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It might seem scary or a huge risk to go against the company you work for, but at times, there is an ethical requirement for an employee to do so. No one likes to tattle on someone or something, but when laws are being broken, deliberately, someone needs to step up and say enough is enough. Managers, employees, and human resource professionals should understand the importance of whistleblowers and how, if something is truly wrong, important they are to society. By understanding a key whistleblower case, what happened to cause the litigation to arise, what laws protected the whistleblower, and what the overall outcome was, managers and employees can work to ensure that their own knowledge of the law and its compliance within the workplace is solid.
Whistleblowing, according to Moran (2011), is the action in which an employee goes to their manager, or appropriate state/federal agency, to inform them about the company’s illegal activities. Many times people like to assume that these whistleblowers are acting in their own self-interest, against the company and the other employees, but in reality, they are acting ethically when others around them are not. Since there could be a perception of negativity towards a whistleblower, the federal government created protections for these whistleblowers, which include the Whistleblower Protection Act of 1989, The False Claims Act of 1863-revised in 1986, and the Sarbanes-Oxley Act. These three pieces of legislation protect these employees from discriminatory or retaliation from their employers and other employees. In general, these acts provide protections for employees in regards to whistleblowing when reporting mismanagement, abuse of authority, waste of public funds, or a danger to public health/safety. Whistleblowers are also able to be reinstated to their jobs, back pay, attorney’s fees, and court costs covered. In other words, the Federal, and some state governments, want to ensure that employees feel safe to report illegal behavior.
Robert Ferro (Drew, 2009; Pae, 2009; Phillips & Cohen, 2009), a government contractor working for Northrop Grumman, a weapons and satellite manufacture, discovered that many of the technical parts being sold to the government were faulty. When he reported this to his supervisor, he was told to ignore the issue and that the company knew the parts were faulty back in 1995. Robert continued to complain to his supervisor and upper management about the faulty parts, even writing a report which was deleted by the company, to the government. This continued until 2002 when the faulty parts started failing on U.S. Government satellites. Robert, at that time, approached the government himself and filed a lawsuit.
Ferro’s own law firm, Phillips & Cohen (Phillips & Cohen, 2009), filed suit against the company while working with the U.S. Government under the False Claims Act. They argued that the company was actively defrauding the government, and therefore wasting public funds, and that Ferro was able to claim damages for the governments’ behalf. Northrop Grumman continued to decline that the parts were faulty or that they knew about it for years. During litigation however, emails, documents, and other transcripts were uncovered showing that the parts were faulty and that the company covered up the issues, in violation with their contract. Once physical evidence of the cover up became public, Northrop Grumman settled out of court to a total of $325 million. Robert Ferro himself will receive $48.7 million due to the coverage given from the Sarbanes-Oxley Act. It’s unclear if he returned to work with Northrop Grumman.
This example of a whistleblower shows that, even when something has been going wrong for years, a single employee can bring down a mountain of lies and cover ups. Moran (2011) explains that while some employees may file whistleblower cases out of revenge or spite, this example was about the morality and ethics of the problem. Ferro clearly knew that the parts were faulty (Drew, 2009; Pae, 2009; Phillips & Cohen, 2009) but was prohibited to do anything about it for years due to his fear of possibly losing his job. It was only after the parts started to fail, his moral guidance told him enough was enough, and he reported the issue directly to the government.
Managers, leaders, employees, and human resource professionals need to be aware of the possibility of whistleblowers and how they can impact the overall production of the company. The biggest takeaway is that companies, managers, and leaders should not be doing anything illegal (or to breach a contract) to begin with. By keeping a high level of ethics and morality within their team and company, employers can feel confident that they are making strong decisions each and every day.