5 Ways To Minimize Whistleblower Risks

How can businesses protect themselves from damage

The Whistleblower Protection Act of 1989 was enacted to protect federal employees, who disclose "Government illegality, waste, and corruption", from adverse consequences related to their employment. This act provides protection to whistleblowers, who may receive demotions, pay cuts, or risk termination.

For example, recently Frances Haugen, a former product manager at Facebook, revealed her identity as the whistleblower, who reported Facebook to the U.S. Securities and Exchange Commission (SEC) and provided internal Facebook documents to Congress and to the press.

Whistleblowers have a number of protections that allow them to disclose documents, even those that may be deemed confidential; however, the availability of these protections depends on the nature of the documents, the scope of what the whistleblower takes from the company, and to whom they provide these documents.

While it is advised that companies develop and implement policies and legal procedures to respond to whistleblower complaints, there is a lack of guidance available to help businesses take the right actions and complete the necessary steps in preparation for any legal procedures being implemented.

Here are five insightful lessons that corporations should take into consideration to protect their businesses from whistleblowers.

Whatever the situation be, any and all complaints coming from whistleblowers must be reviewed to establish whether specific company policies are being violated. Likewise, it should be determined which local, state, or federal laws or regulations the complaints in question touch upon, if any, or if the problematic activity brought to light by a whistleblower exposes the business to potential civil or criminal liability.

In some instances, additional information may be necessary to conduct a proper evaluation of the complaint. If so, very circumscribed fact-gathering may be necessary to determine how best to proceed.

Widespread disclosure of a whistleblower’s complaint could result in retaliation, destruction of evidence, or other irreversible consequences. Accordingly, related information should be disseminated within a company on a need-to-know basis.

With that as a guiding principle, companies should consider how to open secure and private lines of communication with necessary parties in the aftermath of a whistleblower complaint, especially where issues raised may resonate across multiple offices or jurisdictions. Finally, companies must determine whether any mitigation efforts are required to protect the health and safety of employees and customers.

If the whistleblower’s identity is known, it is advisable to assure them that the complaint raised will be taken seriously and investigated thoroughly in a timely manner. At the same time, a company dealing with a whistleblower should adopt and adequately communicate a zero-tolerance policy for retaliation.

Developing trust with the whistleblower in a foregoing manner may allow allegations to remain confidential while under investigation. Such transparency can also foster an atmosphere of cooperation on the whistleblower’s part, who may be called upon to provide the names of those with critical information regarding the given complaint, key dates, the chronology of events, and relevant documents.

For whistleblower complaints involving sensationalized or newsworthy allegations or consumer-facing issues, it is important for a company in the crosshairs to prepare communications and crisis management strategies to minimize public backlash that can result in reputational injury or economic hardship. Crisis communications and public relations consultants should be leaned upon in these instances, and traditional and social media should be monitored for relevant digital conversation.

As mentioned, all complaints need to be investigated, though the party or parties tasked with undertaking any particular investigation should be determined on a case-by-case basis. Low risk, low credibility allegations may be handled in-house, while high risk, high credibility whistleblower allegations will oftentimes require experienced outside legal counsel. This is certainly true when a complaint is likely to result in litigation, regulatory oversight, or criminal liability.

Whatever form an investigation may take, when preparing to investigate whistleblower claims, attention must be paid to timing, duration, and potential costs—information that should be presented without delay to management.

The bottom line for businesses is that whistleblowers must be treated respectfully and seriously, understanding that their concerns may provide management with helpful insight into company practices or problems that need to be addressed.