What is the United States Sentencing Commission? An E&C overview.

The United States Sentencing Commission (USSC) established the first organizational sentencing guidelines in 1991. The US federal sentencing guidelines set out the type of punishment and reforms federal judges are advised to implement when sentencing an organization (such as a public company) for a violation of federal law. This organization has released a new publication that applies to the sentencing of all organizations—such as public companies—for felony and Class A misdemeanor offenses. This report includes guidance on developing and maintaining effective compliance and ethics programs in order to prevent, detect, and report criminal conduct.  

What is the United States Sentencing Commission? How does it connect to compliance? 

The United States Sentencing Commission is a bipartisan, independent agency that studies and develops sentencing policies for the federal courts to reduce disparities and promote transparency and proportionality in sentencing. Created by Congress in 1984, the USSC is located in the judicial branch of the US government and serves as a resource for Congress, the executive branch, the courts, and the public on matters relating to federal crime and sentencing.  

In its new 2022 report, The Organizational Sentencing Guidelines: Thirty Years of Innovation and Influence, the USSC concludes that the most important impact of the federal sentencing guidelines is not the number of companies convicted, or the billions collected in fines, but rather the enormous impact that the guidelines have had on compliance by establishing universally-regarded standards for effective compliance programs. 

As noted by the USSC, the major innovations of the organizational guidelines include "(1) incentivizing organizations to self-police their behavior; (2) providing guidance on effective compliance and ethics programs that organizations can implement to demonstrate efforts to self-police; and (3) holding organizations accountable based on specific factors of culpability." 

What’s the difference between individual and organizational sentencing? 

There are several distinct differences between the sentencing of organizations versus individuals. To start, organizations cannot be jailed. Instead, sentencing for organizations involves the assessment of fines and restitution, as well as mandating the implementation of compliance reforms. Over two-thirds of the cases involving organizational offenders also include a period of probation for the organization with an average term of 39 months that requires compliance with a probation officer. One of the requirements is that the organization give up the names of the individuals involved in the crime. Often, the costs associated with fines and compliance measures required during the company's probation will result in the inability for the company to continue, as 70% of companies convicted are small organizations with fewer than 50 employees. 

Individuals who have been accused of committing or being involved in a crime at their organization are generally required to serve jail time for their offenses. Many times, these are not high-ranking officials in the company, but rather employees who got caught up in misconduct because the organization lacked effective policies and training to meet compliance requirements. 

The sentencing guidelines show that there is no "one-size-fits-all" approach to sentencing organizations and the individuals who work for them. Instead, there are a number of factors involved in developing a sentence, including whether the crimes were self-reported by the organization, whether the organization and its employees cooperated with the investigation, and whether individuals accepted responsibility for the actions that occurred.  

How are the USSC’s federal sentencing guidelines different from DOJ guidance? 

Occasionally, the Department of Justice (DOJ) will release guidelines in order to show organizations what a good ethics and compliance program looks like. This differs from USSC federal sentencing guidelines in a few different ways, including: 

  • DOJ guidelines are non-binding. Rather, they provide best practices for companies to use when developing their own E&C programs. USSC federal sentencing guidelines, on the other hand, are a set of binding rules and considerations that must be made when organizations and individuals are being sentenced for federal white-collar crimes. 
  • The DOJ guidelines instruct organizations about how to develop effective E&C programs and train their employees to make ethical decisions that will avoid federal investigations into the organization's business practices, as well as the incurrence of organizational fines and jail sentences for individual offenders. 
  • Companies and their employees who have attempted to follow the DOJ guidelines typically face reduced penalties during sentencing, such as self-reporting the crime and accepting responsibility. 

The most recently revised DOJ  guidelines note that the E&C programs that most effectively shield the organization and individuals from consequences include those that are adequately resourced with authority, staffing, and budget; are tailored to the company's unique compliance risks; and cause the business and its employees to participate in regular conversations and efforts to avoid compliance risks. 

Are there examples of how effective compliance programs meet USSC guidelines?  

Yes. Having an ethics and compliance program helps to mitigate risk, and data from the United States Sentencing Commission proves it. Since fiscal year 1992, the overwhelming majority of organizational offenders—nearly 90%—had virtually no E&C program in place. More than half of those convictions (53%) also had a person facing a criminal repercussion. And 75% of the time, the person being sentenced was a lower-level member of a company with some authority—such as a manager or more senior employee.  

Since 2000, nearly a fifth of organizational offenders have been ordered by the court to implement an effective E&C program as part of their sentencing. The USSC guidelines state that smaller organizations are expected to exhibit the same commitment to detecting and preventing criminal activity as large ones, however, they are granted the ability to implement less formal E&C procedures, such as having the governing authority directly manage the E&C program, training employees through informal staff meetings, and ensuring compliance through regular "walk-arounds" of the company that occur during regular management tasks.

What else should I know about meeting federal sentencing guidelines?

A comprehensive training program is an essential part of meeting USSC guidelines and maintaining a strong E&C program. To learn more, check out LRN's practical tools for building an effective E&C program or get in touch with a member of our Advisory Services team.  


The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers should consult with their own attorney regarding legal matters.