Ethics Survey Underscores Challenges that Corporate Whistleblowers Face

The Ethics & Compliance Initiative has released a Global Business Ethics Survey (GBES) that includes several significant findings that are consistent with what we are observing in our practice representing whistleblowers in SEC whistleblower rewards and Sarbanes-Oxley whistleblower retaliation claims:

1. Employees feel increased pressure to compromise organizational standards.  In particular, 22% of private sector employees worldwide felt such pressure, and the numbers increase to 37% in India and 43% in Brazil.

2. In the private sector, more than one in three employees reporting misconduct experienced retaliation.

3. Observations of misconduct are commonplace, with a median of 33 percent.

4. Nearly three-quarters of employees surveyed who felt pressure to compromise standards also witnessed misconduct.

According to the Ethics & Compliance Initiative, the GBES “is a rigorous, multi-country inquiry into worker conduct and workplace integrity, providing insight into workplace ethics in both public and private sector organizations.”  The full report can be downloaded here.

Report Finds Swift Retaliation

The report also found that 72 percent of employees who experienced retaliation said it happened within three weeks of them first filing their report.  This finding highlights the importance of knowing your rights before you blow the whistle.  The complex maze of federal and state whistleblower rewards and whistleblower protection laws provide substantial incentives and strong protections, but it is critical to understand how these laws apply to your specific situation and to develop a strategy to protect yourself against retaliation and increase the likelihood of prevailing in a potential retaliation claim.

One of the considerations for a corporate whistleblower is whether to report internally or instead to a regulator and potentially qualify for a whistleblower award.  Under some whistleblower reward programs, a whistleblower can report anonymously.  But under the False Claims Act’s qui tam provision, a whistleblower’s identity will likely be revealed once the case is no longer under seal.  And the type of work that a whistleblower performs at a company can affect the timing of external whistleblowing.  While most corporate whistleblowers can disclose fraud to the SEC through the SEC whistleblower program immediately upon discovering the fraud, employees whose principal duties involve compliance or internal-audit responsibilities must report internally and wait 120 days before reporting to the SEC to qualify for a SEC whistleblower award.

It is also important for a corporate whistleblower to understand the limitations of certain whistleblower protection laws.  The whistleblower protection provision of the Sarbanes-Oxley Act protects disclosures to a supervisor and other internal disclosures, but under a recent Supreme Court decision Somers v. Digital Realty, internal disclosures are not protected under the Dodd-Frank Wall Street Reform and Consumer Protection Act unless the whistleblower has provided the information to the SEC.

Sarbanes-Oxley Whistleblower Protection

In the wake of the Supreme Court’s recent decision in Somers v. Digital Realty, the Sarbanes-Oxley Act is the main source of protection for corporate whistleblowers.  To learn more about SOX whistleblower protection, download our free guide Sarbanes-Oxley Whistleblower Law: Robust Protection for Corporate Whistleblowers. Whistleblowers working at government contractors or grantees are also protected under the False Claims Act whistleblower protection law and the NDAA whistleblower protection provisions.  And there are approximately 24 industry-specific whistleblower protection laws that are adjudicated at the Department of Labor.  Information about those laws is available here.