In December of 2002, Time featured three women whistleblowers on the cover of its “person of the year” issue, noting that in “a year when our trust in American institutions was tested, Sherron Watkins of Enron, Coleen Rowley of the FBI and Cynthia Cooper of WorldCom found the strength to stand for what’s right.” At the time, I was at the Securities and Exchange Commission, and I had worked on countless cases where—to put it bluntly—a powerful and ethically unhinged group of men stole things from innocent people. For years, that magazine cover sat in my office as a reminder that courage wins. Today, as heartening as it is to see Time’s new issue honoring the #metoo “Silence Breakers,” I worry that courage doesn’t always win quickly enough.
With each day breaking another heinous story of sexual predation, I’m reminded of how my work at the SEC often felt like a game of Whack-a-Mole. The very moment we felt we were gaining ground, another case would pop up, and then another and another, each more insidious and complex than the one before. By the time Madoff surfaced, we were exhausted by the serial misconduct that had caused so much suffering and desperate to find effective and lasting solutions.
Training! We kept hearing. Provide more training! It was maddening then in the context of corporate fraud, and it’s even more infuriating as a response to the current social crisis. We don’t need a breakfast workshop outlining that it’s wrong to steal, just like we don’t need HR programs to clarify that bathrobes aren’t business attire or that uninvited sexual advances have no place at work (or anywhere else). We need to take what’s happening more seriously, stop shifting the work to victims, and avoid making excuses for miscreants by suggesting a refresher course in human decency might do the trick.
A decade passed before the silence breakers of 2002 saw Congress enact meaningful laws to encourage and protect those who report corporate fraud. While it was a long wait, the ultimate success of those reforms and the community they emboldened may offer a roadmap for the next phase of the #metoo movement.
One of the most nefarious practices in the modern workplace is the widespread use of agreements and protocols to bar employees from sharing dirty laundry with law enforcement. In a study our firm conducted with the University of Notre Dame, 16% of respondents said their company’s confidentiality policies and procedures bar the reporting of potential illegal or unethical activities to law enforcement or regulatory authorities. (The figure rose to 28% for employees earning more than $500,000 annually.) Employers use deliberately broad legalese to thwart the reporting of all forms of federal, state and local violations, from sex crimes and OSHA violations to environmental misconduct, securities violations, and everything in between. Since most people don’t hire lawyers to review employment agreements, most miss an unassailable truth: No person and no entity can interfere with an individual’s right to report possible wrongdoing to her government. Any agreement that seeks to do so is unenforceable.
With its new authority under the Dodd-Frank whistleblower program, the SEC has waged war on such practices, levying hefty penalties on companies that seek to gag employees. While positive, the SEC’s jurisdiction is limited–mainly comprising public companies and registered financial services firms. We must call on legislators to pass a law that requires all employers to expressly inform employees (in all manner of policies, procedures, manuals and employment agreements) that nothing and no one can stop an employee from reporting suspected violations of law to government authorities. In addition to opening the floodgates of reporting, what institution or trade association could decry such a reasonable proposition?
Both in actual practice and reasonable perception, retaliation quiets too many whistleblowers. Retaliation-based discrimination charges with the EEOC have increased by 58% over the last decade, with 42,018 charges filed in 2016. According to the most recent National Business Ethics Survey, 21% of workers who reported misconduct suffered from retribution, compared to 12% in 2007. Most alarmingly, the publisher of the study noted an 83% increase in the rate of retaliation, while reporting has only increased 12%.
The solution is to take retaliation head on. On this front, too, with its new statutory license, the SEC has gone after numerous companies and even fined one $500,000 for retaliating against a whistleblower even though the reported conduct was not found illegal. But let’s be clear: individuals who report sexual misconduct and suffer retaliation are often on their own. And when it comes to her word versus his, a young actor or assistant with a lawyer she found in the phone book has no chance against an industry titan who has hired an army of the nation’s most seasoned litigators.
The formidable strength of the United States government can level the playing field. Similar to the Dodd-Frank whistleblower program, we urgently need legislation to empower and fund law enforcement to combat, and quickly deter, institutional retaliation.
Most companies I prosecuted at the SEC or now investigate as a whistleblower lawyer have a code of conduct. The thing is, good conduct is not outlined in a manual, it is established by an ethical culture. Corporate leaders must create, and work tirelessly to maintain, a culture rooted in transparency, accountability and integrity. In the corporate lexicon, “snitch” has no home. Truth-tellers are heroes. Top-down messaging champions the activist community and makes clear that wrongdoers will be punished swiftly, regardless of seniority.
An ethical workplace invites, rather than fears, the truth. One way to build a culture of truth is to commission regular, confidential and independent surveys to determine, among other things, if employees feel safe, if they would be comfortable reporting misconduct, if there are ways the company could create better avenues of reporting, and if employees feel company leaders set an ethical ‘tone from the top.’ Another ethical practice is to assign an independent advocate to corporate whistleblowers. If we can provide emergency childcare for working parents, surely we can provide adequate support to whistleblowers behind and ahead of their journey. Similarly, ethical companies will conduct independent reviews of any allegations of misconduct to determine and follow up with whistleblowers if codes–legal or cultural–have been violated. Ensuring that actions align with policy and principles is how organizations transform lip service into active integrity.
Even as companies increasingly punish wrongdoers after the fact, our primary focus has to shift to prevention. That work rests not with victims or governments, but with the community. As tragically revealed in recent reports of sexual misconduct, people knew about the harassment allegations, and their collective silence endangered and ultimately created more victims. This isn’t a new phenomenon. In criminal activity, the problem is rarely that people didn’t know, it’s what they didn’t do.
The “bystander effect” emerged as a psychological construct in the 1960s after Kitty Genovese was murdered while scores of her neighbors allegedly looked the other way. In the years since, researchers have identified countless reasons for such apathy, including that bystanders didn’t notice the problem or perceive it as an emergency; they felt someone else (likely with more authority) would respond first; they feared speaking up; and they sometimes felt that when related parties have conflict, it’s no one else’s business.
Wrong. The extent of #metoo damage makes clear the scope of #metoo responsibility. Misconduct is everyone’s business and it is always an emergency. What’s more, unlike financial crimes with an inevitable trail of deceit, investigations into sexual misconduct stumble along the tricky terrain of he said/she said, where “he” often holds the power. Accountability turns on others – other victims, other witnesses, even other hunches. We cannot wait for victims and media to do the work of uncovering rot. We are accountable to each other. Today.
Within the universe of corporate fraud, it took too long to stop the bleed. In the back and forth of campaign promises, community marches and legislative banter, jobs and homes were lost, businesses shuttered, retirement accounts zeroed out. With each front page scandal, we lost a little more faith until all that was left was a terrible sense that unfettered gluttony and lawlessness were givens.
Truth-tellers changed the calculus then, and they will do it now.
As more victims are empowered to come forward, let’s honor their courage with credible and lasting changes to a status quo that put them at risk. We must get beyond dialogue to actually establish a culture of respect in the workplace, created by employers, defended by law enforcement and maintained by conscious bystanders. #Metoo is more than a hashtag, it is a reckoning: No individual is more powerful than a courageous community. We hold the power.
Jordan A. Thomas is chair of the whistleblower representation practice at Labaton Sucharow and a former assistant director in the SEC’s Enforcement Division.