Regulatory Compliance is the legal obligation a business must undertake to ensure that its personnel are aware and take steps to comply with relevant laws and regulations that govern the business and its practices. These laws can be state or federal statutes or regulations and at a local level they can be city, county, and municipal ordinances. These laws may carry criminal or civil penalties or may directly impact the operations of the business, including searches, seizures of assets, or its ability to operate.
Generally, compliance means conforming to laws or regulations that properly apply to a business and its practices. The measure of satisfactory compliance—or an effective compliance plan—can be elusive depending on the government agency that regulates a particular industry. For example, manufacturers of medical devices are regulated by the FDA; makers of consumer products are governed by the CPSC; aircraft part manufacturers, service providers, and aircraft mechanics are governed by the FAA; food growers, processers, and distributors must comply with the FDA food safety regulations; and chemical manufacturers must have a hazard communication program approved by OSHA.
In some instances, state authorities also regulate certain business practices. If the business operates overseas or sells its products or services in other countries, international regulations also will apply. Other regulations such as GLBA, FISMA, HIPAA, and Sarbanes-Oxley also exist. Other business practices that are regulated include the financial accountability of publicly traded companies, bank and financial lending practices, and the activity of transportation companies.
A lawyer’s work in regulatory compliance will be to advise the company about satisfactory compliance or defend the business against a regulatory compliance decision. A lawyer will review statutes and regulations, agency regulatory decisions, general counsel opinions, and applicable case law to give an opinion about compliance. The subject of a lawyer’s advice may be a specific business practice, a regulatory decision, or a new regulation, the application which may be generally unknown. Also, a lawyer may create a compliance plan for a business, which will assist in determining its own compliance going forward. Compliance plans are also integrated with the company’s risk management policy, which will support the company in its search for insurance and liability protection.