“Gatekeepers” as Whistleblowers: Compliance Officers, Accountants, and Attorneys

By virtue of their unique insight into the functioning of a company, compliance officers, accountants, and attorneys are often in the best position to detect potentially unlawful conduct by their employers. But these so-called “gatekeepers” also have a responsibility to advise a company about the unlawful conduct and seek to correct it, not merely to report or complain to management about it. Laws, regulations, and ethical and professional rules may dictate whether and to whom a gatekeeper may report wrongdoing, whether they are protected from retaliation if they do so, and whether they can be eligible for awards under whistleblower award programs. Navigating these requirements and obligations can be challenging, but it is critically important for gatekeepers to understand their rights as potential whistleblowers.

Sections

  1. Compliance Officer Whistleblowers
  2. In-House Counsel Whistleblowers
  3. Corporate Accountant Whistleblowers

Compliance Officer Whistleblowers

Robust compliance programs can help companies in a wide array of industries identify and address risks before they become legal liabilities. From corporate accounting and reporting to government contracting, from Medicare reimbursement to product safety, corporate compliance officers and other compliance personnel play a critical role in protecting their companies, as well as clients, customers, investors, and the general public. By raising sensitive issues, compliance personnel may find themselves at odds with management, who can be single-minded about maximizing revenue even if that means ignoring laws and regulations. As a result, conscientious compliance employees may experience retaliation, including marginalization, demotion, or termination.

What Laws Protect Compliance Officers?

Compliance officers in many corporations today are protected by anti-retaliation laws that prevent employers from retaliating against employees who value integrity over expediency, and who report noncompliance with the law to their supervisors or to the government. These include the Dodd-Frank Act (protection for reporting securities violations), the Sarbanes-Oxley Act (protection for reporting fraud), the False Claims Act (protection for reporting fraud in government contracting), and the Consumer Finance Protection Act (protection for reporting federal consumer law violations). A host of federal and state laws also protect employees in specific industries such as ground transportation, aviation, nuclear power, or defense contracting, or in specific activities affecting the environment. Compliance whistleblowers who report wrongdoing concerning multiple aspects of operations may have protection under more than one such law.

These whistleblower protections take various forms, but they generally prohibit employers from discriminating, retaliating, or taking adverse employment actions against employees for filing complaints, making protected disclosures, or reporting wrongdoing to supervisory personnel with authority to investigate and stop the wrongdoing. Under many such laws, the compliance whistleblower can obtain reinstatement, back pay and compensatory damages for reputational harm, and compensation for pain and suffering if an employer terminates, harasses, or demotes the employee for trying to bring the company into compliance or objecting to illegalities.

Compliance officers who meet certain criteria may also be able to participate in certain “award” programs that allow them to share in monetary recovery the government obtains from corporate wrongdoers. Specifically, they may be able to serve as qui tam relators and sue on behalf of the government to recover fraudulently obtained government funds under the False Claims Act. Others may receive awards by reporting underpayment of taxes to the Internal Revenue Service, or, in some cases, providing tips to the Securities and Exchange Commission about securities violations or to the Commodities Futures Trading Commission about violations of regulations governing futures trading.


In-House Counsel Whistleblowers

An in-house attorney often serves as the first line of legal advice for companies, helping them understand their legal obligations and ensuring that they operate within the bounds of the law. In-house counsel may advise companies on issues ranging from corporate accounting and reporting to government contracting, to Medicare reimbursement to product safety. Like all attorneys, in-house counsel owe certain ethical duties to their clients—who here are also their employers. But this does not mean that a company’s attorneys must acquiesce to illegal activity and cannot raise concerns about the questionable decisions of their employers.

In-house attorneys who oppose unlawful conduct may find themselves at odds with their employer-clients. This can prompt an employer to retaliate in various ways, including by marginalizing, demoting, or terminating the attorney’s employment. Fortunately, the attorney-client relationship is not an absolute bar to in-house counsel asserting employment claims. Conscientious attorneys who have experienced retaliation may qualify for many of the same whistleblower protections as non-attorney employees, subject to some special requirements given their unique position as attorneys.

What Laws Protect In-House Counsel?

In-house counsel in many corporations today are protected by anti-retaliation laws that prevent employers from retaliating against employees who report illegal conduct to their supervisors or, in certain instances, to the government. These include the Dodd-Frank Act (protection for reporting securities violations); the Sarbanes-Oxley Act (protection for reporting fraud); the False Claims Act (protection for reporting fraud in government contracting); and the Consumer Finance Protection Act (protection for reporting federal consumer law violations). A host of federal and state laws also protect employees in specific industries such as ground transportation, aviation, nuclear power, or defense contracting, or in specific activities affecting the environment. In-house counsel whistleblowers who report wrongdoing concerning multiple aspects of operations may have protection under more than one such law. Additionally, the tort of wrongful termination in violation of public policy may protect in-house counsel who are terminated for refusing to engage in unethical conduct.

