spreadsheets or other computer software that cannot be accessed by others. Managers are currently required to track employee??™s absences under the Family Medical Leave Act. It is recommended that the Human Resource department take a more active approach in this area. Assurance needs to be made that the employee has a valid claim to be absent under this act and proper documentation by the employee needs to be provided. The employee is also to give proper notification as to when they will be leaving, if possible, and to keep the company informed as to their return. We must do what is possible to provide a comparable position and pay upon the employees return.
Occupational Safety:
Currently Riordan Manufacturing has a Safety Manager and one Safety Technician at its three manufacturing plants, and the company is to be commended on the excellent safety and compliance record it has maintained. The Safety Manager is to remain current on any new specific duty regulations handed down by OSHA. All locations and equipment that may be affected by new regulations are to be inspected, and changes are to be made if required. The company also has a general duty to maintain a safe work environment, so the safety technicians are required to report any complaints or recommendations made by the workers to the Safety Manager, and if the complaint or recommendation is deemed necessary, then the safety technician is to make the repair or alteration decided upon. It is expected that employees will not in any way impede an onsite inspection by OSHA. If a violation is found the Safety Manager and Corporate Compliance Officer are to be notified. Any recommendations made by OSHA to resolve the infraction are to be followed.
Riordan Manufacturing carries workers compensation insurance in each of the states in which it does business, therefore its employees are eligible for worker??™s compensation if it is determined they were injured while on the job. There is no corresponding state program at the plant in China, however there are plans being made to incorporate an assistance program in case of injury to an employee.
Environmental Rules and Regulations:
It is also the Safety Manager??™s responsibility to remain informed on all current and updated regulations enacted by the federal Environmental Protection Agency, as well as the state EPA??™s of Georgia, Michigan and California, where the company operates. Proper monitoring equipment is to be incorporated at each location with inspections to be performed by the safety technicians when required. Any issues of non-compliance are to be immediately reported to the Safety Manager and Corporate Compliance Officer. If the situation is determined to be even a possible breach it is to be reported to the appropriate EPA office and full assistance is to be given regarding any inspections. Any repairs or system changes deemed necessary to repair the problem are to be initiated.
Product Liability:
With many of the products that Riordan Manufacturing makes, along with the product licenses that have been sold, the possibility of a product liability case arising is very strong. All products that we design and manufacture must be tested and retested in order to perform as we have promised. This also includes providing the necessary and proper directions as to how to use the product, insure the product is properly packaged and that if there are any possible dangers or side effects from use of the product that the proper warnings have been printed and labeled. Due to strict liability standards the company must also be sure that all subcontractors are performing up to our quality standards. Riordan Manufacturing also manufactures custom plastic parts that are used in other companies??™ products, so we must be as certain as possible that they too are following proper quality standards.
International Law:
It is the Vice President of International Operations responsibility to ensure that the company is compliant with all international issues. China presents its own set of problems when it comes to manufacturing. Raw materials and any sub-assemblies contracted for with any foreign company need to be rigorously inspected, before being used in any of the company??™s products. It is well known that standards for material and parts from foreign companies are many times not equal to those originating from the United States. Use of substandard raw materials and products definitely leaves Riordan Manufacturing open to product liability claims.
It is also important that plant operations in China be closely monitored. Inspections by Chinese authorities regarding safety, environment and employee protection issues tend to be very lax. It is expected that these issues be given the same amount of consideration in China, as they would be given here. It is expected that our company be a good steward of the environment and that its employees are properly respected.
Governance:
The Riordan Manufacturing Board of Directors sets overall policy in the management of business affairs in accordance with state corporation requirements, along with its Articles of Incorporation, and its By-Laws. It is responsible for the oversight of the company??™s management staff.
The Board shall be comprised by a varying number of members possessing different talents such as industry knowledge, financial literacy or other talents deemed necessary. In order to satisfy the Sarbanes-Oxley Act it is required that there also be an audit committee which must be comprised of board members that are independent of the company and therefore receive no monetary compensation from the company. At least one member of the audit committee must be a financial expert either through education or experience.
The Board is also responsible for the appointment of the officers of the company as well as the removal of its officers if it is felt that they are not acting in the best interests of the company. The directors and officers owe the company a fiduciary duty of care, which means they will act in good faith and with the best interests of the company. Directors and officers are also to act with the fiduciary duty of obedience, which means they must act within the laws of the state, the articles of incorporation and its by-laws.
Another stipulation of the Sarbanes-Oxley Act is that proper accounting of the company??™s financial status be reported. This financial statement is also to be accompanied by a statement filed by the CEO and CFO that the financial statement is a true and accurate record of the company??™s financial position. A knowing and willful violation is punishable by up to a maximum of twenty years in prison and a fine of up to five million dollars. At the present time the Finance and Accounting department has had difficulty in compiling financial information from all of the company??™s locations due to the lack of compatibility of the company??™s financial reporting systems. It is recommended that these problems be quickly rectified in order that accurate financial accounting may be assured. It is important that the CEO and CFO can knowingly attest to the accuracy of the company??™s financial statement
References
Cheeseman, H.R. (2010). Business Law, Legal Environment, Online Commerce, Business Ethics, and International Issues, Seventh Edition.
Apollo Group, Inc.. (2006). Virtual Organization: Riordan Manufacturing. Retrieved from Apollo Group, Inc., LAW/531 website.
U.S. Depart of Transportation, (2007). Corporate Compliance Program Model. Retrieved from www. Fhwa.dot.gov/construction/cquit/compmodl.cfm. Retrieved on August 13, 2010.

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