Whistleblower Warning: A Quick Policy Checkup

Having a sound whistleblower policy is good business for an association and serves a greater purpose beyond allowing them to check a box on the Form 990 each year. It helps an organization maintain a sense of integrity and transparency and protect those individuals willing and courageous enough to call the organization out for poor or unethical practices.

But even if you have a whistleblower policy, it’s possible that your organization could still be out of compliance with federal law. Retaliation against whistleblowers was made a crime as part of the American Competitiveness and Corporate Accountability Act of 2002  (opens in a new tab)—also known as the Sarbanes-Oxley Act—and that’s the focus of a federal inspector general’s letter to the nonprofit International Relief and Development, an organization that receives a majority of its funding from USAID.

In the letter, Special Inspector General John F. Sopko warned IRD that a separation agreement that the organization has departing employees sign contains “unacceptable gag provisions” that violate those protection laws. “I remain concerned that IRD is acting improperly to limit the rights of potential whistleblowers to report instances of waste, fraud, and abuse,” he wrote, according to the Washington Post  (opens in a new tab).

IRD’s possible violation of whistleblower protection laws provides an opportunity for associations to ensure that their own policies are in working order.

“A sound whistleblower policy has to be framed in a way that indicates to your employees that it is for a legitimate purpose and for their protection,” said J. Craig Busey, general counsel for the American Dental Association. “It has to be stressed that there’s no retaliatory aspect to it and that the culture of the organization is such that you want bad conduct to be identified.”

According to ASAE benchmarking research, 79 percent of associations have a formal written whistleblower protection policy, a strong number but one that Busey would like to see improve.

“If you have not conveyed to your employees that there is a willingness to hear about what may be going bad in the organization, then I think you have a situation where problems can develop in ways that you can’t identify,” he said. “And if you don’t have people who are willing to speak up, number one, they’re going to feel that they’re working for an organization that doesn’t care much about quality and about compliance with the law, and, secondly, they may start to feel that they’re in a position that is difficult to maintain. It’s tough to go to work every day when you believe that your supervisor or your organization is engaged in illegal or unethical conduct.”

That said, Busey did say that there are instances where employees do owe a duty of confidentiality to their employer or former employer.

“I think, to the extent that that is read to say, ‘You can’t report anything to the government that was done improperly or illegally here,’ that probably wouldn’t be very enforceable anyway,” he said. “It may be appropriate to require former employees to refrain from making statements about their former employer where the employer has a legitimate protectable interest or where the employee has received additional compensation or severance in exchange for the commitment, again, assuming that the restriction doesn’t infringe upon that person’s protected rights for exposing violations of law.”

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