Courts create uncertainty in Dodd-Frank protections

Reuters brings us a tale of two whistleblowers.  Both disclosed violations of the Foreign Corrupt Practices Act (FCPA) within their chain of command and both were fired. Neither went to the Securities and Exchange Commission (SEC).One of the whistleblowers filed a claim in Tennessee where the federal court’s opinion was that the disclosure was protected.  The other whistleblower filed in Texas where a federal court found that it may be necessary to report to the SEC in order to claim the protections of Dodd-Frank.

The courts never decided the issue because they threw out the whistleblowers’ claims for other reasons. But their apparent disagreement on this issue presents an unfortunate development in the ever-evolving state of whistleblower law. If left unresolved, the conflicting messages will compel whistleblowers, regardless of what steps they take within their own company, to report to the SEC as well. Otherwise, they risk being left out in the cold.

Most employees prefer to disclose internally rather than publicly embarrass their employers. But, employers often respond to that courtesy by savaging the employee’s reputation and firing him so as to undermine the credibility of the whistleblower’s claims.

For the above reason, it is dangerous to blindly walk into a supervisor’s office with an internal disclosure, hoping for the best.  A better approach is to discreetly research how the employer responded to past disclosures and to seek advice from attorneys with expertise in whistleblower cases.

It’s also helpful to learn from other whistleblowers what to expect.  The International Whistleblower Archive contains a treasure trove of articles and videos describing the experiences of other whistleblowers and providing advice on how to avoid the usual pitfalls.