Federal law protects employees who file whistle-blower information regarding banking practices with the U.S. Treasury Secretary, the U.S. Attorney General or any federal supervisory or banking agency. However, an employee does not gain whistle-blower protection merely by threatening that he will go to the authorities.
To get the law’s protection, an employee must follow the letter of the law, not just the spirit. That means making a good-faith effort to ensure the complaint is valid. It also means filing internal and external reports of alleged wrongdoing.
Recent case: Greg Hill worked for Mr. Money, a sub-prime lender, until he was discharged as part of a reorganization. Shortly before he found out he was about to lose his job, Hill complained toabout another employee’s alleged fraudulent loan practices, including inflating credit scores and lending out of state.
The company investigated and the employee that Hill complained about resigned. Then Hill sued, alleging he had been targeted for termination because he had complained.
But the 6th Circuit Court of Appeals threw out the case. It said that the federal banking whistle-blower statute was very specific in what it required. Employees have to actually go to a federal law enforcement agency with their information before their employer allegedly retaliates. (Hill v. Mr. Money Finance Company, No. 3:06-CV-1639, 6th Cir., 2007)
Final note: The practical impact of this case is this: Employees are now more likely to run to banking authorities right away, instead of giving their employers a chance to fix the problem. Also note that there are many federal statutes that protect employees who blow the whistle, and most of them protect even internal complaints.