Corporate Scandals: Protecting the Whistle-Blower

We've all heard stories about employees who blow the whistle on corporate scandals and are subsequently fired or demoted. It has never been uncommon for employees to fear making corporate scandals public because not only will they lose their own jobs, but other corporations will be reluctant to hire them. That is why recent leglislation has been passed in an effort to protect the whistle-blower in the case of corporate scandals.

The federal government wants employees to feel comfortable with coming to them about suspected corporate scandals. The feds know that there are few other ways to sniff out and stop fraudulent practices, so righteous employees are their great white hope. If you know of something illegal going on at the corporation for which you work, you are now protected from negative consequences as a result of blowing the whistle on corporate scandals.

How are wistle-blowers protected?

According to the new law, employees who "blow the whistle" on their employers are protected not only from termination, but also from demotion or loss of responsibilities. In fact, corporations who refuse to give whistle-blowers promotions could also be found liable for discrimination. Employees now have the right to inform the federal government about possible corporate scandals (even if they aren't true) with no possible repurcussions.

For example, let's say that Brian works for an insurance company and he discovers that the owners are underpaying on claims. Without fear of consequence, he could go to the federal or state government to report the fraudulent activity, and the owners of the insurance company couldn't fire him or even pass him up for a promotion.

What types of corporate scandals are we talking about?

Any kind. From money laundering to violations of employment law to tax fraud to securities fraud, employees can blow the whistle on any corporate scandal. After the relatively recent corporate scandals (i.e. Enron), the federal government has concerned itself with protecting employees who would not have otherwise come forward. Many corporations are backed by millions of dollars and plenty of high-powered lawyers who can stomp any good Samaritan employees from doing their duty to the United States; now, corporations can be sued and even face criminal charges for discriminating against a whistle-blower employee.

Who can be found liable?

This is one of the most interesting points. Not only can owners, officers and supervisors of a corporation be found liable under this new law, but so can contractors and vendors who compromise the rights of a whistle-blower employee.

For example, let's say that Emily works for an investment firm and she discovers evidence of insider trading. She contacts the federal government to report the fraud. Now, let's say that a legal consultant for the investment firm advises the CEO to terminate Emily's employment. Not only could the CEO be sued and charged, but the legal consultant would face consequences as well, even if the consultant is an independent contractor for the investment firm.

What does this mean for employees?

If you work for a publicly-held corporation and you suspect fraudulent activity or a corporate scandal, you should report your suspicions to the authorities. Employees no longer have to fear loss of employment if they are concerned about the activities of their employers, which hopefully means that more corporate scandals will be discovered before a tragedy like Enron takes place.