There are countless examples in recent news highlighting the potential for far-reaching consequences when wrongdoing goes unchecked, and when whistleblowers face unbridled public scrutiny. Safety hazards could result in serious injuries or even further loss of life and financial penalties and reputational damage could be significant. By protecting whistleblowers, taking their concerns seriously, and even providing them with monetary incentive, corporate boards can utilize whistleblowers as an effective mechanism to promote their companies’ success from within and protect the communities that they serve.

As Jackson Lewis attorneys Lindsay Dennis Swiger and Christian Clark highlighted recently in an article titled “’Knock on our door before we knock on yours:’ Recent DOJ Trends | Corporate Governance & Internal Investigations Advisor (,” the United States Department of Justice is implementing a pilot program to monetarily reward employees who “blow the whistle” on their employers in efforts to help the DOJ root out and punish white collar crime. As we have seen, recent whistleblower cases underscore the immense pressure whistleblowers can face, raising questions about the emotional toll and potential for retaliation, and they also underscore the importance of taking a “boots on the ground” approach to rooting out safety concerns and wrongdoing. It appears that, realizing this, the government is now taking a more proactive, as opposed to reactive, approach.

It is now more important than ever for corporate boards to also be proactive in approaching whistleblower policies. The onus is now on corporations to take the lead in promoting whistleblowing from within by not only monetarily incentivizing it like the DOJ, but by strongly supporting whistleblower wellbeing and mental health through upholding and implementing good internal whistleblower policies and protections. This is especially true considering that mental health and personal wellbeing are too often overlooked, and providing support in those areas offers an incentive that money alone cannot buy––peace of mind.

Strong corporate governance relies not just on established rules and procedures, but also on a culture that encourages transparency and accountability. In this context, whistleblowers—employees who report suspected wrongdoing—emerge as vital allies in safeguarding your company’s reputation and long-term success through uncovering hidden risks and protecting public trust.

  • Unearthing Concealed Issues: Elaborate schemes to conceal misconduct can evade internal audits. Whistleblowers, with their firsthand knowledge, can expose hidden issues like financial fraud, safety hazards, or environmental violations. This exposure allows for timely corrective action, mitigating potential damage, and preventing legal ramifications.
  • Deterring Misconduct: A well-defined whistleblower program sends a clear message that ethical behavior is paramount. When employees know they can speak up without fear, potential misconduct is deterred before it escalates into major problems.
  • Promoting Transparency and Accountability: When whistleblowers expose wrongdoing, it shines a light on potentially flawed practices. This transparency fosters accountability to stakeholders—investors, employees, and the public.

Key Features of Effective Whistleblower Programs

To leverage the power of whistleblowers and strengthen oversight, consider these key features for your company’s whistleblower program:

  • Multiple Reporting Channels: Provide various avenues for employees to report concerns, including hotlines, online reporting systems, and designated individuals within the company.
  • Confidentiality and Anonymity: Guarantee that employee identities will be protected throughout the investigation process to the extent permitted by law.
  • Anti-Retaliation Policies: Implement clear policies that strictly prohibit retaliation against whistleblowers who come forward in good faith.
  • Impartial Investigations: Ensure investigations are conducted by neutral third parties to guarantee impartiality and build trust within the organization.

Whistleblowers are not adversaries; they can be valuable allies in your pursuit of strong corporate governance. By actively encouraging and protecting whistleblowing within your organization, you empower your employees, and safeguard your company’s future. The detrimental effect on whistleblower wellbeing is likely to have a chilling effect on whistleblowing; therefore, it is imperative that companies continue to strengthen their approach to safeguard these individuals and the whistleblowing procedures.

Beyond Legal Protections: Building a Culture of Open Communication

While legal protections are essential, fostering a culture of open communication is equally important. This means:

  • Leadership Commitment: Board members and senior leadership must visibly demonstrate their support for the whistleblower program. This sends a strong message about the company’s values and encourages employees to speak up.
  • Training and Awareness: Educate employees about the whistleblower program, its procedures, and their rights. This empowers them to identify and report potential misconduct.
  • Open Communication Channels: Create opportunities for employees to raise concerns beyond the formal reporting channels. This allows for early identification and resolution of potential problems.


