In this article, some of the most prominent and important legislation in the United States relating to whistleblowers that fit into the criteria that is held in the whistleblower provisions of the laws that will be explained. Beginning with the first most relevant and modern law to protect whistleblowers and even provide a reward structure for their information in the United States, this article will help to understand some of these major whistleblower laws and also reveal how in recent decades, later laws were created to expand the protection of whistleblowers and provide other reward structures.
Before moving onto the large and impactful legal strides that have been made most notably in the two most recent decades to further protect these types of whistleblowers from the repercussions that come with their information provided, one of the most important laws that provided protections to whistleblowers before these new legal strides was the federal False Claims Act (FCA) enacted in 1863 during the Civil War era. This federal law was created with the purpose of curbing defense contractor fraud during the American Civil War as the war had attracted many war profiteers that wanted to quickly and unfairly make large amounts of profit through defrauding the government (“The False Claims Act”). The FCA outlines the liability and penalty that can be imposed on people and companies that submit false claims and defraud the government and their programs, and allows “private citizens to file suits on behalf of the government [- called “qui tam” suits]”, in addition to the United States pursuing this fraud on their own, for the incentive of “[receiving] a portion of the government’s recovery” in the case that these private citizens bring successful qui tam suits to the government (“The False Claims Act”). However, in relation to the protection that this law provides in the wake of the information that whistleblowers may bring in these qui tam suits, the FCA also “includes a provision that protects whistleblowers (whether employees or independent contractors) from retaliation by their employers,” which protects against things like “termination, suspension, demotion, harassment, or any other discrimination in the terms and conditions of employment,” but the employee has the burden of proving a few different things for their retaliation claims to be accepted (“Whistleblower Protection From Employer Retaliation”).
All in all, the FCA served as the primary protection that many whistleblowers had before the legal strides taken in the recent two decades, but the scope of cases of whistleblowing that this applied to was very narrow in comparison to the different forms that whistleblowing can take outside of these cases where fraud is being committed against the U.S. government through things that had to do with federal contracting and spending. For this reason, in the wake of other corporate scandals and the financial crisis of 2007-2009, larger and more impactful legal strides were taken to provide better protections to whistleblowers in different kinds of cases and even created provisions for financial awards for certain types of information provided. Firstly, in response to a series of certain corporate accounting scandals that caused significant corporate and investor losses in the very early 2000s, the Sarbanes-Oxley Act of 2002 was passed to reform the accounting of public companies and provide more protection to investors, which also includes a provision for protections given to whistleblowers that provided information that person reasonably believes is in violation of “any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders” (“Sarbanes Oxley Act (SOX) 18 U.S.C. §1514A”). These protections are against things including “discharge, [demotion], [suspension], [being threatened], [being harassed], or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee”, which are somewhat similar to the protections provided by the FCA but were applicable to whistleblowing in cases specific and pertinent to the SEC law and regulation and investor fraud against shareholders on the basis of any other federal law relating to this (“Sarbanes Oxley Act (SOX) 18 U.S.C. §1514A”).
Moving forward now to the aftermath of the financial crisis of 2007-2009, the Dodd-Frank Act was enacted in 2010 to improve “accountability and transparency in the American banking and financial system” as serious malpractices by many large financial institutions had set the worst recession since the Great Depression into motion, but in the midst of this, it also amended the Sarbanes-Oxley Act’s originally weaker provisions when it came to whistleblowers as it “[increased] the complaint filing period with the Department of Labor (DOL), [clarified] the right to a jury trial, [barred] the use of arbitration agreements, and [expanded] remedies for violations of whistleblower protections,” all with the aim of looking to bolster the confidence of whistleblowers in coming forward with important information that could prevent serious situations like this from unfolding as they had (“Corporate Whistleblowers”). Along with this, it also amended the Sarbanes-Oxley Act to “cover more employees, including those of ‘nationally recognized statistical rating organization[s].’,” so that it could be further applied transnationally to specific whistleblowers outside of the US, and it even created “modern reward laws” so that these whistleblowers could receive “a percentage of government recoveries from successful prosecutions” similar to the previously explained FCA (“Corporate Whistleblowers”). Overall, the Dodd-Frank Act established “two of the most successful U.S. whistleblower programs at the Securities and Exchange Commission (SEC) Whistleblower Program and the Commodity Futures Trading Commission (CFTC)” and is regarded as one of the most important whistleblower laws that has been passed and established (“Corporate Whistleblowers”).
Citations:
“Corporate Whistleblowers.” National Whistleblower Center, National Whistleblower Center, 19 Apr. 2021, www.whistleblowers.org/know-your-rights/corporate-whistleblowers/.
“Sarbanes Oxley Act (SOX) 18 U.S.C. §1514A.” Sarbanes-Oxley Act (SOX) | Whistleblower Protection Program, United States Department of Labor - Occupational Safety and Health Administration, www.whistleblowers.gov/statutes/sox_amended.
“The False Claims Act.” The United States Department of Justice, The United States Department of Justice, 14 Jan. 2021, www.justice.gov/civil/false-claims-act.
“Whistleblower Protection From Employer Retaliation.” Berger Montague, Berger Montague, bergermontague.com/practice-areas/false-claims-act-qui-tam-whistleblower-law-firm/anti-retaliation-provision-false-claims-act/.
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