Whistleblowers have been a hot topic lately. Employees voicing concern about questionable corporate practices have made news in the Enron collapse. There has been heated controversy over the scope of whistleblower protection available to the new federal workforce of airport baggage screeners. Companies providing toll-free hotlines for anonymously reporting employer violations have reported a recent spike in the number of calls received. In addition, there are several items of federal whistleblower protection legislation currently being considered by the Senate and the House of Representatives.

The trend of recent events and legislation is to provide increasing protection for employees who suffer reprisal from their employers when they report or refuse to participate in the illegal or wrongful activities of the organization. The various new laws currently under consideration may allow more employees to make whistleblower claims, and broaden the scope of claims they can properly make and the types of damages they can collect.

Evolving Laws

The most broad-reaching of these bills, the Paul Revere Freedom to Warn Act, has been recently been introduced to the House of Representatives. This bill would provide protection to whistleblowers both in the government and the private sector, giving them the right to sue their employers in federal court for compensatory or punitive damages, lost wages and benefits, court costs and attorneys’ fees and other losses suffered as a result of employer retaliation for their actions. The legislation would also shield individuals who come forward to members of Congress to “blow the whistle” on institutional wrongdoing, especially in matters involving national security.

This federal legislation, if adopted, will be particularly significant because not all states provide protection to whistleblowers, especially employees in the private sector. Among the states that do have whistleblower laws, coverage varies widely. What may be protected in one state may not be protected in another.

New York statutes offer somewhat limited protections to the whistleblower. Under New York Labor Law, an employee reporting the wrongdoing of an employer is only protected from retaliation for disclosing practices that both violate a law and present “a substantial and specific danger to public health or safety.” Any employer misdeeds that do not fall under the category of substantially endangering public health and safety-- no matter how egregious-- are not actionable.

The enactment of the Freedom to Warn Act would significantly broaden whistleblower protection in New York by allowing individuals to sue their employers in federal court for a broad range of claims that would not be covered under present state law.

Minimizing Employer Liability

The best way for an organization to defend itself from the claims of whistleblowers is to take steps to decrease the likelihood that violations will occur in the first place. This means creating an environment that minimizes health and safety risks, emphasizes a strong code of ethics and does not tolerate discrimination and harassment.

When complaints about misconduct do arise, be prepared to handle them appropriately. Have a proper internal reporting procedure in place to review and resolve employee claims. Some employers use outside services or “hotlines” to allow employees to report violations anonymously.

Investigate all complaints seriously and responsibly. Tell complainants that you appreciate them coming forward, and inform these individuals after the investigation of any corrective action that the organization decides to take.

Make it clear to employees that there will be no retaliation for reports of violations, and stick to this policy. Educate all managerial employees as to the legal consequences of reprisals against whistleblowers.

A clearly defined reporting and internal investigation process will not only allow organizations to detect and correct problems in their early stages, but will also minimize the likelihood that the employee will feel the need to go “outside” to resolve the issue.