It’s been just over two years since Sarbanes-Oxley began requiring companies to provide employees with a way to anonymously report financial misdeeds. In practice, that has usually meant setting up telephone hotlines, most of them open to any type of ethics complaint. But along with each call about financial fraud, companies take dozens of calls on everything from gripes about co-workers coming in late to complaints from workers who say they are underpaid.
For employers, that means sifting through many calls to find the ones that require immediate attention. “We are finding it is a productivity drain,” says Tyco senior vice president of corporate governance Eric Pillmore. “But you don’t know when that one call will come in that [is about] a critical issue.” Tyco has a full-time employee devoted to taking hotline calls.
At smaller EnPro Industries, a manufacturer with 4,400 employees, human-resources director Sheri Tiernan says its hotline, now in its second year, averages a manageable three calls per quarter. “Fortunately, we have not had any calls of [a Sarbox] nature,” she says. Nonetheless, all of the calls are investigated and quarterly reports on hotline activity are provided to the audit committee.
Apart from dedicating a full-time staffer to field calls, outsourcing hotline management, as EnPro does, is a way to have the urgent problem calls parsed from the petty grumbling. The Network, a hotline-service provider based in Norcross, Ga., provides detailed reports of all calls, and categorizes the complaints. According to The Network’s call records, theft is the number-one reason employees at most companies pick up the phone (22 percent of the calls), followed by discrimination complaints (16 percent). Sarbox calls are tied with wage and hour complaints at 13 percent.
Still, says attorney Michael Nosler of Denver-based Rothgerber Johnson & Lyons LLP, callers don’t have to be right about a Sarbox complaint to receive whistle-blower status. “Even if they’re wrong, they’re protected under law from retaliation,” he says.
Under the regulation, employees can be held liable for up to $1,000 worth of the firm’s attorney’s fees for frivolous or groundless complaints, but that applies only if the complaints are formally lodged with the Occupational Safety and Health Administration. As for unrelated complaints to the hotline, says Nosler, that’s the cost of doing business today.