Attention New York Employers: What to Know About New York’s Expanded “Whistleblower” Law

Written by: Joseph A. Keane, Esq.

On January 26, 2022, New York’s expanded “whistleblower” law goes into effect.  The amendments to Section 740 of the New York Labor Law will increase the categories of covered workers protected by the statute,  add protected activities that entitle an employee to whistleblower protection, enhance worker protection by broadening the definition of prohibited retaliatory actions, and require a new workplace posting about the law, amongst other changes.

Who Can Make a Whistleblowing Retaliation Claim?

The new law includes former employees and independent contractors. The current law defines an “employee” as “an individual who performs services for and under the control and direction of an employer for wages or other remuneration.” Accordingly, current employment will no longer be required to file a whistleblowing retaliation claim against an employer.

What is the Scope of Protected Activity?

Under the new law, protected activity can relate to any practices or activities that the employee “reasonably believes” (i) violate any law, rule, or regulation; or (ii) pose a substantial and specific danger to public health or safety, thus creating two separate whistleblowing protections. Section 740 currently only protects those employees who report violations of law that create and present a substantial and specific danger to the public health or safety, or which constitutes health care fraud.

No longer must an employee be aware of an actual violation. Now, a reasonable belief in a violation will invoke “whistleblower” status. Further, the law has been significantly expanded by creating two separate protected activities and eliminating the public health and safety or healthcare fraud requirement. Therefore, employers will face potential whistleblowing claims that were previously unavailable under the statute, such as fraud or other financial improprieties.

What is Considered Retaliatory Conduct?

The new law significantly expands prohibited retaliatory conduct. It will include: (i) actual or threatened adverse employment actions, including discharge, suspension, or demotion, related to the terms and conditions of employment; (ii) actions or threats that would “adversely impact a former employee’s current or future employment;” and (iii) the actual or threatened contacting of immigration authorities or reporting the immigration status of employees or their family members. Under the current statute, retaliatory conduct is limited to “discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment.” Employers now must be aware that any perceived threat to an employee who engages in a protected activity can be considered retaliatory conduct.

Are Employees Required to First Notify Their Employer of A Perceived Wrongdoing?

The new law only requires employees to make a “good faith” effort to notify their employer before disclosing to a public body. Further, notification is not required if an employee reasonably believes that (i) there is imminent and serious danger to public health or safety; (ii) reporting to the employer would result in a destruction of evidence or other concealment of the violation; (iii) the alleged violation could reasonably be expected to lead to endangering the welfare of a minor; (iv) reporting would result in physical harm to the employee or any other person; or (v) the employer is already aware of the violative activity and will not correct it. Currently, employees are required to bring the alleged violation to the attention of the employer and provide the employer a reasonable opportunity to correct such violation before disclosing to a public body.

Did the Statute of Limitations Change?

The new statute of limitations for filing a whistleblowing retaliation claim is extended from one year to two years.

Are There Additional Penalties for Employers? Remedies for Employees?

The new law adds the remedies of front pay in lieu of reinstatement, a civil penalty of up to $10,000, and punitive damages. Under the current statute, employees are limited to (i) injunctive relief; (ii) reinstatement; (iii) compensation for lost wages, benefits, and other remuneration; and (iv) reasonable costs, disbursements, and attorneys’ fees.

What is the New Workplace Posting Requirement for Employers?

The law now requires employers to post a notice in the workplace that informs employees of their protections, rights, and obligations under the whistleblowing law. Specifically, the notice must be posted “conspicuously in easily accessible and well-lighted places customarily frequented by employees and applicants for employment.” The New York Department of Labor will likely publish a model policy in advance of January 26, 2022.

How Should Employers Prepare?

With the expansion of employee whistleblower protections in New York, employers must update policies and procedures to conform with the new law. Employers should (i) review/update management training for best practices in responding to reported violations of law; (ii) post conspicuous notices of employees’ rights under the new law; (iii) update Handbooks to reflect the expanded protected activity; and (iv) contact counsel when presented with reported violations of law by employees.

Hall Booth Smith, P.C.’s labor and employment attorneys are available to answer any questions you may have on this or other employment law issues.

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