Congress to Consider New Bill Aimed at Increasing Whistleblower Rewards and Enhancing Company Liability

Leading members of the House Oversight and Government Reform Committee propose legislation to increase whistleblower rewards and expand companies’ liability for whistleblower claims.

Choate Alert

 | February 29, 2016

 | Labor, Employment and Benefits Group

What you need to know:

The two leading Democrats on the Oversight Committee introduced a bill Thursday that would expose companies to a greater degree of financial and legal liability stemming from whistleblower-related lawsuits and investigations. The bill—entitled the “Whistleblower Augmented Reward and Non-Retaliation (WARN) Act—proposes a number of important reforms. While some of the reforms apply exclusively to the financial sector, many do not. Some of the key proposed reforms include:

  • Entitling whistleblowers to an enhanced share of any financial settlement resulting from their tips (up to 30%);
  • Allowing whistleblowers more time to file complaints with the SEC before the information is considered untimely (up to 90 days);
  • Expanding both the range of eligible whistleblowers and the types of information that entitle whistleblowers to a financial reward; and
  • Applying anti-retaliation protections to include whistleblowers who report violations of the Financial Institutions Anti-Fraud Enforcement Act and the Federal Deposit Insurance Act.

Even if the WARN Act does not pass Congress, its introduction in the House signifies the increasing wave of whistleblower-rights sentiment within state and federal legislatures.

What you need to do:

Employers’ best defenses against enhanced whistleblower risk, like that signified by the WARN Act, are effective investigations protocols and integrated complaint-response systems which promptly identify, investigate and remedy alleged workplace misconduct. Employers should review their complaint and investigation protocols to ensure that every complaint is promptly and thoroughly investigated. Employers should also design transparent and effective compliance programs which identify workplace problems before they lead to major whistleblowing.

 

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