A memorandum released yesterday by Senator Charles E. Grassley highlights allegations that 14 of the 15 executive branch departments are in violation of the Whistleblower Protection Enhancement Act (WPEA).
The WPEA, passed in 2012, stipulates that every U.S. Government nondisclosure policy, form or agreement must contain an explicit statement (referred to as the “anti-gag” provision) alerting employees that “nondisclosure requirements do not supersede employees’ rights and obligations created by existing statute or Executive Order relating to (1) classified information, (2) communications to Congress, (3) reporting violations and/or misconduct to an Inspector General, or (4) any other whistleblower protection.”
Executive Departments Missing the Mark
In May of 2013, Senator Grassley’s office wrote a letter to all 15 Executive Departments to determine whether they had implemented the anti-gag provision. Ten months later, well past his requested deadline, Senator Grassley’s office had received responses from 11 of 15 Executive Departments—ten of those responses were incomplete.
Each department’s response was graded on an A to F scale. The Treasury department received the highest grade earning a B+ (met minimum implementation requirements); eight departments earned a C (met partial requirements); and two earned a D (implementation is underway). The four departments that did not respond were given failing grades.
Further Evidence of Increasing Focus on Whistleblower Protections
Senator Grassley’s focus on ensuring that Executive Department employees are free to report compliance failures without fear of retaliation highlights the U.S. Government’s focus on whistleblower protections. The Supreme Court recently ruled in Lawson v. FMR, LLC. that whistleblower protections under the Dodd-Frank Act extended beyond employees of public companies. Lawson now ensures that employees of private contractors hired by public companies are also covered by the whistleblower protections of Dodd-Frank.
There has also been recent disagreement in the courts over whether or not whistleblowers are protected under Dodd-Frank only if they report their allegations to the SEC. Most District Courts addressing the matter, including the recent New Jersey case of Khazin v. T.D. Ameritrade, ruled that employees who only reported fraud internally were still protected. However a recent case in the Fifth Circuit, Asadi v. G.E. Energy United States, L.L.C., ruled that whistleblower protections only extended to those who reported to the SEC. This conflict may also have to be decided by the Supreme Court.
Best Practices to Foster and Internal Culture of Reporting
What grade would your organization receive for its efforts in implementing best practices around whistleblower complaints? To help protect your people, reputation and bottom line, be sure to follow the following best practices:
1. Be sure your constituents know the options available to them
While many of these Executive Departments, and other government agencies (as well as public and private companies, colleges and charities) may already have a hotline reporting channel for employees as part of their ethics and compliance programs, it is worth noting that findings from NAVEX Global’s 2014 Hotline Benchmarking Report show that the Public Administration & Government industry had the highest rate of anonymous reports as compared to other industries.
It is then even more critical that hotlines are publicized, readily available and that employees are trained in when and how to properly use them.
2. Train managers and supervisors to properly handle complaints
Ensure that managers and supervisors know how to receive and address issues raised internally by employees. Studies have shown that, in over 60 percent of cases, employees have already reported the issue internally to a supervisor or manager before contacting the hotline. A smaller percentage may have contacted a supervisor and then the company hotline before ultimately reporting to a regulator like the SEC. Proper ethics and compliance training – especially in the areas of reporting and potential retaliation – are critical for managers and supervisors and can help ensure that an issue is addressed well before a problem grows.
3. Create a retaliation-free culture
Most importantly, make sure that managers and supervisors do not exacerbate the reported issue by retaliating against the reporter. This retaliation, overt or more subtle instances, make it less likely that employees trust the system and report future incidents.