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5 Tips for Preventing Whistleblower Retaliation Claims

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By Casey C. Sullivan, Esq. on June 15, 2015 12:56 PM

Tips and complaints to the SEC's whistleblower program continue to grow at record pace, even if the Commission has been slow to pay out whistleblower awards. With more tips, come more claims of retaliation. More than one out of every five whistleblower reports some form of retaliation.

Those retaliation claims, the salt in the wound of an SEC investigation, can have stiff penalties, given the new protections afforded whistleblowers by the Dodd-Frank Act. But retaliation complaints are avoidable if a company has the proper procedures and policies in place. Here are five tips to help you stave off claims of retaliation:

1. Encourage In-House Reporting

Having a corporate climate that encourages openness and communication is key to staving off whistleblowers. Employees should feel comfortable reporting suspected wrong doing in-house before going to authorities, allowing any issues to be investigated and potentially corrected. Transparent internal investigations can demonstrate to potential whistleblowers that the company takes their concerns seriously and is willing to act on them.

2. Don't "Pretaliate"

You can encourage in-house reporting, but you can't require it. Dodd-Frank's Rule 21F-17 prohibits actions which "impede an individual from communicating directly" with the SEC about securities violations. That includes confidentiality agreements which require that all information be internal or state that complaints may only be addressed within the company. The existence of such an agreement, on its own, is a violation that can carry a hefty fine.

3. Codify Your Anti-Retaliation Policy

Businesses should have a written anti-retaliation policy and make sure it's included in their code of conduct. Don't just reference it, put it in prominently. Similarly, all code of conduct training should include anti-retaliation training, which should emphasize not only what could constitute prohibited retaliation, but how employees can report suspected problems.

4. Focus on Management

Your anti-retaliation training should be focused on management specifically. Managers and supervisors may be unaware of what constitutes illegal retaliation or may not know how to respond to internal complaints. Make sure that these employees, whose actions could end up costing the company, are well-versed in what constitutes retaliation and how to prevent it.

5. Document Employment Decisions

Make sure there is a clear record to support employment decisions, whether they are warnings, reprimands or firings. The more justification for your decisions you have down on paper, the more support you will have if you need to counter a later retaliation claim.

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