Companies Should not Whistle at Whistleblowers

Public companies are required by Sarbanes Oxley to avoid adverse employment action against employees who in good faith suggest that certain laws are being violated by their employer.  The enforcement of anti-retaliation protections rests in a Review Board of the United States Department of Labor (and not, as many might assume, with the SEC).  The idea is that the DOL has experience under other laws in protecting against employer retaliation.

In September, the Review Board held (Menendez v. Halliburton) that an employer may be held to have taken unlawful retaliatory action simply by divulging the name of a whistleblower to that person’s fellow employees.  Seems the employees shunned Menendez after he blew the whistle, indicating that workers don’t like a rat even while the Congress and SEC are attempting to promote such actions.  (Indeed, the 2010 Dodd Frank Act provides cash bounties to whistleblowing employees in many circumstances.)

While it seems about four centuries since Halliburton got any piece of good publicity, the release of an anonymous whistleblower’s name clearly is not what that person wanted to have happen, and it is hard to imagine a corporate motive  for that name release except an effort to discourage the underlying behavior.  In that light, the Review Board had little choice but to condemn the practice in protection of the regulatory reporting scheme.

In an interesting sidelight, the CPAs doing the company audit declined to speak with the whistleblower until his allegations were resolved, an action that might well endear the accountants to management but is hard to parse with the idea that the CPAs need to track down the accounting truths,  at least when placed on inquiry notice.

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