The Legal Imperative

The legal trends developing in the United States make whistleblowing

policies an important part of organizations' overall ethics code. Increasing
statutory protection at the federal and state levels, and court decisions that
protect whistleblowers under the public policy exception to employment-at-
will, lead to the statement of a legal imperative regarding whistleblowing.
1. Increasing Federal protection for whistleblowers. Employees of most
organizations are expressly guaranteed protection against reprisals from
their employers when they disclose actions that violate specific federal
statutes. Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act and the Occupational Safety and Health Act all contain
anti-retaliation provisions.[6]
In addition, in 1989 President Bush signed a federal "Whistleblower's
Protection Act" which extends protection available to federal employees
who disclose government waste, fraud, and abuse. This law does not directly
affect private sector employers. However, numerous legal scholars have
recommended comprehensive federal legislation protecting both public and
private sector whistleblowers. Congress is expected to consider legislation
in 1992 that will extend federal whistleblower protection to private sector
employees.[2]
2. The increasing number of state whistleblower protection laws. In the
meantime, states are moving quickly to fill the void left by the lack of
comprehensive federal legislation. Michigan passed the first
"Whistleblower's Protection Law" in 1981, and the majority of states now
have such statutes. Many of these apply equally to public and private sector
employees. Most of these laws specify that employees have a right to report
the illegal or illegitimate actions of their employers to regulatory agencies,
government officials, law enforcement officials, and the like. They generally
provide remedies, including reinstatement and back pay, for employees who
can show that they have suffered adverse employment consequences as a
result of their whistleblowing activities. Some states also allow successful
plaintiffs to collect punitive damages. Organizations should be aware of the
law regarding employee whistleblowers in states in which they operate.[7]
3. The increasing erosion of the employment-at-will doctrine. In addition to
the legal trends toward whistleblower protection at the federal and state
levels, the courts are increasingly recognizing exceptions to the traditional
at-will doctrine which has governed most private sector employer-employee
relationships for well over 100 years. For example, courts have found
"implied contracts" in employee handbooks or in statements made by
company officials when hiring individuals which limit the right to terminate
except for"just cause." Some courts have found that some employers have
shown "malice and bad faith" when discharging employees and have
provided relief to the employees. Other courts have held that certain
personnel decisions by employers violate "public policy" and that such
actions are exceptions to the traditional doctrine of employment-at-will.[8]
All of these exceptions have, in some jurisdictions, been cited to protect
whistleblowers from discharge. The public policy exception probably offers
the broadest potential protection for whistleblowers. Therefore, I will
examine it in slightly more detail.
Essentially, the public policy exception means that employees performing
acts that are consistent with public policy or refusing to perform acts that
public policy discourages are protected against reprisals. The term "public
policy" is vague, and has been interpreted differently by different courts.
Some courts have ruled that the whistleblower who in good faith discloses
perceived organizational wrongdoing is acting in a manner consistent with
public policy, and therefore is protected from discharge. Other courts,
however, have denied relief to whistleblowers, even while acknowledging
that employers' disciplinary actions were unfair.[9]
So, while there is no certainty that at-will employees can find protection
under one of the exceptions to the doctrine, courts in many jurisdictions
have provided relief to whistleblowers. Organizations must be aware that
even if there is no federal or state statute expressly protecting
whistleblowers, there is a possibility that adverse personnel actions against
whistleblowers may backfire because of the increasing limits the courts are
placing on employment-at-will.
So what exactly is the legal innovative? Nothing in federal or state law, and
no court decision, suggests that your organization is required to develop an
internal whistleblowing policy. Does it follow that because whistleblowers
may be protected from reprisals that your organization should have such a
policy?
I believe it does. Research indicates that many organizations retaliate against
whistleblowers.[10] In the absence of a clear organizational directive against
such retaliation, it may happen in your cornpany. Such personnel actions
may put your organization in violation of federal or state law protecting
whistleblowers, or may make you vulnerable to employee lawsuits based on
exceptions to the doctrine of employment-at-will.
Whatever your personal views toward whistleblowers, the prudent course is
to formalize a stance toward whistleblowing that outlines your company's
opposition to reprisals against whistleblowers. The legal imperative is to
prevent adverse personnel decisions that may be linked to whistleblowing.
Such retaliation, even when not specifically prohibited by law, has the
potential for creating damaging lawsuits. A policy that expressly forbids
such conduct is probably advisable for this reason alone.