IRS Awards $104 Million Reward to Whistleblower
Earlier this week, the IRS announced that it would pay Bradley Birkenfeld a $104 million dollar reward for his “whistleblowing” activity. Birkenfeld helped expose a widespread tax evasion plan at a well-known Swiss bank. As a participant in the scheme, Birkenfeld also spent 31 months in federal prison. The information provided by Birkenfeld aided in securing an agreement with the bank that resulted, among other things, in a $780 million dollar fine.
Notably, according to a former official with the Securities and Exchange Commission, under SEC whistleblower rules, Birkenfeld would not have been entitled to any reward because of his conviction of a related federal offense. This distinction highlights the myriad of rules, regulations and statutes that cover so-called whistleblowers.
Federal executive branch employees are generally covered under the Whistleblower Protection Act (WPA). The WPA prohibits “personnel action” taken against certain “covered employee[s]” “because of” a “protected disclosure[,]” which usually consists of reporting illegal or improper governmental activities. Private employers, however, are potentially subject to federal whistleblower laws as well.
For example, the Occupational Safety and Health Administration (OSHA) administers whistleblower claims under seventeen different federal laws. Among those laws, OSHA administers claims of retaliation under the Sarbanes-Oxley Act for reporting violations federal securities laws as well as claims of whistleblowing for violations of environmental laws relating to asbestos in elementary and secondary school systems under the Asbestos Hazard Emergency Response Act. Other federal laws provide protection beyond direct employees and cover contractors and subcontractors too, such as the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, which applies to allegations of discrimination or retaliation for reporting alleged violations of federal air carrier safety laws or regulations. Indeed, federal laws cover a wide variety of so-called whistleblower activity, including, reporting allegations of an unsafe cargo containers (International Safe Container Act) or reporting alleged violations of certain environmental laws or regulations (Clean Air Act, Safe Drinking Water Act, Federal Water Pollution Control Act, Toxic Substances Control Act, Solid Waste Disposal Act, and the Comprehensive Environmental Response, Compensation, and Liability Act).
Many states also have whistleblower laws, such as the Minnesota Whistleblower Act. This is certainly not an exhaustive list of whistleblower laws.
Takeaway: Whether certain employee activity is protected under a whistleblower law is a fact-intensive question. But employers should be aware that many federal laws are industry specific and could potentially provide additional considerations when dealing with such conduct. Accordingly, seeking legal counsel when addressing a “whistleblower” situation can be of great assistance in determining what rules and regulations may apply.