Whistleblowing is an ethical practice as long as the whistleblower's accusations are accurate and he makes them without malice. Whistleblowing has serious consequences for both the organization and the whistleblowing employee, especially when the accusations are inaccurate.
A 1992 Louisiana Tech University survey of whistleblowers found that 62 percent lost their jobs, 18 percent felt harassed on the job and 11 percent had their salaries reduced. When employees expressed concerns to management in these incidents, they received hostile or unresponsive results. Management mitigates fallout from whistleblowing by informing employees about the appropriate steps to take when expressing internal ethical concerns.
Organizations need formal policies to manage whistleblowing effectively. An effective policy includes a statement that employees have an obligation to report wrongdoing, lists people designated to receive complaints, and establishes a fair investigative process. An effective policy also guarantees that the organization protects employees from adverse consequences in their employment.
Federal laws protect whistleblowers from retaliation, including Title VII of the Civil Rights Act, the Occupational Health and Safety Act, and the Age Discrimination in Employment Act. The 1989 Whistleblower's Act, signed by President George H.W. Bush, further protects federal employees who disclose government waste, abuse or fraud, but this law does not protect private-business employees. Several states have legislation that protects whistleblowers.