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In response to the question this hearing presents, my research indicates that whistleblowers have some legal protection, but the protection is likely insufficient. Over 30 Federal statutes protect whistleblowers and relate to a variety of topics, including workplace safety, the environment, public health, and corporate fraud. However, these statutes provide only a relatively limited amount of protection because of their ad hoc and narrow approaches. Rather than protect any employee who reports any illegal activity, Federal statutes only protect whistleblowing related to a specific topic or statute, and then only if the whistleblower works for an employer covered by the statute.
Even if the right type of illegal activity is reported, the whistleblower may or may not be protected, depending on how the employee blew the whistle. Some statutes only protect employees who formally participate in enforcement proceedings, while others protect employees who affirmatively report illegal activity or who refuse to engage in misconduct. Some statutes require reports to be made externally to the government, while others protect whistleblowers who report misconduct to their supervisors.
The procedural requirements for a whistleblower to file a claim are varied as well. Some laws permit whistleblowers to file claims directly in Federal court, while others require whistleblowers to file claims with an administrative agency like OSHA. Some of these statutes permit only the agency to prosecute claims on an employee’s behalf, while others permit employees to pursue their own claims.
As Chairwoman Woolsey suggested, the statute of limitation for these laws vary from 30 to 300 days, which only compounds the confusion created by these multiple protections and procedures. Suffice it to say, one would never create this system from scratch.
Whether a whistleblower is protected depends on the employer for which the employee works, the industry in which the employee works, the type of misconduct reported, the way in which an employee blew the whistle, and, under some statutes, the willingness of an administrative agency to enforce the law.
Because of these nuances it is simply too easy for good-faith whistleblowers to fall through the gaps created by these varied requirements, a situation that fails to encourage employees to blow the whistle and fails to protect them when they do.
The problems with the current system are illustrated by the Sarbanes- Oxley Act of 2002, which applies to employees of publicly traded companies who report fraud. At the time it was passed, many expected that Sarbanes-Oxley would provide the broadest most comprehensive coverage of any whistleblower provision in the world. These expectations have not been realized. Employees rarely win Sarbanes-Oxley cases.
In the act’s first 3 years, only 3.6 percent of Sarbanes-Oxley whistleblowers won relief after an OSHA investigation. Only 6.5 percent of whistleblowers won appeals in front of an administrative law judge. Subsequent statistics from OSHA indicate that not a single Sarbanes-Oxley whistleblower won a claim before OSHA in fiscal year 2006 out of 159 decisions made by the Agency during that year.
My empirical study of Sarbanes-Oxley outcomes highlights more general problems. First, the legal and procedural nuances I detailed earlier don’t have real bite. Employees who don’t fall squarely within the law’s narrow legal boundaries do not get protected. Under Sarbanes-Oxley, for example, ALJ determined that 95 percent of whistleblower cases failed to satisfy these boundary issues as a matter of law and dismissed those cases. Judges almost never hear the factual merits of whether retaliation occurred because an employee blew the whistle.
Second, ALJs dismissed one-third of Sarbanes-Oxley cases because whistleblowers failed to satisfy the act’s 90-day statute of limitations, demonstrating that such short statute of limitation periods can have drastic consequences.
Third, retaliation cases are highly fact-intensive cases that require resources, time and expertise. Requiring an administrative investigation may not efficiently utilize government resources and may unduly delay justice under that act. As an example I detailed some of the problems with OSHA’s enforcement of Sarbanes-Oxley in my written statement.
As a result of these problems, rank-and-file employees likely cannot determine the protection available to them before blowing the whistle, which means that Federal law is not doing its job of encouraging employees to come forward with information about misconduct.
Society cannot gain the enormous public benefits from whistleblowers who disclose health and safety issues and other corporate misconduct. To address these issues Congress should comprehensively examine the manner in which Federal law protects whistleblowers, and I have detailed specific recommendations in my written testimony.