Employers: Here’s What to Know About Whistleblower Policies and Best Practices

Nicole Rothstein

Whistleblowers play a critical role in keeping institutions honest—from the government to small businesses. According to the Global Ethics Survey, global trends show that approximately eight in ten employees report misconduct. So, as a small business owner, if there is questionable activity occurring within your company, chances are good that you will be made aware. It’s important to your business, reputation, and livelihood that you know what to do when you’re approached by a whistleblower, and how to effectively investigate reports.

What is a whistleblower?

Do the names Karen Silkwood, John Michael Gravitt, and Cheryl Eckhard ring a bell? These famous American whistleblowers courageously put their careers (and even their lives) at stake in order to report wrongdoing. While cases of this magnitude may not be the norm, whistleblowing does happen regularly in both public and private businesses. So, what does it mean to be a whistleblower?

Whistleblowers are usually current or former employees who reveal information about activity within a company that’s illegal, immoral, unsafe, and/or fraudulent. Whistleblowers play a crucial role in holding companies accountable. 

Specific whistleblowing situations usually involve one or more of the following elements of wrongdoing:

  • Mismanagement
  • Misuse of funds
  • Abuse of authority
  • Danger to public health or safety
  • Damage to the environment
  • Unsafe working conditions
  • Hour and wage violations
  • Internal discrimination
  • Predatory sales practices

Barriers that can prevent individuals from coming forward include:

  • Fear of retaliation
  • Fear of alienation from peers
  • Not understanding company policies
  • Not knowing how to report an incident 
  • Belief that management isn’t held to high enough standards
  • Lack of trust in the internal system
  • Perception that nothing will be done
  • Fear of being perceived as a “snitch”

Create a safe space for reporting 

A factor in how comfortable your employees feel coming forward with a concern is how receptive they perceive your business will be if they report a concern. It is important to create a company culture that prioritizes accountability and transparency. There are steps you can take in the workplace to emphasize these priorities and help employees feel safe when revealing malfeasance, including:

  • Creating an anonymous whistleblower hotline
  • Training supervisors on how to handle whistleblower reports
  • Maintaining open communication 
  • Establishing an “open-door policy” so employees feel comfortable approaching supervisors
  • Creating a written policy on whistleblowing

That last one is complex, so let’s dig a little further. 

Establishing a formal policy on whistleblowing

The subject of whistleblowing can be included in your employee handbook, or it can be a separate document altogether. Regardless of how the policy is presented, it should be in writing and easily accessible to all employees.

Included in your whistleblower policy should be a general process for reporting incidents. The term “hotline” conjures up a report via phone call, but it can actually refer to multiple avenues for submitting a complaint—such as email, text, or through a website. Also, commit in writing to a specified (and short) amount of time in which you will begin investigating reports.

A well-thought-out process is helpful, but it’s beneficial to be flexible, too. An employee might only feel comfortable confiding in certain coworkers or supervisors. They might therefore be hesitant to reveal wrongdoing if they believe only one path to reporting is acceptable. 

Use a positive tone; choose encouraging wording toward whistleblowing. Additionally, as you’re creating your whistleblower policy, be clear on and compliant with whistleblower laws and protections (more on that later). The policy should be updated and each employee should sign that they have read it.

What to do when approached by a whistleblower

So, you have your policy in place and you’re feeling prepared. But exactly how well would your leadership skills hold up if you were confronted by a whistleblower today? 

Whether you are approached directly by the whistleblower or the information is passed along to you through someone else, how you handle the situation could have a significant impact on your business.

Consider the following best practices when navigating whistleblowing:

  1. Maintain a positive attitude toward whistleblowing. Consider whistleblowing as an opportunity to create important changes within your company.
  2. Take every complaint seriously. Do not disregard any concern that is brought to you. Make sure the employee knows that the situation will be a priority.
  3. Avoid misconceptions. Don’t let your feelings or perceptions on whistleblowers in general or the individual specifically factor into how you handle the concern.
  4. Be patient and understanding. Don’t rush the whistleblower. Understand that it probably wasn’t an easy decision to voice their concern.
  5. Don’t interject your own thoughts or opinions. Refrain from offering excuses or downplaying the situation.
  6. Indicate that you believe the whistleblower. Build a foundation of trust by ensuring the whistleblower knows that you find them and their report credible.
  7. Alleviate their concerns. Worrying about retaliation may be an ongoing concern. Reassure them that their job is safe and they will not be punished for coming forward.
  8. Express your appreciation. Recognize their bravery and show your gratitude for the steps they’ve taken to do the right thing.
  9. Maintain anonymity. To the best of your ability, keep the whistleblower’s name confidential—or known to as few people inside and outside your company as possible.