By establishing a robust whistleblower program with strong legal protections, fostering a culture of open communication, and including other incentives, such as money, employees will continue to be empowered to take ownership of their roles within a company. This ultimately strengthens corporate governance, prevents costly lawsuits, safeguards the company’s reputation, and ensures long-term success.

Board briefing: Whistleblowing and corporate governance | Board briefings | Technical guidance | IIA

Why whistleblowers are important – Corporate Governance Institute (

On March 7, 2024, Deputy Attorney General Lisa Monaco (“DAG Monaco”) gave the keynote address at the American Bar Association’s 39th National Institute on White Collar Crime.1 She addressed the success she views in the Department of Justice’s (“DOJ”) efforts to combat white collar crime. Specifically, DAG Monaco highlighted recent convictions of executives at high-profile companies, including “dozens of executives across a range of industries, including investment firms, health care companies, and defense contractors.” Id.

DAG Monaco also emphasized the DOJ’s practice of progressive discipline. In one example, she shared how a technology company faced a harsher penalty in 2023 because it breached a Deferred Prosecution Agreement (“DPA”) agreed to in 2019. Id. The DOJ required at least a corporate guilty plea to settle that case. Similarly, a pharmaceutical company faced unique and harsh penalties in 2023 because it was a repeat offender. Id. After an investigation for price fixing, the DOJ required the company to sell off an entire product line because it had already resolved a Foreign Corrupt Practices Act (“FCPA”) violation with a DPA. Id.

In addition, DAG Monaco highlighted the impact that the DOJ claw back policy has had on incentivizing employers to comply with the law. The program permits companies to reduce criminal fines by making a good-faith effort recover, or claw back, compensation from individual wrongdoers. By providing “a dollar-for-dollar credit to companies that claw back or withhold compensation from culpable employees,” the DOJ aims to ensure that the actual wrongdoers are the ones paying for their misconduct. Id.

In addition to targeting executives and imposing harsher penalties, now the DOJ is recruiting employees to help the agency discover and punish white collar crime. DAG Monaco announced that the DOJ is implementing a pilot program that recruits employees to “blow the whistle” on their employers: “[W]e recognized there’s another way we can encourage individuals to report misconduct: by rewarding whistleblowers. And how do we do that? Money.” Id.

Comparing the program to “Wanted” posters in the Old West days, DAG Monaco views the pilot program as a way to fill the gaps in other whistleblower incentive programs used at the IRS, FinCEN, and through qui tam actions. DAG Monaco explained that the Attorney General has been authorized to pay awards for information or assistance leading to civil or criminal forfeitures for some time, but that authority has only been used occasionally and never as part of a targeted program. The pilot program’s purpose is to expand that tool and pay whistleblowers out of the funds recovered from a subsequent forfeiture, or the money gained through criminal activity that the DOJ seizes.

The DOJ has launched a 90-day window to develop the plan within the basic guardrails it has already established. It would offer payments:

• Only after all victims have been properly compensated;
• Only to those who submit truthful information not already known to the government;
• Only to those not involved in the criminal activity itself;
• And only in cases where there isn’t an existing financial disclosure incentive—including qui tam or another federal whistleblower program.

While information about any violation is accepted by the DOJ, DAG Monaco noted that the DOJ is especially interested in information about criminal abuses of the U.S. financial system, foreign corruption cases outside the jurisdiction of the SEC, and domestic corruption cases, especially those involving illegal corporate payments to government officials. The exact details of the pilot program have not been developed or disclosed.

How does this impact employers?
It may be too soon to see the immediate impact. DAG Monaco’s announcement did not change any existing laws, but it put potential whistleblowers on notice that their efforts may have additional financial benefits. Thus, DAG Monaco stressed the importance of compliance programs, stating, “I can assure you the price of committing another violation will be far higher than the cost of preventing one.” Id. DAG Monaco encouraged the use of compliance programs and self-disclosure of potential violations, which may prevent financial awards to potential whistleblowers who must be the first to report a violation. To anyone considering a potential self-disclosure, DAG Monaco gave pointed advice: “knock on our door before we knock on yours.” Id.

