Whistleblowing and Product Liability

By designing the products and services that people use, engineers have an influence on the everyday lives of people. Because of this influence, engineers have a certain responsibility to safety and welfare of the people that use these products and services. Engineers and the corporation that employ them can be held liable for the products and services they design. In a perfect world, engineers and corporations would always make the right choice, meaning that they would make decisions, products, and services that would benefit society.

However, in the real world this not always the case. For this reason, liability of companies and employees affect the the practice of whistleblowing is a beneficial for the welfare of the public.

As technology, and society have become more intertwined, engineers have are being asked to design more and more advanced products. When designing these products, engineers and the companies they work for, must keep in mind that one of them or each them can be held liable, “As already established, engineers employed by a company can be personally liable for their actions.

This liability is not secondary to the employer’s liability as a matter of law. The plaintiff has the option of pursuing the judgment from the engineer or the employer (under the theory of vicarious liability through the doctrine of respondeat superior). In fact, some states will still hold engineers joint and severally liable with their employer.” (Friedland, Lttmann, Okeil)

Though an engineer is working for a company he/she can still be held personally liable for damages.

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Another case of liability for engineers is the self-employed engineer, a self employed engineer still faces the same liability as engineer working for a company, however is certain situation he or she can face more liability, “If a business is not incorporated as a type of liability-limiting entity, the owner is personally liable for all debts of the business—in addition to any personal liability the owner accumulates in his or her capacity as a working engineer.” (Friedland, Lttmann, Okeil). In this case the engineer is also running a business, therefore he or she may be liable for the debts of the business.

However, the firm can be set up in a different way, “On the other hand, if an engineering firm is set up as a liability-limiting entity,14 the engineer-owner will not be personally liable for the debts of the business.” (Friedland, Lttmann, Okeil) One other case would be engineers that work for the government, “This includes federally employed engineers—as Grover and Rhomberg stated, “federal engineers or any government employees who are acting within their scope of duties are virtually immune from personal liability.”” (Friedland, Lttmann, Okeil). Engineers for the most part are not held liable for damages if, they can prove that they took the necessary step such as taking enough care, due diligence, and prove that the damages were not what they intended, when designing their product or service.

There are some ways engineers can minimize liability. One of the ways an engineer can is by practicing good design. This means that an engineer can takes necessary steps to design the product in such a way so that risks and hazards the end user faces are mitigated. One of the reasons why this should be done is “When a product is involved in an incident, attorneys first look to see if the hazard could have been designed away by some reasonably economical and available technology.

This is weighed against the foreseeability, likelihood and severity of the risk” (Hardin). While in the design process an engineer one way an engineer could be to consider any and all ways a product can be misused. After finishing an analysis the company can then use the proper warnings and labels on the product. With these warning labels, the end user can be properly informed on how to use the products properly. This practice also helps minimize liability because the company can claim, that the end user used the product in a inappropriate way.

Because engineers can be held liable for the products they design, this may impact decision that an engineer makes. For example, engineers on some projects sign and seal, “By signing and sealing a document, an engineer certifies that the document was prepared under that specific individual’s responsible charge (Weiss 2008)”(Friedland, Lttmann, Okeil). If an engineer has signed off the document, this ensures that engineer have used good practice and due diligence when the plans were created under the engineer’s responsibility. The engineer would also be responsible for the plans if they are defective. However, avoiding to off on documents does not excuse or release an engineer from potential liability, “Attempting to use unsealed plans as a defense to malpractice is not an effective strategy.” (Friedland, Lttmann, Okeil). This would only show the engineer’s failure to practice the standard of care and may create additional liability as this is a violation of professional rules about signing and sealing.

One practice that has been of use in the engineering or any field for that matter is act of whistleblowing. “The term whistleblowing is believed to have originated in nineteenth century England in response to British policemen blowing their whistles to call attention to the fact that a crime was being committed.” (Purdy). Whistleblowing is basically an employee or insider that alerts the government and public of potential questionable practices that a company commits. The act of whistleblowing can be viewed as a necessary act for an engineer as the act can be viewed as putting the public’s welfare first.

