Earlier this week, the White House issued an executive order pausing enforcement of the Foreign Corrupt Practices Act (FCPA). The FCPA prohibits U.S. companies and individuals (as well as some foreign entities) from bribing or making similar payments in order to obtain business outside of the U.S. The order states that these prohibitions place U.S. businesses at a competitive disadvantage compared to foreign companies not subject to these restrictions.

Many U.S. companies have employee policies or codes of conduct that strictly prohibit the use of payments or favors to obtain work both inside and outside the U.S. These employers may want to wait before rescinding or revising their guidelines on overseas business practices. First, the countries where U.S. companies hope to obtain business may have their own laws against such payments, and violations could subject both the company and its employees to criminal or civil investigations and sanctions. In addition, state and other federal laws in the U.S. also prohibit practices covered under the FCPA, and companies engaging in these practices could face civil suits from shareholders and other affected parties.

Next, the FCPA cannot be revoked through executive branch action, and the order suspends — but does not abandon — enforcement efforts. Even if lawsuits challenging the order do not succeed, the statute of limitations for FCPA violations is longer than the Trump administration’s time in office. Finally, before modifying their compliance polices, companies would need to consider the business and ethical impacts of relaxing their positions on foreign payments. Based on these factors, employers should wait to see how the federal government will approach FCPA compliance going forward before making changes to their policies and business practices.

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