Now is a good time to evaluate and invest in your company’s compliance programs. Assessing current risk and appropriately investigating suspected or potential misconduct can help ensure your business is compliant with laws and regulations. The development of effective compliance programs also helps identify potential training that might be beneficial to help foster a culture of compliance, transparency, and encouraging ethical behavior.

Jackson Lewis attorneys are experienced and available to discuss proactive steps for sound corporate governance/compliance strategies and programs to prevent future liability.

  1. Office of Public Affairs | Deputy Attorney General Lisa Monaco Delivers Keynote Remarks at the American Bar Association’s 39th National Institute on White Collar Crime | United States Department of Justice ↩︎

When workplace misconduct, whistleblowing or harassment is at issue, employers commonly turn to outside investigators to help ensure an unbiased investigation that will withstand challenge in future litigation. Engaging an investigator who is an attorney helps ensure that the investigation file and report will be protected by attorney client privilege. Employers may later decide to waive that privilege and produce the report, which can give rise to mandatory disclosure of the investigator’s entire file and, potentially, testimony by the investigator. These tips help protect the privilege that applies to the investigation and help ensure the integrity of the investigation.

  1. Watch What You Tell the Investigator.
    At the start of an investigation, it is tempting to provide the investigator with a download of all relevant details – for example, that the employer finds the claimant not to be credible, or the employer’s opinion on the likely outcome of the investigation. Instead, provide the investigator with just the basic information to enable them to conduct the investigation – let the witnesses provide the details, and allow the investigator to draw their own conclusions about credibility and outcome.   
  2. The Employer Decides the Scope.
    Issues often arise that are beyond the scope of the investigation as initially envisioned. For example, a witness may have their own complaint, or allegations of unrelated misconduct may arise. When this occurs, the investigator should return to the employer to determine whether the investigator’s mandate should be expanded to include these issues. The employer determines its instructions to the investigator.
  3. Let the Investigator Decide What to Do.
    The investigator should decide what witnesses to interview and documents to review. If the employer is part of these decisions, the integrity of the investigation could be challenged on the basis that the employer played too large a role in shaping the investigation. Instead, provide the investigator with the complaint, and possibly very key documents, such as clearly applicable policies, a write-up given to the claimant if directly relevant, or an annual review that is being challenged. If the complaint is not in writing, it should be reduced to writing by someone representing the employer, with the claimant confirming it is accurate.
  4. Don’t Ask the Investigator for Legal Advice.
    When an attorney conducts the investigation, the investigator should not also provide legal advice to the employer; another attorney should be engaged for this purpose. Questions to direct to separate counsel may include, for example, the scope of the investigation (see #2 above); how to handle a reluctant witness; managing performance issues of the claimant, accused or witnesses while the investigation is pending; or the possibility of intermediate measures such as separating the claimant from the accused or putting one or both on administrative leave. Obtaining legal advice from the investigator creates the risk that that advice will be discoverable as part of the investigator’s file. 
  5. Handling Draft Reports.
    Ideally, at the end of the investigation the investigator should provide their factual findings and conclusions by way of an oral report to the employer, before the employer decides whether to obtain a written report. When a written report will be prepared, the best practice is for the employer not to review drafts of that report, since those drafts may ultimately be discoverable. If a draft is reviewed, the employer should correct factual misstatements but should not influence factual findings or conclusions.  
  6. Separate Recommendations from Findings of Fact.
    If the investigator is asked to make recommendations, they should be listed in a separate document from findings of fact and conclusions reached by the investigator. Recommendations may include, for example, that the accused should attend training, that policies should be changed, or that an employee should receive a written warning or performance improvement plan. Keeping recommendations separate from the rest of the report helps protect those recommendations from disclosure later on.   