One of the moral arguments with the act of whistleblowing is choosing between loyalty towards the public and loyalty to their employer. One argument is that people highlighted when looking at the ethical codes of some engineering societies, such as ASME (American Society of Mechanical Engineers). The first fundamental canon of the ASME code of ethics is “Engineers shall hold paramount the safety, health and welfare of the public in the performance of their professional duties.” (ASME Code of Ethics) It can be argued that while performing one’s engineering duties, whistleblowing would sometimes be necessary because the business practices of a company maybe putting the public’s welfare at risk therefore an engineer may have to blow the whistle.

Another argument is that employees should be loyal to their employers. Some businessmen even view whistleblowing.

One view from an article by Kenneth D Walters

“Some businessmen hold to this traditional view and strongly oppose any effort to dilute the undivided loyalty expected from employees. In 1971, James Roche, then chairman of the board of General Motors Corporation, warned against what he considered to be the insidious effects of whistle blowing:

‘Some critics are now busy eroding another support of free enterprise — the loyalty of a management team, with its unifying values of cooperative work. Some of the enemies of business now encourage an employee to be disloyal to the enterprise. They want to create suspicion and disharmony, and pry into the proprietary interests of the business. However this is labeled — industrial espionage, whistle blowing, or professional responsibility — it is another tactic for spreading disunity and creating conflict.’”

Because of this view, some people in the industry may view whistleblowing as detriment to business. People that argue against whistleblowing believe that if an employee’s loyalty is somewhere else, this creates disharmony and a lack of unity in the workplace. This creates disharmony within the workplace and this may lead to lower amounts of productivity. Also, another argument against whistleblowing is that some may believe that employees have a certain amount responsibility and loyalty to their employers, which may include a responsibility to the company’s reputation.

Even with some companies and people in industry against whistleblowing, whistleblowers have certain legal protections, “While it is true that most employees undertake to blow the whistle at their own risk, a fact that has received little notice is that employees in public organizations do have substantial legal protection in this regard. It arises from the First Amendment’s provision that government may not deny citizens freedom of speech” (Walters) One of these protections is the First Amendment, citizens are allowed to voice their opinions, this also includes, their views on their employer and its business practices.

Another piece of legislation that protects whistleblowers is the Whistleblowing Protection Act passed , “Congress passed the Whistleblowing Protection Act as a means of protecting government whistleblowers from reprisal. Most states have also passed their own whistleblowing laws as a means of uncovering behavior that violates state laws.” (Purdy). This law protects government whistleblowers from retaliation for their actions. Employees protected under this act include federal employees, former federal employees and applicants. This act also outlined the correct procedure to report wrongdoing and workplace retaliation. In more recent years, more legislation has been passed to protect whistleblowers.

Another piece of legislation that serves to help whistleblowers is the Sarbanes-Oxley Act, “Recognizing that many whistleblowers, before going public, first report unethical or illegal behavior to their superiors, who then fail to act, SOX includes provisions for making individuals who monitor behavior legally responsible for acting on information uncovered or reported to them by others.” (Purdy). This act sees the fact that before going public with information potential whistleblowers first go to their superiors. This act essentially makes the superiors legally liable for not acting or acting on the information reported to them. Another act that encourages In 2010, “Congress set up an incentive program for individuals who came forward to provide the SEC with original information about individuals or companies acting in violation of federal securities law and established protections for whistleblowers.” (Purdy). This act not only further protects whistleblowers, but it also provides incentives for people that provide information that leads to government fines.

One such example occurred in 2008

“Bradley Birkenfeld, an employee of the Swiss bank UBS AG, informed U.S. authorities about the bank’s practice of sending emissaries to the United States expressly for the purpose of helping American businesses avoid paying taxes by placing their money in Swiss banks. After serving 30 months of a 40-month prison sentence, Birkenfeld was awarded $104 million for his whistleblowing efforts. It was the largest such award in American history. The bank ultimately paid fines of $780 million and admitted to tax evasion. Americans who had been involved in the fraud paid more than $6.5 billion to the U.S. government, and charges were filed against them as well as against offshore bankers, lawyers, and advisers involved in the scheme.” (Purdy)

This example clearly shows that if a person reports information that leads to the government being able to access fines to people that practice shady business tactics. Though, Birkenfield served a prison sentence, he still received the incentive, which was 104 million dollars. It may seem that this was a lot of money. However, Birkenfield’s information lead to the United State government receiving over 7 billion dollars worth of fines. The 104 million dollars that Birkenfield receive pales in comparison to the amount of money the United States government would have lost.

