The Risks of Non-Compliance For Your Business


Corporate compliance refers to the adherence of a company to the laws and regulations that aim to protect the welfare of its employees, agents, and other stakeholders. There are many areas of a business where compliance is necessary, including hiring, wages, workplace safety, taxes, licensing, and many more. If a company fails to comply with these laws and regulations, it may face drastic legal consequences. In the worst-case scenario, these consequences can even lead to a closure of a business.

Before we dive into how to avoid these non-compliance consequences, here’s exactly what can happen to your business if you fail to comply with all the laws and regulations relevant to your business.

Fines and penalties

The most common consequence of business non-compliance is fines or penalties. And if you think that’s not so bad, let it be known that these fines are heavy. In some cases, the hefty fines and penalties for non-compliance can even lead to a business’ financial demise.

To illustrate, here are common penalties that businesses face for non-compliance:

I-9 form.

Employers that fail to verify employee eligibility verification forms and keep them on file can face fines of around $20,000.

Fair Labor Standards Act.

Businesses are legally obligated to pay minimum wage as well as overtime pay to exempt employees. Trying to evade this obligation can result in a fine of around $10,000.

Data security.

It is the responsibility of a business to protect its clients’ data. Failure to do so can result in extremely damaging data breaches, which can put clients’ private data at risk. When this happens, a company can be punished with hefty fines that can go up to hundreds of thousands.

Affordable Care Act.

A company that has 50 or more full-time employees is required to provide healthcare for all of them. Failure to do so will result in huge IRS penalties.

Legal consequences

Compliance laws and regulations exist to protect stakeholders’ safety, ensure fair labor practices, and secure people’s personal information. If a company is non-compliant, it can face criminal charges or class action lawsuits that can open up a whole other world of problems–and sometimes, even complete business closure.

Reputation damage

Adhering to business laws is not only necessary to avoid fines and lawsuits, it is also necessary to prevent your business’ reputation from getting damaged. Customers won’t be as willing to deal with your company if they know you are not compliant with laws and regulations. And as every business owner knows, the success of your business will only be as good as your image.

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How to avoid business non-compliance

Remaining compliant with business laws is often difficult and time-consuming, but it is necessary in order to protect your company from the aforementioned consequences. To avoid business non-compliance, here’s what you should do.

1. Assess risk

Get a risk assessment platform like ServiceNow to manage everything that is related to business risks, particularly non-compliance. Doing so will help keep your business compliant without spending as much money and time on compliance processes.

2. Hire a compliance officer

A compliance officer is responsible for auditing areas of your business and pointing out which ones you need to improve in order to stay compliant. If your business does not have the funds for a full-time compliance officer yet, the next best option is to hire one who will work on an hourly basis.

3. Promote a compliant company culture

As the leader of your company, you should be the first role model in compliance. Show your employees that you prioritize compliance and are constantly looking for ways to improve weaknesses. The more employees are aware of business compliance practices, the less likely they are to make mistakes.


Business non-compliance can lead to very costly consequences. To prevent your business from facing financial ruin, reputation damage, and legal issues, make compliance a priority in your company.

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