The growing concern around cyberthreats for companies across the nation is reflected in the increasingly crowded legislative landscape that provides guidance to organizations, employers, employees, consumers, and investors. As part of that landscape, enterprises — both public and private — operate under an unprecedented level of scrutiny. Last month, new SEC requirements went into effect for public enterprises. Final Rule: Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure (the “Rule”). The Rule not only requires public enterprises to report cyber breaches within only four days, but it also requires annual disclosure of material information regarding cybersecurity risk management, strategy, and governance and other periodic disclosures about the enterprise’s processes for assessing, identifying, and managing material cybersecurity risks, management’s role in assessing and managing material cybersecurity risks, and the board of directors’ oversight of cybersecurity risks.

This Rule adds yet another layer to the complicated issues of managing cybersecurity risks, but strong corporate governance equips companies to address them efficiently and accurately. The best practices for public companies that must comply with the SEC’s Rule also guide advice for private entities for managing cybersecurity risks. Key components of the SEC’s Rule shine a light on action items for preventing, navigating, and responding to cyberthreats through strong board governance and engagement, including:

  1. Identify cybersecurity risks as a required disclosure to the organization’s Board;
  2. Ensure the Board understands that it is responsible for oversight of the organization’s cyber security program;
  3. Provide the Board with “decision-useful” information relative to cyber risks;
  4. Train leadership on the necessity of reporting actual and potential cybersecurity incidents and risks to the Organization’s Board;
  5. Create a cybersecurity breach response plan enforced by the Board;
  6. Perform stress tests of the cybersecurity breach plan, with Board participation; and
  7. Leadership and the Board should engage with the Organization’s IT/ Data Governance Teams to ensure best practices are being followed, including ensuring employees are trained on cybersecurity risks.

If you have questions or need assistance with Corporate Governance related to cybersecurity risks or with the SEC’s Final Rule regarding Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, please reach out to the Jackson Lewis attorney with whom you regularly work, or any member of our Corporate Governance and Internal Investigations Practice Group and/or our Privacy, Data and Cybersecurity Practice Group.

Whistleblower claims of all types generally require proof of three elements; a complaint of conduct believed to be unlawful (protected activity), some form of discipline (an adverse action), and proof that the adverse action was motivated by the protected activity (causation). Oftentimes, the existence of an adverse action (such as termination) is undisputed. In whistleblower cases, the disputed issues typically relate to whether an individual engaged in protected activity and whether they can prove causation. The Pennsylvania Appellate Court, in an unpublished, non-precedential decision, recently addressed what evidence is sufficient to prove causation.

In the Pennsylvania case, David Olson sued Lehigh University alleging that he had been fired as a result of his internal complaint that the university reported inflated numbers of job postings and on-campus interviews. The trial court granted summary judgment to the University after finding that Olson did not present sufficient evidence to establish that his report resulted in his termination. The court noted that Olson did not “allege that his supervisors threatened to fire him or to impose any other adverse consequences because of his report.” The court ruled that Olson’s subjective contention that his supervisor “did not like the fact that the data was revealing inaccurate reporting, and the relationship changed after that”, and that “all of a sudden things got cold with [his] supervisor” was insufficient. The court noted that Olson’s reliance on vague and inconclusive circumstantial evidence did not constitute the concrete evidence of causation required under Pennsylvania law.

When defending or evaluating these claims, we are often faced with subjective testimony from the alleged whistleblower claiming they were treated differently after engaging in protected activity. This subjective assessment can include feeling isolated, not being engaged by team members, not receiving plum assignments and a general feeling that the plaintiff was being treated differently. The defendant’s arguments in the Olson case, while non-precedential, will be worth keeping in mind regardless of jurisdiction when defending whistleblower claims where the plaintiff asserts subjective perceptions and feelings in an effort to establish causation. 

Jackson Lewis attorneys are available to further discuss investigations, whistleblower defenses and preventive strategies.

NLRB General Counsel Jennifer Abruzzo is pressing for stricter enforcement against the use of workplace technologies to monitor employees.  As a result, employers should consider the National Labor Relations Act (the “Act”) when conducting forensic reviews of employee emails and texts during internal investigations. 

