There is a new piece of federal legislation being proposed that would give financial incentives to whistleblowers who expose safety defects in autos. The legislation is in response to the recent wave of auto defects, some of which were concealed by automakers for up to ten years. It would allow any whistleblower to share in the penalty payments that an auto company may be forced to make as a result of failing to disclose a known defect.
Whistleblowers To Be Rewarded
The legislation appears to have bi-partisan support, and would reward a broad class of whistleblowers including:
If any one from this class of whistleblowers shares original information on defects or reporting violations, then they could receive up to 30% of penalties levied against the automaker. For example, last year General Motors paid a fine of $35 million for failing to report the ignition switch defect that has claimed 379 lives to date. This incentive for a whistleblower to come forward may be the type of insider scrutiny that the industry needs, since auto industry executives seem to be free of conscience when it come to disclosing life threatening defects in their vehicles.
It is encouraging to see that car dealerships are included within the scope of the legislation, since many dealers are the first ones to become aware of problems with their own customers’ cars. Further, many automakers penalize dealers for disclosing to the public or media any suspected defects, and sometimes refuse to reimburse the dealer for the cost of repairs. This will finally put car dealerships on the side of consumers, and they can play a role in preventing needless injuries and deaths due to defects.
What Are The Repercussions for Whistleblowers?
The role of whistleblower can be complicated, especially for an employee who relies on their job to make a living. There is a real concern of retaliation against an employee who make expose violations, such as job loss, pay cuts and even disgruntled actions by other employees who may see the defect revelation as a threat to their own livelihood. However, there should be provisions for anonymity in the reporting process, and if the reward is significant enough then income may not be a problem.
This type of whistleblower legislation is similar to those used by the SEC and IRS, but in the case of auto defects it may be life saving. It does raise the question of why such a law is needed, and whether concealing defects is just business as usual at automakers. The fact that federal legislators have to enlist the aid of those with access to vehicles and parts illustrates just how far this practice has gone in the auto industry. This is not a simple matter of an unknown defect creating a single accident. This law is the result of the habit of automakers to sell defective cars for years at a time, without ever informing the consumer that their life may be in danger.