Written By Harinder S. Basra, John C. Batzel, Kahlan K. Mills, Mark S. Powell and Joel Wiens
On November 19, 2018, as part of the Alberta Securities Commission's (the "ASC") new whistleblower program, the Securities Amendment Act (the "Amendments") came into force and amended the Securities Act (Alberta) (the "Act"). The primary purpose of the Amendments is to encourage employees to report potential breaches of Alberta securities law to the ASC and to protect them when doing so. The Amendments strengthen confidentiality, prohibit reprisals and provide a civil right of action for whistleblowers in the event a reprisal occurs.
The New Whistleblower Program
1. What is a whistleblower?
The Amendments define a "whistleblower" as an employee who voluntarily discloses information to the ASC regarding an alleged contravention of Alberta securities laws by his or her employer (or by a fellow employee). An "employee" includes full-time and part-time employees, directors and independent contractors as well as full-time and part-time employees and directors of affiliates.
2. How are whistleblowers protected?
The Amendments require the whistleblower's identity, as well as any information or record that might reasonably be expected to reveal the whistleblower's identity, to remain confidential unless:
a) the Executive Director of the ASC and the whistleblower consent to disclosure;
b) the ASC determines disclosure is necessary to show that a person or company subject to a hearing has not contravened Alberta securities laws;
c) a judge of the provincial court presiding over a trial involving an offence under the Act determines disclosure is necessary to show that an accused person or company has not committed the offence(s) in question; or
d) the executive director has reasonable grounds to believe that the whistleblower has committed an offence under the Act or the Criminal Code (Canada) related to the disclosed information.
Notwithstanding the above, the Amendments provide that a whistleblower may be compelled to testify at a hearing or trial.
Furthermore, the person, company or co-worker subject to the whistleblower's disclosure is prohibited from engaging in reprisals against the whistleblower. This protection also covers situations where employees express an intention to whistleblow or are co-operating with the ASC. "Reprisal" is defined to include any measure or conduct (or threat) that "adversely and materially affects employment or working conditions" of the whistleblower (e.g., dismissal, demotion, transfer, reduction in pay, change in hours, reprimand). The prohibition extends to reprisals against an employee whose relative acts as a whistleblower.
However, the prohibition on reprisals will not apply where the employee or their relative "did not reasonably believe the information respecting alleged wrongdoing" at the time of whistleblowing.
The ASC has the power to investigate any reprisals taken by an employer and may issue administrative penalties of up to $1 million. In certain cases, the ASC may prosecute reprisals in Court and seek fines of up to $5 million along with terms of imprisonment.
3. Additional restrictions on employers
An employer cannot prohibit, by way of contract or policy, an employee from whistleblowing to the ASC. Nor can an employer obstruct an employee from disclosing information to the ASC, seeking advice about disclosure from the ASC or co-operating with an ASC investigation or proceeding under the Act. This prohibition extends to the enforcement of confidentiality agreements by employers, meaning a confidentiality provision will be void to the extent it seeks to prevent a whistleblower's disclosure or cooperation with the ASC.
4. Immunity for whistleblowers
An employee will not be liable for whistleblowing unless:
a) the employee did not reasonably believe the information respecting the alleged wrongdoing at the time of whistleblowing; or
b) the employee engaged in the wrongdoing he or she reported.
5. Civil liability for reprisals
A whistleblower subject to a reprisal has a right of action against its employer and any other employee "who took or directed the reprisal." The Amendments require the whistleblower to prove (i) that the reprisal did in fact occur and (ii) that they were a whistleblower at the time of the reprisal. Importantly, the whistleblower need not prove that the reprisal was caused by the act of whistleblowing.
An employer can successfully avoid liability in two ways:
a) by proving that the alleged reprisal was unconnected to the employee's act of whistleblowing; or
b) by proving that the employee, when acting as whistleblower, did not reasonably believe the information respecting alleged wrongdoing.
The amount of damages depend on the nature of the reprisal. If the employee was terminated or suspended, had their pay decreased or was denied a benefit with a monetary value, the liable company must pay up to two times the amount that would have been owed to the employee in the time between the reprisal and the determination of damages. Reprisals of a non-monetary nature will be reversed, if practicable, and the employee is entitled to an amount up to their total remuneration earned between the date of reprisal and the date that damages are determined.
Implications for Companies
Companies should be particularly mindful of the relatively weak burden of proof whistleblowers face when seeking damages for reprisals. The onus is on the defendant employer to show that any sanctions placed on an employee were independent of that employee's status as a whistleblower. To help meet this onus, employers should set out clear procedures for dealing with whistleblowers and document decision-making as well as employee performance issues to provide a basis for discipline or dismissal.
Companies should also ensure supervisors and human resources team members are aware of the prohibitions against reprisals. Discipline and whistleblower policies should be updated to be consistent with the new whistleblower regime and clearly communicate that reprisals for whistleblowing will not occur.
Lastly, it should be kept in mind that the new whistleblower protections concern disclosures of information to the ASC. The disclosure of information to other third parties besides the ASC (for example, the media) is not protected by these provisions, and employees who engage in such disclosures may be subject to disciplinary action under the employers' confidential information policies or agreements.
Our lawyers have considered the implications of the new whistleblower program on the relationship between companies and their employees. Please contact us to discuss how the changes impact your business.