On October 31, 2022, Abruzzo issued Memorandum GC 23-02 titled “Electronic Monitoring and Algorithmic Management of Employees Interfering with the Exercise of Section 7 Rights.”  This memo urges the NLRB to find that employers presumptively violate the Act if their electronic monitoring and automated management practices interfere with or prevent covered employees from engaging in protected concerted activity. 

Abruzzo suggests a new legal framework for determining the lawfulness of electronically monitoring employees.  Her memo proposes that if the employer establishes that their surveillance practices are “narrowly tailored” to address a legitimate business need (i.e., that its need cannot be met through means less damaging to employee rights), the Board should balance the respective interests of the employer and the employees to determine whether the Act permits the employer’s practices.  Even if the employer’s business need outweighs the employee’s rights, Abruzzo suggests that an employer should be required to disclose to employees the technologies it uses to monitor and manage them, its reasons for doing so, and how it is using the information it obtains.

When conducting internal investigations, employers should be cognizant of the NLRB General Counsel’s new focus relating to electronic monitoring.  A forensic review of employee emails and texts should be carefully tailored to the situation to make it more likely to be acceptable under any new standard the NLRB may set based on Abruzzo’s initiative.  Employers should consider whether their existing policies are appropriately tailored and sufficiently address the review of e-mails/texts during an internal investigation.

Employers should be aware of other examples Abruzzo identifies relating to how the increased use of new technologies for monitoring employees might violate the Act, including: (1) using wearable devices, security cameras, and radio frequency identification badges to track conversations and movements; (2) inserting GPS tracking devices and cameras in vehicles used by employee drivers; and (3) utilizing computers to monitor employees in call centers, offices, or at home through keyloggers and software that takes screenshots, webcam photos, or audio recordings throughout the day.

Her memo also considers when surveillance extends to break times and nonwork areas – which could be viewed as preventing employees from engaging in solicitation or distribution of union literature during nonworking time.  Just recently, in Stern Produce Company, 372 NLRB No. 74 (Apr. 11, 2023), the Board considered a situation where a known union-supporting employee was told by his supervisor not to cover the inside-facing camera in his truck during a lunch break.  The Board found that the employer violated the Act because the supervisor’s actions created an impression of surveillance which departed from the Employer’s past practice as the employee was never told not to cover the camera during his lunch break and was not aware of a policy prohibiting employees from doing so.

In sum, employers should keep their eye on the possible NLRB impact on internal investigations. Considering Abruzzo’s memo, employers should evaluate their electronic monitoring policies, and review NLRB updates on enforcement against such practices as well as their internal investigation strategies for legal compliance on an ongoing basis.

The Jackson Lewis Corporate Governance and Internal Investigations practice group is well-versed in workplace surveillance issues and continues to analyze ongoing developments in the area.  Please contact a Jackson Lewis attorney with any questions regarding workplace surveillance and any other corporate governance and internal investigations developments.

In late December 2022, in conjunction with an omnibus spending bill, Congress passed the Anti-Money Laundering Whistleblower Improvement Act, which President Biden signed into law on December 29, 2022. This law permits whistleblowers to receive 10% to 30% of any monetary sanction the government imposes over $1 million for money laundering.  Money laundering is the process of concealing the origin of illegally-obtained money – typically acquired through illicit activities such as drug trafficking, corruption, embezzlement, or gambling – by converting it to legitimate sources. 

Depending on the size of the case, whistleblower awards under the new law can be substantial, running into the millions or tens of millions of dollars.  Not surprisingly, these changes are aimed to incentivize whistleblowers to report wrongdoing.

In light of the new law, employers could expect to see a considerable surge in whistleblower claims against their organizations.  In preparation, they should look to enhance their “speak-up” policies and other reporting channels; examine their investigation protocols; review their audit procedures to ensure there is a clear process for identifying red flags; and invest in training with respect to these types of issues.  Training is especially important with respect to front-line managers who play a critical role in responding to concerns raised and ensuring that there is no subsequent retaliation as a result.

Under federal law, retaliation is prohibited against whistleblowers and can include any action that affects the terms and conditions of the employee’s employment, including discipline, reduction in pay, suspension, demotion, or termination, among other things.  Several states, including New York, New Jersey, Virginia, and California have broader protections against retaliation for whistleblowers, so if an employer has employees in these states, additional efforts should be made to ensure compliance with the applicable laws.

