Company Policy vs Law: How to Help Them Thrive Together

Company Policy vs Law: How to Help Them Thrive Together

Written by ComplianceBridge Policies & Procedures Team on August 8, 2023

When formulating policies and procedures, companies find themselves standing at the intersection of numerous considerations. They must question whether these policies are in harmony with their corporate culture and resonate with their people. They also need to ponder on the practicality of these procedures: Are they sustainable? Will they work in the long run? Just as important is the question of engagement: Will these policies be embraced or merely tossed aside and overlooked? While these questions are important, there’s an even bigger factor in the mix: law. This is where understanding the difference of’company policy vs law comes into play.

This article unravels the complex relationship between company policies and the law, explores the interplay between the two and discusses how to create policies that not only maintain the integrity of the operation, but also adhere to the law. 

Understanding the Difference: Company Policy vs Law

Understanding the difference between company policy vs law is essential when determining how your organization will operate. Company policies serve as a company’s internal constitution, guiding how employees conduct themselves in the workplace and interact with each other. They are usually laid out in an employee handbook and may cover things like dress code, tobacco use, paid time off, vacation, and code of conduct. These policies are unique to each company, reflecting their particular vision, values, mission, and goals.

On the other hand, laws regulate the broader aspects of business operations and interactions between various entities, such as businesses, consumers, and government bodies. These legal regulations can include things like the Equal Employment Opportunity law, citizenship status, restrictions on working hours for under-age employees, and tax legislation. All organizations are governed by and must adhere to these laws.

While company policies help ensure legal compliance, they often step beyond the law’s boundaries to embody an organization’s unique ethos and context. For instance, while there’s no universal law prohibiting employees from smoking in designated areas, a health-focused organization may choose to enforce a stricter, tobacco-free policy for its employees.

Understanding Relevant Laws and Regulations

While many laws are more universal in nature, impacting all organizations across the spectrum, some organizations will be subject to a different set of laws and regulations than others, depending on their industry; these additional regulations are tailored to their operations and risks. For instance, a health insurance company needs to understand privacy laws like HIPAA. Pharmaceutical companies must adhere to proper labeling provisions. From manufacturing to financial services to tech, every industry tends to be regulated by laws specific to their field of work.

Furthermore, laws may differ from state to state, so it’s important to be aware of the differences. When considering company policy vs law, it is imperative that a company is well versed not only in the more universal laws, but also those governing their industry and specific to their geographical region. Knowledge of these laws and regulations is integral to the formulation of effective company policies. 

Aligning Company Policies with Legal Requirements

Striking a balance between legal compliance and practicality is crucial when developing company policies. For instance, a data privacy policy needs to comply with relevant laws but also be practical for everyday operations. Additionally, just because there is harmony today between company policy vs law, there may not be alignment next month or next year because laws and regulations undergo periodic amendments. 

It is essential for organizations to stay updated and responsive to these changes by conducting regular reviews and adjusting policies to maintain compliance. A company may need to revise its data privacy policy, for example, upon the introduction of new data privacy regulations

The Role of Legal Counsel in Formulating Company Policies

Legal experts are among the most qualified to maneuver through the weeds of company policy vs law. Because it is their business to know the law, they know it well; this knowledge serves as a vital resource to help navigate the complexities of legalese. They help organizations understand legal requirements and translate them into company policies by simplifying legal jargon into actionable points. Consistent communication and consultation with legal counsel are key to staying abreast of legal changes mentioned previously. This close collaboration facilitates swift implementation of compliant policies.

The Potential Consequences of Non-Compliance

Non-compliance with a company policy doesn’t always lead to the kind of serious consequences faced by those who violate a law. When the policy exists to meet legal requirements, that’s when the consequences can become serious. Non-compliance with laws can lead to a myriad of repercussions, including financial penalties, legal proceedings, and reputational damage. For instance, numerous companies have been fined hundreds of millions of dollars for violating GDPR rules (and then there’s Facebook with a fine over a billion dollars). 

Even if the threat of non-compliance is toothless, failing to adhere to laws and regulations can also erode trust among employees, leading to decreased engagement and productivity, further damaging the organization’s performance and morale. Employees are usually the first to know when their company is doing something wrong, whether that’s failing to pay employees on time or failing to maintain a clean, safe work environment. When employees perceive a lack of care from their employer, they’ll be more likely to exhibit similar behavior.

Ensure that Company Policy Aligns with the Law and Your Company’s Culture

Robust company policies must incorporate the law as well as the culture and processes of the company. Without a well-established and thorough policy management process, your policies and procedures will fall behind the growth of your organization and the changing landscape of laws and regulations. ComplianceBridge helps businesses across a variety of industries streamline and perfect policy management. 

From our collaborative policy creation and review to our automated reminder system for policy renewal, we have you covered. You can create approval workflows so policy managers can receive input from subject matter experts, legal department, etc. Additionally, our platform makes distribution easy, provides custom policy quizzes, and features an organized policy library.

If you’re ready to take your policy management to the next level request a demo of ComplianceBridge today!

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