Launching a Whistleblower Hotline Across Europe

White & Case LLP

Challenge: European data protection laws severely restrict employers' freedom to launch whistleblower hotlines consistent with Sarbanes-Oxley, Dodd-Frank and corporate social responsibility "best practices."

As corporate social responsibility and business ethics continue to grab attention, evermore- sophisticated "best practices" and compliance strategies emerge. A key practice that anchors many corporate social responsibility programs and compliance initiatives is launching and publicizing an internal whistleblower procedure, report channel, or "hotline" that entices insiders to denounce colleagues' misdeeds so management can root out corporate crimes, corruption and cover-ups.

Workplace whistleblower hotlines take many forms. Some stand on their own while others comprise part of a broader corporate code of conduct, code of ethics, compliance or social responsibility program. Some run in-house while others are outsourced. There are single global hotlines and there are aligned but separate report channels across local affiliates. Some hotlines are closed to staff in certain countries. Whatever the form or reach, the idea behind a workplace hotline is simple: Empower insiders who hear about white collar crime, policy breaches or other wrongdoing to come forward with allegations so management can investigate, right wrongs, and punish the guilty.

Domestically within the US, workplace whistleblower hotlines are a largely uncontroversial "best practice" to which few ever object. But tensions rise when a multinational extends report channels abroad. In Europe in particular, whistleblower hotlines can spark blowback from staff, employee representatives and government enforcers, and can trigger confounding legal issues without US counterpart. To a socially-responsible American, the hurdles impeding European whistleblower hotlines have gotten higher than they should have any right to get.

Pointer: Take a member-state-by-member-state approach in adapting a US-driven hotline to Europe's tough hotline-specific legal restrictions.

Over a dozen European jurisdictions interpret their local domestic data protection laws (either by regulation or at least by data agency pronouncement) specifically to rein in employer hotlines. And an EU advisory body called the Article 29 Working Party issued a persuasive but non-binding report that recommends all 27 EU states embrace a particularly-restrictive interpretation of EU data law to restrict hotlines. Broadly speaking, Europeans see hotlines as threatening privacy rights of denounced targets and witnesses when hotlines are not "proportionate" to other report channels in European workplaces.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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