A new Department of Justice program that offers cash rewards to whistleblowers is likely to encourage employees to bypass internal ethics hotlines, a fundamental tool companies utilize to mitigate internal wrongdoing before it escalates. Legal experts express concerns about this shift, highlighting potential risks for companies relying heavily on internal mechanisms.
“There could be certain employees who choose not to report internally because they have a prospect of a whistleblower award at DOJ,” said Steve Fagell, a Covington & Burling partner.
Carolyn Small, special counsel at Jenner & Block and a former assistant U.S. attorney, adds that the program “creates the risk of disincentivizing internal reporting.”
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