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Column by Nancy Cooper
When Workers Speak Out
From Enron's collapse to the U.S. attorneys scandal, whistleblowers play a crucial role in exposing employer wrongdoing. Yet, the laws protecting them are varied and confusing.
While more and more employees are filing suits claiming they should be protected as whistleblowers, employers are getting increasingly confused over what the term really means -- and with good reason.
Originally, the term "whistleblower" referred to employees who reported, or attempted to report, fraud in government contracts. However, as the statutes have evolved, the term has also been attached to protections for any employee trying to exercise various rights under labor statutes or working to protect the public interest. Today, the way the term is used varies according to the statute under which an employee brings a claim. Over the past 40 years, more than 90 laws and regulations have been enacted by the federal government alone. States are not far behind. Some states have passed specific whistleblower laws, while others lump the protections into public policy exceptions developed through state law. It's not surprising that most employers are confused about exactly what "whistleblower" really means or how they can protect their company from exposure if a claim is made.
The first step is to understand the nature of the claim. Most of the federal statutes that cover whistleblowers are aimed at protecting employees who report fraud from retaliation, whether it is fraud in the manner in which contracts are granted, funds are handled, safety measures are taken (or not) and reported (or not), or similar types of concerns. The idea behind these laws was that employees on the inside are often the first to know of actions that may not be in the best interest of the public, so they needed to be protected if they dared to come forward. One of the best known cases is that of Karen Silkwood, a metallurgist whose death after gathering data on safety practices at the nuclear plant where she worked was portrayed in a 1983 film starring Meryl Streep. Of course, corporate whistleblowing is not always done on this grand a scale and the consequences are rarely so dramatic.
Whistleblowing was back in the forefront with the collapse of Enron and the passage of the Sarbanes-Oxley Act of 2002. This time, the fraud was not safety related, but instead focused on corporate accountability and the manipulation of financial reports that were regularly submitted to the government and company stockholders. Enron and the Sarbanes-Oxley Act changed the public perception about the application of whistleblowing statutes. For many years, most people thought these statutes were aimed at protecting employees who reported fraud within the government, or within the operations of government contracts or industries regulated by the government (like the nuclear power industry). Indeed, for many years, these areas were where the laws were most commonly applied. Yet, the fallout from Enron opened the public consciousness to the application of protections within private companies.
The term "whistleblower" has since broadened in the public perception to mean anyone acting to exercise their rights under various statutes, with the current trend of interchanging the terms "whistleblowing" and "retaliation." Most of the employment statutes, both state and federal, include employee protections from retaliation when exercising their rights. However, if an employee chooses to exercise their rights and, say, take family leave, this doesn't make them a whistleblower per se. Whistleblower statutes come into play only when an employee, or a co-worker, reports a denial of rights under the statutes and, as a result, action is taken against them by an employer.
Whistleblowing protections don't only come from statutes. Many states protect employees who make good faith reports of violations of public policy (e.g. patient care) to governmental agencies. If there is no specific law in place, these employees may be covered under the public policy exception of a wrongful discharge claim. In other words, it is illegal to terminate an employee for acting on an issue that is important to public policy, event though there may not be a specific law protecting the action.
Despite the complexities of whistleblower statutes -- from the overwhelming number of different statutes and retaliation protections, to public policy issues -- employers can largely protect themselves and their companies simply by following good practices. For instance, employers need to ensure they have an employee handbook that clearly establishes the policies regarding expected behavior, including a channel for reporting concerns. If concerns are reported, they should be accurately, neutrally, and thoroughly investigated. If something is wrong, address it, rather than hoping it will go away. Above all, when a complaint is made, whether or not it is substantiated, never penalize, discipline, or fire an employee simply for bringing it forward.
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