These whistleblower protections take a number of forms, but they generally prohibit employers from discriminating, retaliating, or taking adverse employment actions against employees for filing complaints, making protected disclosures, or reporting wrongdoing to supervisory personnel with authority to investigate and stop the wrongdoing. Under many such laws, the in-house counsel whistleblower can obtain reinstatement, back pay and compensatory damages for reputational harm, and compensation for pain and suffering if an employer terminates, harasses, or demotes the employee for trying to bring the company into compliance with the law or objecting to illegalities.

In-house counsel may also be able to participate in certain whistleblower “award” programs that allow them to share in monetary recovery the government obtains from corporate wrongdoers. In limited circumstances, in-house counsel may be able to serve as qui tam relators and sue to recover fraudulently obtained government funds under the False Claims Act. They may also be able to obtain awards by reporting underpayment of taxes to the Internal Revenue Service, or, in some cases, providing tips to the Securities and Exchange Commission about securities violations or to the Commodities Futures Trading Commission about violations of regulations governing futures trading.

At all times, whether they are considering blowing the whistle internally, asserting a retaliation claim, providing information to regulators, or seeking a whistleblower award, in-house counsel must be mindful of their duties as attorneys. Like all attorneys, an in-house counsel whistleblower is bound by state ethics rules, which limit the type of information an attorney can use to pursue a retaliation claim or disclose to the government. But state bar ethics rules and federal regulations contain exceptions to ethical obligations, and many courts have recognized that in-house counsel can use certain confidential or even privileged information to pursue employment claims and to report wrongdoing to governmental authorities. Additionally, some agencies, such as the Securities and Exchange Commission and Commodity Futures Trading Commission, have also designed their own rules to permit such disclosures by attorneys.


Corporate Accountant Whistleblowers

Corporate accountants are privy to a wide array of detailed financial information about their employers. This access is essential for companies to ensure revenues, costs, inventory, and other critical financial information are calculated accurately and disclosed properly to investors and regulators. It also means, however, that corporate accountants are often the first to notice that financial information is inaccurate or even deliberately misstated.

By raising concerns about financial inaccuracies or noncompliance to supervisors, the government, or regulators to protect the company and its investors, clients, and the general public, corporate accountants may find themselves at odds with their employers. The pressure to maximize profits and tout the strength of a company may lead corporations to misrepresent their financial positions, mislead investors, seek undue payments from the government, or unlawfully evade tax liability. As a result, corporate accountants may face retaliation, such as marginalization, demotion, or termination, simply for being a conscientious employee.

What Laws Protect Corporate Accountants?

Corporate accountants in many corporations today are protected by anti-retaliation laws that prevent employers from retaliating against employees who value integrity over expediency, and who report noncompliance with the law or accounting principles to their supervisors or to the government. These include the Dodd-Frank Act (protection for reporting securities violations), the Sarbanes-Oxley Act (protection for reporting fraud), the False Claims Act (protection for reporting fraud in government contracting), and the Consumer Finance Protection Act (protection for reporting federal consumer law violations). A host of federal and state laws also protect employees in specific industries such as ground transportation, aviation, nuclear power, or defense contracting, or in specific activities affecting the environment. Corporate accountant whistleblowers who report wrongdoing concerning multiple aspects of operations may have protection under more than one such law.

These whistleblower protections take various forms, but they generally prohibit employers from discriminating, retaliating, or taking adverse employment actions against employees for filing complaints, making protected disclosures, or reporting wrongdoing to supervisory personnel with authority to investigate and stop the wrongdoing. Under many such laws, a corporate accountant whistleblower can obtain reinstatement, back pay and compensatory damages for reputational harm, and compensation for pain and suffering if an employer terminates, harasses, or demotes the employee for trying to bring the company into compliance or objecting to illegalities.

Corporate accountants may also be able to participate in certain “award” programs that allow them to share in monetary recovery the government obtains from corporate wrongdoers. Corporate accountants may also be able to serve as qui tam relators and sue to recover fraudulently obtained government funds under the False Claims Act. They may also be able to obtain awards by reporting underpayment of taxes to the Internal Revenue Service, or, in some cases, providing tips to the Securities and Exchange Commission about securities violations or to the Commodities Futures Trading Commission about violations of regulations governing futures trading.

 

Why Hire KMB For Your Whistleblower Case?

Our nationally-recognized attorneys have successfully represented many compliance officers, accountants, and attorneys working in banking, pharmaceuticals, health care, and other industries. If you are considering blowing the whistle or have already done so and are experiencing retaliation, contact the experienced lawyers at Katz, Marshall & Banks, LLP. Your communications with us are confidential and are without further obligation.