There are also several things to avoid doing when confronted by a whistleblower, including:

  • Demanding evidence before taking their claim seriously
  • Pressuring them to disclose their identity to coworkers or other constituents
  • Indicating that the report could be bad for the business
  • Appearing reluctant to investigate the report

Overall, you’ll arrive at a more favorable outcome and face fewer obstacles if you’re a leader who treats the whistleblower respectfully and takes all concerns seriously. 

Protecting the whistleblower

Whistleblower protection is key to successful whistleblowing policies and outcomes. As these individuals decide whether or not to come forward, they may be balancing the desire to do the right thing and see change happen, with the fear of retaliation.

The U.S. Department of Labor states that an employer cannot retaliate against an employee for exercising their rights under the whistleblower protection laws. Five agencies are used to implement these policies, including the Occupational Safety and Health Administration (OSHA), which enforces the provisions of over 20 whistleblower statutes, as well as the Mine Safety and Health Administration, the Office of Federal Contract Compliance Programs, the Wage and Hour Division, and the Veterans’ Employment and Training Service.

Additionally, employees can file retaliation claims directly with the Equal Employment Opportunity Commission (EEOC) or even file a claim in civil court. This means that a company can face penalties from an agency audit due to a complaint or investigation—or through the court system.   

What is retaliation? 

Retaliation is when an employer takes any type of negative action toward an employee for engaging in protected whistleblowing activity.

An adverse action is one that would dissuade an employee from coming forward. A whistleblower is commonly fearful of one or more of the following outcomes:

  • Being fired or demoted
  • Having benefits stripped
  • Being disciplined
  • Having pay or hours reduced
  • Being denied overtime
  • Having threats made against them

The bottom line is, it is illegal to take any adverse action taken against an employee in response to their good faith complaint—even if the complaint is wrong. Additionally, if would-be whistleblowers don’t believe there are protections in place, they may remain silent. Make sure you understand your obligation to protect employees, and that your employees know their rights to protection against retaliation.

How to investigate a report

A key to effectively handling a whistleblower is to investigate the report as soon as possible. Keep in mind that, as previously mentioned, a whistleblower should not be required to provide evidence in order for a report to be examined. 

It’s beneficial to identify a process for investigating before you receive a report. You can react to reports more quickly if you aren’t spending time determining how to go about it.

Your investigative process should include the following steps:

  1. Assembling the investigative team. Will the investigators be internal (members from your HR, compliance or security teams) or will you seek outside counsel? 
  2. Conducting witness interviews. In addition to the whistleblower, who else should the investigators talk with in order to compile relevant information?
  3. Analyzing the evidence. It’s possible that most of your time is spent in this step, especially if the findings are not black and white. 
  4. Making a decision. As the saying goes, anything that’s worth doing is worth doing right. So while time is of the essence, accuracy is everything.
  5. Creating a written summary. Ensure that your findings are easy to understand and made accessible to the necessary constituents.
  6. Rectifying the situation. The solution might be simple, or it may involve many other steps. Either way, effectively repairing the problem is crucial.

As you go through each step of the investigative process, be sure to document everything and ensure that all relevant documentation is well preserved.

A final word on whistleblowing

Whistleblowing can provide critical insight into the internal workings of your business. By creating a culture that welcomes whistleblowing, you demonstrate a commitment to compliance, honesty, and transparency. When handled appropriately, a whistleblowing report can be an opportunity to create a more accountable, effective, and safe workplace. 

Nicole Rothstein Nicole Rothstein covers a variety of topics related to finance, small business advocacy, and workforce and regional development. In addition to writing for and managing several blogs and publications, she has worked closely with federations, chambers of commerce, nonprofits, small businesses and financial institutions to create impactful content marketing strategies.
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