How to Survive the Whistleblower Epidemic

Retaliation Claims Are Dangerous

Employees in today's world are educated on their rights and entitlements. Unfortunately, some employees use this knowledge to gain an advantage in the workplace. Retaliation claims have become one of the more dangerous claims against which employers must defend themselves. Almost all employment statutes (and many other statutes affecting businesses) prohibit retaliation for opposing or complaining about activity contrary to the statute. Coincidentally or not, many employees who are facing discipline and/or the threat of termination begin to raise concerns or make formal complaints. Employers are often faced with the dilemma of what to do with the complaining employee who appears to be manufacturing issues to protect his job. These employees can be disruptive to the work environment and affect employee morale. But discipline or termination, even when the complaints are wholly unfounded and/or intentionally disruptive, can create significant legal risks.

The struggle to avoid whistleblower issues and retaliation claims is best won before a complaint is ever made. Once an employee complains, s/he is often already halfway to the courthouse. The most effective preventive actions are the same actions that help with most employment issues:

1. Don't Violate the Law

The first, and obvious, step to avoiding whistleblower claims is not to violate the law. Simple. But a company's good intentions are only as good as its weakest manager. Companies must hire, promote and place the right people in manager and supervisor positions. In addition to picking the right people, companies must continue to train their managers. It is essential that managers and supervisors know what laws apply and what they need to do to make sure the company complies.

2. Strive for a Fair Environment

Although some complaints arise from legitimate concerns or perceived violations in the workplace, many arise because an employee is disgruntled, or thinks something is unfair. We have all heard the saying, “Life's not fair.” No company can provide a perfect or completely fair employment setting for all employees. However, striving for a “fair” environment and maintaining policies and procedures that help provide consistent treatment can help gain employee favor. Consistency starts with clear policies and the enforcement of those policies. Employer expectations should be well communicated, and frequent, honest feedback should be provided. Discipline and poor performance reviews should not come as a surprise. It is harder for employees to complain (and harder for them to succeed on retaliation claims) when rules are clearly communicated and enforced.

3. Listen to Employees

Employees often have a lot to say. Employers that provide employees with a safe opportunity to voice their opinions and provide input into decisions that are made or the processes to be followed often experience higher employee morale. Employees often feel better about the result if they feel like they have been heard, even if the employer did not agree with the employee.

4. Maintain a Policy (and Culture) That Prohibits Retaliation

This too seems like an obvious suggestion. Maintaining a policy is not as simple as sticking one in the handbook and watching it gather dust. To be truly effective, the policy must become part of the culture. Supervisors and managers should be trained on the policy. They should also be trained to know what
actions can create legal risk. Managers should understand that any change in the way in which they deal with a complaining employee could result in a retaliation claim.

The biggest hurdle to overcome is to change the way both employees and managers feel about complaining. Retaliation claims are often easy to prove because supervisors, and others, view complaints as “whining,” “complaining” or “stirring up trouble.” “Complaints” are viewed negatively. When the culture encourages employees to suggest improvements, and provides opportunities for input to improve the work environment, issues raised can be received in a positive light. Ideally, the employee also begins to raise the concerns in a more positive manner, providing suggestions for improvement (a positive, forward-thinking approach) rather than complaints (a negative, past-dwelling approach).

5. Conduct Periodic Self Audits

Employers that conduct self audits often uncover issues before the issues result in complaints. Self audits can cover every part of an employer's business, from the business practices required by the particular industry's regulations, to financial and accounting practices, to more general human resource issues. Audits should be focused and broken down into manageable parts. Audits for consistency in compensation, discipline and hiring practices can help uncover potential discrimination or unfairness. For any audit to be effective, the employer must follow through on the results of audits. If an issue is discovered, steps should be taken to address it.

6. Provide an Internal Complaint or Grievance Process

Finally, employers should consider providing an internal complaint or grievance process. Few companies want to encourage whistleblowers. But it is much better for employees to complain internally and provide the company an opportunity to correct the issue than for the employer to first learn of a complaint when a government agency knocks on the door. An internal complaint process can be as simple as an anonymous hotline or as complex as a formal grievance and arbitration process.

Conclusion

There is no magic cure to prevent all whistleblower claims or complaints. The whistleblower threat is here to stay and it affects all employers. Employers can successfully manage the symptoms of the epidemic by training managers and supervisors, managing employee expectations and morale with consistent application of policies, providing avenues for employees to voice their opinions safely, and monitoring the practices in the workplace.

Patricia Anderson Pryor, a member of this newsletter's Board of Editors, is a partner in the Cincinnati, OH, office of Jackson Lewis LLP. Ms. Pryor is a litigator in both state and federal courts, representing and defending employers in nearly every form of employment litigation, including class actions.

Whistleblowers have become a common staple in today's society. They are glorified in books, movies, and television shows. Who can resist the story of the “little guy” who takes down the big company and at the same time saves society from whatever ills or evil the company was forcing upon it? This romanticized image of the whistleblower, as a modern day David vs. Goliath, makes the complaining employee all the more dangerous.

