European data protection laws severely restrict employers’ freedom to launch whistleblower hotlines consistent with Sarbanes-Oxley, Dodd-Frank and corporate social responsibility “best practices.”
As corporate social responsibility and business ethics continue to grab attention, evermore- sophisticated “best practices” and compliance strategies emerge. A key practice that anchors many corporate social responsibility programs and compliance initiatives is launching and publicizing an internal whistleblower procedure, report channel, or “hotline” that entices insiders to denounce colleagues’ misdeeds so management can root out corporate crimes, corruption and cover-ups.
Workplace whistleblower hotlines take many forms. Some stand on their own while others comprise part of a broader corporate code of conduct, code of ethics, compliance or social responsibility program. Some run in-house while others are outsourced. There are single global hotlines and there are aligned but separate report channels across local affiliates. Some hotlines are closed to staff in certain countries. Whatever the form or reach, the idea behind a workplace hotline is simple: Empower insiders who hear about white collar crime, policy breaches or other wrongdoing to come forward with allegations so management can investigate, right wrongs, and punish the guilty.
Domestically within the US, workplace whistleblower hotlines are a largely uncontroversial “best practice” to which few ever object. But tensions rise when a multinational extends report channels abroad. In Europe in particular, whistleblower hotlines can spark blowback from staff, employee representatives and government enforcers, and can trigger confounding legal issues without US counterpart. To a socially-responsible American, the hurdles impeding European whistleblower hotlines have gotten higher than they should have any right to get.
Over a dozen European jurisdictions interpret their local domestic data protection laws (either by regulation or at least by data agency pronouncement) specifically to rein in employer hotlines. And an EU advisory body called the Article 29 Working Party issued a persuasive but non-binding report that recommends all 27 EU states embrace a particularly-restrictive interpretation of EU data law to restrict hotlines. Broadly speaking,
Take a member-state-by-member-state approach in adapting a US-driven hotline to Europe’s tough hotline-specific legal restrictions.
Europeans see hotlines as threatening privacy rights of denounced targets and witnesses when hotlines are not “proportionate” to other report channels in European workplaces. Among the specific hurdles that European jurisdictions erect to frustrate hotlines, the 12 biggest are:
- restrictions against hotlines accepting anonymous denunciations
- limits on the universe of “proportionate” infractions on which a hotline accepts denunciations
- limits on who can use a hotline and be denounced by hotline
- hotline registration requirements
- alignment with “proportionate” alternate report channels in the workplace
- notices to employees, targets and witnesses explaining their rights
- restrictions against outsourcing hotlines
- communications to targets/witnesses disclosing specific whistleblower denunciations
- complying with “sensitive” (EU data directive article 8) data restrictions as to criminal data received by hotline
- rights to access, rectify, block or eliminate personal data processed via hotline
- restrictions against transferring hotline data outside of Europe
- deleting/purging data in hotline call files
Before offering a hotline to employees in Europe, isolate, in each affected EU member state, the unique issues under local law. Check which of these 12 legal issues arise in each relevant jurisdiction. (See the chart below for summaries of local law in affected jurisdictions.) Then take steps necessary to make hotline reporting protocols, employee communications packages, and hotline staff “scripts” comply. In accounting for these issues, some multinationals succeed in crafting a single European hotline; others decide to tailor different hotline protocols for different member states.
Whistleblower Hotlines and Data Protection Laws in Europe
This chart summarizes data protection law pronouncements in those EU member states that issued data-law mandates or interpretations specific to employee whistleblower hotlines as of late 2011. “Whistleblower hotline” means any channel/system for employees/ stakeholders to submit complaints/concerns/allegations of wrongdoing to management.
Click here to view the table.