Initially, the news that any individual in your company has filed an Internal Report detailing potential illegal, inappropriate or unethical behavior may seem like a terrible development and it is natural to feel shocked or concerned when such an event occurs but it is better than keeping it in the dark. Simply stated, if a "whistleblower" brings up a real problem, you may want to deal with it and get it resolved before the issue can affect the business' viability. In point of fact, a recent report in Harvard Business Review written by researchers Stephen Stubben of the University of Utah and Kyle Welch of the George Washington University found that internal whistleblowing is really a sign of a company's good health. In fact, in an analysis of over one million internal whistleblower reports at United States companies, they found that those companies that had active and viable reporting systems for internal reporting were more likely to be able to address those issues before they became costly legal problems. Do not overlook the mandates under the Sarbanes - Oxley Act that require "public companies" to have in place a procedure/plan to allow employees to engage in "anonymous whistleblowing" as part of their compliance programs. It should also be noted that under the Bounty programs established through the False Claims Act and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, those Bounty Programs may get employees to report to the government potential illegal or unethical behavior rather than to their company. When it is done internally within the organization, it is certainly better for the company than becoming embroiled in a lengthy and costly governmental investigation.
Regardless to whom the whistleblower raises their concerns, these allegations must be handled with care. It is extremely important to recognize that once a concern is raised, the whistleblower protection under various legislation will extend and protections will be given to the whistleblower (Sarbanes - Oxley Act and Dodd-Frank Act). It must also be understood that if an organization has a formal reporting procedure, the lack of use of that procedure will not protect a company once a concern is raised. No matter how an individual raises a potential concern (i.e., anonymous phone call, letter to Company President, etc.) of unethical or illegal or inappropriate conduct, they are a whistleblower and subject to protection.
It is also important that any organization dealing with an internal complaint deal with it on a business-related format rather than an emotional reaction regardless of what is alleged or claimed. It is extremely important that good business judgment, not emotional reaction, determine how an investigation is conducted and what ultimately is done with regard to the allegations.
It is also very important that once a decision is made as to how to deal with the issue that the decision is communicated within the organization and actions are taken to implement the chosen resolution. It is extremely beneficial for the organization going forward that everyone understand their obligations to the business and to each other so that the event becomes a building block for good business practices going forward.
Questions? Contact attorney Walter Liszka in our Chicago office at (312)629-9300 or by email at [email protected]