The practice of compliance refers to adhering to the laws, policies, and regulations that apply to a business. These rules are often set by external entities, including government agencies at the federal, state, and local levels, or independent organizations that set standards for a particular industry or field at the national or international level.
Jobs in the compliance industry require an understanding of important legal issues, and although compliance officers do not practice law, they must be able to navigate the regulations that apply to the industries in which they work.
Dan Urman, director of Online and Hybrid Programs within the Northeastern School of Law, explains that businesses in all industries must address compliance. “There is almost nothing in the world that does not have a legal underpinning,” he says, and, as a result, compliance officers are in high demand.
Read on to explore what the compliance industry is, the key skills a successful compliance officer must obtain, and the most common concentrations for jobs in this field.
What Does a Compliance Officer Do?
Compliance officers help ensure that businesses abide by the regulations that apply to them, most often by reducing the risk of violating those rules. They are commonly referred to as non-lawyer professionals in the sense that they have a broad understanding of the laws that apply to their business and the industry as a whole but do not necessarily practice law in court.
In this regard, compliance departments are responsible for:
• Identifying the major non-compliance risks that a business faces
• Advising the business and training employees on how to avoid or otherwise address these risks
• Implementing controls and other policies to protect the business and its employees from these risks
• Consolidating compliance controls to avoid the duplication of efforts and resources
• Monitoring the effectiveness of these controls and other risk mitigation measures
• Resolving any compliance issues that arise and minimizing the impact on the business
• Establishing a code of conduct for reporting and resolving compliance issues
Effective compliance brings many benefits to a company, including fewer legal problems, improved operations, better public relations and reputation, and higher employee retention.
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What Skills Can Help Compliance Professionals in Their Roles?
Businesses are subject to regulations that cover the industry they operate in, the work they do, and the people they employ. What’s more, rules can change frequently and quickly as a result of adverse events, shifts in public opinion, or changes in government leadership.
For this reason, compliance professionals must be able to quickly identify the provisions of a new law that applies to their company, and effectively communicate that information first to executive leadership, and then to employees. As Urman explains, compliance is less about memorizing every detail of the law and more about “cutting through” the language to identify what matters most.
“It’s about learning…how to think like a legal professional,” he says. “It’s a combination of knowledge and skills. It’s knowing the right questions to ask, [and] knowing how to communicate with lawyers.”
This agility enables compliance departments to help companies anticipate and adapt to changing regulations with minimal disruption to business operations. For instance, knowing that a product needs to meet stricter quality standards in 24 months, compliance professionals can work with the appropriate stakeholders to create a strategy and timeline for making the necessary changes to processes, including changes in design, development, testing, and production.
Employing a compliance professional who is both agile and has a strategic mindset can also give an organization a competitive advantage. For example, a business may strategically establish policies that exceed established compliance requirements with the help of their compliance officer. These additional policies may include higher standards for food safety, more generous maternity/paternity leave, increased security for sensitive data, or even better energy efficiency, depending on the business’ needs.
What Are Common Concentrations for Jobs in Compliance?
While all industries are subject to their own sets of rules, some fields are more heavily regulated than others.
Companies are subject to numerous regulations that aim to protect consumers’ physical or financial safety, or safeguard sensitive information from internal and external threats. Many of these laws were enacted in response to corporate scandals or questionable business practices.
In the United States, some standard business compliance regulations include Sarbanes-Oxley (protection against fraudulent accounting), PCI DSS (secure credit and debit card transactions), and FISMA (information security risk management). In addition, businesses must ensure that they comply with federal tax law, which determines how an organization files its taxes, as well as various operational regulations at both the federal and state levels. These regulations may refer to a company’s ability to obtain licenses, sell certain goods and services, collect sales tax, advertise truthfully, and compete fairly, among others.
The most important regulation in healthcare is the Health Insurance Portability and Accountability Act (HIPAA). HIPAA protects the privacy of patient data and ensures organizations face steep penalties if this data is not kept secure.
Other rules and regulations that apply to healthcare compliance include the False Claims Act (fair and accurate insurance billing), the Stark Law (appropriate referrals to third-party providers), EMTALA (treatment of all patients regardless of ability to pay), and Joint Commission Accreditation (a necessary condition for Medicare and Medicaid reimbursement). Healthcare providers such as hospitals and doctor’s offices are also required to comply with a range of regulations related to laboratory and medical device safety, patient experience, care quality, and employee certification.
Human Resources Law
Several categories of HR compliance regulate how businesses must hire, manage, and protect their employees. These include:
• Anti-discrimination regulations, which prohibit discrimination on numerous factors, including gender, race, age, disability, and military background.
• Wage laws, which set requirements for minimum wage, overtime, age restrictions for certain types of work, and guaranteed breaks. There are also regulations about classifying employees correctly and reporting pay data that fall under this category.
• Family and medical leave regulations, which let employees take unpaid leave to care for a new child or an ill family member.
• Immigration laws, which require companies to hire employees who are eligible to work in the United States.
• Safety rules, which ensure safe working conditions and require companies to keep accurate records of accidents or other hazards.
• Union regulations, which prevent businesses from interfering with workers’ rights to improve job site conditions, air grievances, or form a union.
Other Areas of Regulatory Compliance
There are additional concentrations of regulatory compliance that don’t fall into the business law, healthcare law, or human resources law categories. These include:
• Intellectual Property: This covers the process of obtaining patents, trademarks, and copyrights, which protect a company’s assets from being used without their permission.
• Banking: The Dodd-Frank Act specifically subjects financial institutions to regulations that increase transparency, accountability, and customer protection.
• Food Safety: Businesses that produce and sell food are subject to regulations that protect consumers from biological, chemical, and physical hazards.
• Environmental Protection: Federal, state, and local laws prohibit the pollution of water, soil, and air in an effort to protect public health.
State and local laws may set standards that even exceed federal requirements. For example, a regulation set at the state-level may require higher minimum wage and longer paid sick than the national standards require.
Other regulations offer employee benefits or set requirements that are not covered by federal law at all. These could include regulations on the pooling of tips, pregnancy accommodation, or even banning the ability to ask job prospects about their salary in a previous role (a practice that has been made illegal in Massachusetts as of July 1, 2018, in an effort to improve pay equity.)
How To Get A Job In The Compliance Industry
The average annual salary of a compliance officer is more than $72,000, and wages are notably higher in industries that are subject to more stringent regulations. These industries include mining, manufacturing, finance, and energy, among others.
The highest concentration of compliance jobs, however, are in the public sector. Employees in these roles tend to have a lower annual salary than those in the private sector, but also have better benefits and job security.
Businesses of all sizes are subject to compliance, and the applicable regulations vary substantially from one industry or government agency to another. A bank, for example, has different compliance requirements than a chemical manufacturer.
As a result, there is no typical career path for a compliance officer. “People come from all walks of life and hold all types of jobs,” Urman says.
The minimum requirement for a compliance officer job is a bachelor’s degree in accounting, business, or finance, yet as regulations and compliance laws become more complex, employers are starting to turn to candidates with a Master of Legal Studies or a Master of Business Administration (MBA) to fill these roles.
A Master of Legal Studies program like Northeastern’s offers students looking to break into the compliance industry the chance to explore the depths of these laws at the local, national, and international levels, to declare one of three unique concentrations—including Health Law, Business Law, and Human Resources Law—and to apply their work to real-life scenarios through the program’s experiential learning component.
Learn more about how a Master of Legal Studies degree can set you on a path toward a career in compliance by visiting the program page on Northeastern’s Graduate site today.