Key Takeaways

• When making charging decisions, the DOJ will now consider whether a company has developed compliance-promoting criteria within its compensation system and will require all companies seeking resolutions with the Department to develop such criteria under a new pilot program.
• The DOJ’s new pilot program also offers reduced criminal fines for companies that fully cooperate, timely and appropriately remediate, and seek to claw back compensation from corporate wrongdoers. In addition, companies may retain any compensation recovered from the employee-bad actor.
• Companies seeking to develop programs under these new initiatives will need to pay serious attention to state wage and hour laws that may have limitations on their ability to effectively implement certain clawback mechanisms.

On March 15, 2023, the U.S. Department of Justice (DOJ or the Department) launched a three-year Compensation Incentives and Clawbacks Pilot Program (Clawback Program) intended to incentivize companies to create more robust compliance programs by connecting compliance with compensation structures for executives and employees. This new policy follows mandates announced in Deputy Attorney General Lisa Monaco’s September 15, 2022, Department-wide Memorandum, followed by revisions to the DOJ’s Evaluation of Corporate Compliance Programs (ECCP) on March 3, when, for the first time, the Department sought to incentivize companies to create compensation systems that clearly and effectively...

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