As part of Outten & Golden's collaboration with Labaton Sucharow on the Corporate Whistleblower Watch newsletter, Sage Counsel is an occasional feature addressing common issues at play in a wide range of whistleblower issues
Erhart v. Botfl Holding, Inc, No. 15 Civ. 02287, 2017 WL. 588390 (SD. Cal. Feb. 14, 2017)
Wells Fargo. Bio-Rad. Volkswagen. Just three examples of corporations that, to their peril, either ignored or actively suppressed employee whistleblowers. They join countless other companies, large and small, that found out the hard way that a head-in-the-sand approach toward whistleblowers is not just unethical, but also poses grave threats to their bottom lines and public reputations.
Activists seized on Wells Fargo's annual shareholder meeting this week to press the bank for changes to a wide range of alleged unfair practices. As the country's fourth-largest bank, Wells faces backlash from a scandal involving up to two million accounts opened without customer authorization, as well as related allegations of employment law violations - including firing whistleblowers who refused to participate in fraudulent account openings. Activists mobilizing around the Forgo Wells campaign, among others, have condemned the bank's use of forced arbitration clauses in customers' and employees' contracts, which obstruct many of these issues from coming to light because they prevent employees and consumers from banding together and taking Wells to court.
Last month, a federal jury in San Francisco awarded $8 million to a former general counsel for life sciences company Bio-Rad who was terminated after raising concerns about possible Foreign Corrupt Practices Act (FCPA) violations by his employer. The verdict sent shockwaves through the legal community as it redefines the boundaries of general counsel privilege, and may spur others to act as whistleblowers themselves.
The U.S. Equal Employment Opportunity Commission (EEOC) recently issued final "Enforcement Guidance on Retaliation and Related Issues" ("Guidance") which details how the federal agency will enforce anti-retaliation laws. This Guidance is the first major update to EEOC enforcement policy on retaliation in nearly 20 years, and reflects changes in employment law over the last two decades, particularly several landmark U.S. Supreme Court decisions. The updated Guidance also adds specific language regarding retaliatory actions under the Americans with Disabilities Act.
The Securities and Exchange Commission is showing its commitment to keeping the lines of communication open between the SEC and whistleblowers willing to report wrongdoing. The SEC recently announced stiff penalties for two companies that included language in separation agreements that required employees to waive financial rewards they might be eligible for if they disclose employer wrongdoing to the SEC.
News that Wells Fargo opened more than two million unauthorized deposit and credit card accounts has filled the headlines over the past few months. While there is no question that the customers were harmed by the bank's unlawful sales practices, other victims have had their lives and livelihoods turned upside down in the scandal - innocent Wells Fargo workers who claim the bank used regulatory filings and other tactics as retaliation, jeopardizing their careers.
Stories of corporate greed, cover-ups, and corruption make headlines nearly every day. Scandals at Enron, AIG, Madoff Securities, and elsewhere rocked the investment world to the point that we almost take such violations in stride. What we shouldn't take for granted, however, is the critical role of the courageous whistleblower who exposes the wrongdoing, often at great personal risk.
President Obama has now signed into law the Defend Trade Secrets Act (DTSA), which takes effect immediately and represents a significant change in the way trade secret disputes are likely to be resolved in the United States. The law also extends new whistleblower protections to employees.