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Court ruling may expose whistleblowers to retaliation

Employees in California and elsewhere who learn of illegal or unethical practices in their companies have long been encouraged to take advantage of protections for those who report the offenses. Whistleblowers are essential in industries such as finance, and the information they provide to the Securities and Exchange Commission allows that agency to hold accountable companies responsible for handling the investments of many citizens. Whistleblowers may even be eligible for substantial rewards under certain circumstances, but in order to qualify for rewards and protections, they must follow the SEC guidelines.

Among the SEC rules is that reports of alleged wrongdoing must be made to the SEC within a certain period of time for an employee to be considered a whistleblower, thus gaining the protections of the government. Recently, companies have been encouraging employees to report directly to them instead of to the SEC. When companies learn of internal wrongdoing, they have the chance to correct it or report it to the SEC themselves, which often results in penalties that are not as harsh as when an employee makes the report.

One man's case went to the U.S. Supreme Court when he was fired after telling his management team that a supervisor was falsifying cost reports. He claimed he should have received federal protection from such retaliation, but the court agreed that the company had the right to fire the employee because he never made his report to the SEC. This means he did not qualify as a whistleblower.

Many say this ruling will reduce the number of frivolous reports. However, some fear it will encourage more employees to report immediately to the SEC instead of allowing their companies a chance to rectify any wrongdoings. One recommendation for those in California who are considering becoming informants because of illegal activities in their companies is to consult with an attorney who can assist them in gaining the protections they need to avoid retaliation and other negative consequences.

Source: New York Post, "Supreme Court deals blow to whistleblower protections", Kevin Dugan, Feb. 21, 2018

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