Audit, Compliance and Risk Blog

Litigation is an occupational hazard for corporate directors and officers. Fortunately, the hazard of directors' liability can be reduced substantially when the corporation indemnifies them from personal liability arising from their services. Indemnification is an undertaking by a corporation to reimburse legal costs and related expenses incurred to defend a claim, and may also include advances to cover defense costs as they are incurred. Indemnity arrangements may appear in the corporation’s charter or bylaws, and/or a separate agreement between the individual and the corporation. State laws govern indemnification, and apply through corporate bylaws and/or employment contracts with directors and officers.

Executive compensation packages can become sources of tension between directors and shareholders in companies. In the U.S., state corporation laws authorize directors to fix their own compensation and to determine suitable compensation for the officers of the corporation, while federal income tax rules require shareholder validation before the company can deduct individual compensation exceeding $1 million ($500,000 for participants in the Troubled Asset Relief Program (TARP)). U.S. federal laws have expanded requirements for shareholder “say-on-pay” votes, but only require that the votes themselves be advisory, not binding. The 2009 federal stimulus bill requires participants to offer non-binding shareholder votes, and the 2010 Dodd-Frank Act requires all public companies to do the same. (See my recent blog on Securities and Exchange Commission (SEC) rulemaking).

The Civil Rights movement of the 1960s extended beyond the ballot box to enter most U.S. workplaces. Beginning with Title VII of the Civil Rights Act of 1964, federal (and follow-on states’) laws seek to ensure employees' rights to equal treatment, by prohibiting employer discrimination against employees because of any characteristics that historically have been the basis for discrimination (dubbed “protected classes”). Federally protected classes presently include the following:

By Jamie Scudder, Maplecroft

This month marks the twentieth anniversary of the passage of the federal Family and Medical Leave Act (FMLA) of 1993. FMLA requires large employers to grant eligible employees time off to respond to a broad range of medical conditions that they or their immediate family members may suffer. Since 1993, the law has been amended and expanded a number of times, with the Department of Labor’s Wage and Hour Division (WHD) revising its regulations to incorporate and apply these changing requirements. For example, effective March 8, WHD has revised rules providing protections for National Guard and Reserve troops subject to deployments, and for airline flight crews.

If you’re responsible for hospital training requirements, and/or have responsibility for planning and carrying out a training program for your staff, you should know that OSHA regulations—such as the Hazard Communication Standard (HCS)—have been revised to conform to the UN’s Globally Harmonized System of Classification and Labelling of Chemicals.

Everyone has relationships in the workplace. Many relationships are purely professional, while some add personal elements, and one or more may even be very personal. Anti-discrimination laws may impose scrutiny on any relationship where at least one person is a manager or supervisor, or the owner of a small enterprise. In the U.S. these include laws (including Title VII of the federal Civil Rights Act of 1964, and comparable state laws), regulations and enforcement guidelines (from by the Equal Employment Opportunity Commission (EEOC) and state equivalents), and court cases applying these standards. In Canada these include comparable human rights and occupational health and safety regimes.

The Occupational Safety and Health Administration (OSHA) requires employers to prepare and maintain records of occupational injuries and illnesses (I&I Logs) as they occur. OSHA also requires employers to post an annual I&I Summary in each “establishment” within their workplace by February 1, summarizing that workplace’s I&Is during the previous calendar year. In states that administer federal standards within state-run programs, employers follow the comparable state requirements. Because of this posting requirement, January is the time to confirm that your facility has maintained an adequate I&I Log during the year, and to prepare your summary for each workplace.

Do you ever discuss work with co-worker friends on Facebook or other social media sites? Or, if you’re an employer, do you worry about what your employees may post about work on their Facebook pages—even when they do so from home after hours?

The Foreign Corrupt Practices Act (FCPA) of 1977 prohibits U.S. companies from making bribes or other “corrupt payments” to foreign officials for the purpose of obtaining or retaining business. Concerns that this U.S. attempt to mediate its companies’ overseas activities might prove quixotic—and potentially disadvantaging—to American competitiveness have abated (although not disappeared) since the Organization for Economic Cooperation and Development (OECD) promulgated its “Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.” As of November 2012 the OECD Convention has been ratified by all 34 OECD member countries, and five others as well.