Whistleblower protection has become an important topic in corporate governance, legal compliance, as well as corporate social responsibility (“CSR”) strategy. Legislated protections for whistleblowers mean that Whistleblower programs and policies are often implemented in the shadow of state laws, and therefore form part of prudent legal compliance and risk management as well as CSR best practice.
“Whistleblowing” is generally referred to as the act of an employee who reports illegal, fraudulent or corrupt activity. In 2002, legislators in the United States extended protection to whistleblowers in the Sarbanes-Oxley Act. This piece of legislation imposes criminal sanctions for retaliation against employees who inform law enforcement officials of corporate wrongdoing, and also gives such employees the right to initiate civil claims against their employers.
Various provincial and federal statutes across Canada also contain provisions intended to protect employees who provide information to law enforcement officials. Most occupational health and safety legislation protects employees from reprisal. For example Ontario’s Occupational Health and Safety Act (“OHSA”) prohibits employers from reprisal against a worker because the worker has complied with its provisions, sought its enforcement, or given evidence in an OHSA proceeding. Employers can be penalized if found to be in contravention of these provisions.
The Canada Labour Code (the “Code”), which applies to employers under federal jurisdiction, contains similar protections for employees who give information to an inspector, testify against their employers, or have sought enforcement of the Code. Employers who contravene these provisions may be found guilty of a summary conviction offence and could be liable to a fine of up to $15,000.
Human rights legislation often contains protections for whistleblowers by prohibiting any person from threatening, intimidating or discriminating against an individual because that individual is enforcing their rights under a human rights statute.
There is also environmental protection legislation that contains whistleblowing provisions. Ontario’s Environmental Protection Act (“EPA”) provides extensive protection to employees facing employer reprisal for complying with environmental legislation (Ontario’s Environmental Bill of Rights, 1993 also contains similar protections). More specifically, the EPA provides that employers shall not dismiss, discipline, penalize, coerce, intimidate, attempt to coerce or intimidate an employee for complying with: the Environmental Assessment Act; the Environmental Protection Act; the Fisheries Act [R.S.O. 1970, c. F-14]; the Nutrient Management Act; the Ontario Water Resources Act; the Pesticides Act; the Safe Drinking Water Act, 2002; and the Toxics Reduction Act, 2009. Breaching the EPA is an offence which could give rise to a prosecution. Alternatively, an employee can complain to the Ontario Labour Relations Board, which can take any remedial action it considers appropriate (including ordering reinstatement with full back pay). Employees may also have a civil claim for lost wages and punitive damages if they are terminated for attempting to have an environmental law enforced.
Federally, the Canadian Environmental Protection Act (“CEPA”) makes it an offence for an employer to discipline, harass or dismiss an employee who, in good faith reports an alleged offence under the act, refuses to conduct activities that would be illegal under the act, or declares his or her intention to comply with the act. CEPA also contains a provision allowing a person who reports an alleged infraction under the act to request that his or her identity not be disclosed. It is also worth noting that Private Members’ Bill C-469 – An Act to establish a Canadian Environmental Bill of Rights, which recently had its first reading before Parliament, provides whistleblowing protection to employees who are employed on or in connection with the operation of any federal source or federal work or undertaking.
The Criminal Code of Canada (the “Criminal Code”) also contains whistleblower protections that are even broader than the foregoing regulatory requirements. Section 425.1 of the Criminal Code prohibits employers from retaliating, or threatening to retaliate against an employee for providing information to a person whose duties include the enforcement of federal or provincial law. The information disclosed by the employee must relate to an offence that is contrary to provincial or federal law and which the employee honestly believes has been committed by his or her employer, a company officer, director or co-worker. Violating section 425.1 may result in criminal sanctions, including the possibility of imprisonment for a term of up to five years.
Given the potential consequences businesses face for any sort of retaliation against a whistleblower, it is highly prudent to create and implement internal policies, procedures and protections with respect to whistleblowers. These may include the design and implementation of internal complaints and grievance mechanisms. Such programs are not simply good CSR practice, they may also be necessary to avoid legal liability. In this respect, the objectives of CSR should be seen to coincide with legal compliance management and mitigation of legal risks.