Ask Rita: How Do We Handle A Whistleblower?
If someone alerts you to wrongdoing within your nonprofit, they’re protected under the law. Here’s how to handle a whistleblower situation.
Retaliating against a whistleblower can cause your nonprofit major problems.
Dear Rita:
I have some concerns about a report I just received from one of the employees in our accounting department, which indicates that our Chief Financial Officer may be engaged in some “accounting tricks.” While not a CPA, the reporting employee has a degree in finance and over 10 years experience in bookkeeping, and has provided some very convincing analysis that the “tricks” may not be legal and may be diverting funds from our nonprofit.
While we begin our investigation to determine the validity of these allegations and to assess whether we’ve suffered any losses as a result, our employee is scared that telling us will cost him his job or invite retaliation of some kind.
What are our obligations to this employee?
Sincerely,
Wet Whistle
Dear Whistle,
In the employment context, a “whistleblower” can be defined as an employee who reports and discloses knowledge of activity or conduct that violates the law. Typically, these reports are made to law enforcement or regulatory agencies, however, depending on which state you are in, whistleblowing can occur when the report is made internally to management. The violations reported can include, among many other things, workplace safety and financial wrongdoing, such as in your case.
In the wake of many years of highly publicized cases, most states, as well as the Federal Government, have expanded legal protections from adverse action or retaliation for employees who make these reports. As a result, there are very serious legal consequences for taking action or retaliating against an employee who makes reports and disclosures. In most states, the reports need not be of an actual violation of the law. The protections also apply to employees who have a reasonable belief that the information they are disclosing is a violation of the law. Given your employee’s experience and education, there’s no doubt they believe this to be the case here.
In order to ensure that an employer’s operation is not harmed by violations of law and that “doing the right thing” is always the highest priority, employers should have a strong policy in place. Your nonprofit’s whistleblowing policy should clearly encourage employees to exercise their right to report any activity they reasonably believe violates any state or federal law, violates or amounts to noncompliance with a state or federal rule or regulation, or violates fiduciary responsibilities.
In addition, the policy should advise employees they have the right to report these violations to management, as well as the right to take the reports of unlawful activity to government or law enforcement agencies.
Perhaps most importantly, employees should be advised of their right to be free from any retaliation or adverse treatment because of their disclosures. (Read and download a Sample Whistleblower Policy.)
To answer your question, you must first understand this employee has engaged in protected activity and your actions should be based upon that premise. Take the allegations seriously and do not interpret the disclosures as disloyalty or undermining of the mission of your nonprofit. The employee shouldn’t be labeled as a “troublemaker” or presumed to be lying about what is reported.
Be supportive and encourage the employee to bring any concerns of possible retaliation to you. This is especially important after you begin your investigation into the allegations and the reality of the disclosure becomes more widely known. Make your best efforts to be personally observant and vigilant to ensure that the employee is not subject to adverse treatment because of the disclosures, regardless of how subtle that treatment may be.
It is also important to remember that making these disclosures does not immunize employees from violations of performance or behavior standards and requirements. The fact that the employee has made these disclosures, however, does require greater care and caution in taking any disciplinary action in order to prevent the perception that such performance-related criticism is retaliatory. Such actions, as in most cases but especially critical in this situation, should be based on clear factual support of performance concerns, which must be amply documented and memorialized.
In summary, when an employee “blows the whistle” it is critically important to be proactive in supporting and protecting the employee. Also understand the spirit of the law supports the disclosure of illegal or unlawful activity committed in the workplace and all actions taken should be informed by that spirit.
In addition to following the spirit of the law and your desire to make sure your nonprofit always tries to comply with the highest ethical and legal standards, I’ll leave you with further encouragement in the words of human rights activist Fuad Alakbarov:
“Every country needs its whistleblowers. They are crucial to a healthy society. The employee who, in the public interest, has the independence of judgment and the personal courage to challenge malpractice or illegality is a kind of public hero.”
About the Author
Mike Bishop is a member of the State Bar of California and has been admitted to practice in a number of federal district courts in both California and Ohio. During his legal career, Mike worked for 32 years with a Sacramento law firm, where he focused on employment litigation in both state and federal courts. During that time, he defended employers in litigation.
In 2016, he began his work as an Employment Risk Manager for the Nonprofits Insurance Alliance, assisting nonprofits in evaluating employment risks. Mike lives in Lakewood, Ohio, and is a graduate of the University of California, Davis, with a bachelor’s degree in political science, and a 1982 graduate of the University of the Pacific, McGeorge School of Law.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.
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