Ionia Management is a Greek company that manages a fleet of tanker vessels. The company was convicted of a crime and sentenced for its role in falsifying records to conceal the overboard dumping of waste oil from one of its vessels into international waters. The case is now on appeal to the federal Second Circuit Court of Appeals.

Ionia Management says it was convicted based on the acts of rogue employees, who had been trained and repeatedly reminded of the company policy prohibiting the dumping but did it anyway. That leads us to the question of whether the company or its owners should face criminal fines and possibly jail for the acts of its subordinate employees. Or is civil liability in court more appropriate?

However you feel about criminal liability for corporate actions, in these post-Enron days, it is a fact of business. And as a employment lawyer, I feel compelled to point out a couple of the ways in which your employee relations can land you in criminal court.

The Sarbanes-Oxley Act of 2002 was directed to stop the types of accounting and corporate practices led to the Enron collapse. But there is a very broad provision in the Act which protects any individual who provides truthful information regarding the commission or possible commission of a federal crime to a law enforcement officer.

If the whistleblowing employee’s livelihood or employment is interfered with, not only does the company face civil whistleblower liability to the employee for wrongful demotion or  termination, but everyone who was involved in the employment decision could also face criminal charges!

Another part of the Act prohibits document falsification, alteration or destruction, even before a subpoena is issued, if the intent is to conceal a document that is relevant to an official proceeding. The person altering or destroying the documents can face a fine or up to 20 years in prison.

Another way to get into trouble criminally in this day and age of identity theft is to improperly protect your employee’s personal information. Both the Fair Credit Reporting Act and the Health Care Portability and Accountability Act attach criminal penalties to the unnecessary obtaining, misuse or disclosure of an employee’s confidential information, such as credit or medical records.

The key to avoiding these possible criminal charges is to have an attorney review your document retention policies and make corrections now that help you keep confidential documents under lock and key and let you destroy unneeded documents promptly and routinely.

You also have  to make sure that all of your recordkeeping,  including such routine documentation as driver’s logs for the Interstate Commerce Commission or accident logs for OSHA, is truthful and accurate.

Also, have your attorney review any demotions or terminations of employees before you proceed with those employment actions if there is any suspicion that the employee has talked to anyone outside the company about a possible violation of law or regulation.

Finally, be careful when governmental investigators come calling so that you do not obstruct justice. Many statutes such as ERISA (concerning health and pension benefit plans), OSHA (safety and health) and the Texas worker’s compensation laws include criminal penalties for any attempt by an employer to mislead or impede a governmental agency investigation. Your angry reaction to having your business interrupted by a “bogus” agency investigation could result in an obstruction of justice charge against you.