January 2014

The definition of a whistleblower and the criteria for reliance on associated protections has been the subject of a number of recent cases.  In these matters, the reporting method has been the determining factor in whether and what protections are available.

A case heard by the First Circuit U.S. Court of Appeals describes an important caveat in the comfort of whistleblower protection.  In the matter of Winslow v. Aroostook County, the Court found that an employee’s report is not whistleblowing (and thereby not protected) if making the report is part of their job.

Winslow served as executive director of a federally-funded local workforce investment board (LWIB).  Aroostook County was the grant sub-recipient for the LWIB and the fiscal agent for the federal grant.  The County hired Winslow, paid her salary and supervised her.  During a compliance review by federal monitors, the monitors found that absent an express agreement between the LWIB and Aroostook County, it was improper for Winslow to report to the County rather than to the LWIB.

Winslow was instructed by her superior to type up and distribute these findings to the Chairman and the two co-Chief Local Elected Officials of the LWIB.  When it was eventually decided that a different entity would serve as the new fiscal agent for the LWIB, Winslow engaged in additional communications which others deemed insubordination.  Winslow was terminated and not hired by the new entity.  Winslow then sought whistleblower protection for having originally reported the findings which eventually led to her unemployment.  The Court stated that “Though there may be exceptions, the usual rule in Maine is that a plaintiff’s reports are not whistleblowing if it is part of his or her job responsibilities to make such reports, particularly when instructed to do so by a superior” and that there was no effort to cover up the findings by her employer.

Another recent case provided exclusions with regard to different protections.  The Fifth Circuit concluded in Asadi v. G.E. Energy (No. 12-20522) that a whistleblower who does not file a complaint with the Securities Exchange Commission (“SEC”) is not a “whistleblower” under Dodd-Frank, and thus does not have standing to obtain the protections under this law. As directly acknowledged in the Opinion, the Firth Circuit conflicts and effectively overrides the SEC’s own regulation on this precise point.

Employers may initially think cases which limit the basis for whistleblower protections represent favorable outcomes, but the opposite can be true. Clearly in the second case described above, these rulings encourage, if not mandate, that whistleblowers circumvent an employer’s own corporate governance systems and go directly to outside regulating bodies with their information.  And in some instances, a whistleblower who doesn’t meet certain criteria may still have protections under another mechanism, such as Sarbanes-Oxley, with the right to sue under a different administrative process administered by the Department of Labor.

Fulcrum Inquiry provides turnkey whistleblower reporting systems.  For more guidance on what should be part of a company’s hotline and whistleblower process, see Best Practices in Whistleblower Systems.