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Whistleblower Policy

A set of guidelines governing the exposé of corporate wrongdoings

What is a Whistleblower Policy?

A whistleblower policy is now considered a very critical part of almost all organizations, as a result of legal issues. Whistleblowers almost always become victims of their actions, so some countries such as the US are seeing the need to increase legal protection at all legislative levels. Read on to find out more about whistleblowing policies and the pros and cons of whistleblowing.

 

Whistleblower Policy Theme

 

What is a Whistleblower?

A whistleblower is that person who exposes wrongdoings in an organization relating to illegal, dishonest, dangerous or fraudulent practices. Sometimes whistleblowing is internal to an organization and is meant to expose the practices of an organization to CEOs and managers. It could also be external, where a whistleblower exposes illegal practices to the media, the police or the government.

The reasons behind the act of whistleblowing are not always related to serious crime. An employee could be disclosing the behavior of another employee who is exercising minor theft, using sick leaves inappropriately, or taking advantage of company resources for personal gain. Not everyone agrees that whistleblowing is the right way to expose malpractices.

Some people think that whistleblowers are moral characters who are willing to make sacrifices and expose wrongdoing. On the other hand, some people think whistleblowers are discontented employees with malicious intentions. A policy maker must look at this matter with an objective eye.

The complications that come with whistleblowing together with the underlying legal imperatives encourage organizations to come up with a whistleblower policy to manage the act.

 

Legal Imperatives of a Whistleblower Policy

Court decisions are taking advantage of public policy exceptions to establish the statements of legal imperatives regarding whistleblowing. The legal statements include:

 

1. Increasing Protection of all Whistleblowers

Many organizations guarantee their employees protection from reprisal. If someone works in an organization in which there are malpractices that violate federal laws, they will be protected in the event that they blow the whistle on the issues. Here is how the law protects whistleblowers.

Under Title VII of the Civil Rights Act, the Occupational Safety and Health Act, and the Age Discrimination During Employment Act include clauses that protect whistleblowers from retaliatory attacks.

Also, 29 years ago, President Bush brought into law the Whistleblower Protection Act that guarantees protection to employees of the federal government who take it upon themselves to expose all kinds of malpractices. Unfortunately, legal protection is not applicable to members of the private sector.

 

2. Boosting Laws that Protect Whistleblowers

As we speak, many US states are working to fill up the gaps brought about by the absence of appropriate federal laws on whistleblowing. Michigan, for example, set up its first whistleblower protection law almost 37 years ago. Similar laws exist in other states. Better yet, the laws apply to everyone, including workers in the private sector.

The legal protection empowers workers to expose illegal actions in their working environment to law enforcement agencies. In addition, the laws provide remedies such as reinstatement accompanied by back pay for those who can show that they suffered severely as a result of exposing illegal activities.

 

3. Employment at Will

As the legal winds usher in new laws on whistleblowing, the same cannot be said about the doctrine of employment at will. The courts have recognized exceptions to the “at will” doctrine, which has been in play in the private sector for almost a century.

As an example, in many cases, the courts have come across implied contracts in many employee statements by officials responsible for hiring, and the only limit to termination of employment is in the case of a just cause. Actually, many courts believe there are employers who have acted in bad faith and have shown malice when terminating employees. Such employees have been awarded relief by the courts.

Evidently, the law is undergoing changes to protect those who publicly call out those involved in illegal activities. However, it is obvious that even with protection from the law, the life of a whistleblower will not be the same afterward. There are advantages and disadvantages that come with whistleblowing.

 

Whistleblower Policy: Advantages of Whistleblowing

 

1. Exposes malpractices

Whistleblowers play an important role in business and government. When an organization or even a federal agency steps over an ethical or legal line, whistleblowers are the ones who make such acts public so that violators can be held to account. There is also scrutiny as a result of investigations, lawsuits or media attention, all of which influence the conduct of all organizations.

Government offices and companies that take part in misconduct and who previously got away with it are forced to institute reforms once their misconduct becomes public knowledge.

 

2. Protection

Whistleblowers in the US are protected, thanks to the whistleblower protection program. Employees who notice illegal practices in their organization are protected from any kind of retaliatory acts from their employers or colleagues. Retaliatory acts may include demotion, dismissal, reduction of man-hours or denial of employee benefits. Any company that is in violation of this protection law faces suspension, fines or even a civil lawsuit.

 

Whistleblower Policy: Disadvantages of Whistleblowing

 

1. Reduced Employment Prospects

There is a downside to whistleblowing as much as it is meant to call out illegal practices. Whistleblowing brings with it a lot of attention to the whistleblower and the organization as well. Then there are the legal testimonies, media interviews, and investigations that can harm the employability of the whistleblower.

Although an ordinary person would treat a whistleblower as a hero for exposing corruption, industry players and managers may consider whistleblowers as indiscreet and disloyal for exposing company secrets. Also, all the media attention may actually harm the whistleblower because he or she can be blacklisted in their profession.

 

2. Complications

Although whistleblowers act on the assumption that their exposé is meant to serve the greater good, they sometimes go through challenges that arise out of their actions. Often, the media will dig deeper into the whistleblower’s life in an attempt to find something to write about. There are complications that can arise from the legal process or lawsuits, and the whistleblower may be forced to hire an attorney.

In addition, sometimes the whistleblower is exposed to threats from all directions, including from their former co-workers and supervisors. Put together, all these amounts to a lot of stress that can lead to bad health or even cracks in relationships.

 

Final Takeaway

Whistleblowing policies are not a solve-all remedy to issues faced by whistleblowers. However, creating such policies is the first step in a long and arduous journey. The policies must be communicated to employers and employees in a transparent manner. Employees must also be trained in ethics so that they become familiar with ethical issues and dilemmas that are unique to each organization.

 

Related Readings

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

  • Accounting for Income Taxes
  • Due Diligence
  • Forensic Audit Guide
  • Top Accounting Scandals

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