Posted on Oct 15, 2014 by TURNER PADGET LITIGATION TEAM
On September 22, 2014, the Securities and Exchange Commission announced a whistleblower award of $30 Million to a whistleblower that came forward with information about an ongoing corporate fraud. Attorney General Eric Holder also spoke of a plan to boost payouts to motivate more whistleblowers.
Whistleblower complaints may seem like an abstract concept – the stuff of big corporate greed and major media drama. But whistleblower actions are very real and can impact companies large and small. Congress has recently passed many new whistleblower protection statutes. In addition, recent Supreme Court opinions broaden the scope of older whistleblower laws. Private companies doing business with publicly traded companies are susceptible, and companies doing business with the federal government, you are susceptible to a possible whistleblower suit under the federal False Claims Act.
Whistleblower actions arise when an employee suspects his company of wrongdoing. He may believe the company is committing accounting fraud, maintaining unsafe working conditions, violating environmental regulations or defrauding the government. These types of concerns, when voiced, can trigger statutory protections for the employee under a number of federal laws, from Sarbanes-Oxley to OSHA to the Clean Air Act. It’s worth noting that, as of October 2014, state whistleblower protections in South Carolina pertain to government employers only, not private employers.
If you are faced with a whistleblower complaint, you need to handle the matter and the employee responsibly.
Below are some initial measures you should consider:
Government investigations and lawsuits are expensive. To minimize the risk, company managers should strengthen internal reporting systems and anti-retaliation policies as well as encourage positive relationships with employees so they feel comfortable reporting issues to their manager(s) rather than the government. Also, developing a response plan and undertaking immediate action can help to minimize negative consequences. Companies should be proactive and know how they should respond when the whistle blows.