Dodd-Frank Act Provides Whistleblowers with Greater Protections

December 21, 2011

Dodd-Frank Act Provides Whistleblowers with Greater Protections

Last summer, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) in response to the financial crisis that began in 2007. The Act reformed many facets of America's financial system including increasing regulations, consolidating regulatory agencies and establishing committees to supervise at-risk organizations.

Most relevant to employees, however, is that the Act modified existing whistleblower protections, as well as added an incentive program to encourage employees to report illegal corporate activities including, among others:
-Fraud in reporting/accounting
-Irregular commodities trading
-Insider trading
-Shareholder fraud

What Is a Whistleblower?

Whistleblowersare company employees who report illegal activities taking place within their organization. Most companies have internal reporting procedures, but employees who do not feel comfortable sharing their information internally may instead speak with external regulation or law enforcement agencies.

Employees who are aware of illegal activities are often hesitant to come forward with information because he or she fears retaliation from an employer. For example, an employee might fear demotion, being scheduled for fewer hours, or even dismissal from his or her job.

The Act protects whistleblowers from employer retaliation, as well as provides rewards for employees whose knowledge leads to a government monetary recovery.

Dodd-Frank Act Protections and Incentives

The U.S. Securities and Exchange Commission adopted Final Rules to implement the Act's new whistleblower protections in May 2011, and they have been in effect since August 12, 2011. The Act's employeewhistleblowerprotectionsinclude:
-Employers may not demote, terminate or otherwise punish a whistleblower even if his or her claim is erroneous.
-Private subsidiary employees of public companies are no longer excluded from whistleblower protections.
-The statute of limitations has been extended to 180 days (from 90 days) and starts to run once an employee becomes aware of a violation, rather than the day the violation occurred.
-Whistleblowers are provided with a private cause of action if their employer violates terms of the Act.

In addition to the Act's protections, whistleblowers are now eligible to receive compensation if they share "independent knowledge or analysis" that leads to a government recovery of $1 million or more. The compensation can be anywhere from 10 to 30 percent of the government's recovery depending on the significance of the whistleblower's information and the seriousness of the company's violations.

Blowing the whistle on a company can be complicated and daunting. There are experienced whistleblower protection attorneys available to protect employees' rights and be an ally throughout this process. Anyone who needs whistleblower protection should contact a qualified employment law attorney immediately.

Article provided by Swartz Law, LLC
Visit us at http://www.swartzemploymentlaw.com