A code of conduct is a written set of rules and principles that explains how employees are expected to behave at work, including ethics, conflicts of interest, harassment, data protection, and how to report concerns. It usually sits in or alongside the employee handbook and applies to everyone, including leaders.
Key takeaways
- Public companies must disclose whether they have a code of ethics for senior financial officers, and US stock exchanges require codes for listed companies.
- A good code covers behavior, conflicts of interest, gifts, confidentiality, data use, and reporting channels.
- It needs a non-retaliation promise and more than one way to report concerns.
- Employees should acknowledge it at hire and when it changes.
How code of conduct works
Most private companies aren't legally required to have a code of conduct, but most have one because it sets clear expectations and supports discipline decisions. Public companies are a different case: SEC rules require them to disclose whether they've adopted a code of ethics for senior financial officers, and the NYSE and Nasdaq require listed companies to adopt codes that cover directors, officers, and employees.
A practical code explains principles in plain language, then gives examples. It covers respect and anti-harassment, conflicts of interest, gifts and entertainment, use of company assets, confidential information, privacy, anti-bribery, accurate records, and safety. It then explains how to raise concerns, including an anonymous channel, and promises that people who report in good faith won't face retaliation.
Codes work only when leaders follow them and violations have consequences. Training, annual acknowledgment, and visible enforcement matter more than length.
Code of conduct example
A 300-person software company writes a 12-page code. Each section opens with one sentence of principle, followed by "what this looks like" examples, such as "You can accept a vendor's lunch during a business meeting, but not tickets to a sporting event." The final page lists three ways to report: your manager, HR, or a third-party hotline. New hires sign it during onboarding, and everyone re-acknowledges it each January in the HRIS.
Why code of conduct matters for employers
A clear code reduces gray areas, which is where most misconduct starts. It also helps in disputes: when discipline follows a documented rule that employees acknowledged, decisions are easier to defend. Harassment appeared in 40.4% of EEOC charges in fiscal year 2024 (FY2024 EEOC enforcement statistics summary (CWC)), and a code with real reporting channels supports the defenses employers rely on.
Distribution and acknowledgment are where many companies slip. An HRIS or policy tool that tracks who has signed which version removes the guesswork. Our handbook acknowledgment request email and employee handbook guide cover the rollout.
Common code of conduct mistakes to avoid
Writing it in legal language
If employees can't understand it, they can't follow it.
Only one reporting channel
Offer alternatives so employees can avoid reporting to the person involved.
Restricting protected discussions
Overly broad confidentiality or social media rules can violate the National Labor Relations Act.
Different rules for executives
Uneven enforcement destroys credibility and invites claims.
Code of conduct: questions people also ask
What should a code of conduct include?
Is a code of conduct legally required?
What is the difference between a code of conduct and a code of ethics?
How often should a code of conduct be updated?
Do employees have to sign the code of conduct?
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HRTally glossary entries are written by people who have run US payroll, benefits, and HR operations, then checked line by line against primary sources such as the IRS, Department of Labor, EEOC, and Bureau of Labor Statistics. Dollar limits and rates are for 2026 unless stated. We review every entry at least twice a year and whenever a rule changes. This page explains general rules and isn't legal or tax advice; state law can differ. Read our editorial standards.
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<blockquote>A code of conduct is a written set of rules and principles that explains how employees are expected to behave at work, including ethics, conflicts of interest, harassment, data protection, and how to report concerns. It usually sits in or alongside the employee handbook and applies to everyone, including leaders.</blockquote><p>Source: <a href="https://www.hrtally.com/hr-glossary/code-of-conduct/">HRTally HR Glossary, Code of conduct</a></p>
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.