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Employer Guide to Retaliation and Whistleblower Laws

We think of whistleblowers as people who affect big corporations and the government. Whistleblower complaints expose corporate fraud and insider trading. Or whistleblowers leak embarrassing details about government cover-ups.

Whenever an employee reports company misconduct or violations, they become a whistleblower. Federal and state laws protect employees who come forward to report corporate wrongdoing. Whistleblower retaliation is illegal and can be a civil and criminal offense.

In this article, we explain whistleblower protection laws and how they affect small businesses and their owners.

What is a Whistleblower?

A "whistleblower" is any employee or former employee who reports a company's mismanagement to outside authorities. A whistleblower isn't someone within the company who reports harassment to a supervisor. They are also different from an insider who leaks trade secrets to a competitor.

Whistleblower reports can lead to further investigations by outside agencies. Some government agencies have whistleblower hotlines. The hotlines encourage employees to report known or suspected violations. The government created whistleblower protection acts associated with the agencies. They protect workers who make these reports.

Whistleblower Protection Laws

Many state and federal regulatory agencies depend on whistleblowers within companies. They help kickstart their investigation processes. Laws protect private businesses from government scrutiny, just like individuals. Unless someone inside makes a complaint, agencies have no grounds for investigating.

Companies engaged in fraud or other illegal activities would prefer their workers not to report them. They engage in retaliatory practices against their workers. Government agencies have robust whistleblower protections to ensure workers will come forward.

  • The Occupational Safety and Health Administration (OSHA) oversees workplace safety and working conditions. Its Whistleblower Protection Program gives support and protection for reporters in various situations.
  • The Securities and Exchange Commission (SEC) enforces violations of financial regulations, securities fraud, and insider trading. The Office of the Whistleblower protects whistleblowers from retaliation and adverse actions intended to prevent reporting.

Qui Tam Suits

It's not a science fiction character. It's a possible penalty facing employers who defraud the government. Qui tam actions allow private people to begin legal action if they know that their employer is defrauding the government. This includes whistleblowers. Some laws that have qui tam provisions include:

  • The Sarbanes-Oxley Act protects and gives financial incentives to whistleblowers who report crimes to the SEC.
  • The False Claims Act allows whistleblowers to file claims on behalf of the government and receive up to 30% of any award.
  • The Dodd-Frank Act offers protection and rewards of sanction money to whistleblowers.

State Whistleblower Protection Laws

Most states have laws protecting individuals who report violations of state laws. Most whistleblower provisions cover fraud involving state Medicare or related public health programs. Antiretaliation laws protect people who file discrimination or harassment claims against their employers.

Filing an employment discrimination claim is not the same as whistleblowing. The law protects both activities and prevents reprisals or retaliation against reporters.

Protecting Your Business Against Retaliation Claims

Most whistleblower cases against business owners happen when the company retaliates. Larger companies may have an office of the ombudsman (or ombudsperson) to handle these situations. Small businesses should have a whistleblower policy in place for retaliation claims.

If you need to take disciplinary action against the whistleblower, there are some things you can do to protect your company. If you don't have a policy, your human resources department needs one immediately. Until then:

  • Get legal advice. Talk with an attorney to understand your legal obligations to the employee and your business.
  • If the investigation is ongoing, cooperate with the investigators. Do not interfere with the investigators' access to the worker or other information.
  • Keep a detailed record of your interactions with the worker. You can still take justified disciplinary action if it's unrelated to the whistleblowing activity.

For instance, a worker may have filed a complaint with OSHA over unsafe conditions at a job site. The same worker may also have a record of absenteeism and tardiness. Workplace conditions don't affect workers' ability to show up on time. So you can continue the disciplinary process.

Get Legal Help With Your Employee Whistleblower Claims

You're probably confused and even angry if you're dealing with a whistleblower claim. You want legal help to handle the claim correctly, and there is no retaliation claim. A small business attorney can help you thread the needle and protect your business interests, yourself, and your employees.

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