Foreign-based whistleblowing employees often have both rewards and protections available to them even when there is a presumption against extraterritorial application. An overview of this issue under the Sarbanes-Oxley Act, the Dodd-Frank Act, the False Claims Act, and state common law wrongful discharge suits.
This article by TELG managing principal R. Scott Oswald and Jason Zuckerman was published by ABA Section of International Law on March 1, 2011. The full article is available as a PDF on our site.
ABA Section of International Law
Whistleblowers: What Protections And Forms of Relief Are Available For Foreign-Based Employees
Whistleblowers play a critical role in exposing financial fraud, threats to public health and safety, and fraud on the Government. Indeed, a recent study concluded that whistleblowers played a bigger role than external auditors, government regulators, self-regulatory organizations, or the media in detecting fraud. Congress has recognized the critical role of whistleblowers in protecting the public fisc and combating corporate fraud by enacting numerous robust whistleblower reward and protection laws and strengthening existing whistleblower protection statutes. For example, the Dodd-Frank Act includes two whistleblower reward provisions, three new whistleblower retaliation causes of action, and strengthens the whistleblower retaliation provisions of the False Claims Act (“FCA”) and the Sarbanes-Oxley Act (“SOX”). In addition to the expansion of whistleblower protection law at the federal level, several states have strengthened their whistleblower protection statutes and the common law wrongful discharge tort continues to expand. While there is a presumption against extraterritorial application of United States law, foreign-based employees using federal whistleblower protection laws to remedy retaliation have largely succeeded in getting around that presumption. Moreover, whistleblower reward laws, such as the qui tam provisions of the False Claims Act and the new whistleblower rewards provisions of the Dodd-Frank Act, do not contain any exception for individuals disclosing unlawful or fraudulent conduct by a United States company that transpired abroad. Indeed, it is anticipated that the whistleblower reward provisions of the Dodd-Frank Act will result in increased enforcement of the Foreign Corrupt Practices Act (“FCPA”) by providing a strong financial incentive to foreign-based employees to report violations of the FCPA. This article summarizes the primary whistleblower reward and protections available to foreign-based employees.