Whistleblower Retaliation Could Land You in Trouble
You must always avoid any retaliation against whistleblowers when they come forward with complaints. There are both state and federal laws, including the Sarbanes-Oxley Act of 2002, that protect whistleblowers from retaliation by their companies and employers.
If you or your company engages in retaliation against a whistleblower who complains of fraud, illegal activities or other wrongful dealings in the workplace, you are risking a lawsuit brought by the worker. In addition, you could face criminal prosecution if the circumstances are correct.
A whistleblower is an employee who makes complaints about a company's misconduct, such as complaints about health and safety code violations, shareholder fraud, financial mismanagement or other illegal activities. Employees that follow up with the complaints or give information to investigators are also considered whistleblowers. Many laws, at both the federal and state level, protect whistleblowers from retaliation by their employers.
The Sarbanes-Oxley Act of 2002
In the wake of highly publicised financial frauds and corporate mismanagements the United States government passed the Sarbanes-Oxley Act. The primary thrust of this Act is to prevent shareholder fraud and other financial wrongdoings of publicly traded companies. However, there are also clauses within the Act that protect whistleblowers.
Under the Act, employee complaints about his or her employer breaking, or not following, certain federal laws relating to securities, shareholder fraud, or other types of fraud (wire, mail, or bank), are protected against employer retaliation. As long as the employee had a good faith intention when he or she made the complaints they are protected from retaliation, even if no conviction results.
Lastly, the employee does not have to complain to a federal or state agency to receive the protection provided by the Act. Indeed, even if an employee makes a complaint to a superior within the company, he or she will still receive whistleblower protection.
Other Federal Laws that Protect Whistleblowers
In addition to the Sarbanes-Oxley Act, employees that complain about discrimination or harassment in the workplace are protected against retaliation by their employers. There are other federal laws that protect employees that complain about violations of health or safety codes, violations of the Family and Medical Leave Act, or about their employers breaking wage and hour laws.
Although many of these laws do not refer to "whistleblowers," the concept is the same. Employees cannot be fired or subjected to other retaliatory measures because they made complaints, whether inside or outside of the company.
Lastly, there are a number of federal laws that protect workers that complain of wrongdoing within specific industries. For example, there are laws that protect workers that are employed by companies that do work for the federal government, or those employed by companies that deal with hazardous materials.
State Laws that Protect Whistleblowers
Many states have laws that protect whistleblowers that complain of violations of state laws regarding family and medical leave, mandatory time off for jury duty and voting, state antidiscrimination laws and state wage and hour laws.
Many states allow employees to bring lawsuits when they believe that they were disciplined or terminated for reasons such as exercising a legal right or complaining of their company's illegal activities "in violation of public policy."
Some states only allow an employee to bring a "violation of public policy" lawsuit if they complained to a government agent or agency, while others allow employees to bring such lawsuits for internal complaints. Some states allow employees to bring lawsuits only when the law that the company allegedly violated contains explicit anti-retaliation clauses; others do not have such a requirement. Still other states do not allow "public policy" claims at all.
How to Avoid Whistleblower Claims
Here are a few steps that you can take to reduce the risk that your company will be subject to such a lawsuit:
- Don't retaliate -- Try to remember not to treat employees that have complained about your company any differently than those who have not.
- Have a complaint policy in place and be sure to use it -- It is a good idea to have a complaint policy in place, even if it is not required by law. Train and educate your employees in using the system. Once you have your complaint policy in place be sure to abide by it.
- Investigate all credible complaints -- If you receive an internal complaint about alleged wrongdoing, be sure to investigate it, so long as it is credible. If you find that the complaint was truthful, take the steps needed to remedy the situation.
- Be careful in disciplining whistleblowers for other misconduct -- If you have a whistleblower in your company that needs to be disciplined for other conduct you must be very careful. Get evidence to support your claim that you are disciplining for reasons other than the whistleblowing and make sure the employee knows the reason he or she is being disciplined.
Get Professional Legal Help With Your Employee Whistleblower Claims
If one of your employees has filed a whistleblower claim against your company, act now. A lawyer can assist you in understanding the law, untangle the meaning of Sarbanes-Oxley Act, and ultimately protect the interests of your business. Contact a local small business attorney who can help you manage whistleblowers without making a bad situation worse.