Fire a Whistleblower, or Falsify Documents, and Go to Jail 07-08-2003
- By Rita Risser, attorney at law

The woman who "blew the whistle" on Enron's accounting practices was fired by the company. Although firing whistleblowers is illegal in most states, it is not illegal under Texas law, so she was not able to sue. Congress recently passed the Sarbanes-Oxley Act in part to prevent that from happening to future whistleblowers.

The Act has many provisions, but we'll cover here those that relate to employees. The Act protects employees when they disclose information about fraudulent activities within their companies. In addition to filing a lawsuit under state law, the whistleblower employee may file a complaint with the Department of Labor within 90 days of the alleged retaliation.

Under the laws of most states, whistleblowers are entitled to emotional distress and punitive damages. Now under federal law, any person who "interferes with" the employment or livelihood of an employee for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, can be imprisoned for up to 10 years, and pay a fine up to $250,000.

This means that a manager can go to jail not only for firing a whistleblower, but also for demoting, refusing a promotion, or giving a negative reference.

The Act also requires companies, through their audit committees, to provide procedures for the confidential, anonymous complaints of employees' concerns about accounting or auditing matters. Employers may be able to use existing procedures for this purpose, if those procedures allow for confidential, anonymous reports.

The Act prohibits the destruction or alteration of documents, falsification of documents, or making any false entry in a document. This prohibition applies to any document relevant to the "investigation of any matter within the jurisdiction of any department or agency of the United States or any bankruptcy case, or in relation or contemplation of any such matter or case." The punishment is a fine and/or 20 years in jail.

Given the broad statutory language, this provision arguably applies to investigations by the Department of Labor into wage and hour violations, by the EEOC into claims of discrimination and harassment, as well as workplace investigations of fraud and financial whistleblowing.

What you should do: Make sure your corporate ethics policy is up to date. It should specifically prohibit retaliation, and require accuracy in documentation. Every company should insure that a well-publicized procedure is in place for confidential, anonymous employee complaints. All managers need to be trained on how to manage and fire employees the right way to prevent claims of retaliation. All employees should be trained on their responsibilities to prepare accurate documentation, and on the company's lawful document retention and destruction policy.

Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.