Whistleblower Rewards FAQ

Published on June 06, 2020

Q: What is a whistleblower reward law?

A: Under multiple U.S. whistleblower laws, a U.S. citizen or foreign national who discloses original information on waste, fraud, and abuse may be entitled to receive part of the government’s financial recoveries as a whistleblower reward. The amount of rewards is tied to how much the whistleblower contributed to the success of prosecutions.

Q: Are whistleblower reward laws successful?

A: Yes. Whistleblower reward laws have been highly successful and are one of the government’s most important tools to uncover and prosecute fraud. Since 2011, law enforcement agencies who implement these programs have collected over $37 billion for the benefit of taxpayers and investors and paid $6.7 billion in rewards to whistleblowers.

Q: Why do whistleblower reward laws work?

A: Rewards programs are effective for two reasons. The first is that they promote positive behavior by employees who witness wrongdoing, by incentivizing them to step forward and alleviating the risk to their career and financial stability.

The second is they create a deterrent effect within the market through large award payments. Effective whistleblower programs make noncompliance by companies significantly riskier since they increase the probability of detection and the likelihood of penalties, which are the two most important variables in deterrence models.

Q: What are the most important whistleblower reward laws?

A: In the United States, the most successful whistleblower reward laws include:

- The False Claims Act, which requires payment to whistleblowers of between 15 and 30 percent of the government’s monetary sanctions collected if they assist with prosecution of fraud in connection with government contracting and other government programs;

- The Dodd-Frank Act, which requires payment to whistleblowers of between 10 percent and 30 percent of monetary sanctions collected if they assist with prosecution of securities and commodities fraud; and

- The IRS Whistleblower Law, which requires payment to whistleblowers of 15 to 30 percent of monetary sanctions collected if they assist with prosecution of tax fraud.

- Foreign Corrupt Practices Act, which requires payment of between 10 percent and 30 percent of monetary sanctions collected if they assist with the prosecution of foreign bribery.

There are also multiple environmental protection laws with whistleblower rewards provisions, including the Act to Prevent Pollution from Ships and the Lacey Act.

Q: Do whistleblower reward laws encourage false reports?

A: No. A study by the University of Chicago Booth School of Economics found that ““[t]here is no evidence that having stronger monetary incentives to blow the whistle leads to more frivolous suits.” The only way to prevail in a claim for a whistleblower reward is to be right about wrongdoing.

Q: How can an individual file for a whistleblower reward?

A: In order to file and qualify for a financial reward, you must follow the rules and procedures outlined under each individual law. If you fail to follow these procedures, it can result in the denial of any award, even if your information assisted the government in receiving sanctions from a wrongdoer. The National Whistleblower Center highly recommends hiring a whistleblower attorney to guide you through this complex process.

Q: Can non-U.S. citizens receive whistleblower rewards?

A: Yes. Under many whistleblower laws, such as the Dodd-Frank Act and the Foreign Corrupt Practices Act, eligibility and rewards do not depend on U.S. citizenship

Q: If an individual applies for a whistleblower reward, will their identity remain confidential and/or anonymous?

A: It depends on the law that you file under.

The Dodd Frank Act modified both the Securities Exchange Act and the Commodities Exchange Act so that they explicitly provide potential whistleblowers with an avenue for anonymous filings. Under each of these laws, the potential whistleblower must be represented by a licensed attorney who will file the claim on the whistleblowers behalf and keep their name confidential.

The False Claims Act allows whistleblowers to file their claim under seal, keeping their identity confidential. Only the court and U.S. government will have access to the whistleblower’s identity until the U.S. district court orders otherwise. These provisions are not lifted until the government concludes its investigation and the court lifts the seal. Once this happens, whistleblower complaints typically become a matter of public record.

Under the IRS whistleblower law, the potential whistleblower is unable to file their claim anonymously as the whistleblower must personally sign the form to their claim under oath. However, the IRS does have rules that protects the confidentiality of the whistleblower and in practice, this rule has proven to be just as effective as the anonymity rule found in the Securities and Exchange Act.

There are no firm rules that mandate confidentiality under the Act to Prevent Pollution from Ships, the Lacey Act, or others. Those who utilize these laws should request confidential informant status.

The National Whistleblower Center highly recommends hiring a whistleblower attorney to guide you through this complex process.

Q: What if a whistleblower is retaliated against for submitting a claim?

A: If an individual or organization learns the identity of a whistleblower who has reported evidence of their wrongdoing, they will often take retaliatory actions to discredit or punish the whistleblower. This is especially common when the accused has leverage over the whistleblower in the workplace.

To deter retaliation, many whistleblower laws offer a host of remedies once retaliation has been proven such as:

• Back pay

• Out of pocket losses

• Damage for pain and suffering

• Attorney fees

• Reinstatement to the whistleblowers former job

Many of these remedies can be won through legal action in a federal or state court. However, there are still gaps in whistleblower protection laws. Stronger protections are needed to provide whistleblowers with the justice they deserve.

Q: How can I get help?

If you need help finding an attorney, visit Resources for Locating an Attorney.

The New Whistleblower's Handbook: A Step-by-Step Guide to Doing What's Right and Protecting Yourself (Lyons Press, 2017) is the first-ever consumer's guide to whistleblowing. It contains clear and comprehensive rules that fully explain the how to effectively blow the whistle. It is very important that you review this resource in order to determine what laws may protect you and whether you need to take immediate action to protect your rights.

Please read the FAQ disclaimer.

The material in this FAQ may not reflect the most current legal developments. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this website or in this FAQ. Before acting on any information or material in this web site, we strongly recommend you review these resources.

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