Website Heading

CALIFORNIA CORPORATE & SECURITIES LAW

Why You May Want To Reconsider Promising Confidentiality To Whistleblowers

In this recent post, I suggested that absolute guarantees of confidentiality to whistleblowers may be counterproductive. In today’s post, I will elaborate on why.

The scope of the promise may be unclear.  Often, the promise of confidentiality is as succinct as “All reports and disclosures you make under this Code of Ethics will remain confidential unless required to be disclosed by applicable law.”  The company may believe that it is agreeing not to disclose the reporting person as the source of the disclosure.  The reporting person may take the position that the company has agreed not to disclose either the fact of the report or its substance, particularly when either may serve to identify the whistleblower. Misunderstandings about what was and was not promised may lead to litigation.  A company may find that the exception for disclosures required by law is too narrow.  A company may, for example, decide that voluntary reporting to its regulator is in its interest.

Broad promises of confidentiality may impede a company’s ability to investigate reports.  Broadly worded agreements to keep reports confidential may frustrate a company’s ability to investigate a complaint.  In conducting an investigation, it may be a practical necessity to reveal at least some aspect of the report.  For example, a whistleblower may provide information collusive bidding practices. Investigating the complaint may require the company to secure bidding materials and interview employees.  Although these activities may be crucial to the investigation, they are likely to reveal both the existence and the general nature of the complaint.  In many cases, this may be sufficient for others to identify the source of the report.

Broad promises of confidentiality may prevent a company from taking effective action.  If the a whistleblower’s report proves out, the company will likely want to take remedial actions, including suing the malfeasors.  The company, however, may be hamstrung if it can’t disclose the disclosures made by the whistleblower.

Promises of  blanket confidentiality may encourage internal reporting, but these are promises that companies should be very wary of making.

“. . . a stone, a leaf, an unfound door; a stone, a leaf, a door. And of all the forgotten faces.”

The actor Gene Wilder passed away this week.  Like many thespians, he was known by a stage name.  His nom de scène honors two of my favorite authors – Thomas Wolfe and Thornton Wilder.  According to The Wall Street Journal, he took the name Gene in honor of the central character in Wolfe’s lyrical masterpiece Look Homeward Angel:

With a full, if inexact, sense of what portended, she [Eliza] gave to Luck’s Lad the title of Eugene, a name which, beautifully, means “well born,” but which, as any one will be able to testify, does not mean, has never meant, “well bred.”

Look Homeward Angel is the semi-fictional account of Eugene Gant’s growing up in Asheville, North Carolina.  The name Wilder honors the playwright Thornton Wilder, the author of Our Town.  Coincidentally, I spent my high school years in Asheville, and that is where and when I first saw Our Town, a play that has ever since been my favorite.

Share on:

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

Related Articles