EVERFI Content Team

The term “whistleblower” has evolved over the years—in fact, centuries. First used, literally, to refer to someone who blew a whistle, like referees or police officers, it became widely used as a term referring to employees in a workplace exposing wrongdoing of some kind.

But even before the term became prominent in organizational circles, it had been used to refer to individuals who “blew the whistle” in an attempt to right some wrongdoing. For instance, in 1777, naval officers Samuel Shaw and Richard Marven blew the whistle to report the mistreatment of British prisoners of war, efforts that led to the first whistleblower protection law adopted by the Continental Congress in 1778.

The False Claims Act of 1863, or “Lincoln Law” formalized the concept of whistleblowing in the US and was enacted to combat fraud by suppliers to the Union Army during the Civil War. Over the years laws have emerged to ensure protections for whistleblowers—e.g., to protect their jobs and to protect them from retaliation when reporting issues to their employers.

Whistleblowing cases are on the rise, after a slight dip in 2020. While this can create some anxiety for employers, it’s important to note that whistleblowing is a good thing for organizations. Supporting a climate and culture that encourages employees to speak up or speak out when they feel there is some wrongdoing going on, can help employers be alert to issues that might be undetected before they’re too big to successfully overcome.

Employees need to know that their willingness to come forward will not be viewed negatively and will not result in any kind of negative sanctions for them.

Common Reasons Why Workers May Become Whistleblowers

The reasons that employees may become whistleblowers can range from the altruistic to the opportunistic.

For one thing, there’s clearly the potential for money to be made. In 2022, the U.S. Securities and Exchange Commission awarded an established $229 million in 103 awards in whistleblowing cases. But despite the fact there are potential financial rewards waiting for employees who report wrongdoing, many are driven not by monetary drivers but by the desire to right a wrong—whether it impacts them individually, the employer, or society at large.

• Harassment. Harassment is a top driver of whistleblowing—situations in which employees are being mistreated at work—by managers, colleagues, customers, or others—and feel they have no other means of redress.
• Concerns about safety violations or unsafe working conditions. Unsafe working conditions—or unsafe conditions that could potentially impact customers and others—may lead to whistleblowing claims in an effort to improve workplace safety.
• Ethical obligation. Employees’ own personal values and beliefs may drive them to become whistleblowers to expose fraud, corruption, or other illegal practices, simply believing it’s the right thing to do.
• Protecting the public from harm that might be caused through unsafe products, environmental hazards, or financial fraud.
• Legal and regulatory compliance issues. Many companies—particularly those in the healthcare or financial services industries, for instance—are governed by a wide range of legal and regulatory requirements. When they fail to adhere to these requirements, employees may be prompted to blow the whistle.
• Environmental harm. Companies may also have the potential to negatively impact the environment, an issue that has become critically important to many people. World Whistleblowers Day is an event that has emerged to shine a light on this type of transgression.
• Illegal activity. Fraudulent billing practices, financial misconduct, and other issues may prompt whistleblower claims related to various types of illegal activity that employees have observed.
• The misuse of classified data. Concerns over data security and privacy—for employees, customers, and patients in healthcare environments—have become common these days with breaches announced regularly. Employees spotting the presence of these issues may feel an obligation to blow the whistle.
• Preventing financial losses. Exposing fraud or mismanagement can help prevent financial losses for companies and their stakeholders. Early detection can save companies from larger financial penalties and losses.
• A hostile or harsh workplace environment. A hostile work environment can create negative, even potentially dangerous, situations for employees. Reporting can lead to a more transparent and open work culture.
• Retaliation and career damage. Employees may fear, or be victims of, retaliation from their employers ranging from job loss, to harassment, to the creation of a negative work environment.
• Corruption and bribery. Employees may be driven to become whistleblowers if they observe corruption in their organizations.

Whether they feel personally wronged or are driven by concerns for their companies or society in general, employees are often driven to report issues that can reflect negatively on the companies they work for, if not appropriately addressed. It’s important to note that employees may not be driven report issues outside of the organization if they know who they should turn to within the organization and if there is a climate of trust and transparency established so they feel confident that the issue will be addressed.

Ensuring transparent and ongoing communication about the company’s support of whistleblowing and the steps employees should take if they feel they or others have been victim of wrongdoing can help to avoid the escalation of an issue that could have been resolved internally.

Legal Protections for Whistleblowers in the US

There is a robust framework of laws and legal protections in the United States to protect whistleblowers to ensure they feel protected in the event that they raise an issue of concern.

