Auto-industry whistle-blowers could soon reap financial rewards

Senate Passes Legislation Aimed At Accelerating Discovery Of Safety Flaws

In hearing after hearing last year, members of Congress took turns admonishing auto executives and federal regulators for their roles in prolonging an ongoing series of safety crises.

Now, Congress is taking action.

While several pieces of legislation aimed at improving car safety have been introduced in the wake of the General Motors ignition-switch and Takata airbag cases, one finally gained traction earlier this week. The US Senate approved legislation that provides financial incentives for auto-industry whistle-blowers to come forward with information on defects that could endanger motorists.

Under provisions of the Motor Vehicle Safety Whistleblower Act, an employee who comes forward with information could collect as much as 30 percent of the financial sanctions levied against an automaker.

The incentives could provide millions of dollars to an employee whose knowledge leads to enforcement or fines. Earlier this year, the National Highway Traffic Safety Administration fined Honda $70 million in civil penalties for failing to submit death, injury and warranty information. A hypothetical whistle-blower in that case would have been eligible to receive a $21 million payout under the law.

Future payments under the law could actually be even larger, as NHTSA seeks to increase the maximum penalty allowed by law from $35 million to $300 million.

The bill now goes to the House for consideration.

In the senate, the legislation received bipartisan support and received unanimous consent. It was sponsored by Sen. John Thune (R-South Dakota), and had four Democratic and three Republican co-sponsors. The bill emerged in the wake of the General Motors ignition-switch defect crisis. Documents have shown company officials knew about defects in the switches as early as 2004, but didn't issue a recall to remedy the deadly problem until February 2014. At latest count, the flawed switches have led to 90 deaths.

Similarly, records showed that global supplier Takata knew about problems with airbags that explode rather than deploy normally in car accidents for years before a rolling series of recalls began. At least six drivers have died after being sprayed with shrapnel from the exploding airbag materials.

Lawmakers are hoping the legislation provides incentive for employees to come forward instead of waiting years for the next safety crisis to unravel. The legislation covers employees who work at OEMs, suppliers, dealerships and contractors, and allows them to remain unnamed in the process, but denies awards to employees convicted of criminal action in relation to the violation or contributes to the violation of motor-vehicle safety laws. The 30-percent figure is a maximum possible payout – the secretary of the Department of Transportation would have authority to make a final monetary determination.

The whistle-blower law is one of several new pieces of legislation proposed that would set stricter safety thresholds for the auto industry.

A bill sponsored by Sen. Richard Blumenthal (D-Conn.) would prohibit dealerships from selling or leasing used cars until any recall-related safety issued had been repaired. Another bill sponsored by Sen. Ed Markey (D-Mass.) would mandate that all outstanding recalls are completed before a vehicle's registration could be renewed. Both bills have been referred to a subcommittee on Commerce, Science and Transportation.

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