Whistleblower Protections
Federal Legislation Seeks to Eradicate Corruption
Most people know of whistleblowing as a tool to disclose wrongdoing in the workplace, but there is a much richer and more dramatic history behind the act and its legal implications. A whistleblower is defined as an individual who exposes a person, organization, or institution that engages in illicit or illegal activity. The earliest detailed whistleblowing case in the United States occurred in 1773 when two seamen reported the unethical torture of British prisoners of war advised by the Commander in Chief of the Continental Navy. In 1989, the United States passed the Whistleblower Protection Act, specifically targeted towards federal whistleblowers who discovered internal law violations. This act prohibits federal agencies from retaliating against any employee who acts as a whistleblower. The added protection of this legislation works to eradicate corruption within the government by encouraging whistleblowers to speak up. However, as stated in its definition, whistleblowing is not limited to federal operations.
Corporate corruption is not a new activity, nor does it show signs of ceasing in the future. Enron is one of the most notable cases of whistleblowing that revealed corporate-wide fraud and misconduct. Sherron Watkins, an executive at Enron, wrote an anonymous one-page complaint before revealing her identity to meet with Enron's chief executive. Her grievances began a domino effect that led to Enron's implosion. Unfortunately, in August 2001, the U.S. Security and Exchange Commission (SEC) failed to protect Watkins's identity, ending her corporate career. Fortunately, the SEC now allows whistleblowers to submit accusations anonymously. This option guarantees confidentiality for those reluctant to report due to consequences on their career or personal life. The Office of the Whistleblower orchestrates the SEC's whistleblower program. Whistleblowers can anonymously submit tips through the SEC's secure TCR system. If a tip leads to enforcement action, the SEC also awards whistleblowers monetarily. Despite only being implemented within the last decade, these new practices and award systems have shown favorable results. Within the 2021 fiscal year, the SEC received a record number of around 12,200 whistleblower tips.
The Sarbanes-Oxley Act of 2002 was the federal government's direct reaction to Enron and various related corporate and financial scandals. The legislation covers several areas regarding record-keeping and reporting. Whistleblowing is one of the provisions addressed in Section 806. The section states that employees, agents, and officials of public companies are prohibited from retaliating against an employee for disclosing violations of protected conduct. Retaliation includes any action from harassing, threatening, or revealing the whistleblower's identity. Section 806 also lists remedies if such action is found against a company. These remedies include compensation, reinstatement, back pay with interest, and other appropriate relief measures. In 2015, Tyler Shultz, an employee at Theranos and the grandson of former U.S. Secretary of State George Shultz, a Theranos board member, contacted the New York State Department of Health and The Wall Street Journal after discovering counterfeit lab results. Shultz's decision to unveil the inner goings of Theranos exposed its history of fraudulent practices, leading to its collapse in 2018. Like other tech giants in the last few years, Facebook has been on the receiving end of whistleblowing. In October 2021, an anonymous whistleblower submitted documentation to the SEC, alleging that Facebook officials have avoided contesting misinformation and dangerous speech to guarantee the company's profits and financial growth. These infamous incidents highlight how integral whistleblowers are in maintaining honest business practices. Whistleblower protection acts encourage whistleblowing by providing security and relief from the inherent risks of speaking out against massive corporations.
Today, workplace violations are more frequently reported in light of COVID-19. The Department of Labor protects whistleblowers from employer retaliation, such as layoffs, demotions, or reductions in pay or hours. OSHA's whistleblower protection program covers whistleblowers who report health and safety concerns. If your workplace is unsafe during the pandemic, you have the right to file a complaint and are entitled to protection from any retaliation.
To file a report to the SEC, submit a tip using its online system. Similarly, OSHA has an online complaint form to report a safety or health complaint. If your employer has retaliated against you for a complaint, please utilize OSHA's whistleblower complaint program. Refer to more information on the Sarbanes-Oxley Act of 2002; refer to its full reading online. Finally, to learn more about the SEC's whistleblower complaint system, feel free to review their website or contact them with question
