National Whistleblower Appreciation Day is tomorrow, July 30. To celebrate the long history of individuals coming forward to speak up about misconduct, we’re sharing a brief history of whistleblowing in America and why those who “blow the whistle” have been and are so crucial to shaping the culture of organizations and government agencies around the world.
The History of Whistleblowing in America
The history of whistleblowing in America extends back to the late 1700s, with the first protections being enacted shortly after the United States of America was founded in 1776.
On July 30, 1778, the Continental Congress passed the first whistleblower protection resolution for the United States. This resolution states that, “it is the duty of all persons in the service of the United States, as well as all other inhabitants thereof, to give the earliest information to Congress or any other proper authority of any misconduct, frauds or misdemeanors committed by any officers or persons in the service of these states, which may come to their knowledge.”
This resolution was in response to one of the first cases of whistleblowing in the United States that involved a petition from 10 petitioners. They reported that their commander, Commodore Esek Hopkins, treated prisoners inhumanely and was guilty of many crimes, making him unfit to serve in this public position.
It wasn’t until nearly a century later that the False Claims Act of 1863 was passed during the Civil War in response to contractors selling defective goods to the Union army. Known as the “Lincoln Law”, this allowed private citizens to bring lawsuits against companies and individuals suspected of fraud on behalf of the federal government. While this law is over 150 years old, it is still in use today and was used as recently as 2018, when the DOJ relied on it to obtain nearly $3 billion in settlements and judgments.
In more recent American history, two laws have been passed in the past few decades that provide more explicit and timely protection for whistleblowers. The Whistleblower Protection Act of 1989, “was intended to strengthen and improve protections for the rights of federal employees and to prevent reprisals. The purpose of the WPA was to help eliminate wrongdoing within the government by mandating that employees should not suffer adverse consequences as a result of disclosing a violation of law, rule, or regulation, gross mismanagement, a gross waste of funds, an abuse of authority, or a “substantial and specific danger” to public health or safety.
More recently, the Whistleblower Protection Enhancement Act of 2012, “strengthened the protections for federal employees who disclose evidence of waste, fraud, or abuse.”
Whistleblower Protections for Non-Government Employees
You’ll notice that the protections discussed earlier only apply to federal employees. However, in the aftermath of the Enron and WorldCom scandals, Congress passed the well-known Sarbanes-Oxley Act, commonly known as SOX. This act extended protections to whistleblowers outside of the government to publicly traded companies. With SOX in play, employees at public companies were granted protections for reporting wrongdoing. These protections extend to employees who report on securities, shareholders, bank, mail, or wire fraud, in addition to any violation of SEC rules or regulations.
While this was a big step in providing protections to non-governmental employees, you’ll notice a large swath of the population is still not included – employees in the private sector. However, in 2014, a Supreme Court decision changed the interpretation of SOX to include private contractors and subcontractors of public companies, as well as privately-owned companies, if they provide services to publicly traded organizations.
Why Are Whistleblowers So Important?
The discussion about whistleblowing can be a fraught one. Some organizations are less receptive to reports of wrongdoing, or even worse, are corrupt from the top. Another common pitfall is the belief that more reports to an incident hotline is a bad thing.
For some, it may seem counterintuitive – but more reports and inquiries is good for the company and shed valuable insights into the health of your organization’s culture. As research from Kyle Welch, Professor at George Washington University, notes, “…hotline reporting data is an incredibly valuable set of information to compliance leaders and executive leadership. Reporting information is the pulse check of organizational culture and should be weighed, analyzed, and acted on accordingly.”
Further, this research also demonstrates a positive financial impact to organizations with a higher volume of reports. In his research, Welch finds that, “organizations with the highest volume of reports per employee were the least likely to suffer lawsuits and fines; and those that did paid less on average than their peers in fines and settlements.”
Reports and inquiries to a whistleblowing program shed a lot of light into the cultural health of an organization. Forward-thinking leaders are using this valuable information to make changes and identify trends and challenges. Though there is still work to be done in adopting the mentality that more reports is a good thing, those that have easily see the benefits of a more ethical workplace.
Though this post focuses just on the history of whistleblowing in America, it’s clear that the importance of those who seek to call attention to unethical or unsafe behaviors continues to grow. In honor of those who have blown the whistle to bring issues to light, we say thank you. We also want to recognize business leaders who use these resources to make positive change in their organizations. In summary, creating a culture of ethics, compliance and respect means that whistleblower reports must be valued and their rights protected.
Happy National Whistleblower Appreciation Day!