It is important to note that the SEC and other federal agencies have taken the position that employees may be able to disclose what the employer believes is confidential information if they are doing so in the context of reporting and/or investigating unlawful conduct, such as money laundering.  This appears to be the case even if the employer has internal policies strictly indicating otherwise.    

To discuss ways to improve the policies in your organization, effectively roll out training, and minimize potential exposure to whistleblower claims under the new law, please contact a Jackson Lewis attorney.

Over the years, the Securities and Exchange Commission has taken aim at common language in settlement and severance agreements regarding nondisclosure and confidentiality. It has been relatively commonplace for such agreements to include language that requires, for example, the settling or departing employee to agree not to disclose the employer’s confidential information or trade secrets, and/or that, when disclosures are required by the employee by law, the employee will notify the company’s legal department in writing.  This is no longer permitted.

The SEC also forecloses language in the agreements that permit the filing of a charge with the federal agency, but attached to that a waiver by the employee of a right to any monetary recovery in connection with such a complaint or charge.

Rule 21F-17, which followed the passage of the Dodd- Frank Wall Street Reform and Consumer Protection Act, provides the SEC with its rationale. The Rule states that “[n]o person may take any action to impede an individual from communicating directly with commission staff about possible securities law violations, including enforcing, or threatening to enforce, a confidentiality agreement … with respect to such communications.”  Both the NLRB and EEOC have taken similar stances. Language such as that cited above can be and in some cases have been viewed as an illegal impediment to the right of individuals to communicate with these regulatory agencies.

The SEC assessed a monetary penalty of $265,000 against a publicly traded company in 2016 where its severance agreement required employees to waive their rights to monetary recovery if they filed a charge or complaint with the SEC or other federal agencies, and prohibited the disclosure of confidential employer information except under compulsion by law, after first notifying the company and obtaining its written consent. The SEC noted that in part, these provisions removed financial incentives that could encourage employees to communicate with the commission.

In a separate enforcement action involving another publicly-traded company, the SEC assessed a monetary penalty of $340,000 for the inclusion in the severance agreement of provisions that employees could freely participate in investigations or proceedings before any agency, but that they waived any individual monetary recovery. Again, the commission found that the agreement removed “critically important financial incentives that are intended to encourage persons to communicate directly” with commission staff about violations of securities law.

The SEC has not targeted closely- held businesses to date, but the possibility exists that a private company that contracts with publicly traded firms could be subject to scrutiny for these provisions. Further, even privately held companies may find themselves the subject of scrutiny by agencies such as the NLRB and EEOC.

Jackson Lewis attorneys can assist employers get prepared for 2023 by reviewing and updating employment-related agreements particularly given the changing landscape. The firm has a nationwide presence and stands ready to assist employers with these and other labor and employment concerns.

The Biden Administration recently announced increased coordination between EEOC, the US DOL and the NLRB to strengthen an intra-agency approach focused on combatting unlawful workplace retaliation.  The approach will raise awareness and engage not only workers and the public, but also other key stakeholders, including employers.

Given the Administration’s focus, employers should anticipate aggressive coordination and joint enforcement efforts which will take advantage of the full range of resources and tools available within the government as the agencies work to secure workers’ rights because workplace experience issues in multiple, intersecting dimensions of their employment may not be completely covered by any single agency’s jurisdiction.

Prudent employers want to do the right thing – prevent retaliatory actions and behavior in their workplace.  But, acknowledging human nature, we know that the impulse to “get even” exists.  What can be done to show that an employer has taken every reasonable measure to mitigate the risks of a “bad actor” creating legal and brand risk for the organization?

