Employment separation and layoffs can present some unique challenges for the compliance practitioner. Employees can use layoffs to claim that they were retaliated against for a wide variety of complaints, including those for concerns that impact the compliance practitioner. Yet there are several ways that operationalization will help to protect your company as much as possible.

Before you begin your actual layoffs, the compliance practitioner should work with your legal department and HR function to make certain your employment separation documents are in compliance with the Securities and Exchange Commission (SEC) requirement regarding Confidentiality Agreement and Separation Agreement language which purports to prevent employees from bringing potential violations to appropriate law or regulatory enforcement officials. Such documents must not have language preventing an employee taking such action. But this means more than having appropriate or even approved language in your CA, as you must counsel those who will be talking to the employee being laid off, not to even hint at retaliation if they go to authorities with a good faith belief of illegal conduct. You might even suggest, adding the appropriate language to your script so the person leading the conversation at the layoff can get it right and you have a documented record of what was communicated to the employee being separated.

When it comes to interacting with employees first thing any company needs to do, is to treat employees with as much respect and dignity as is possible in the situation. While every company says they care (usually the same companies which say they are very ethical), the reality is that many simply want terminated employees out the door and off the premises as quickly as possible. At times this will include an ‘escort’ off the premises and the clear message is that not only do we not trust you but do not let the door hit you on the way out. This attitude can go a long way to starting an employee down the road of filing a claim for retaliation or, in the case of FCPA enforcement, becoming a whistleblower to the SEC, identifying bribery and corruption.

Treating employees with respect means listening to them and not showing them the door as quickly as possible with an escort. From the compliance perspective this could also mean some type of conversation to ask the soon-to-be parting employee if they are aware of any FCPA violations, violations of your Code of Conduct or any other conduct which might raise ethical or conflict of interest concerns. You might even get them to sign some type of document that attests they are not aware of any such conduct. I recognize that this may not protect your company in all instances but at least it is some evidence that you can use later if the SEC or Department of Justice comes calling after that ex-employee has blown the whistle on your organization.

I would suggest that you work with your HR department to have an understanding of any high-risk employees who might be subject to layoffs. While you could consider having HR conduct this portion of the exit interview, it might be better if a compliance practitioner was involved. Obviously, a compliance practitioner would be better able to ask detailed questions if some issue arose but it would also emphasize just how important the issue of FCPA compliance, Code of Conduct compliance or simply ethical conduct compliance was and remains to your business.

Finally, are issues around hotlines, whistleblower and retaliation claims. The starting point for layoffs should be whatever your company plan is going forward. The retaliation cases turn on whether actions taken by the company were in retaliation for the hotline or whistleblower report. This means you will need to mine your hotline more closely for those employees who are scheduled or in line to be laid off. If there are such persons who have reported a FCPA, Code of Conduct or other ethical violation, you should move to triage and investigate, if appropriate, the allegation sooner rather than later. This may mean you move up research of an allegation to come to a faster resolution ahead of other claims. It may also mean you put some additional short-term resources on your hotline triage and investigations if you know layoffs are coming.

The reason for these actions are to allow you to demonstrate that any laid off employee was not separated because of a hotline or whistleblower allegation but due to your overall layoff scheme. However it could be that you may need this person to provide your compliance department additional information, to be a resource to you going forward, or even a witness that you can reasonably anticipate the government may want to interview. If any of these situations exist, if you do not plan for their eventuality before you layoff the employee, said (now) ex-employee may not be inclined to cooperate with you going forward. Also if you do demonstrate that you are sincerely interested in a meritorious hotline complaint, it may keep this person from becoming a SEC whistleblower.

Three Key Takeaways

  1. Treat departing employees with dignity.
  2. Make sure your separation documents meet SEC requirements regarding disclosures re: whistleblowing.
  3. You must check your hotline and anonymous reporting systems to make sure you do not lay off a whistleblower.