Another example of whistleblowing is

“Muller v. Conlisk, a policeman discovered that other policemen had taken stolen property they had recovered in the course of their duties into their own use. He reported this fact to his superiors, waited, and saw no indication that they were investigating the charge. Finally, he appeared on a television news program and suggested that the fact he had reported was being covered up. He was fired- for making ‘derogatory comments reflecting on the image or reputation of the Chicago Police Department.’ The court ordered him reinstated on the ground that the rule prohibiting derogatory comments was ‘unconstitutionally overbroad,’ and that the First Amendment protects ‘some speech by policemen which could be considered ‘derogatory to the department’.’”

In this case, a police officer blew the whistle on his fellow officers. The policeman in question first reported the incident to his superiors. When his superiors failed to take action, he then went public with the incident. He was then terminated. However, he was later reinstated for wrongful termination. Even if an employee criticizes, the company or agency they work for, they cannot be terminated for that reason, because of the First Amendment, which allows for the freedom of speech. However, this is a case for employees that work for the government, it may be different for employees that work for private corporations.

An example of a court ruling in where a whistleblower was terminated in a private company, “in Petermann v. International Brotherhood of Teamsters an employee fired for testifying against his employer (a labor union) at a legislative hearing was found to have been unlawfully discharged. The court ruled that the firing was ‘against public policy’ even though there was no formal contract of employment.” (Walters). In this ruling it was still maintained that the employee’s view is still protected under the First Amendment. Also, termination for speaking out or testifying against an employer could also be considered an act of retaliation, therefore employees are the protected under law.

There are many actions a company can take to prevent a whole whistleblowing scandal. One of the actions companies can take is, “the organization’s own grievance procedures should be streamlined so that employees can get a direct and sympathetic hearing for issues on which they are likely to blow the whistle if their complaints are not heard quickly and fairly. Much whistle blowing occurs only because the organization is unresponsive to early warnings from its employees. A sincere commitment to an ‘open door’ policy makes much whistle blowing unnecessary.” (Walters). With a sincere, open door policy companies can hear out employees and the employees voice their concerns and complaints. If done well, employees would not feel the need to go public with their concerns.

Another action a company can take is that

“the organization should take a look at its concept of social responsibility. Too often social responsibility is seen as being limited to corporate gifts to charity parceled out by top management and the board of directors. But the organization’s interface with society is far more complex than this, and employees at all levels have a stake in the organization’s social performance. Keeping the internal channels of communication open, not only on personal issues affecting employees but also on these larger questions of corporate social policy, decreases external whistle blowing.” (Walters)

If a company keeps its social responsibility in mind, the welfare of public would probably be keep in mind as well. Therefore, employees would not feel the need to blow the whistle for the welfare of the public.

Also, organizational view that companies could take is “the organization should recognize that dealing harshly with a whistle-blowing employee could result in adverse public reaction and publicity. Respecting an employee’s right to differ with organizational policy on some matters, even if the law does not currently require it, may be in the best interests of the organization in the long run.” (Walters). A public whistleblowing incident can hurt the company’s reputation, therefore allowing employees to have a different view from a company’s view.

In a ideal world, whistleblowing incidents would never need to happen because in an ideal world companies and employees would not engage in shady business practices. However, this is the real world, sometimes whistleblowing is a necessary often last case resort. The three ideas above however can both benefit companies and employees. Employees would not feel the need to whistleblow and companies would not have a potential public scandal that could hurt the company’s reputation. Also, engineers in a company should necessary steps to prevent liability when designing products and services. With this in mind, the decision making of employees which includes engineers affects the liability their personal liability and company liability.

This shows that engineers and companies should keep this in mind when making decisions. This can help both companies and employees help each other create a more successful future.