Several practical steps exist, each of which must be tailored to suit the organization, ranging from the most benign, to the most severe approach.  Some of those steps include:

  • Put in place a written, widely circulated and easily understood – in layperson’s language – policy prohibiting retaliation.
  • Distribute the policy both to new hires when onboarding, and to incumbent employees at every level within the organization.  Senior-level leaders absolutely must consistently show that the policy applies to all within the organization, including to themselves.
  • Make clear that the policy applies to all employees, is linked directly to the organization’s values, and that violations will be dealt with sharply and consistently.
  • The policy should appear in the organization’s practices and procedures manual, handbooks and code of business ethics.
  • Require signed acknowledgments of receipt and understanding should be maintained and should be renewed/revisited annually.
  • Evaluate the risk attached to mid- and senior-level leaders, and influential individual contributors who may become the focus of claims or an investigation, and in the event of a claim, make clear that the burden of persuasion will fall on them individually or jointly to show that they played no part in any retaliatory behavior.
  • Make clear to all complainants and cooperating witnesses that the organization needs to hear about any concern that the individual might view as hostile within their work environment, and put in place routine, periodic, and systematic check-in’s to be certain that no complainant or witness has been subjected to retaliatory or unfair treatment.
  • Put in place a close, arm’s length review protocol for any employment actions affecting any complainant or witness prior to execution of any employment action using decisionmakers who played no role in and ideally are ignorant of the underlying claims.
  • Where heightened risk warrants doing so with senior-level leaders, in the event of a claim, present senior leaders with mandatory alternatives of [i] accepting a paid leave of absence until resolution, or [ii] remaining in role and entering into an agreement that allows for “Detrimental Conduct”-based claw back of compensation, with warning that finding of retaliatory conduct will result in termination for “Cause”, and ineligibility for rehire.
  • As permitted by law, consider a fee-shifting agreement under which an individual credibly accused of and determined by the organization to have engaged in retaliatory behavior or conduct, is in any action brought against the organization by the target or by a regulatory agency, responsible for payment to the organization’s defense costs.

There are more practical and effective solutions.  We can help you find them.  If you have any questions, please speak with a Jackson Lewis attorney.

As companies plan and strategize about next steps regarding the  “S” of ESG, i.e., Social initiatives, we are often asked about best practices in promoting Diversity, Equity, and Inclusion (DEI)  goals in the workplace.   Companies increasingly are seeking to tie compensation to DEI goals. Doing so demonstrates the company’s commitment to DEI, and rewards positive efforts. Of course, as any prudent lawyer would say, one needs to tread carefully and understand the path chosen.  Jackson Lewis principal Michael Hatcher, who regularly counsels employers in this area, advises that companies need to be careful not to tie compensation to any specific “hire” or “promotion” decision.   Such a practice could lead to claims that the company is incentivizing unlawful race/gender-based employment decisions, despite a laudable goal.

Instead, there are a variety of ways to carefully design a lawful compensation strategy to minimize exposure to litigation.  Such programs typically take into account the “big picture” of what the company is trying to achieve, rather than tie awards to “numbers.” Accordingly, Hatcher recommends relying upon a broader array of factors when creating the appropriate compensation program. Examples include, but are not limited to:

  • Manager evaluations, where the company can develop concrete examples that would be applied across the board, such as attendance at implicit bias training or actively mentoring others across racial, gender, or other boundaries.
  • Team-approach to bonuses, where for example, a particular level of company leadership is eligible to receive the reward based upon “team performance,” not individual effort, against appropriate benchmarks.  Benchmarks are typically goals a company strives for in their DEI efforts, and they need to be carefully crafted to avoid claims of bias.

The strong support of DEI initiatives by leadership and corporate culture play an important role in developing and carrying out these programs. 

Once the appropriate incentive program is developed, careful communication, both internal and external, will be paramount to its success. Internal communications will help educate and train stakeholders on the company’s DEI’s initiatives, as well as the limitations imposed by laws such as Title VII’s prohibition against discrimination, which includes so-called “reverse discrimination” against whites and men.  External communications can help enhance the success of the company’s DEI efforts.  Training to reinforce what company management can do to lawfully promote DEI initiatives within the bounds of antidiscrimination laws should be complemented by a strong communications program.

As this remains an evolving area, it is always important to seek legal counsel before tying compensation to DEI goals.  Please contact the Jackson Lewis attorney you regularly work with if you have any questions.