Even though whistleblower retaliation is illegal, those who are considering the possibility of becoming whistleblowers are still sometimes understandably hesitant to move forward. It feels like a risk and they don’t want to lose a career that they’ve worked for, especially because “blowing the whistle” isn’t a financially lucrative opportunity.
Whistleblowers may receive financial compensation, but whether they get paid and how much they receive depends on various factors, including the specific laws and regulations in place and the nature of the information they disclose. These are some common scenarios where whistleblowers might receive payment of some sort after reporting wrongdoing for the benefit of all.
Government whistleblower programs
There are laws that incentivize individuals to report certain types of misconduct, such as fraud, corruption or violations of laws and regulations, especially when government funds are involved. Under these programs, whistleblowers may receive a portion of any monetary sanctions or fines that result from their disclosures. In the U.S., for example, the False Claims Act and the Dodd-Frank Act have provisions for whistleblower rewards.
SEC whistleblower program
The U.S. Securities and Exchange Commission (SEC) runs its own whistleblower program. When people come forward with reports of securities law violations, this program rewards these individuals accordingly. If the information provided leads to successful enforcement actions with monetary sanctions exceeding a certain threshold, whistleblowers can receive a percentage of the monetary penalties.
IRS whistleblower program
The Internal Revenue Service (IRS) also runs a whistleblower program for those who report significant tax fraud – which needs to be done intentionally – or tax underpayments. Whistleblowers may be eligible to receive a percentage of the additional tax, penalties and interest collected by the IRS as a result of their disclosures. The specific totals will vary from case to case, as the percentage is applied to different recovery totals.
The legal system
While financial incentives can motivate individuals to come forward with information about wrongdoing, many whistleblowers are also motivated by a sense of ethics, a desire to protect the public interest and a commitment to upholding the law. Whistleblower protections and rewards are intended to support and encourage individuals who take the courageous step of exposing wrongdoing.