Whistleblower Suppression: You Can’t Fire Employees Who Expose Bad Acts

Whistleblower Suppression & The Wells Fargo Scandal

In September 2016, the situation at Wells Fargo went from bad to worse.

The Consumer Financial Protection Bureau announced Wells Fargo was being fined $185 million for opening or applying for more than two million bank accounts or credit cards in the name of customers, without their knowledge or permission. The scandal led the bank to fire more than 5,300 employees and end its controversial employee sales goal program.

Next, the FBI announced a probe of the bank, opening the door to criminal charges. The U.S. House of Representatives Financial Services Committee opened an investigation. A few days later Wells Fargo CEO John Stumpf was grilled by both Democrats and Republicans on the Senate Banking Committee.

Many commentators asked, “where were the good employees? How did this go on for so long?” CNNMoney reported that bank employees who tried to stop the unauthorized customer account openings were fired.

Firing employees who take a stand against illegal behavior is illegal. It’s called whistleblower suppression. Both federal and state law provide protections to whistle-blowers.

The Law Protects Good Employees Who Expose Illegal Actions

Minnesota has robust whistle-blower protection. It is unlawful for a Minnesota employer to discharge, discipline, threaten, or otherwise discriminate against, or penalize an employee because:

  1. An employee in good faith reports violation or suspected violation of any federal or state law or rule adopted pursuant to law to an employer or to any government body or law enforcement official,
  1. A public body or office asks an employee to participate in the investigation hearing or inquiry,
  1. Employee has an objective basis to believe that an employer’s order violates state or federal law and the employee informs the employer that he or she refuses to perform that order because it is illegal, or
  1. The employee reports the situation in good faith which places the public at risk of harm because of the lack of quality healthcare services provided by healthcare facility, organization, or healthcare provider and the lack of quality violates the federal or state law standard.

In addition to state law, several federal laws, including Sarbarnes-Oxley and Dodd-Frank, unambiguously prohibit whistleblower suppression.

How Should Company Leadership Respond?

Companies who find themselves in a scandalous situation should take the following steps:

  1. Retain an attorney experienced in corporate scandals
  2. Identify the company’s rights and duties under the law
  3. Establish an action plan, which includes an investigation into what happened

One of the worst things a company can do, when it learns of illegal acts, is to try to cover it up. A measured response, guided by legal counsel, will mitigate damages and help the company overcome this trying situation.

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