Dodd-Frank only Applies to Local Whistleblowers

According to a ruling by a US court in a lawsuit brought by a foreign worker against their employer for retaliation, the anti-retaliation statute for whistleblowers comes into effect only when the employee works in the US. Foreign employees have no redress if they are terminated for whistleblowing, even if the employer has significant dealings in the US i.e. sells to companies based in the US.

The Dodd-Frank Wall Street Reform and Consumer Protection was put into place to help the US government through the Securities and Exchange Commission to monitor and regulate local and foreign companies whose activities may have a significant impact on the US. Among its provisions is protection for whistleblowers against retaliation through termination.

Whistleblowers help in trade and business regulation because the SEC simply does not have the workforce or resources to diligently do it on their own. It is reported that whistleblowers triggered 12% (404 cases) of SEC investigations into suspected illegal trade or business practices in 2013, and the SEC is on the record as willing to reward whistleblowers for their contribution.

However, foreign whistleblowers are deemed beyond the jurisdiction of Dodd-Frank even as US sanctions are imposed on the foreign company. The refusal of the US court to extend the protection of the Dodd-Frank anti-retaliation statute may have a considerable impact on the willingness of foreign employees to expose their employers’ wrongdoings for fear of retaliation. Considering the increasingly global nature of business today, this could have a deleterious impact on business in the future.