Whistleblowers Affect All Employers

In August 2012, the Securities and Exchange Commission (SEC) made its first award to an anonymous whistleblower under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). And now with the money starting to flow, the number of whistleblowers, or purported whistleblowers, is destined to increase. Although the Dodd-Frank Act is receiving the most media attention, it is not the only act providing whistleblower protection. Other statutes, both state and federal (including the False Claims Act), provide bounties or cash rewards (similar to those provided by the Dodd-Frank Act) for employees who report violations. Aside from the bounties or cash rewards that whistleblowers can pursue, the threat of a retaliation claim against the employer often provides the whistleblower with an added layer of protection from discipline and termination. Regardless of whether an employer is publicly traded or subject to the Dodd-Frank Act, the media attention on whistleblowing and the public awareness created by the statute has increased the whistleblower pressure in all employment settings.

Retaliation Claims Are Dangerous

Employees in today's world are educated on their rights and entitlements. Unfortunately, some employees use this knowledge to gain an advantage in the workplace. Retaliation claims have become one of the more dangerous claims against which employers must defend themselves. Almost all employment statutes (and many other statutes affecting businesses) prohibit retaliation for opposing or complaining about activity contrary to the statute. Coincidentally or not, many employees who are facing discipline and/or the threat of termination begin to raise concerns or make formal complaints. Employers are often faced with the dilemma of what to do with the complaining employee who appears to be manufacturing issues to protect his job. These employees can be disruptive to the work environment and affect employee morale. But discipline or termination, even when the complaints are wholly unfounded and/or intentionally disruptive, can create significant legal risks.

The struggle to avoid whistleblower issues and retaliation claims is best won before a complaint is ever made. Once an employee complains, s/he is often already halfway to the courthouse. The most effective preventive actions are the same actions that help with most employment issues:

1. Don't Violate the Law

The first, and obvious, step to avoiding whistleblower claims is not to violate the law. Simple. But a company's good intentions are only as good as its weakest manager. Companies must hire, promote and place the right people in manager and supervisor positions. In addition to picking the right people, companies must continue to train their managers. It is essential that managers and supervisors know what laws apply and what they need to do to make sure the company complies.

2. Strive for a Fair Environment

Although some complaints arise from legitimate concerns or perceived violations in the workplace, many arise because an employee is disgruntled, or thinks something is unfair. We have all heard the saying, “Life's not fair.” No company can provide a perfect or completely fair employment setting for all employees. However, striving for a “fair” environment and maintaining policies and procedures that help provide consistent treatment can help gain employee favor. Consistency starts with clear policies and the enforcement of those policies. Employer expectations should be well communicated, and frequent, honest feedback should be provided. Discipline and poor performance reviews should not come as a surprise. It is harder for employees to complain (and harder for them to succeed on retaliation claims) when rules are clearly communicated and enforced.

3. Listen to Employees

Employees often have a lot to say. Employers that provide employees with a safe opportunity to voice their opinions and provide input into decisions that are made or the processes to be followed often experience higher employee morale. Employees often feel better about the result if they feel like they have been heard, even if the employer did not agree with the employee.

4. Maintain a Policy (and Culture) That Prohibits Retaliation

This too seems like an obvious suggestion. Maintaining a policy is not as simple as sticking one in the handbook and watching it gather dust. To be truly effective, the policy must become part of the culture. Supervisors and managers should be trained on the policy. They should also be trained to know what
actions can create legal risk. Managers should understand that any change in the way in which they deal with a complaining employee could result in a retaliation claim.

The biggest hurdle to overcome is to change the way both employees and managers feel about complaining. Retaliation claims are often easy to prove because supervisors, and others, view complaints as “whining,” “complaining” or “stirring up trouble.” “Complaints” are viewed negatively. When the culture encourages employees to suggest improvements, and provides opportunities for input to improve the work environment, issues raised can be received in a positive light. Ideally, the employee also begins to raise the concerns in a more positive manner, providing suggestions for improvement (a positive, forward-thinking approach) rather than complaints (a negative, past-dwelling approach).

5. Conduct Periodic Self Audits

Employers that conduct self audits often uncover issues before the issues result in complaints. Self audits can cover every part of an employer's business, from the business practices required by the particular industry's regulations, to financial and accounting practices, to more general human resource issues. Audits should be focused and broken down into manageable parts. Audits for consistency in compensation, discipline and hiring practices can help uncover potential discrimination or unfairness. For any audit to be effective, the employer must follow through on the results of audits. If an issue is discovered, steps should be taken to address it.

6. Provide an Internal Complaint or Grievance Process

Finally, employers should consider providing an internal complaint or grievance process. Few companies want to encourage whistleblowers. But it is much better for employees to complain internally and provide the company an opportunity to correct the issue than for the employer to first learn of a complaint when a government agency knocks on the door. An internal complaint process can be as simple as an anonymous hotline or as complex as a formal grievance and arbitration process.

Conclusion

There is no magic cure to prevent all whistleblower claims or complaints. The whistleblower threat is here to stay and it affects all employers. Employers can successfully manage the symptoms of the epidemic by training managers and supervisors, managing employee expectations and morale with consistent application of policies, providing avenues for employees to voice their opinions safely, and monitoring the practices in the workplace.

Patricia Anderson Pryor, a member of this newsletter's Board of Editors, is a partner in the Cincinnati, OH, office of Jackson Lewis LLP. Ms. Pryor is a litigator in both state and federal courts, representing and defending employers in nearly every form of employment litigation, including class actions.