A whistleblower is an employee who exposes or reports his/her employer for doing something illegal, unhealthy, violating public policies or wasting government resources.
Numerous laws have been brought to protect whistleblowers, so people don’t have to be afraid to speak up and report dangerous/illegal/corrupt activities.
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What does a whistleblower do?
A whistleblower is a person who exposes information under one of these categories:
- threat to public interest and safety
- threat to national security
- violation of the law
- violation of company policy
When an employee decides to expose an alleged wrongdoing, there are several ways in which the information might be brought to surface:
- externally reporting to law enforcement authorities
- externally reaching out to the media
- internally by bringing the accusations to the attention of other people inside the organization
Whistleblowers will always be subject to retaliation by the accused company, which is the reason why specific laws have been passed in an effort to protect them.
Retaliation against whistleblowers needs to involve an unfavorable employer action, such as:
- Demoting or denying a promotion
- Denying overtime or benefits
- Failing to hire
- Having an internal policy which provides for an unfavorable personnel action due to activity
protected by a whistleblower law enforced
- Making threats
- Reassignment to a less desirable position
- Reducing pay or hours
- Wrongful termination
Laws protecting whistleblowers in the USA
There is no single law, that protects whistleblowers from retaliation. Instead, there are numerous federal and state laws that include protection for whistleblowers as part of the law.
Here are the US federal laws that include protection:
- United States False Claims Act of 1863 – The first US whistleblowing laws still in use today. It encourages whistleblowing of fraud against the government by promising a percentage of the money recovered.
- Lloyd-La Follette Act of 1912
- Freedom of Information Act of 1966
- Clean Water Act of 1972
- Safe Drinking Water Act of 1974
- Energy Reorganization Act of 1974
- Resource Conservation and Recovery Act of 1976
- Toxic Substances Control Act of 1976
- Ethics in Government Act of 1978
- Civil Service Reform Act of 1978
- Comprehensive Environmental Response, Compensation, and Liability Act of 1980
- Surface Transportation Assistance Act of 1982
- Whistleblower Protection Act of 1989
- Clean Air Act of 1990
- Wendell H. Ford Aviation Investment and Reform Act for the 21st Century of 2000
- Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002
- Pipeline Safety Improvement Act of 2002
- Sarbanes–Oxley Corporate Reform Act of 2002
- Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
Most states have additional laws to protect whistleblowers from retaliation.
The large number of laws means that the employee “blowing the whistle” needs to be aware of which law is relevant in the given case before reporting any wrongdoing.
Deadlines for reporting vary between 10 days and 6 years, depending on the law, which is another reason why knowledge of the relevant law is important for a whistleblower.
Attorneys can help navigate the complexities that arise because of the large number of laws protecting whistleblowers.
Damages and settlements available for whistleblowing claims with example cases
With wrongful termination or retaliation due to whistleblowing claims, the following damages may be awarded:
- reinstatement or front pay
- back pay
- out-of-pocket costs
- attorney’s and court costs
- pain and suffering
- punitive damages
- a percentage of the money recovered by the government
Some whistleblower claims, where the wrongdoing by a private company was especially large, are worth millions of dollars to the employee who “blew the whistle”. For example, SEC whistleblowers are entitled to an award of 10-30% of the money recovered.
Out of court settlements are not very common in whistleblower cases. The employee who blew the whistle is usually retaliated against by being terminated, and a lengthy period of litigation commences.
Whistleblower retaliation settlement amounts are rarely made public for obvious reasons, so to get an idea of the average whistleblower case awards, here are a few example cases:
- Charlie Littleton, a former jail administrator, was paid $187,000 by Bastrop Country, Texas. He “blew the whistle”, when he found out that several county employees were using inmates to build barbecue pits to be sold for profit, and were improperly using county funds and equipment. He was wrongfully terminated after raising questions about the fraudulent conduct, after which he filed the lawsuit.
- Sarah Missy McCray received $500,000 from the state Transportation Cabinet in Kentucky and was reinstated to a new state job. She was wrongfully terminated due to whistleblowing, after she exposed a merit system scandal during a former governor Ernie Fletcher’s administration. She testified against the organization in front of the local grand jury, after which she was fired in retaliation.
- Dr. James Tiesinga received approximately $300,000, after he filed a complaint against his former employer, Dianon Systems Inc. The company billed Medicare for unnecessary sample testing, thereby defrauding the government. Under the False Claims Act, Dr. Tiesinga was to be paid a portion of money recovered by the government. Dianon System eventually settled for $1.5 million to resolve allegations, and the whistleblower’s share is believed to be approximately $300k.
How to blow the whistle and report an illegal act
Before blowing the whistle, one needs to think through the implications of their actions thoroughly. Most whistleblower cases are lost, and retaliation is sure to follow. Please scroll down to the whistleblower dilemma section to read about this.
If you’ve made the decision to become a whistleblower, it is important to get help from an attorney. Laws protecting whistleblowers are complex. Having a good understanding of the public and common law, as well as state and local regulations is essential.
Depending on the nature of the wrongdoing, reports may be made to:
- U.S. Securities and Exchange Commission
- Attorney General
- District Attorney
- Secret Service
- Federal Bureau of Investigation
- or other law enforcement agency
It is not a good idea to go public with your knowledge of fraud by talking with a news outlet. Public disclosure may disqualify legal whistleblower protection and awards, and is a huge strain on the future professional and personal life of the person blowing the whistle.
The whistleblower dilemma
When an employee obtains knowledge of some sort of wrongdoing at the company, thorough thought must be given to what action he/she will take. Companies do not like whistleblowers, which is understandable from the point of the company. Whistleblowers can cause a lot of “problems”.
You can be 100% sure that the company will retaliate against a whistleblowing employee one way or another, therefore it’s important to consider the repercussions of blowing the whistle. Here is what will surely happen in a whistleblower case:
- Instant termination or severe demotion (even though it’s illegal to terminate an employee for whistleblowing)
- A long and grueling litigation process
- General psychological and financial strain on the life of the whistleblower for years to come
Unfortunately the professional career of whistleblowers is usually broken as well, since finding a new job becomes next to impossible. Blowing the whistle is seen as an act of disloyalty, which is not a trait employers look for.
Many whistleblowers go bankrupt in the years that follow, since they lose their job and are unable to find a new one.
Before blowing the whistle, here is some advice:
- speak with a knowledgeable attorney to find out if you have a case
- know your legal rights
- document the fraud
- know the statue of limitations
- give serious thought to the repercussions
- do not go to the media