On March 7, 2024, the Department of Justice (“DOJ”) announced the creation of a pilot whistleblower program. This pilot program supplements existing whistleblower programs that fall under other regulators’ jurisdiction like the Securities and Exchange Commission and the Internal Revenue Service. Under the DOJ’s program, a whistleblower who reports “significant corporate or financial misconduct” not otherwise known to the DOJ will be eligible for a portion of any resulting civil or criminal forfeiture (after victims have been compensated). The DOJ will develop the program’s formalities over the next 90 days, with the program likely taking effect by year end.

Companies should act in response to this development since employees now have a financial incentive to report misconduct. The DOJ has indicated that the program will take reports about violations of any federal law, although the DOJ is particularly focused on criminal abuses of the U.S. financial system, foreign corruption cases, and domestic corruption cases (especially matters involving illegal corporate payments to government officials). More specifically, companies should consider reviewing and evaluating their internal complaint procedure.  This analysis should examine how and when employees are advised of the complaint procedure (i.e., is it easy for employees to determine how to complain), the ease of the complaint procedure and the effectiveness of the investigative process. Additionally, it is critical to ensure that the company’s culture encourages the reporting of concerns – whether communicating this during periodic town hall meetings, quarterly emails or annual training. Companies should encourage good-faith complaints since this allows the company to discover and take quick action on any misconduct and reduce future liabilities. Additionally, a strong complaint process may serve as a disincentive for employees to engage in misconduct. 

This article is for informational purposes only and should not be considered legal advice. Please consult with your legal counsel regarding any specific situation.

Written by Christie Newkirk and Tayler Gray from Carrington, Coleman, Sloman & Blumenthal, L.L.P.