New Report Reinforces The Role Effective Internal Reporting Policies Play In Preventing Whistleblower Suits

A recent survey of employee attitudes toward whistleblowing reinforces the importance of an effective compliance program in mitigating FCA suits. The Ethics Resource Center recently published its bi-annual National Business Ethics Survey (NBES), a longitudinal study of employee attitudes that seeks to provide a “barometer of workplace ethics.” The survey, a copy of which can be downloaded here, finds that employees perceive “historically low levels of current misconduct in the American workplace.” Specifically,

* The percentage of employees who witnessed misconduct at work fell to a new low of 45 percent. That compares to 49 percent in 2009 and is well down from the record high of 55 percent in 2007.

* Those who reported the bad behavior they saw reached a record high of 65 percent, up from 63 percent two years earlier and 12 percentage points higher than the record low of 53 percent in 2005.

However, the NBES notes that this positive trend is accompanied by “ominous warning signs of a potentially significant ethics decline ahead”:

* Employees who reported misconduct and who reported experiencing some form of retaliation rose to 22 percent, up from 15 percent in 2009 and 12 percent in 2007.

* The percentage of employees who perceived pressure to compromise standards in order to do their jobs climbed five points to 13 percent, just shy of the all-time high of 14 percent in 2000.

* The share of companies perceived as having a weak ethics culture climbed to near record levels at 42 percent, up from 35 percent in 2009.

The NBES also examined the impact of the new Dodd-Frank whistleblower provisions on employee attitudes regarding reporting of employer misconduct. According to the survey, employees say they are far more motivated by the nature of the misconduct and its potential harm than by financial reward. Only three percent of employees who actually reported misconduct said they went outside the company as their first resort. About half (49 percent) said that they would consider reporting to federal authorities under certain circumstances, even if it might cost them their job. An additional five percent said they would report to the federal government, but “only if there was a chance for a substantial financial reward.”

As the study notes, despite the addition of new incentives under Dodd-Frank for whistleblowers to report wrongdoing to the federal government, employees say that they prefer to first report their concerns internally to their employers. The study recognizes that while “[a]s whistleblower protections become more widely known these behaviors may change,” for now, “financial rewards from government agencies do not seem to be enough of a motivator to cause employees to circumvent their employers.” However, the self-reported nature of the survey merits some caution in interpreting these results.

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