This month’s series is sponsored by Advanced Compliance Solutions and its new service offering the “Compliance Alliance” which is a three-step program that will provide you and your team a background into compliance and the FCPA so you can consider how your product or service fits into the needs of a compliance officer. It includes a FCPA and compliance boot camp, sponsorship of a one-month podcast series, and in-person training. Each section builds on the other and provides your customer service and sales teams with the knowledge they need to have intelligent conversations with compliance officers and decision makers. When the program is complete, your teams will be armed with the knowledge they need to sell and service every new client. Interested parties should contact Tom Fox.

Show Notes for Episode 51, for the week ending May 5, the Cinco de Mayo Edition

Over some breakfast tacos and Mexican coffee, Jay and I have a wide-ranging discussion on some of the week’s top compliance related stories. We discuss:

  1. Uganda considers a demand side response to corruption. See Tom’s article in Compliance Week. What are the rationales for anti-corruption legislation? See Tom’s post on the rationales underlying the FCPA on the FCPA Compliance Report.
  2. Why due diligence investigations still need the human element. See Scott Shaffer’s article in FCPA Blog.
  3. Kara Brockmeyer joins Debevoise & Plimpton LLP. See Tom’s article in the FCPA Blog.
  4. What has been the fate of whistleblowers at Wells Fargo. See James Stewart considers in his Common Sense column in the New York Times.
  5. Federal jury convicts former Guinea mining minister of laundering bribes. See article in the FCPA Blog.
  6. Astros lead the AL with the second best record in baseball. What does Tony Parker’s injury mean for the Spurs/Rockets playoff series?
  7. The Financial Reporting Council (FRC) investigates KPMG on its audits of Rolls Royce for the firm’s failure to detect bribes paid by the company. See article in the FCPA Blog.
  8. Listeners to this podcast can received a discount to Compliance Week 2017. Go to registrationand enter discount code CW17TOMFOX.

In this episode I visit with white collar defense and Qui Tam specialist Joel Androphy about prosecution of whistleblower claims at the federal and state level. Androphy explains what type of evidence is required to file such a claim, have the government take over the action and what a whistleblower may expect. It is a fascinating view from a whistleblower expert counsel at the state and federal level. Joel Androphy can be reached at jandrophy@bafirm.com. For more information about his practice areas, including whistleblower claims, False Claims Act lawsuits and Qui Tam claims; check out the firm website at bafirm.com.

In this episode, Jay Rosen returns from a week’s trip to Walt Disney World. Jay and I have a wide-ranging discussion on some of the week’s top compliance related stories. We discuss:

  1. DOJ Criminal Division’s Acting Principal Deputy Assistant Attorney General remarks on the FCPA and its enforcement. – See text of speech by clicking here. See Matt Kelly’s blog post by clicking here.
  2. Whistleblowers in the news. See Tom’s article on the Barclay’s CEO and Amtrust in FCPA Blog and on KPMG in Compliance Week. Mike Volkov weighs on whistleblowing as indicia of corporate culture here.
  3. One year reports note that declinations are on the rise under the on the now one-year old FCPA Pilot Program. For Miller & Chevalier report click here (sub. req’d). For the Stanford University FCPA Clearinghouse Report in the Wall Street Journal, click here.
  4. Tribute to Kara Brockmeyer, retiring as head of the SEC’s FCPA Unit. See Tom’s article in Compliance Week.
  5. Jay details his upcoming conference schedule and weekend report on ethics and compliance observations from the Florida version of the Magic Kingdom.
  6. Listeners to this podcast can received a discount to Compliance Week 2017. Go to registration and enter discount code CW17TOMFOX.

2016 was more than simply the most robust year in Foreign Corrupt Practices Act (FCPA) enforcement. It was also a record year in Securities and Exchange Commission (SEC) whistleblower awards and additionally the year the SEC literally crashed through the $100 million mark for whistleblower awards under Dodd-Frank. It would therefore seem like a very propitious time for a well-rounded conference focusing solely on this issue. Fortunately for us in the compliance space, Financial Research Associates and Compliance Week have answered the call with the Whistleblowers & Compliance conference to be held in NYC on February 27, 2016. In this episode I visit with Conference Chair, Gregory Keating, on the upcoming event.

Best of all listeners to this podcast will receive a discount to the event. You can receive a 15% discount off the regular price by entering the Code CMP 161. For more information on the event, check out the website by clicking here.