Whistleblowers Perform a Social Good

In recent years, whistleblower litigation has increased significantly. A wide range of new legislation includes whistleblowing provisions such as the Dodd-Frank Wall Street reform bill, False Claims Act for federal financial fraud, and Virginia’s new whistleblower law (HB 798) on employer retaliation. Contrary to the assertion of many in the business lobby, whistleblowers perform an essential social good that creates better outcomes for employees, consumers, and business.

Perhaps most obviously, whistleblowers are good for employees. An employee who is able to “blow the whistle” on a culture of sexual harassment or racism creates a better place to work and not just for the employee but for everyone working at the business.

Whistleblowers are good for consumers. Whistleblowers detect more corporate fraud than any other source, including management review, internal audit, or law enforcement.[1] Every year fraud costs taxpayers billions of dollars.[2] Whistleblowers have brought to light some of the biggest frauds in American history. For example, whistleblowers revealed the almost impossibly corrupt business practices of Theranos and (insert deep voice here) “Elizabeth Holmes.”[3]

Whistleblowers are good for business. A recent study in the Harvard Business Review demonstrates whistleblowers create fewer lawsuits and lead to settlements for smaller dollar amounts than instances where whistleblowers are not encouraged to come forward.[4] The research demonstrates whistleblowers provide an avenue for companies to address problems before they mushroom out of control.

Whistleblowers are a win-win. Rather than demean whistleblowers, we should all applaud the beneficial service they provide.

[1] 2020 Global Study on Occupational Fraud and Abuse. Association of Certified Fraud Examiners. Available at https://www.acfe.com/report-to-the-nations/2020/.

[2] See e.g., McFadden, Cynthia and Karamehmedovic, Almin. Medicare Fraud Costs Taxpayers More Than $60 Billion Each Year. ABC News (Mar. 17, 2010). Available at https://abcnews.go.com/Nightline/medicare-fraud-costs-taxpayers-60-billion-year/story?id=10126555.

[3] Jarvis, Rebecca. The Drop Out. Podcast available at https://abcaudio.com/podcasts/the-dropout/; The Inventor: Out for Blood in Silicon Valley. HBO Documentary Films 2019; Carreyou, John. Hot Startup Has Struggled With Its Blood-Test Technology. The Wall Street Journal (Oct. 16, 2015). Available at https://www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901?mod=article_inline.

[4] Stubben, Stephen and Welch, Kyle. Research: Whistleblowers Are A Sign of Healthy Companies. Harvard Business Review (Nov. 14, 2018). Available at https://hbr.org/2018/11/research-whistleblowers-are-a-sign-of-healthy-companies.

Bo Frith