Protection for Whistle-Blowers

As a result of the recent accounting and other frauds, Congress in 2002 passed the
Sarbanes-Oxley Act, which codified certain rules pertaining to corporate behavior.
One provision in the bill was designed to protect “whistle-blowers,” or lower-level
employees who sound an alarm over actions by their superiors. Employees who
report improper actions are often fired or otherwise penalized, and this keeps many
people from reporting things that should be investigated. The Sarbanes-Oxley
provision was designed to alleviate this problem—if someone reports a corporate
wrongdoing and is later penalized, he or she can ask the Occupational Safety and
Health Administration (OSHA) to investigate the situation, and if the employee
was improperly penalized, the company can be required to reinstate the person,
along with back pay and a sizable penalty award. According to The Wall Street
Journal, some big awards have been handed out, and a National Whistle-Blower
Center has been established to help people sue companies(a).

It’s still dangerous to blow a whistle, but less so than before the Sarbanes-Oxley
Act was passed.

(a) Deborah Solomon and Kara Scannell, “SEC Is Urged to Enforce ‘Whistle-Blower’ Provision,” The Wall Street
Journal, November 15, 2004, p. A6.