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By Jim Adler August 21, 2015

The U.S. Senate in April of 2015 unanimously passed the Motor Vehicle Whistleblower Act. The bill has not yet passed the House of Representatives. If and when it does pass and is signed into law, how will that impact safety recalls and the consumers who drive defective vehicles?

In part, the bill is a response to notoriously delayed auto recalls by Takata Corp. for defective airbags and General Motors for defective ignition switches. Geared to incentivize whistleblowers in the auto industry, it would enable auto employees who report concealed dangers to be paid millions of dollars for exposing such problems.

Nature of Automotive Whistleblowers

Many automakers have become known for hiding, covering up, denying and thwarting exposure of potentially dangerous defects which then kill and maim thousands of Americans. The Whistleblower Act is designed to encourage divulgence of such wrongdoings from within the industry itself in the form of “whistleblowers.” That’s a term for people who expose illegal or dishonest activities from within a public or private organization, thus “blowing the whistle” on wrongdoings.

Specifically, the Motor Vehicle Whistleblower Act is designed to help expose dangerous flaws more quickly than has been the case with defective automotive products such as exploding Takata airbags. These injured and killed many Americans before such airbags were recalled by auto manufacturers by the millions.

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

Whistleblower Rewards

Whistleblower rewards would come from the fines imposed on automakers by the federal government. In March of 2015 Toyota paid a fine of $1.2 billion for delaying recalls. From that amount, a whistleblower could have received $360 million under the new act.

Similarly, a whistleblower could have earned over $10 million had the act been in place when General Motors in 2014 paid a $35 million fine set by the National Highway Traffic Safety Administration for malfunctioning ignition switches.

In terms of assessing rewards, the law takes into account the significance of the information provided and the degree of assistance given by the whistleblower.

Original Information Required

The new act would require “original information,” meaning information about defects which wasn’t known earlier by the NHTSA, which is part of the Department of Transportation, or wasn’t derived exclusively from a public proceeding. Rather, it will be “original information” if it was derived from the whistleblower’s own independent analysis or knowledge.

The act also would take into account whether the whistleblower tried to report problems internally first, which is required unless the employee feared retaliation for reporting them. The legislation also would protect whistleblowers’ identities in most cases, and its application would include violations that arose prior to the law’s enactment.

This act was patterned after earlier whistleblower legislation encouraging persons to share information with the Securities and Exchange Commission and the Internal Revenue Service.

Safety Enhanced

If the Whistleblower Act becomes law and is applied as planned, many auto defects will be reported earlier and auto recalls and repairs will be made faster, thus enhancing the safety of millions of Americans.

If you or a loved one was harmed by a defective automobile, notify our law firm for free legal advice about a possible injury lawsuit to claim payments for your losses.

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