• The False Claims Act (FCA), was the first whistleblower law in the US. It allows individuals to sue on behalf of the government for false claims, and to share in any recovery. Whistleblowers are protected from retaliation for reporting fraud against the government.
• The Whistleblower Protection Act (WPA) protects federal employees who disclose evidence of waste, fraud, or abuse in government operations, prohibiting retaliation against them.
• Military Whistleblower Protection Act provide protections for members of the armed forces who report violations of laws or regulations that may include sexual harassment and discrimination in the military.
• The Occupational Safety and Health Act (OSHA). OSHA was established to ensure safe and healthy working conditions for employees. It covers most private sector employees and offers protections for those who report workplace safety and health violations.
• Dodd-Frank Wall Street Reform and Consumer Protection Act. Established in response to the 2008 financial crisis, Dodd-Frank created whistleblower programs offering protections and incentives for those reporting violations of securities laws.
• Sarbanes-Oxley Act (SOX). Also enacted in response to corporate scandals, SOX offers protections for whistleblowers in publicly traded companies who report issues related to fraud, securities violations, and other federal law infractions.
• Foreign Corrupt Practices Act (FCPA). Prevents the bribery of foreign officials and promotes ethical business practices abroad, including whistleblower provisions for those who report violations.
• Environmental protection laws like the Clean Air Act and the Water Pollution Control Act provide whistleblower protection for employees who report environmental concerns.
• The Consumer Product Safety Improvement Act (CPSIA) protects employees of manufacturers, private labelers, distributors, and retailers when reporting consumer product safety violations.
• The National Defense Authorization Act (NDAA) provides expanded protections for individuals in the defense contracting industry, including the protection of employees of contractors, subcontractors, and grantees who report waste, fraud or abuse related to federal contracts or grants.

Despite the many laws providing a safe environment for employees to report wrongdoing, doing so is not without risk. For instance, there are instances where employees may find that they are not protected.

When Is Whistleblowing Not Protected in Business?

Whistleblowing protections are critical to help ensure that employees will expose or report illegal or unethical activities in the organizations where they work. However, they may not always be protected.

For instance, employees who have access to classified information are themselves held accountable under strict confidentiality agreements and legal obligations prohibiting them from disclosing certain information. This was a key factor in the case of Edward Snowden who disclosed classified information about NSA surveillance to the media.

Another issue that can lead to risk for whistleblowers is when they make disclosures that may have malicious intent or be driven by the potential for personal gain. If they believe they’re making these disclosures in good faith, they’re generally protected. However, if they chose to disclose information that may potentially hard others, or benefit themselves financially without consideration of public interest, they may not be.

Pros & Cons of Whistleblowing

Whistleblowing plays a crucial role in maintaining transparency and accountability in organizations by exposing wrongdoing. While it is generally undertaken by employees acting in good faith to report major issues, whistleblowing can have both positive and negative outcomes. The intention behind whistleblowing is to correct wrongs, not to cause harm, making it a complex but necessary action in the business world.

Pros

• Whistleblowing exposes illegal or unethical practices, leading to corrective action and fostering a culture of integrity.
• By reporting safety violations, whistleblowers help ensure a safer workplace, potentially preventing accidents and injuries.
• Whistleblowing encourages organizations to adhere to laws and regulations, thereby promoting ethical business practices.
• Whistleblowers often expose actions that could harm the public, such as environmental violations or public health risks, thereby playing a crucial role in protecting society.
• Whistleblowing can lead to increased transparency within organizations, as it puts companies under scrutiny to act responsibly.
• Whistleblowing empowers employees to speak up against wrongdoing, fostering a culture where concerns can be raised without fear.

Cons

• Despite legal protections, whistleblowers may face retaliation, including job loss or demotion.
• Whistleblowing can strain relationships with colleagues and management, leading to a hostile work environment for the whistleblower.
• Whistleblowers may face legal challenges or financial burdens, especially if they need to seek legal representation.
• The process of whistleblowing can be emotionally taxing, leading to stress, anxiety, and other psychological effects.
• Whistleblowers may find it difficult to secure future employment in the same industry due to being perceived as a risk by potential employers.
• In some cases, individuals might misuse whistleblower protections for personal gain or to settle personal vendettas, which can undermine the legitimacy of genuine claims.

Tips for Creating a Work Environment that Reduces the Need for Whistleblowing

Creating an environment where employees feel safe to come forward with concerns—and know where and how they should do that—can help companies establish a climate of trust, unearth percolating problems, and protect company interests while ensuring that its activities are legal and ethical. There are a number of things employers can do to encourage such an environment:

• Conduct regularly anonymous feedback surveys and provide other options for employees to share concerns internally.
• Train managers to help them understand how to earn and maintain employee trust.
• Create and communicate a clear whistleblower policy.
• Encourage open dialogue.
• Act promptly on feedback.

When employees understand their responsibilities, know how and where to report potential issues, and believe that they will be trusted and protected in a climate of transparency, companies benefit from the ability to spot early warning signs and to take appropriate action before issues escalate.

Learn How to Create a Safer Work Environment with EVERFI’s Workplace Compliance Courses

Employers can take proactive action to establish a culture and climate where employees feel safe and protected—even encouraged—to bring up potentially troublesome issues. Ongoing training, education, support, and communication are critical. EVERFI can help through workplace training courses and resources designed to both inform and educate. Learn more.