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Compliance Programs
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Vol. 1, No. 4 - September 2015
Compliance Programs
Compliance Programs: When They Work and When They Don't
Richard PreissPeckar & Abramson P.C., Partner

Within today’s highly regulatory environment, it is imperative that construction companies develop a structured and well-defined compliance program to avoid legal risk. As industry regulations at the federal, state and local levels continue to expand in oversight, construction companies and their employees are at greater risk of
failing to conduct business in compliance with these laws and regulations. The consequences of non-compliant conduct can reach shocking levels, including the loss of business opportunities, forfeiture of government contracts, costly civil lawsuits, and even criminal prosecution. By developing a sound and well-defined compliance program, companies can effectively minimize these risks and maintain their reputation as responsible corporate citizens.

There are several elements that are crucial in establishing and maintaining a successful compliance program. For one, a genuine compliance program and policy must be specifically tailored to the individual company and the business it conducts. So called "off the shelf" programs are rarely effective for they fail to address the individual needs of a company’s line of business. An effective compliance program should begin with a risk assessment, conducted by both the company and competent counsel, to determine potential legal risk and where its business intersects with compliance issues.

Once a clear and succinct policy is approved, the program must be championed by upper management, who establish a strong culture of compliance among company managers and employees alike.   Any disparagement of the policy among management will be quickly detected by the employees, who in turn will fail to commit fully to the program’s requirements. In order to ensure that managers and employees maintain a genuine culture of compliance, it is crucial that they understand why a compliance program is necessary in the first place.

A thorough explanation should be provided in a series of mandatory training programs that are specifically designed for the company. Training programs, which are carefully outlined to address the program, tangible risks and the importance of acting in compliance with the policy, should be conducted in person by competent
trainers in the presence of respected members of management. The sessions should be well documented, and all employees should be required to "sign off" on the compliance policy in writing or electronically, stating that they understand and agree to follow the requirements and are aware that there is zero tolerance for violations. It is important that a company hold all members—both upper management and entry-level employees—accountable for compliance policy violations and take prompt and fair corrective action. Once a compliance program is in effect, companies must encourage employees to ask any questions concerning the policy and provide them with prompt and thorough responses.

A culture of compliance is one that unconditionally recognizes compliance as a constant and integral feature of a company’s business.  If these basic approaches to compliance are adopted, companies will be far more likely to avoid legal risk and achieve long-term success in today’s competitive and highly regulated construction market.

Find Peckar & Abramson's newsletter here. Long known for leadership and innovation in construction law, Peckar & Abramson's Results FirstSM approach extends to a broad array of legal services — all delivered with a commitment to efficiency, value and client service since 1978. Now, with nearly 100 attorneys in nine U.S. offices and affiliations around the globe, our capabilities extend farther and deeper than ever.


The views expressed in this newsletter are not necessarily those of AGC. Readers should not take or refrain from taking any action based on any information contained in this newsletter without first seeking legal advice. 


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