Whistleblowing

In general, under Pennsylvania law, employees are employed “at-will,” which means employers can fire them for any reason, at any time. But there are exceptions to this rule. One exception arises under various state and federal laws prohibiting employers from discharging or otherwise retaliating against whistleblowers.

A whistleblower is an individual, often an employee, who reports to law enforcement or regulatory authorities illegal or unethical actions in the workplace for the purpose of aiding those authorities in investigating the wrongful activities and enforcing the law.

Various laws prohibit employers from retaliating against employees for reporting unlawful conduct in the workplace, such as violations of environmental and safety laws or financial fraud. If your employer has retaliated against you for whistleblowing, or if you are thinking about reporting to a third party unlawful or unethical behavior by your employer, you should speak to an attorney as soon as possible to understand your rights.

Our firm’s partners, Lew Gardner and Rob Frankhouser, are fully versed in the laws that protect whistleblowers. They can also offer valuable advice on how to proceed in the face of real or potentially unlawful retaliatory practices.

How Are Whistleblowers Protected?

Various federal and state laws protect employees from retaliation for reporting wrongdoing in the workplace, including securities fraud, tax fraud, illegal activity in the futures and options markets, and other fraudulent activity.

These laws prohibit retaliation by an employer against an employee following discovery of an employee’s disclosure. Some examples of prohibited retaliatory actions against the whistleblower include, but are not limited to: termination; demotion; reduction in hours or pay; reassignment; failure to promote; unfavorable performance reviews; harassing, intimidating or threating the whistleblower; constructive discharge; etc.

Many of the state and federal laws provide that whistleblowers can sue their employers for damages caused by the retaliatory actions. In addition, under certain circumstances, employees might have a right of action for violation of Pennsylvania public policy even if the law being violated does not explicitly provide protections for whistleblowers.

Whistleblower Protection Under Federal Law

Different federal laws protect whistleblowers from retaliation in specific circumstances. These include the following:

• SEC Whistleblower Protections
  
  
  Securities fraud involves fraudulent and illegal manipulation of the securities market. The United States Securities and Exchange Commission accepts complaints from whistleblowers to protect the investing public.
  
  
  Illegal activities in the securities market could include insider trading, stock price manipulation, fraudulent SEC filings, and accounting fraud. It might also include Ponzi schemes, embezzlement, and bribery.
  
  
  The Dodd-Frank Whistleblower Act offers protection to whistleblowers and, in some instances, offers whistleblowers rewards for reporting securities fraud. Whistleblowers who provide information that leads to an enforcement action are entitled up to 30% of all sanctions collected above $1 million.
• Qui Tam Litigation
  
  
  The False Claims Act is a tool the government uses to recover money that was obtained by fraud. These matters are pursued by the whistleblower in federal civil court and are referred to as “qui tam” lawsuits.
  
  
  Qui tam lawsuits involve claims of fraud arising out of contractual or business relationships with the government. Some examples include Medicare and Medicaid fraud, and construction, engineering or defense contractor fraud. Deceptive or fraudulent practices in these areas can include bid-rigging, price inflation, and fraudulent billing practices.
  
  
  Whistleblowers who report abuses under the False Claims Act are rewarded with 15% to 30% of the funds recovered in the qui tam action.
• IRS Whistleblowing Protections
  
  
  Established in 2006 by the Tax Relief and Health Care Act, the IRS Tax Whistleblower Rewards Program allows whistleblowers to provide information regarding corporations and wealthy individuals who fail to pay their taxes, or who engage in fraudulent tax practices such as misstatement of income, tax evasion schemes, and illegal deductions.
  
  
  Whistleblowers coming forward must have proof of specific violations. Under the program, rewards range from 15% to 30% of the amounts recovered by the IRS.

Pennsylvania Whistleblower Laws

Pennsylvania laws also protect whistleblowers who report illegal activities.

The most well known statutory protection for whistleblowers is found in the Pennsylvania Whistleblowers Act, which provides as follows:

“No employer may discharge, threaten or otherwise discriminate or retaliate against an employee regarding the employee’s compensation, terms, conditions, location or privileges of employment because the employee or a person acting on behalf of the employee makes a good faith report or is about to report, verbally or in writing, to the employer or appropriate authority an instance of wrongdoing or waste.” 43 P.S. §1423(a).

The PA Whistleblower Law applies only to employees of a “public body.”   But that term has been broadly defined to include, in addition to state and local government, any other body “which is funded in any amount by or through Commonwealth or political subdivision authority or a member or employee of that body.” Thus, employees of any company that receives Commonwealth funding would be protected from retaliation for reporting fraud or waste.

Employees are protected from retaliation when they report to either their employer or an “appropriate authority.” But the law does not require employees to first report the wrongdoing internally.

Employees are only covered by the law if they make a good faith report of wrongdoing or waste, meaning that the person making the report must have reasonable cause to believe the report is true.  An employer is not barred from taking disciplinary action against an employee who makes a report in bad faith.

In addition to the general Whistleblower Law, there are a variety of other Pennsylvania statutes that protect employees or others in specified situations.  For example, in the healthcare area, there is a law that protects employees who work in nursing homes or other facilities that care for the elderly from retaliation for reporting abuse or neglect.

If you are considering disclosure of an unlawful or unethical practice in the workplace, or if your employer has retaliated against you for doing so, you should seek counsel sooner rather than later. Call GardnerFrankhouser now to schedule a free consultation.

Contact us at 412-903-7720 or by email, 24 hours a day, seven days a week.