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Sen. Ed Markey called her a “21st-century American hero” and Sen. Amy Klobuchar predicted her whistleblowing would be the “catalyst” for action by Congress to finally reform the social media industry. But under current law, Facebook whistleblower Frances Haugen could still face serious punishment.
If lawmakers want more corporate insiders to reveal misconduct that harms the public, they need to give more than praise. They need to pass laws that strengthen their legal protections.
As it stands now, Haugen faces the prospect that Facebook could haul her into court and bankrupt her. Like most corporate employees, she’s subject to a confidentiality agreement. Whistleblower laws permit employees to disclose conduct reasonably believed to be illegal to Congress, law enforcement or government regulators. But disclosures to the media are not similarly protected, raising the possibility that Haugen could be sued for breach of contract.
That’s what happened to me.
In 2015, I disclosed to regulators, the media and on my website non-public information about my former employer, Blue Shield of California, that I believed showed the company breaking the law. Blue Shield sued me over my disclosures, claiming they violated my confidentiality agreement. My lawyer tried to get the suit dismissed, but the court ruled that whistleblower protections did not prevent Blue Shield from enforcing the agreement against me for disclosures to the media and on a website.
Since I couldn’t afford further litigation, I was forced into a settlement that bars me from disclosing any more about the company and even prohibits me from speaking certain facts about it that have already been reported in the media due to my prior whistleblowing.
Some Facebook critics have expressed hope that Haugen’s disclosures about Facebook will lead to a judgment day for social media like the one Big Tobacco faced. That’s a fitting analogy: Jeffrey Wigand, one of the most prominent corporate whistleblowers of recent decades, worked through the media to trigger a public reckoning for that industry. Unfortunately for Wigand, even as he succeeded in delivering explosive revelations, his life was upended in the process.
Wigand’s former employer, Brown & Williamson, sued him in 1995 for disclosures he made to reporters that allegedly violated his confidentiality agreement. While the company had to drop the lawsuit in 1997 as part of the tobacco industry’s $368 billion settlement of the multistate litigation against it, the suit — as well as other retaliation by the company — took a huge toll on Wigand.
Just the possibility of a lawsuit by the company to enforce its confidentiality agreement led CBS to kill an episode of 60 Minutes featuring an interview with Wigand. The network was set to air the episode when its lawyers warned that it could be sued for inducing Wigand to break his confidentiality agreement, prompting the media powerhouse to bottle up a story alerting the public to a significant public health threat. (CBS did later broadcast the interview, but only after the Wall Street Journal had reported much of what Wigand had told 60 Minutes. The drama was memorably portrayed in the 1999 film The Insider.)
In the 25 years since Wigand’s whistleblowing, Americans have experienced a long string of corporate scandals and misconduct — from the recklessness of big banks that caused the 2008 financial crisis to the massive rigging of car emissions systems by Volkswagen to cheat on pollution tests. As the reach and power of big corporations has swelled, we’ve seen that matched by the scale of the havoc they can cause. That has led to the adoption of a swath of corporate whistleblower protection laws, including the provisions of the Sarbanes-Oxley Act that protect public company employees, like Haugen, from legal action or other retaliation for disclosures to Congress or regulators. But missing from those laws is protection for disclosures to the media.
Some might ask why such protection is needed at all. Isn’t the ability to speak freely to lawmakers or regulators enough? No, not if we want whistleblowers to have the best shot at reforming harmful corporate conduct, which often requires, in addition to informing authorities, applying public pressure. It’s hard to imagine that Haugen would have generated nearly as much momentum for reform of Facebook as she has without her disclosures to the media.
Furthermore, unlike corporate whistleblowers, government employees who reveal wrongdoing already have significant protection for media disclosures. The Whistleblower Protection Act prohibits retaliation against federal employees for disclosing wrongdoing to anyone, including the media. The Supreme Court has ruled that government employees at all levels have a First Amendment right to speak to the media about matters of public concern without fear of retaliatory action by their government employers.
The protection government employees enjoy for media disclosures is hardly absolute. Leaks of classified material, for example, are unprotected. But there is a clear recognition in the law that such disclosures are an essential part of whistleblowing. As the Court of Appeals for the Federal Circuit has noted, “The purpose of the Whistleblower Protection Act is to encourage disclosure of wrongdoing to persons who may be in a position to act to remedy it, either directly by management authority, or indirectly as in disclosure to the press.”
Fortunately, we’re now seeing some movement toward recognizing in law the public value of media whistleblowing by corporate employees — at least with respect to some types of misconduct.
Last month, coincidentally just days after Haugen revealed herself on 60 Minutes as the Facebook whistleblower, California Gov. Gavin Newsom signed a bill that prevents employers from prohibiting employees or ex-employees from publicly speaking out about unlawful harassment, discrimination or other mistreatment of employees. Passed at the urging of #MeToo activists and Pinterest whistleblower Ifeoma Ozoma, the law is intended to “empower survivors to demand accountability and prevent future abuses by perpetrators,” according to the bill’s author, California state Sen. Connie Leyva.
The logic behind the bill, that public exposure forces accountability for current abuses and helps to prevent future ones, applies equally to corporate misconduct that victimizes customers, investors or the public. Imagine if every executive knew that any employee could publicly disclose any action by the company that they reasonably believed was illegal. Would Facebook have acted as it has? At the very least, that kind of environment would force corporate leaders to think harder before breaking the law.
Corporate lobbyists may argue that protecting media disclosures is a bad idea because it would imperil vital business trade secrets. But just as public disclosure of classified government material is excluded from whistleblower protection, certain types of corporate information could similarly be put off limits.
The only purpose served by not protecting media disclosures of illegal corporate wrongdoing is to shield companies from accountability. That’s the policy choice our laws currently make. But with public admiration of whistleblowers and skepticism of corporations as high as it is, legislators have an opportunity now to change that.
Corporate whistleblowing, as Frances Haugen has demonstrated, has the potential to do enormous good. But that potential can’t be fully realized if every corporate insider contemplating doing what Haugen has done has to be a hero to do it.