The law provides financial incentives for whistleblowers to report misconduct either through the filing of lawsuits or by providing information to government agencies. For example, the federal False Claims Act visits civil liability upon those who present false claims to the government, such as government contractors. A private person, known as a “relator,” may bring a civil action under the FCA in the name of the U.S. government. Relators are often employees of the government contractor, who obtain knowledge that their employer is defrauding the government by submitting false claims for payment. The FCA incentivizes whistleblowers to come forward by offering successful relators up to thirty percent of the recovery. California has a similar false claims act statute protecting the state government.
The IRS Whistleblower Office pays monetary awards to eligible individuals whose information is used by the IRS. The individual must provide specific and credible information regarding tax underpayments or violations of internal revenue laws, which in turn lead to proceeds collected.
The award percentage depends on several factors, but generally falls between 15 and 30 percent of the proceeds collected and attributable to the whistleblower’s information.
In the realm of investor protection, the Securities and Exchange Commission is authorized by Congress to provide monetary awards to eligible individuals who come forward with original information that leads to a Commission enforcement action in which over $1,000,000 in sanctions is ordered. The range for awards is between 10% and 30% of the money collected.
