How to Create a Legal Corporate Whistleblower Policy
Created by FindLaw's team of legal writers and editors | Last reviewed March 13, 2017
Whistleblowers play an important role in holding companies and government entities accountable for wrongdoing, and there are many laws designed to encourage and protect them. Violating these laws can be expensive and bad for business. Therefore, it’s important for managers and executives to implement and follow through on a sound whistleblower policy within their company. To create a legal corporate whistleblower policy, you need to know what a whistleblower is and what constitutes retaliation, and you need to understand the specifics of both state and federal whistleblower laws.
What Is a Whistleblower?
A whistleblower is someone who reports wrongdoing within an organization. This could be the person who makes the initial report, or someone who participates in the investigation. The unethical or illegal activity can be anything from workplace harassment to defrauding the government or dumping toxic waste. The whistleblower may report the actions to an outside authority, or simply to a manager or supervisor within the company. And even if the claim turns out to be wrong, the individual is still protected as a whistleblower as long as the initial complaint was made in good faith.
What Is Whistleblower Retaliation?
Since claims of illegal activity can be time-consuming and damaging to a business, there may be a temptation to fire or reprimand the whistleblower. You must resist that temptation, as it could be viewed as whistleblower retaliation, resulting in an expensive lawsuit, fines, and even criminal prosecution. Retaliation could include things like demotions, pay cuts, disciplinary actions, harassment, and reassignment. Every corporate whistleblower policy should include a system for managing complaints and prohibiting retaliation.
Whistleblower Laws: State and Federal
Over the years, the number of whistleblower laws has increased on both the federal and state levels. However, certain laws may or may not apply to your whistleblower policy, depending on the type of business you’re running and where your business is located.
For example, if you run a publicly traded company, the whistleblower provisions of the Sarbanes-Oxley Act forbid you from retaliating against an employee who initiates or participates in an investigation of suspected securities or antifraud violations. Similarly, the Dodd-Frank Act includes anti-retaliation provisions as well as monetary incentives for whistleblowers who report securities violations to the Securities and Exchange Commission.
Other federal laws include similar provisions for workplace safety and for companies who deal with environmental issues like toxic waste and pollution. However, it’s important to note that with his statements about altering federal laws like Dodd-Frank, it’s unclear whether President Trump will also seek to change the whistleblower provisions of those and other federal laws.
Most states have their own whistleblower laws that will affect your corporate policy as well. These laws vary widely from state to state with regard to who is covered as a whistleblower (for example, public versus private employees), who is liable for retaliation within the company, the types of fines a company may face, and the statutes of limitations for filing a retaliation lawsuit. Because of differing state laws and their potential overlap with federal laws, it’s important to consult a local attorney before finalizing your corporate whistleblower policy.
Key Points for Your Corporate Whistleblower Policy
Although there are many laws that apply to whistleblowers, the following are key points to consider when crafting a corporate whistleblower policy:
• Have a complaint system in place. Foster a culture of openness and communication, and allow for complaints to be made anonymously.
• Investigate complaints thoroughly. Someone who feels like their complaint is dealt with appropriately will be less likely to report to a third party.
• Have a policy against retaliation and follow it. Train managers to deal with reports of misconduct.
• Keep records of complaints, investigations, and employee misconduct
• Be careful about disciplining whistleblowers for unrelated misconduct. This can be viewed as whistleblower retaliation if not handled very carefully.
Create a Solid Corporate Whistleblower Policy by Consulting an Attorney
Violations of federal and state whistleblower laws can be expensive and may severely damage your company’s reputation. Therefore, it’s vital that you create a corporate whistleblower policy that encourages internal reporting, thorough investigations, and anti-retaliation measures. However, crafting such a policy according to state and federal laws can be daunting. Have peace of mind regarding your corporate whistleblower policy by contacting a local whistleblower attorney.
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