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Anyone following the case of Edward Snowden might think that being a whistleblower is probably not a good thing.
Snowden revealed the secret U.S. electronic surveillance program Prism, a mass surveillance effort that allegedly spied on U.S. citizens. Since his revelations were made public, Snowden has applied for political asylum in more than a dozen countries as he seeks safety from espionage charges in the United States. For now, I doubt many would want to be in his shoes.
But in many, many cases, whistleblower laws make allegations of organizational wrongdoing a protected activity and sometimes even a profitable one. An area that is especially widespread involves the Dodd-Frank financial reform law. The law offers hefty rewards to those reporting securities law violations and creates a scenario that businesses cannot afford to ignore.
You may argue the need for such legislation. Dodd-Frank, for example, was written following the disastrous banking and Wall Street collapses of 2007-2008. Workplace safety laws often follow disastrous accidents where numerous workers are hurt or injured. There is almost always a legitimate concern behind such legislation.
What seems questionable, however, are some reward mechanisms included in many whistleblower laws. Dodd-Frank allows whistleblowers to receive as much as 30 percent of the penalties collected if they total at least $1 million. That seems likely to guarantee motivations of personal benefit rather than legitimate concern. Not surprisingly, lawyers are lining up to encourage employees to blow the whistle if they suspect violations. It’s an understatement to say that some of the results can become very “creative.”
These laws are clearly something businesses need to keep in mind. And the best initial advice I have is this: If you’re involved in a whistleblower allegation case, do things right and do them right away.
Obviously, you need to become familiar with the laws and be in compliance. But when and if your employees raise a problem, you should establish an environment where they feel comfortable and obliged to come to you first. Work with them; do not marginalize them or dismiss their concerns. The only reason they would have to go outside—become a whistleblower—is if they cannot trust or communicate with you. Be aware—even if you do these things, you could still be in for an unpleasant ride, but if you follow these steps you’re still in a stronger position.
I have a client that had an employee who reported the company over a safety concern to the Occupational Safety and Health Administration (OSHA). The company weathered an examination and was exonerated. The next year this same employee reported the company to the Department of Labor over a prevailing wage complaint. Again, the company endured an examination of the allegation and was exonerated.
This employee felt he had whistleblower protection and continued to poison the relationship between other employees and management. He didn’t. I extricated him, but it was a very delicate situation.
In our society today, there is often a “jackpot” mentality. This means that many people see becoming a whistleblower and the opportunity to sue somebody—someone with money—as the way to wealth. Laws that include hefty rewards for whistleblowers play right into this mentality. A small army of lawyers is out there to provide support. Owners and managers are wise to know the laws and operate with these dangers in mind.
