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Are You the Fox in the Henhouse? Whistleblower Protection in In-House Investigations

Daniel Ellsberg, Frank Serpico, Karen Silkwood, Jeffrey Wigand, Sharon Watkins and Floyd Landis — only a few names on the long list of people who blew the whistle on fraudulent business practices. In the past, whistleblowers often faced aggressive retaliation for their actions. Today, a raft of recent laws and legal decisions protects their rights.  What happens, though, when a whistleblower’s report triggers an internal investigation? How can whistleblowers protect themselves after their “cover” has been blown?

The 2002 Sarbanes-Oxley Act (SOA) strengthened the regulation of financial practices and corporate governance. The SOA requires publicly held companies to have a procedure for receiving anonymous whistleblower reports about questionable accounting and auditing issues.  These anonymous tips must be investigated with the goal of identifying and correcting misconduct. Companies also hope their internal investigations will fend off probes by external agencies such as the Securities and Exchange Commission (SEC). The SOA encourages this kind of corporate self-scrutiny and self-correction of errors by setting a number of non-negotiable deadlines for compliance. However, this has significantly increased the number of internal investigations and the exposure of whistleblowers.

Involvement in internal investigations is almost inevitable today for whistleblowers. Even though you filed your report anonymously, the source is usually evident by the level of access required for knowledge of the wrongdoing. Once you have been “outed,” don’t expect the company attorneys to represent your best interests.  Their focus is on protecting the company. You need the assistance of a qualified attorney who represents your best interests and minimizes any possible consequences you may face.

SOA section 806 states that after receiving a whistleblower report, “no publicly traded company, or any officer, employee, contractor, subcontractor, or agent of such company may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee.” However, an internal investigation is not considered a retaliatory action. Refusal to cooperate constitutes a reason to terminate your employment.  Again, a qualified attorney can guide you through the process of protecting your job.

Retaliating against whistleblowers is now a criminal offense, thanks to a new section to Title 18 of the U.S. Code. Infractions carry penalties from a large fine to 10 years in prison. The threshold for actionable retaliation has been lowered to any conduct that “could well dissuade a reasonable worker from filing a complaint” in the Supreme Court decision to Burlington Northern & Santa Fe Railway Co. v. White.  It also extends protection against non-workplace-related retaliation.

A whistleblower has 90 days from the time of the adverse consequence of their activity to file a Sarbanes-Oxley complaint with the Department of Labor. Move quickly, with the experienced Texas whistleblower lawyers at the Law Office of Steve Kardell behind you, protecting your rights.

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