Do whistleblowers have to report internally first?

No. Federal law does not require whistleblowers to report misconduct internally before filing a claim with the government.

Reporting misconduct internally can be helpful, however. Most whistleblowers want to stop misconduct. The safest and most effective way of doing that is often reporting the conduct internally. Many companies have procedures for investigating and addressing whistleblowers’ concerns. Internal reporting can also build credibility with the government by showing that the whistleblower sincerely wants to solve the problem. For that reason, some programs include people who report information to their employer within the definition of whistleblower, making them eligible for whistleblower awards.

But reporting misconduct internally can also backfire, particularly if the whistleblower’s employer does not offer a credible reporting mechanism.

• First, many potential whistleblowers face a risk of retaliation, even in response to internal reports. Reporting to the government offers protection against retaliation.
• Second, internal reports may lead those who engaged in misconduct to try to conceal their activities, including by destroying evidence.
• Third, depending on the circumstances, whistleblowers who report internally may have more difficulty maintaining anonymity.

Ultimately, the decision about whether to report misconduct internally requires careful consideration of many different factors. Some potential whistleblowers, such as accountants, securities brokers, or attorneys, may also have professional obligations to consider when deciding whether to report internally.

To learn more about the False Claims Act and other whistleblower programs, go to www.mololamken.com and follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” — Benchmark Litigation.  Copyright MoloLamken LLP 2023.