A whistle-blower is an informant (typically an employee) who exposes wrongdoing within an organization in the hope of stopping it.  In America, an employer may not fire, demote, harass, or otherwise “retaliate” against an individual who calls attention to violations of law, helps with enforcement proceedings, or refuses to obey unlawful directions from a supervisor.  These protections apply to the so-called “whistle-blower” in a variety of circumstances, including: discrimination based on race, color, sex, religion, national origin, age, and disability, as well as wage differences between men and women performing substantially equal work; retaliation against individuals who oppose unlawful discrimination or participate in an employment discrimination proceeding; violations of the Sarbanes-Oxley Act of 2002; etc.

Recently making headlines on the national stage is an SEC attorney named Darcy Flynn.  As a federally protected whistle-blower, Flynn presented evidence to the SEC’s inspector general and three congressional committees earlier this summer.  Flynn alleges that SEC investigators found their desire to bring a case against an influential bank thwarted by senior officials in the enforcement division – whose director later accepted a lucrative job from the very same bank they had been prevented from investigating.  In another case, the agency farmed out its inquiry to a private law firm – one hired by the company under investigation.  The outside firm ultimately concluded that no further investigation of its client was necessary.

What can a company do to limit its whistle blower liability?  As always, we are strong advocates for taking proactive, preventive measures.  First, review your employee handbook for compliance with all federal, state, and local regulations.  Second, institute a robust HR reporting policy – where grievances can be dealt with early-on, and issues addressed prior to becoming legal problems.  Third, document, document, document.  Keep very accurate records; and ensure that these records are up to date.  Finally, if an employee does raise a complaint (valid or not), you must take immediate, proactive measures to address the situation.  When in doubt, call your employment attorney to verify that your business is protected.