The Supreme Court sent a message to corporate America about whistleblowers
More enlightened companies are beginning to appreciate the reality that whistleblowers are not the disgruntled troublemakers they are so often made out to be.
The fiercely divided Supreme Court does not agree on much these days, making its recent unanimous decision in Murray v. UBS Securities all the more compelling — especially given the unified ruling was about strengthening the rights of whistleblowers, not an obvious subject for a warm bipartisan embrace. But that is exactly what the high court delivered, sending a clarion call to companies to tread lightly when dealing with those who speak truth to power.
The case centered around the whistleblower retaliation protections in the Sarbanes-Oxley Act, which Congress designed to break through the corporate code of silence that stopped so many from reporting misconduct in the financial markets. The court made it very simple. A company cannot treat an employee worse for blowing the whistle. And to prove that basic line was crossed, an employee need only show their whistleblowing was a contributing factor, not a motivating factor, to an employer’s adverse action.
No one wants to run afoul of the Supreme Court’s new mandate. And many companies have already responded by moving to tighten up their corporate controls to ensure better protections for whistleblowers. But if this merely translates to a more hands-off approach with whistleblowers, essentially just staying out of their way, then companies are largely missing the point. The Supreme Court has laid down the gauntlet for a whole lot more.
It is in every company’s interest to accept this challenge and welcome whistleblowers into the corporate fold. Whistleblowers serve as an early warning sign, shining a spotlight on serious issues that may otherwise remain in the dark. If properly heard and supported, they can help companies avoid ending up on the wrong side of a lawsuit, government investigation or public relations nightmare.
I have seen this firsthand from representing hundreds of whistleblowers over the years. Virtually all of them came to my law firm only after they tried to address their issues and concerns within their company first. Only after the company ignored or rebuffed them — in many cases firing, demoting or otherwise rebuking them — did they reach out to us to help them escalate their concerns to the government or courts.
Congress has established an ever-increasing number of rewards programs to encourage whistleblowers to take this very path with firms like mine. Successful whistleblowers under these programs can earn a hefty slice of the government’s recovery from enforcement actions the whistleblower prompted. These awards are routinely in the tens of millions of dollars, with several in the hundreds of millions. Many of our clients have been the direct beneficiary of these handsome payouts.
But virtually none of our clients see the promise of potential riches as the driving force for coming forward. It is what keeps them up at night instead — the need to say something when they saw something that rubbed against their moral compass, to remedy a serious wrongdoing, to protect those in harm’s way.
Nor is it about getting the company in trouble — just the opposite. From our experience, whistleblowers are highly valued employees with a deep dedication to their company and the work they do. Their ultimate goal is to course-correct the company or deal with a rogue employee or faction. They are not looking to get the company investigated, sued or caught up in a PR maelstrom. At least not at first.
More enlightened companies are beginning to appreciate the reality that whistleblowers are not the disgruntled troublemakers they are so often made out to be; that they serve the best interests of the company by ferreting out misbehavior early on, helping to avoid a whole lot of trouble down the road; that supporting and protecting them on their quest — not snubbing, silencing or shaming them — is the best course for everyone.
The Supreme Court seemed to go out of its way to make this point, unanimously recognizing “the health, safety, or well-being of the public may well depend on whistleblowers feeling empowered to come forward.” Companies would be wise to listen. Not simply to comply with Sarbanes-Oxley and the like, but to make sure they do not become caught in the crosshairs of something significantly more damaging to their ultimate bottom line.
Gordon Schnell is a partner in Constantine Cannon specializing in the representation of whistleblowers.