# Whistleblower Definition, Laws, Protections, & Notable Examples Explained

## What Is a Whistleblower?

A whistleblower is any individual who brings to the attention of legal authorities their knowledge of illegal, unsafe, or fraudulent activities within a public or private company or other entity. The Occupational Safety and Health Administration (OSHA), the Sarbanes-Oxley Act, and the Securities and Exchange Commission (SEC) all have programs in place to protect whistleblowers from retaliation. Specifically, federal workers are protected by the Whistleblower Protection Act of 1989. The actions of whistleblowers can lead to severe legal consequences for wrongdoers, and noteworthy reforms.

### Key Takeaways

*   Whistleblowers are crucial for unveiling illegal, unsafe, or fraudulent activities in organizations and can be anyone from employees to outside contractors.
*   Legal protections exist for whistleblowers to prevent retaliation, including demotion or termination, and are enforced by bodies like the Occupational Safety and Health Administration and the Securities and Exchange Commission.
*   Whistleblower information can lead to significant consequences for organizations and impactful legal reforms, such as the introduction of the Sarbanes-Oxley Act post-Enron.
*   Whistleblowers may receive rewards, often a percentage of the recovered amount, if their information leads to successful legal or regulatory action, provided the information is unique and significant.
*   The term "whistleblower" gained its positive connotation through efforts in the 20th century to remove the stigma from reporting wrongdoings, becoming an essential part of regulatory oversight.

## Understanding Whistleblowers: Roles and Responsibilities

Many organizations address whistleblowing, but some focus on specific areas. For example, the [Occupational Safety and Health Administration](https://www.investopedia.com/terms/o/occupational-safety-and-health-act.asp) (OSHA) is more interested in environmental and safety breaches, and the [Securities and Exchange Commission](https://www.investopedia.com/terms/s/sec.asp) (SEC) is more concerned with securities law violations. Many organizations offer rewards for impactful information, allow anonymous tips, and provide various methods for submission of information.

A whistleblower may release information to company officials or a large governing or regulating body. In cases where fraud or other illegal activity involves high-ranking officials and executive members of management, the optimal choice is to report wrongdoings to a regulating body.

## Historical Context: The Evolution of "Whistleblower"

"Whistleblower" dates back to the 19th century. Ralph Nader popularized its modern use in the 1970s to avoid negative terms like "informer." The term combines "whistle," a device used to alert or call attention to, and "blower," referencing the person issuing the alert by the blowing of the whistle.

Sports referees also were called whistleblowers for catching illegal sports plays. In the 1960s, journalists and activists helped change the term's meaning to what it is today.

### Iconic Whistleblowers: Cases That Shaped History

One of the most notable whistleblowers is W. Mark Felt, also known as "Deep Throat," who exposed former President Richard Nixon's involvement in illegal dealings during the Watergate Scandal. Another famous whistleblower is Sherron Watkins, a former [Enron](https://www.investopedia.com/terms/e/enron.asp) employee, who shed light on the company's fraudulent accounting practices. As a result, Enron ceased operations and brought about the birth of the [Sarbanes-Oxley Act](https://www.investopedia.com/terms/s/sarbanesoxleyact.asp).

## Legal Safeguards for Whistleblowers: Protection Against Retaliation

Whistleblowers are protected from retaliation should the information provided be confirmed to be true. This protection includes prohibiting the accused company from taking adverse or harmful actions against the reporter. Antagonistic activities include demotion, termination, reprimands, and other punitive reactions. Whistleblower protection also prohibits the company from pursuing legal action against the whistleblower to recoup losses incurred during the investigation or imposed penalties. 

In certain circumstances, more protection may be offered where threats of physical violence against the whistleblower or associates and family of the whistleblower are found.

## Incentives for Whistleblowers: Rewards and Recognition

Whistleblowers may receive a reward for reporting illegal activities. Usually, this reward is a percentage of the dollar amount recovered by the government or regulating agency as a result of the whistleblower's information. A minimum amount recovered may be necessary, and the whistleblower's information must be unique or new.

Many companies have mechanisms to inform management of wasteful practices. These practices may, or may not be, illegal in nature. Therefore, persons reporting wasteful practices may not receive protection as a whistleblower. However, many organizations encourage suggestions from all associates to improve operations and practices. The reporting person may be recognized for their efforts in improving efficiency and may be entitled to some nominal reward.

In incidences involving the discovery of gross waste, or waste involving a significant dollar amount of value, especially within government agencies, the reporting of waste can qualify the person as a whistleblower.

## The Bottom Line

W. Mark Felt and Sherron Watkins are just two examples of whistleblowers who alerted the authorities to illegal activities occurring within the political and corporate spheres. Their actions led to lasting consequences for companies and political life throughout the U.S. Whistleblowers can receive financial rewards if they provide substantive information that results in successful legal action against or related to perpetrators' behavior. The Whistleblower Protection Act, Sarbanes-Oxley Act, and regulations by OSHA and the SEC to ensure that whistleblowers are safeguarded from retaliation.

> **Article Sources**
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> 1.  Congress.gov. "[S.20 - Whistleblower Protection Act of 1989.](https://www.congress.gov/bill/101st-congress/senate-bill/20/text)"
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> 2.  Congress.gov. "[H.R.3763 - Sarbanes-Oxley Act of 2002](https://www.congress.gov/bill/107th-congress/house-bill/3763)." Accessed Dec. 16, 2021.