Whistleblowers: Protecting Us and in Need of Protection

About the Author: Kristin Rheins is a first-year law student at American University Washington College of Law. Kristin is a graduate of William and Mary and hopes to pursue a career in corporate antitrust and whistleblower advocacy.

 

In a world that feels increasingly dominated not by individuals but by entities, whistleblowers occupy a precarious space. Whistleblowers take the brave risk to expose illegal activity in an organization that is illegal or somehow socially immoral.[1]

Despite their essential role in checking the power of corporate and government affairs, whistleblowers are subject to a variety of retaliatory efforts ranging from immediate termination to excessive increases in workload or even workplace bullying.[2] Legislation bridges the gap between encouraging employees to report suspect activity and preventing employers from punishing those who come forward.[3]

Whistleblowers are often key figures in disrupting organizational corruption and suspect business practices. The Dodd-Frank Wall Street Reform and Consumer Protection Act has had the largest impact on the United States judiciary.[4] The SEC has successfully charged companies who violate the act by having employees sign confidentiality agreements that threaten retaliation to employees who discuss illegal internal matters with outside parties.[5]

Certain states, like New York, are expanding their whistleblower protection laws in effort to promote ethical corporate practices and encourage employees to take have an active role in promoting healthy business practices. In January 2022, the New York State Department of Labor dramatically expanded whistleblower protections under New York Labor Law § 740.[6] Prior to this, the act required the whistleblower to demonstrate an “actual violation” of a statute or regulation that created substantial and specific danger to public health and safety.[7] Additionally, the harm had to affect the “public-at-large” as opposed to an individual or small group.[8] The new provisions protect employees who do not notify their employers before reporting misconduct they reasonably believe that their supervisors would fail to correct or even punish an employee for speaking of.[9] Prior to these expansions, whistleblowers were only protected if they reported actual violations, not ones that they reasonably believed put individuals in danger.[10] New York’s whistleblower laws are perhaps the most robust in the United States and have the potential to pave the way for more states to pass progressive legislation.[11]

Following New York’s legislation, the SEC proposed two amendments to their whistleblower program that began in 2002 and uses financial and protective incentives to encourage whistleblowers to expose federal security law violations.[12] The first proposal awards claims for related actions that would otherwise be compensated by an alternative program.[13] More specifically, this amendment would allow the Commission to pay whistleblowers awards for claims against select federal agencies.[14] The second reaffirms the SEC’s authority to enlarge the monetary amount of a potential awareness, but not to decrease it.[15]

While most of the public opinion on whistleblower legislation is positive, its opponents encourage other ways for organizations to deal with wrongdoing that do not damage an employer’s reputation, such as implementing a higher standard of employee conduct and regularly re-electing superiors.[16] The collective result of both state and administrative increases in whistleblower protection efforts may lead to a rise in litigation and overall whistleblower claims—but these expectations are not necessarily detrimental. The social emphasis and subsequent legislation on whistleblower protection urges employers, particularly larger corporate bodies with extensive bureaucratic networks, to revisit their internal codes of conduct to ensure that all employees know what acceptable (and unacceptable) behavior is.

 

 

[1] Iheb Chalouat et al., Law and Practice on Protecting Whistle-Blowers in the Public and Financial Services Sectors(Int’l  Lab. Org., Working Paper No. 328, 2019).

[2] See generally United States Department of Labor, https://www.whistleblowers.gov/.

[3] Id.

[4] Patrick A. Barthle II, Whistling Rogues: A Comparative Analysis of the Dodd-Frank Whistleblower Bounty Program, 69 Wash. & Lee L. Rev. 1201 , 1204 (2012).

[5] Kathryn Hastings, Keeping Whistleblowers Quiet: Addressing Employer Agreements To Discourage Whistleblowing, 90 Tul. L. Rev. 500 (2015).

[6] Allan Bloom & Laura Fant, New York Department of Labor Issues Required Posting for Expanded Whistleblower Protection Law, Law and the Workplace (Feb. 12, 2022), https://www.lawandtheworkplace.com/2022/02/new-york-department-of-labor-issues-required-posting-for-expanded-whistleblower-protection-law/.

[7] Lloyd B. Chinn et al., New York’s Whistleblower Protection Law Is Drastically Expanded, 12 Nat. L. Rev. 98, 99 (2022).

[8] Id.

[9] Alan Smith, New York Significantly Expands its Whistleblower Law (Feb. 10, 2022), https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/new-york-expanded-whistleblower-law.aspx#:~:text=The%20whistleblower%20reasonably%20believes%20that,the%20welfare%20of%20a%20minor.

[10] Id.

[11] Id.

[12] Press Release, U.S. Sec. and Exch. Comm’n, SEC Proposed Changes to Two Whistleblower Program Rules (Feb. 10, 2022) (on file with author).

[13] Id.

[14] Id.

[15] Id.

[16] D. Robert MacDougall, Whistleblowing: Don’t Encourage It, Prevent It, Nat. Ctr. Biotechnology Info. (2016).

 

 

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