HR News & Trends, Legal Issues

There Are Now 104 Million Reasons for Unethical Employers to be Worried

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Employers are worried about expanded whistleblower rights under federal law. Unethical employers certainly should be, as a recent case in which a convicted felon was awarded $104 million for tattling on his employer graphically illustrates.

Bradley Birkenfeld was a banker for Swiss financial colossus UBS. He owned a home at the base of the Matterhorn, had a place in Geneva, drove a nice BMW and traveled the world helping wealthy clients avoid paying taxes — not always lawfully, it seems.

In 2007, Birkenfeld went to the U.S. Justice Department with details of his and his employer’s allegedly illegal activities. In one instance, Birkenfeld helped a client avoid tax issues by smuggling diamonds hidden inside a toothpaste tube.

$104 million to a felon?

After an intensive investigation, UBS was hit with a $780 million fine. But that was just the tip of the iceberg. Birkenfeld’s information helped the U.S. government recoup more than $5 billion in unpaid taxes and penalties.

Birkenfeld’s cooperation didn’t make him immune from prosecution, though. In 2009, he was sentenced to three years in prison for his part in the tax schemes. He maintained his innocence, saying “I single-handedly transformed centuries of illicit Swiss banking practices, but I paid a huge price for being the only person to have the courage to come forward.”

Birkenfeld did indeed pay a huge price but he also will reap a huge reward.

What this means for employers

Last week, word got out that Birkenfeld will get $104 million for blowing the whistle on UBS. The U.S. government defended the payment, pointing out that its $104 million “investment” in Birkenfeld generated a 50-fold return.

In the wake of the Bernie Madoff scandal, Congress beefed up whistleblower incentives and protections, particularly through the passage of the Dodd-Frank Act in 2010. If you’re on the right side of the law, you’ve got nothing to worry about. But if you’re on the wrong side of the law, your employees now have 104 million more reasons to consider running to the federal government to turn you in.

The message? Please please please stay on the right side of the law.

This was originally published on Manpower Group’s Employment Blawg.

Mark Toth has served as Manpower Group North America's Chief Legal Officer since 2000. He also serves on the company’s Global Leadership Team, Global Legal Lead Team and North American Lead Team. Mark is recognized as an expert on legal issues affecting the U.S. workplace and is frequently quoted in media from The Wall Street Journal to 60 Minutes. He is also a past Chair of the American Staffing Association and is a certified Senior Professional in Human Resources. Contact him at mark.toth@manpowergroup.com.