Posted on June 22, 2007 9:40 AM by
Shanti Atkins
On Thursday, June 21, 2007, the United States Supreme Court handed down an important decision (Rita v. U.S., 06-5754) that should make all employers take note. The case involved the reasonableness of a 33-month prison sentence imposed on a criminal defendant under the Federal Sentencing Guidelines (FSGs). The prison sentence fell within the range established by the FSGs.
The Court held that an appellate court, considering the appropriateness of a prison sentence, can apply a presumption of reasonableness to the sentence if it falls within the guidelines established by the FSGs. Prior to this ruling, a sentence could be reversed if it was deemed unreasonable by an appellate court.
The practical effect of this decision is that criminal defendants (even employers held liable for the criminal acts of their employees) will have great difficulty getting a prison sentence overturned on appeal if the sentence falls within the FSG guidelines. (See Associated Press Article: Court Backs Rules Governing Prison Terms). Most federal sentences fall within the guidelines.
Why This Ruling Matters For Your Organization
The FSGs are rules that set out a uniform sentencing policy for convicted defendants, including corporate and organizational defendants. They apply to all types of employers – public, private, government, non profit etc. Critical amendments to the FSGs in November of 2004 mandated periodic ethics training for all employees. (See ELT’s Summary of Ethics and Code of Conduct Training Mandates).
The FSGs make clear that employers can be held liable for their employees' illegal conduct. And now, if those sentences fall within the guidelines, they will be deemed presumptively reasonable on appeal.
Ethics and Compliance Training: The Best Way To Manage Risk
In light of Supreme Court’s decision in Rita, organizations should be taking a long, hard look at their ethics and compliance training initiatives – and their overall awareness and understanding of the guidelines. Under the FSGs, if an organization has taken proactive steps to prevent unethical and illegal conduct through an effective ethics and compliance program (which includes periodic, formalized training), the employer may be able to mitigate potential fines and punishment for criminal violations by up to 95%. Aside from providing organizations with some peace of mind, training provides a secondary and more important benefit – a cultural shift toward enhanced ethical values and behavior.
At the end of the day, these seemingly technical decisions remind us of an important truth. Even without laws, affirmative defenses and valuable risk mitigation, smart employers will engage in effective ethics and compliance training because it makes good business sense.