What is the Typical Process for Reporting Violations Within A Company?
Companies and employers generally encourage—or sometimes require—employees to report violations of the law internally within the company as opposed to reporting these violations externally to federal agencies. A company should have in place a system of policies and procedures that create a culture where internal reporting is valued and supported. This culture in the workplace should make clear that whistleblowers who report internally within the company will be protected from supervisor retaliation or other adverse action.
As a starting point, a company should make it easy for employees to report violations internally. Examples of how to provide this reporting channel is by using a whistleblower hotline within the company or an email address where employees can voice their concerns about potential company violations. Other examples include hiring an independent third party who can receive employee tips and direct them to the proper internal channels for prompt resolution. Once a complaint is received, the company should then ensure that the proper individual reviews the issue, investigates the problem where necessary, and devises a mechanism to resolve any weaknesses or eliminate the illegal/wrongful conduct. While it is important that complaints be received and resolved rapidly within the company, it can be even more important to ensure that the process for receiving and responding to such complaints is periodically reviewed and updated. This includes implementing audits of the company’s internal reporting process and monitoring procedures to see how well it is executed or whether any changes are needed. If the audits or monitoring activities demonstrate weaknesses, the internal reporting process should be amended and updated. These results should also be communicated to upper management and the board of directors for ongoing evaluation.
It is critical that employees feel that they can trust their company’s internal reporting system. If such a system requires that employees first voice their concerns to their supervisor, there would be little incentive to do so where it is that supervisor who took the adverse action against the employee. Instead, the process for reporting violations should be easily understood by all company personnel, be easily accessible, and be effective. The company should design and implement company-wide policies that strengthen employee trust such as a robust code of ethics, a detailed employee handbook which emphasizes that employer retaliation is unacceptable, and an effective whistleblower protection policy. Company-wide training at all levels within the company will help ensure that all personnel are aware of these policies.
Setting up a clearly defined system for the internal reporting of company violations will allow the company to weed out the wrongful conduct without causing too much harm to the company itself. This is because a company’s upper management and directors can better correct instances of illegal or wrongful conduct more promptly compared to external reporting, which typically involves multiple federal agencies and law enforcement agencies. Internal reporting allows the company to control or otherwise lessen the media attention regarding the alleged wrongful or illegal conduct. Lawsuits are also not as common when the company has a strong and effective system in place for internal reporting.