Organizations Must Abide By Federal, State, And Local Laws

Organizations Must Abide By Federal State And Local Laws And Regulat

Organizations must abide by federal, state, and local laws and regulations. Breaking the law may have consequences such as fines, lawsuits, and even shutdown of corporate facilities. To maintain compliance, organizations develop policies that guide the ethical behavior of employees. In order to explore the differences between laws and policies, please discuss the following: Describe the difference between a policy and a law and provide an example of each. Does a company policy override a local, state, or federal law or does a local, state, or federal law override a company policy? Provide justification for your reasoning. Research and describe an example of an incident when a company broke a federal, state, or local law. What were the consequences of breaking the law? What policies did the company change because of the incident?

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Understanding the distinctions between laws and policies is fundamental for organizations aiming to maintain legal and ethical compliance. Laws are mandatory regulations enacted by governmental bodies at federal, state, or local levels, and they carry enforceable penalties for violations. Policies, on the other hand, are internal guidelines established by organizations to govern employee behavior and operational procedures. While policies aim to ensure ethical conduct and align with legal standards, they are not legally enforceable outside the organization unless they implement or reinforce compliance with legal requirements.

An example of a law is the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex, or national origin. This federal law mandates equal opportunity employment and is enforced by the Equal Employment Opportunity Commission (EEOC). An example of a company policy would be an internal anti-discrimination policy that elaborates on the company's commitment to diversity and outlines procedures for reporting grievances. Such policies are created internally to promote ethical standards and adherence to legal requirements, but they are not statutes and do not have the authority of law outside the organization.

Regarding the precedence of laws and policies, legal statutes override company policies. A company policy cannot legally supersede federal, state, or local laws, as compliance with applicable laws is mandatory irrespective of organizational policies. If a policy conflicts with a law, the law takes precedence, and the organization must alter its policies to remain compliant. For example, if a company policy restricts employees from taking leave beyond a certain period, but federal law like the Family and Medical Leave Act (FMLA) mandates up to 12 weeks of unpaid leave, the law overrides the company's policy, and the organization must comply with the law.

An illustrative incident of legal violation occurred with the Volkswagen emissions scandal. In 2015, Volkswagen was found to have manipulated emission testing results to meet regulatory standards, effectively violating federal environmental laws in the United States. The consequences for Volkswagen included substantial fines—over $30 billion in settlements and penalties—and criminal charges against executives. The scandal also led to a significant overhaul of company policies related to compliance and ethics. Volkswagen implemented stricter internal controls, transparency initiatives, and compliance training programs aimed at preventing future violations. This incident underscored the critical importance of legal adherence and fostering a corporate culture committed to ethical conduct and regulatory compliance.

Overall, the relationship between laws and policies hinges upon legal supremacy, where laws establish mandatory standards that organizations must follow, and policies serve as internal mechanisms to achieve compliant and ethical behavior. Organizations must stay vigilant to legal updates and ensure internal policies are aligned with current legal requirements to avoid violations, penalties, and reputational damage.

References

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  • Environmental Protection Agency. (2015). Volkswagen Settlement: Facts and Figures. https://www.epa.gov/enforcement/volkswagen-legal-settlement
  • Gunningham, N., Kagan, R. A., & Thornton, D. (2003). Shades of Green. Law & Policy, 25(4), 503-532.
  • Legal Information Institute. (2023). Environmental Law. https://www.law.cornell.edu/wex/environmental_law
  • O’Reilly, C. A., & Pfeffer, J. (2000). Hidden Value: How Organizations Measure, Value, and Report Intangible Assets. Harvard Business Review, 78(2), 124-132.
  • U.S. Department of Labor. (2022). Family and Medical Leave Act (FMLA). https://www.dol.gov/agencies/whd/fmla
  • U.S. Environmental Protection Agency. (2022). Clean Air Act. https://www.epa.gov/clean-air-act-overview
  • Venturelli, A., & Stanimirovic, R. (2020). Corporate Ethical Policies and Legal Compliance. Business Ethics Quarterly, 30(3), 347-370.
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