Welcome to the Day 2 of a five-day podcast series Jay Rosen and I are producing in honor of the latest Star Wars movie The Last Jedi. Each day over this week, Jay and I will review a Star Wars movie and discuss it from the compliance perspective. Today, we consider Episode V, The Empire Strikes Back and due diligence.
This movie is my personal favorite of the initial trilogy. During the climactic battle between Luke Skywalker and Darth Vader, there is the BIG REVEAL where Vadar utters the immortal line, “I AM YOUR FATHER”. In the context of knowing who you are doing business with under the Foreign Corrupt Practices Act or UK Bribery Act. I once heard a company President say he did not need to perform due diligence because he looked a man in the eyes and that was enough to know if he was honest. (I should add, this company President also evaluated the strength of a handshake as an additional level of due diligence.) Hopefully we have moved past this level of sophistication for due diligence and its evaluation thereof.
There are three levels of due diligence and you must make a determination which is appropriate for the entity or person you are investigating. If a red flag appears it must be cleared or a risk management strategy articulated to allow moving forward.
Level I
First level due diligence typically consists of checking individual names and company names through several hundred Global Watch lists comprised of anti-money laundering (AML), anti-bribery, sanctions lists, coupled with other financial corruption and criminal databases. Level I due diligence addresses such basic issues as whether the third party actually exists, the identities of management, officers, directors and shareholders and whether such persons are on regulators’ watch lists. It can also provide some basic information on whether there are politically exposed persons (PEPs) involved in the third party. Finally, if there are any media reports linking the company to corruption.
Level II
Level II due diligence encompasses supplementing Level I due diligence with a deeper screening of international media, typically the major newspapers and periodicals from all countries plus detailed Internet searches. Such inquiries will often reveal other forms of corruption-related information and may expose undisclosed or hidden information about the company, the third party’s key executives and associated parties. Level II can give you information on adverse litigation, any bankruptcy proceedings, overt signs of financial difficulty. More generally it will also provide local online information such as corporate filings, regulatory filings, lawsuits and locally archived materials. You also be able to determine if there were any in-country investigations or sanctions from regulatory entities.
Level III
This level is the deep dive. It will require an in-country ‘boots-on-the-ground’ investigation and is designed to supply your company “with a comprehensive analysis of all available public records data supplemented with detailed field intelligence to identify known and more importantly unknown conditions. Seasoned investigators who know the local language and are familiar with local politics bring an extra layer of depth assessment to an in-country investigation.
Now imagine if Luke had performed a more robust level of due diligence on Darth Vadar? Would he have been able to find out Darth Vadar was his father? Perhaps not but then again, we might not have heard that seminal line “I AM YOUR FATHER”.
Join us tomorrow where we consider Return of the Jedi and effective training.
Day: December 17, 2019
This week’s guest on the Innovation In Compliance show is Krista Hardwick, General Counsel at Deputy. Deputy brings an innovative solution to managing compliance and legal risk around scheduling. Krista chats with Tom Fox about how her company’s software helps business owners stay compliant with fair wage and hour laws, as well as increase profitability.
Analyzing Shift Work
Deputy recently released a free ebook entitled The United States of Shift Work, based on their study of 1million shift hours over the course of a year. They were able to conclude that there are many similarities among the different generations of shift workers with regard to the hours they worked vs hours they were scheduled. On average, workers were rostered to work just a few hours more than they actually worked. Krista says that this shows that managers and business owners are complying with the fair workweek laws which state that workers should not be required to work more than they are scheduled. It also implies that business leaders do not want workers to work overtime, which would trigger overtime compliance regulations. Tom comments that this relates directly to the key issues of fairness in the workplace and sustainability.
How Deputy Helps Businesses Be Compliant
Krista advises business owners to love their employees. Keeping your employees happy will help your business be more successful in the long run. She discusses the fair workweek laws that are being implemented across the country, which require businesses to post schedule weeks in advance and not change them once posted. Deputy’s tool, she says, help owners stay compliant with these laws, so they can focus on growing their business. Business owners should also be focusing on creating an optimal schedule that minimizes payroll costs for the company, Krista points out. Deputy partners with Widget Brain to do customized labor forecasting for their clients: they help you create an optimal schedule based on your forecasted profits for each hour of the day. This shows that effective compliance can create greater business efficiency, leading to greater profitability, Tom comments. Krista adds that it also minimizes the chance of a wage and hour audit.
Corporations Need To Respond To People
The number of shift workers is increasing and will continue to increase, Krista says. Due to the amendment to the Department of Labor rules, many workers who are now considered salaried employees will be converted to shift workers and paid an hourly rate come January 2020. Krista says that another issue companies should consider is that Gen-Z’ers are working fewer hours than previous generations. Their work preferences are different, added to which, they have choices about where they want to work and the kind of work they want to do. These issues are important when doing scheduling and workforce management. Tom says that this speaks to how corporations need to respond to people, instead of people responding to corporations.
Resources
Deputy.com
The United States of Shift Work
Deputy on Facebook | LinkedIn | Twitter | Instagram
