Protection of Whistle Blowers

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 A whistle blower is a person who discloses information about wrongdoings--which can include fraud, corruption, employment discrimination, and other violations of laws or company policies, for the benefit of the public. Whistle blowers often play an important role in exposing corruption and money laundering. For example, a whistle blower brought to light a massive case of money laundering (approx. US$ 235 billion) by the Estonia-based bank branch of Denmark-based Danske Bank from 2007 to 2015. See Explainer: Danske Bank's 200 billion euro money laundering scandal, Reuters.com (18 Nov. 2018).


If whistle blowers are not protected by law, they can face severe consequences from their employers or even from law enforcement authorities. Employers or company officials may be tempted to retaliate against a whistle blowing employee by terminating his or her employment, by reassigning the employee to less desirable tasks, or by not promoting the employee under circumstances in a promotion would normally be granted. In addition, to expose corruption, fraud, or other wrongdoing, the whistle blowing employee may have to disclose trade secrets or other confidential information of the employer. Without adequate protection, a whistle blowing employee may face civil or even criminal liability for misappropriation of trade secrets or for breaching his or her duty of confidentiality to the employer.


Around the world, countries are increasingly recognizing the importance of encouraging whistle blowers to expose corruption and other misdeeds. At a minimum, this includes prohibiting retaliation against employees who, in good faith, report on suspected wrongdoing. Some countries provide more extensive protection to whistle blowers than do other countries. Below are some examples.


European Union

  • Whistle Blowing Directive (to take effect in 2021). The Directive will require EU member states to provide protection against retaliation--including suspension from employment, demotion, and intimidation--to whistle blowers across a wide range of sectors including public procurement, financial services, money laundering, product and transport safety, nuclear safety, public health, and consumer and data protection. The protection applies to a person who: (1) made a disclosure in good faith; and (2) had reasonable grounds to believe the information was true at the time of the disclosure. Companies with more than 50 employees or municipalities of more than 10 000 inhabitants will be required to create effective and efficient reporting channels. This includes the appointment of a person suitable to deal with any whistle blower reports. In this category, the Directive specifically mentions the following as being qualified: (i) compliance officer; (ii)  head of human resources; (iii) legal counsel; (iv) chief financial officer; or (v) executive board member or management.


Latvia


United States

  • Public Sector. The 1989 federal Whistleblower Protection Act, 5 U.S.C. 2302(b)(8)-(9), protects employees of the federal government who report the possible existence of activities constituting a violation of law, rules, or regulations, or mismanagement, gross waste of funds, abuse of authority or a substantial and specific danger to public health and safety. The Act prohibits a wide range of retaliatory actions against such persons.
  • Private Sector. The 2000 federal Sarbanes-Oxley Act (SOX) prohibits companies whose securities are publicly traded in the US from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against whistle blowing employees. In Lawson v. FMR LLC, 134 S. Ct. 1158 (2014), the Supreme Court of the United States held that this anti-retaliation provision also protects whistle blowers employed by private companies that contract with publicly traded businesses that are subject to SOX.
  • Bounty Provisions. Section 922 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act provides that the Securities and Exchange Commission (SEC) shall pay awards to eligible whistle blowers who voluntarily provide the SEC with original information that leads to a successful enforcement action yielding monetary sanctions of over $1 million. This provision applies only to companies whose securities are publicly traded.
  • Protection Against Trade Secrets Theft Liability. The Defend Trade Secrets Act of 2016, 18 USC Section 1833, provides that individuals may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of any trade secret that is made:
    • in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and
    • solely for the purpose of reporting or investigating a suspected violation of law; or
    • in a complaint filed in a lawsuit or other proceeding, if such a filing is made under seal.
  • State Laws.  Because the United States is a federal republic, the authority to make laws is shared by the federal government as well as the state governments of the 50 states. Some states have adopted false claims reporting statutes, which afford protection (and in some cases, compensation) to persons who report fraud in government procurement. Under the employment laws of most states, unless there is an agreement to the contrary, an employer normally has the right to terminate an employee's employment for any lawful reason or for no reason. This is known as the "at-will" employment doctrine. However, in many states, courts have recognized an exception to the at-will doctrine, which forbids employers to fire workers for reasons that are against "public policy." In many cases, termination of an employee because he or she has reported a corrupt act would violate the public policy exception to the at -will employment doctrine.

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Interview with the EU Commission - What is the EU Whistleblowing Directive designed to do? | VinciWorks

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Interview with the EU Commission - Why do we need an EU-wide Directive on whistleblowing? | VinciWorks

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 Kas ir trauksmes celšana? | Valdības māja

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The legal framework protecting whistleblowers in the U.S. | PBS NewsHour