The existing South Carolina whistleblower law is an attempt to encourage state and local government employees to report instances of wrongdoing by other government employees. Such wrongdoing could include bribery, kickbacks, embezzlement, conflicts of interest and misuse of government assets for personal gain. Unfortunately, the S.C. law acts as a disincentive for potential whistleblowers.
Typical witnesses to public corruption are employees who can face retaliation from the very people who are committing the criminal acts. Whistleblower protection legislation should protect and compensate those reporting alleged wrongdoing, but South Carolina law sets arbitrary, low limits on restitution, thereby discouraging the whistleblowers from stepping forward.
South Carolina attorney Herbert W. Louthian co-authored an article on the S.C. whistleblower law and its need for reform. Louthian’s article, SC’s Whistleblower Law Reforms Long Overdue, states, “The current law (Section 8-27-10 et seq.) limits the damages for a government employee who has suffered retaliatory discharge or demotion to $15,000. That means if the employee was earning $50,000 per year, was fired in retaliation and remained jobless for two years, he would suffer a net loss of $85,000 plus lost benefits..
He further points out that the current law stipulates attorneys may be paid only $10,000 in fees for a tried case. If the case continues through the appeals process, the attorney can then get only another $15,000 potential fee even if the case drags on for as long as two more years.
This scenario demonstrates that the potential for whistleblowers recovering lost wages or being rewarded for protecting the government from corrupt activities is virtually nonexistent. In fact, Louthian opines, “… no sane employee would risk losing his job and livelihood to blow the whistle on public corruption, and no attorney would take the case..
South Carolina legislators have the responsibility to reform this law to motivate and fairly compensate the victims and any attorneys that pursue whistle blowing. Attorney Louthian recommends a three-pronged approach to a new law. First, the recovery of damages and lost wages should be fair and in line with actual losses an employee would experience. Attorneys, too, should recover fees in line with the case complexity, time spent, and the results achieved. Last, the whistleblower should receive compensation for the recovery of misused or stolen public funds of at least 10 percent.
South Carolina’s governor and our legislators have taken the first steps in helping to curb public corruption in our state with long-overdue reforms. Governor Nikki Haley has created an Office of Inspector General to help identify cases of public corruption in her Cabinet agencies. Furthermore, SC senators Jake Knotts and Vincent Sheheen introduced a bill in early May to institute the reforms suggested.
The article co-authored by Louthian closes by saying, “These reforms would be much more effective if public employees were incentivized by a new sharp-edge whistleblower law to report the illegal activities that only they know about. Together, they can save the taxpayers enormous sums of money in the near future..