05 / 09 / 2017

How to Avoid Whistleblower Complaints and Protect Your Business

protect your business from whistleblowing

A whistleblower is an employee who makes a complaint to law enforcement or regulatory agencies about a company’s illegal or unsafe conduct. This person is figuratively blowing the whistle on his or her employer. An employee who gives information to investigators is also known as a whistleblower. The complaint can be about health or safety code violations, shareholder fraud, financial mismanagement, among other illegal activities.

The most important thing to know about whistleblowers, if you are an employer, is that they are protected by federal and some state laws from your retaliation. If you fire, demote, or do anything that appears to be impacting the employee’s work situation it can be punishable by fines and prison time.

Federal Whistleblower Protections

One of the most prominent whistleblower laws today is contained within the Sarbanes-Oxley Act of 2002, a set of regulations brought about to regulate the financial industry. The law has several clauses covering strong protections for employees who make complaints about an employer breaking federal law about securities, shareholder fraud, or wire, mail, or bank fraud.

Even if that complaint turns up no wrongdoing, as long as it was made with good faith intentions, the employee remains protected. Employees are covered even if the complaint is made to a company superior instead of a government agency or law enforcement.

Federal law in the form of the American Recovery and Reinvestment Act of 2009 extended protection to non-federal workers when complaints were lodged regarding contracts, grants, and other federal financial disbursements appropriated by the Recovery Act.

Complaints against violations of the Family and Medical Leave Act, wage and hour laws, and health and safety violations are other examples of whistleblowing protected by federal law.

State Whistleblower Protections

Protection at the state level differs from state to state. Most have some sort of legal protection that adds to or complements federal law but differ as to their extent. Some examples of state law protection are complaints of:

  • Violation of state family and medical leave laws
  • Violation of mandatory time off for jury duty and voting
  • Anti-discrimination laws
  • Wage and hour laws

Protection levels vary. Some states allow employees to sue when they believe they were disciplined or terminated because they made a complaint about a public policy violation. Suits of this sort are often brought by former employees who feel they were wrongfully terminated for exercising a legal right. Others only give protection if the complaint was made to a government agency.

Some states allow lawsuits to be brought for retaliation in internal complaints while others can only sue if the law violated contained explicit anti-retaliation clauses.

How to Avoid Whistleblower Complaints

The simplest answer is to follow the law. Do everything according to the book and respond to employee complaints before they become legal suits. Create a policy for handling complaints and stick to it.

Some industries are more at risk than other for whistleblower complaints: 

  • Healthcare businesses that receive most of their reimbursement from Medicare and Medicaid
  • Government contractors and subcontractors
  • Non-profit businesses and agencies that receive funding from the state or federal government
  • Import companies paying customs duties

The following key steps will reduce your risk of whistleblower lawsuits.

1. Do Not Retaliate

If you think your company has been completely above board and trusting of your employees, it is all too easy to lash out at someone who reports a violation. You cannot do this. You cannot fire or demote this person without risking a lawsuit. 

You may not treat an employee that leveled a complaint of misconduct any differently from the rest. Look at the complaint as a learning opportunity for improving your company’s activities.

Besides not firing or demoting the whistleblower, you should not:

  • Ignore a worker’s concerns
  • Reprimand an employee because you perceive the business was hurt
  • Exclude an employee from meetings or take away hours or duties
  • Deny a promotion

If the whistleblower is under suspicion of misconduct not related to the complaint, be very careful how you handle the investigation for infractions. Consult a Dallas business attorney, obtain evidence, and make sure the employee knows the reason for the investigation.

2. Implement a Complaint Policy

Even if the law does not require it, develop and put into place a complaint policy that spells out how everything will be handled. Train employees in using the policy or system and always abide by it. Make it crystal clear that nobody will suffer retaliation for coming forward.

3. Investigate All Credible Complaints

If you receive a complaint internally, investigate it if it is credible and do so as soon as possible. If the complaint turns out to be true, fix the situation. If you do not investigate and remediate, employees will have no choice but to go to the authorities without telling you first.

Protect Yourself In the Event of a Complaint 

Once a whistleblower or potential whistleblower comes forward, limit your exposure and cooperate with governmental authorities. As soon as you can, retain counsel. Find an attorney with experience in handling these types of cases before taking any further action. 

The keys to handling whistleblowing are to avoid it if possible and cooperate if you can’t avoid it. Find a knowledgeable attorney to help you navigate the law and retain your business and your reputation.

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