Automaker Whistleblower Protection Act Rewards Do-gooders, But There's A Catch

Buried deep within the recently passed highway transportation funding act is a provision to incentivize whistleblowers to speak out against automakers who design serious safety flaws in the cars that they make.

The Motor Vehicle Safety Whistleblower Act, passed in Congress earlier this year and signed into law by President Barack Obama this month as part of a larger highway transportation funding bill, is the first federal attempt at preventing catastrophic defects such as the ignition switch installed into General Motors cars that killed 124 people. This year, General Motors settled with victims and families for more than $600 million and paid federal regulators more than $900 million in fines.

The bill’s language specifically targets defects such as GM’s ignition switches, but could leave helpless whistleblowers in cases like Volkswagen’s or examples such as Ralph Nader’s outcry as part of his groundbreaking book “Unsafe At Any Speed.”

Sponsors in the Senate lauded the bill’s passage and said it could reduce the chances for further defects.

“After years of not having a multi-year transportation bill, this legislation offered an opportunity to address some safety concerns and recall problems that have been the subject of congressional oversight. I’m particularly pleased the legislation creates incentives for auto-industry whistleblowers to bring safety problems forward so that there’s a tool to quickly fix safety defects and prevent deadly accidents and injuries instead of just responding to safety violations after the fact,” Republican Sen. John Thune, who co-sponsored the whistleblower safety act, said in a statement.

Democratic Sen. Bill Nelson, who co-sponsored the bill with Sen. Thune, said the bill would bring from the shadows engineers who worked within the automobile industry.

“We’ve learned from recent events that the auto industry was not forthcoming about defective products or risks to consumers,” said Nelson. “This bill would reward insiders who become whistleblowers.”

But as part of that bill’s language, protection would only apply to auto-industry employees who speak out and would reward them with up to 30 percent of any monetary sanctions against an automaker. (For a case like GM’s, presumably that amount would be anywhere between $90 million and $270 million.)

The whistleblower protections and incentives mimic similar legislation passed for the financial industry after the recession.

However, the bill’s language doesn’t apply to whistleblowers who would speak out in a case like Volkswagen’s current diesel crisis. According to a spokesman for the Senate’s Commerce committee, the legislation only pertains to safety-related issues — environmental or emissions concerns would be separate legislation. The U.S. Senate Environmental and Public Works Committee is not considering legislation to reward or protect environmental whistleblowers.

A spokesman for the Alliance of Automobile Manufacturers, the largest lobby group for automakers in Washington DC, said the group didn’t have a position on the bill.