How Should a Company Deal With a Whistleblower?
In the past few years, the incidence of government investigations arising in response to whistleblower complaints has risen exponentially. Americans have less tolerance for white-collar crimes, perceived or real, and government agencies have responded with fervor. The investigations, if they uncover verifiable illegal or inappropriate conduct, can lead to severe reputational damage, millions of dollars in sanctions, and even criminal penalties, depending on the circumstances. If you receive a whistleblower complaint from one of your employees, it is important to react appropriately. Below, we discuss how Texas businesses should handle whistleblower complaints. Call a knowledgeable Houston business law attorney with additional questions or for help with a Texas business law matter.
Take All Complaints Seriously
Regardless of how unfounded a whistleblower complaint may seem, it is essential to take the claim seriously. Allegations that seem vague or baseless may in fact just be the tip of the iceberg for an underlying problem within the company. If your business fails to conduct a proper internal investigation and an external governmental agency eventually investigates, your company’s failure to take the complaint seriously can greatly exacerbate the eventual problems for your company, your shareholders, and your employees. Moreover, many federal statutes such as Sarbanes-Oxley require internal investigations under certain circumstances. Speak with your compliance office and your business law attorney to determine your responsibilities.
Make a Plan for Investigation
You should conduct a proper investigation of any whistleblower complaints. Your investigation can scale depending on the nature of the complaint, but it should be complete, thorough, and independent of anyone implicated in the complaint. Evaluate the risks and potential impact of the complaint based on the financial, legal, and reputational risks to the company as well as the credibility of the complainant. Determine who should lead the investigation, including whether an external auditor or outside counsel is best suited to conduct a thorough investigation. Decide whether witness interviews and document collection will be necessary.
You will also have to make determinations as to who at the company to inform about the complaint and the investigation, whether to inform any third parties such as your auditor or shareholders, and whether to report the findings voluntarily to any regulatory agencies. The answers to these questions will depend on the nature of the complaint and the results of the investigation. Discuss the matter with your business counsel.
Do Not Retaliate
Any adverse action taken against a whistleblower may be seen as unlawful retaliation or wrongful termination. Even if you believe that a complaint is entirely unfounded, it is important to investigate the claim fully and react appropriately regarding the whistleblower. Do not penalize the employee with a hostile work environment, a pay cut, denial of benefits or bonuses, termination, or a demotion. Whistleblowers are often already disgruntled and are likely to take legal action if they perceive retaliation.
Responding to the Whistleblower
Your response to the whistleblower will set the tone for your investigation generally, and it could be the difference between rooting out and solving a problem internally vs. facing governmental action and sanctions. Be courteous, and ensure your employee from the get-go that you are taking their complaint seriously. You want to convey to the whistleblower that your company can be trusted to investigate the matter thoroughly and determine the veracity of their concerns.
Encourage the whistleblower to provide as much detail as possible about their allegations in order to assist your investigations. You may need to ask specific questions to elucidate information. If your company has policies in place about how to handle whistleblower complaints and investigations, you must ensure that those policies are properly followed. Let the employee know that you strictly forbid any form of retaliation and that if they are experiencing any retaliation as a result of their complaint, they should let Human Resources or other supervisors know so that the responsible parties can be dealt with.
For assistance with a business law-related issue in Texas, contact the professional and dedicated Houston offices of attorney Leigh Meineke at Leigh B. Meineke Law Firm by calling 832-706-0244.