(888) 277-4253

Speaking out- the dynamics of whistleblowing

The term "whistleblower" comes from England, when police officers (known as “bobbies”) walking their beat would blow on their whistle to alert and warn the public and other law enforcement officers, that a crime was being committed.

Although in most cases, the expected outcome of a whistleblower coming forward is a cause for the greater good, there has always been a stigma attached to blowing the whistle; is it an act of courage, cowardice, or revenge?

Most of us are well aware of the more famous instances of whistleblowing in US history:

In 1972, Mark Felt the #2 man at the FBI (then known only as “Deep Throat”) helped two reporters from the Washington Post bring down President Nixon over the Watergate scandal. Felt kept his identity secret for over 30 years, due to fear of reprisal.

Karen Silkwood, a metallurgist at Kerr-McGee, a plutonium processing plant in Oklahoma, uncovered bad practices that led to employee contamination in 1974. Silkwood died in a mysterious car accident on her way to speak to a journalist.

Jeffrey Wigland, a high-ranking researcher at Philip Morris, risked his job and the life of his family when exposed the secrets of “Big Tobacco” to 60 Minutes in 1995.

Hollywood has immortalized these whistleblowers in the movies All the President’s Men, Silkwood, and The Insider, respectively, but even the glamorization of Hollywood doesn’t make it easier to come forward when you see something amiss at work.

Often, the personal risks are just too great.

Over the years, protections have slowly made their way into corporate policy, and they have been written into bylaws; but for decades, protecting a whistleblower was a slippery slope. Prior to the 1960’s, employees were hired “at will” and could be fired or let go at the drop of a hat, and without explanation.

In 1989, the Federal Whistleblower Protection Act came into effect, to protect federal employees who came forth with reports of fraud, waste and abuse. After the Enron and WorldComm debacles in 2002, the Sarbanes-Oxley Act (SOX) was signed into law. According to SOX, the Act makes it a federal crime for any organization — nonprofit and for-profit — to retaliate against a “whistleblower” who reports illegal or unacceptable activity.

SOX further states that individuals who witness any kind of unsuitable behavior must feel free to speak out. Nonprofit leaders — board and senior management together — should take complaints seriously, undertake an investigation, and rectify the situation.

In 2003, California Governor Gray Davis amended the state's constitution (after the federal Whistleblower Protection Act) with SB777, establishing protections for California state workers, as well as a hotline. Most states have followed suit. But the extension of protections to workers in the non-profit sector, on the state level, is shaky at best.

The state does, however, provide nonprofit employees protection from wrongful termination, and retaliatory dismissal of an employee at a 501(c)3 for whistleblowing, is something protected by the State of California.

Defined, a “wrongful termination” is one in which an employer has discharged an employee in violation of that employee’s legal rights.

If an employer is found guilty, the severity of the violation can vary based on the laws broken. Some can result in statutory penalties, while others mean that the employer must pay the wrongfully terminated employee for lost wages, expenses, and punitive damages.

The filing of a civil lawsuit by an individual who feels he or she was wrongfully terminated is another option.

That’s not to say there aren’t governances that make an attempt at non-profit oversight.

According to Board Source a website dedicated to “advancing the public good by building exceptional nonprofit boards and inspiring board service”:

Nonprofits must observe the highest standards in order to retain the trust of the donating public and the confidence of those they seek to help. The board provides the public face of the organization, and its behavior, and that of individual board members must be exemplary.

The Nonprofit Integrity Act of 2004 specifically lays out policies and opens up a nonprofit to financial scrutiny, and an investigation of finances may come into play when allegations of misappropriation of charitable funds comes to light.

So what, then, lies in the future for San Diego Pride? Are they legally liable? Will the IRS open an investigation due to the CA Franchise Tax Board’s numerous complaints regarding alleged financial misappropriations of the Board? Will the Attorney General step in and pull the three Board members involved in the scandal?

Only time will tell.