No one wants to be a “snitch” – snitches get stiches, right? But protecting wrongdoers with silence can cause serious harm. That’s why consumer advocate Ralph Nader popularized the term “whistleblower” in the 1970s, to cast a more positive light on those who report misconduct. Nader’s reframing helped shift public perception, emphasizing the courage and civic duty of individuals who speak up when something goes wrong inside a company, government agency, or other organization.
Five decades later, the term ‘whistleblower’ is both widely recognized and legally significant. Certain laws require individuals to act as whistleblowers in specific situations. And there are laws to protect whistleblowers against legal retaliation.
But how to know when you must or should blow the whistle? How do you determine what is required and measure the potential consequences? After all, the decision to speak up can carry enormous professional and personal risk, especially for senior executives.
And these executives and senior leaders may face the challenge of being both aware of potential wrongdoing and accountable for preventing or responding to it. That’s a legal and ethical tightrope, one where missteps can result in career damage, regulatory scrutiny, or personal liability.
Whistleblowing: Getting Caught in the Crossfire
Executives are often in the most precarious position when internal misconduct comes to light. They may be the first to notice internal misconduct or detect problems, whether related to financial fraud, discrimination, harassment, regulatory breaches, or insider activity. At the same time, they may be asked to ‘look the other way,’ pressured to approve, ignore, or cover up questionable activity. That puts them squarely in the middle: Do you report and risk retaliation, or do you stay quiet and potentially become complicit?
Whistleblower protections exist to shield employees from retaliation; however, applying those protections effectively requires a clear understanding of what constitutes protected activity and when those protections take effect. Some of the most complex whistleblower situations involve individuals at the top of the organization – senior leadership, legal, finance, and compliance personnel – who are expected to uphold the company’s standards while also navigating their own exposure.
That’s why early legal advice is so critical.
Whistleblowing: What To Know Before You Act
If you’re in a leadership role and suspect, or are made aware of, potential wrongdoing, here are some things to consider before taking action:
What qualifies as protected whistleblower activity? Not every concern or complaint is legally protected under federal or state law. Legal protection often depends on what you report, how you report it, and to whom.
How to document concerns appropriately. It is easy to make early missteps with records. Use of personal devices, forwarding emails to personal accounts, or careless handling of records can weaken your position or even increase risk. Executives need legal guidance on confidentiality obligations, how to handle sensitive documents, private legal communications, and internal protocols that won't jeopardize their position.
What legal protections are available? Whistleblower protections are found in federal laws like Sarbanes-Oxley and Dodd-Frank, as well as state-specific statutes. Knowing what applies in your jurisdiction, how retaliation is defined, and what to expect under your specific circumstances is essential.
How contractual employment agreements can complicate matters. Your employment agreement, severance terms, and equity arrangements may be affected if you report wrongdoing. Some contracts contain confidentiality or non-disparagement clauses that must be navigated carefully.
When to seek outside counsel. It’s important to remember that in-house, general counsel represents the company, not you. In high-stakes or sensitive situations, retaining independent legal counsel ensures your interests are protected, particularly if you anticipate that your role in the matter may be scrutinized.
If someone brings you a concern, you might now have a duty to report. Executives who receive complaints from employees or colleagues may trigger additional legal duties, depending on the company’s reporting structure, industry regulations, and their own responsibilities. Ignoring such complaints can create liability for both the company and the individual.
The analysis of these issues depends heavily on the specific facts. For instance, the answers may turn on your specific role at the company or government agency. If you’re questioning whether something you’ve seen, been told, or been asked to do crosses a legal or ethical line, you may already be facing a whistleblower moment. Before you blow the whistle, you might want to call an attorney.
