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How Can I Protect My Business from Whistleblower Lawsuits?

Federal and state laws often encourage employees to report violations of labor, environmental, and/or public safety laws when they occur. An employee who witnesses or has evidence of wrongdoing or waste while employed and who makes a good faith report of the wrongdoing or waste, verbally or in writing, to one of the person’s superiors, to an agent of the employer, or to an appropriate authority is a whistleblower. Federal and state laws protect employees from facing retaliation for making complaints against their employer. Employers should understand what a whistleblower complaint entails and what to do when faced with a such a complaint.

Whistleblower Actions

The Occupational Safety and Health Administration (OSHA) handles complaints from whistleblowers who allege violations of worker safety, food safety, and securities laws. Typically, an employee may report that the employer is violating an OSHA safety regulation involving safety of the public or the worker. Some whistleblower actions involve OSHA violations.

The Sarbanes Oxley Act of 2002 also provides several means of protection to employees who complain of violations of federal securities laws, such as wire, mail, securities, and bank fraud.  State laws involving discrimination, harassment, family and medical leave, and wage and labor laws are also another source of whistleblower protection. Retaliating against an employee, such as an action to demote, terminate, or make any other changes that impact their employment, because that employee raised an issue qualifying under the Whistleblower law is prohibited.

Protecting a Business from Whistleblower Complaints

The best way to avoid whistleblower complaints is to follow state and federal laws. While it seems so simple, actively working to ensure compliance with labor, safety, regulations, and statutory law is the easiest way to avoid a Whistleblower claim.  Companies should actively create compliance protocols, implement those policies effectively, and evaluate the effectiveness of those policies on a regular basis. Companies operating in health care, financial, and government contracts are more vulnerable to such actions. It is also vital to develop a means by which employees can come forward to report any violations internally, so you have an opportunity to address the issue directly and correct any errors. When establishing internal policies to receive reports of waste and wrongdoing, you must ensure that employees will not face retaliation for coming forward.

Employers should also have a system by which employee complaints are handled so that an employer can verify claims and address any issues. Employers should carefully document all evidence, witness statements, and other

records and findings. If there is a government investigation, having all necessary documents to prove or disprove claims can be easily made.

Even if an employer suspects that an employee has not made a legitimate complaint, you are prohibited from retaliating against that employee, or you can be found to violate their rights.  Yes, even when the report is false or fabricated.  Do not terminate or make decisions that negatively impact an employee’s terms and conditions of employment. Other actions, such as reprimanding the employee, excluding them from meetings, reducing their working hours, or denying a promotion may all be construed as retaliatory.

What Should I Do When a Complaint has Been Launched?

When you receive a complaint from an employee regarding waste or wrongdoing, even if you believe it to be frivolous, you should look into the complaint in an objective manner in compliance with your internal investigation procedures.

When faced with a government investigation, a business must deal with the allegation and handle the whistleblower appropriately. The best way to avoid whistleblower actions is through knowledge of applicable federal and state laws, as well as creating compliance and regulatory mechanisms that ensure that the company adheres to their best practices. However, mistakes can happen that trigger an investigation by a federal or state agency. When they do, consulting with counsel about next steps and following solid advice is strongly recommended.

If you need legal guidance regarding regulatory and compliance practices, contact the legal team at MacMain, Connell & Leinhauser. We provide a full suite of employment-related representation, including reviewing employer policies to minimize litigation exposure. For an initial consultation, contact us online or call 484-318-7106. Located in Pennsylvania, we serve clients throughout Chester County, Philadelphia, and New Jersey.