Developing Whistleblower Policies and Handling Retaliation Claims

Developing whistleblower policies and handling retaliation claims require a nuanced and carefully measured approach. If your policies are too lax or vague, you could expose your organization to undue risk and liability. Conversely, being overly specific with your policies may not provide your organization the latitude necessary to navigate especially unique or complex claims.

Let’s take a deep dive into the best practices for developing  whistleblower policies. We’ll also provide insights into the legal protections for reporters and discuss how you can ensure your company is compliant when dealing with retaliation claims.

What Is a Whistleblower? 

A whistleblower is a person who reports fraud, waste, corruption, abuse, or dangers to public health and/or safety to an entity that is capable of remedying the wrongdoing. Typically, the person works within the organization where the wrongdoing is occurring. 

Developing whistleblower policies is a sensitive task, as your team will face at-odds obligations. From an organizational perspective, you are often expected to take action against individuals who negatively impact the company’s public image, operational security, and revenue. However, you must be careful not to violate the person’s rights intentionally or through negligence. 

Retaliatory firing can put your business in hot water with state and federal regulators. Such actions may expose the company to civil suits, fines, and lasting reputational damage. 

Important Whistleblower Statistics

Whistleblowing is on the rise, largely thanks to several federal programs designed to protect and, in some cases, reward individuals who come forward and report wrongdoing. 

According to a 2022 Securities and Exchange Commission (SEC) report, the agency issued 103 awards that year, totaling $229 million in disbursements. The SEC issued these awards to individuals who provided information that facilitated the success of SEC enforcement actions. 

Since the SEC instituted its awards program, it has paid out over $1.3 billion via 328 awards to whistleblowers. The program has also led to over $6.3 billion in sanctions against violators, $4 billion in disgorgement of ill-gotten funds, and $1.5 billion in returned funds. 

2023 marked another active year for whistleblowers. Federal organizations received nearly 3,000 complaints regarding violations of bills such as the Sarbanes-Oxley Act, the Federal Railroad Safety Act, and the Surface Transportation Assistance Act. 

Establishing Clear Whistleblower Policies

The above statistics demonstrate that today’s employees understand their rights and are passionate about holding employers accountable for violations and wrongdoing. How you respond to these reports makes a world of difference regarding public perception of your organization and the severity of the repercussions.

With that in mind, you need to establish clear whistleblower policies. To do that, you should take the following steps.

Define the Scope of Your Policy

Begin by clearly stating what constitutes whistleblowing in your organization, including the types of concerns that should be reported (e.g., illegal activities, safety violations, unethical behavior). Emphasize the policy’s purpose to protect the organization and its employees. 

Create Reporting Channels

Establish multiple confidential channels through which employees can report concerns without fear of exposure. These channels may include a hotline, an online portal, or a designated ombudsperson. 

Ensure Anonymity

Assure employees that you will protect their identity to the fullest extent possible. Also, explain that the information they provide will be kept confidential. 

Outline the Investigation Process

Clearly describe the steps that will be taken once a report is received. Some common steps may include the initial assessment, investigation, and resolution. 

Provide Training 

Train employees and managers on the importance of the whistleblower policy, how to report concerns, and how to handle reports in a sensitive and confidential manner. Make sure that supervisors understand the seriousness of the process and the liability the company could face for violating anti-retaliation laws. 

What Protections Do Reporting Parties Have? 

Familiarize yourself with the legal framework protecting whistleblowers, including specific federal legislation such as the Sarbanes-Oxley Act and the Dodd-Frank Act. Keep in mind that states likely have their own set of employee protection and anti-retaliation laws. You’ll need to be familiar with those as well. 

Ensure that your organization’s policies are not only in compliance with these laws but also support a culture where employees feel safe to report violations. This includes preventing any form of retaliation against whistleblowers. 

Finally, employees should be informed about their rights and protections under the law. Clear communication can empower employees to come forward with confidence. 

What to Do About Retaliation

If you receive a retaliation claim, act fast. Conduct a prompt, thorough, and unbiased investigation. Depending on the claim, you may want to consider employing a third-party investigator. Document every step of the process to demonstrate that you acted fairly.

If you discover that retaliation occurred, address it swiftly. This may include disciplinary measures against the perpetrator, up to and including termination. 

Ensure that the employee who made the complaint is protected from further retaliation. You may have to monitor the situation and make staffing or schedule adjustments. 

Protecting Employees’ Rights (and Your Company’s Reputation)

Prioritize transparency and integrity when developing whistleblower policies or handling retaliation claims. Make sure everyone understands what is at stake, and always do right by your staff. Doing so will create a culture of compliance and trust that protects your team and the organization.