Whistleblower Retaliation on the Rise

Morgan O'Rourke


September 13, 2012

Despite the presence of multiple state and federal laws protecting whistleblowers from retaliation from their employer, including the SEC’s new Dodd-Frank-mandated Whistleblower Program, doing the right thing has never been so difficult. While the reporting of misconduct has increased, so has the prevalence of retaliation. In 2011, retaliation was the cause of more than 37,000 discrimination charges filed with the U.S. Equal Employment Opportunity Commission. Not only was this the highest number of charges filed in any one complaint category, but it was the third consecutive year that retaliation took the top spot.

Recent data from the Ethics Resource Center further illustrates this troubling trend. According to the report, “Retaliation: When Whistleblowers Become Victims,” 45% of U.S. workers observe misconduct in the workplace each year, and 65% of those employees report it. However, 22% of workers who blew the whistle in 2011 experienced some form of retaliation, up from 15% in 2009—an increase of 2.3 million people. And while the rate of reporting has increased 12% over the past five years, the rate of retaliation has increased 83%, which, in time, could help drive down misconduct reporting rates.

Also at issue is the sharp increase of physical violence as a form of retribution. In 2009, only 4% experienced physical attacks on their person or property. Two years later, that number has increased to 31%, easily outpacing non-violent means of retaliation, such as being passed over for promotions and raises, job relocations, demotions and pay cuts.

“When an employee experiences retaliation for reporting misconduct, companies have two new problems,” said Ethics Resource Center President Patricia J. Harned. “A second form of misconduct has been observed, and the reporter is now a victim. Additionally, retaliation can create an environment that is cancerous to the organization.”

The study demonstrated that employees who have experienced retaliation are less engaged, more likely to quit within the year and more likely to take their concerns outside the company, possibly to the media or to a regulator. In addition, incidents of retaliation erode employee trust in company leadership and discourage other employees from reporting future misconduct, which can allow problems to fester without management’s knowledge and become even bigger issues.

The report suggested that certain actions, including training staff on ethics and compliance, promoting accountability at all levels, communicating with employees about the reporting process, and taking decisive action when a claim of retaliation is made, can help lower retaliation rates.

Morgan O’Rourke is editor in chief of Risk Management and director of publications for the Risk & Insurance Management Society, Inc. (RIMS)