On January 26, 2022, New York joined a growing list of states with expansive whistleblower protection laws by amending Section 740 of the New York Labor Law (“Section 740”). The amendments expand the scope of protected activity for employees and independent contractors, double the length of the statute of limitations, impose notice requirements on employers, broaden the definition of prohibited retaliatory action and the categories of protected workers, and provide for expanded damages and penalties for violations.
Notable Changes to the Law
The amended Section 740 now protects not only current employees but also former employees and independent contractors. These workers can now bring claims for any actual or threatened action that would “adversely impact a former employee’s current or future employment.” Previously, such claims were limited to current employees who could bring an action only for a “discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment.”
Protected workers now have two years to bring claims under Section 740 instead of one year under the previous version of the law. Available forms of relief to aggrieved workers have also been expanded to include not only injunctive relief, but also reinstatement to their position, benefits and seniority rights, compensation for lost payments and benefits and payment by the employer of reasonable costs and attorney fees. In addition, under the amendments, plaintiffs can seek a jury trial and sue for front pay, civil penalties of up to $10,000 and punitive damages.
One small relief to employers provides that if a court finds that a Section740 retaliation claim was brought “without basis in law or in fact,” the employer may be awarded reasonable attorneys’ fees and costs.
The biggest change is the expanded scope of protected activity covered under the law. Previously, Section 740 only protected employees who had objected to or refused to participate in or had disclosed or threatened to disclose to a supervisor or a public body, an unlawful activity, policy or practice that “creates and presents substantial and specific danger to the public health or safety, or which constitutes health care fraud.”
Now, Section740 prohibits retaliation against protected workers because they:
• disclosed, or threatened to disclose to a supervisor or to a public body an activity, policy or practice of the employer that they reasonably believed is in violation of law, rule or regulation or that they reasonably believed poses a substantial and specific danger to the public health or safety; or
• provided information to, or testified before, any public body conducting an investigation, hearing or inquiry into such activity, policy or practice by such employer; or
• objected to, or refused to participate in any allegedly unlawful activity, policy or practice.
Prior to the new amendments, the law required that employees give their employers a reasonable opportunity to correct any alleged violation by first reporting it internally, before disclosing alleged violations to a public body. Now, employees are simply required to make a “good faith” effort to first notify their employer before going to a public body.
Moreover, employer notification is not required at all for protection under the amended law if the employee reasonably believes:
• that reporting alleged wrongdoing to their employer will result in the destruction of evidence; or
• that their supervisor is already aware of the practice and will not correct it; or
• there is an imminent and serious danger to the public health or safety; or
• such activity, policy, or practice could reasonably be expected to lead to endangering the welfare of a minor; or
• reporting to the supervisor would result in physical harm to the employee or any other person
Practical Steps to Take Now
Employers must conspicuously post a notice of the whistleblower protections under Section 740 in “easily accessible and well-lighted places customarily frequented by employees and applicants for employment.” As of this writing, the Department of Labor has not published such a notice.
Faced with such broadly expanded potential liability, businesses should take the following steps to protect themselves from such claims:
• monitor the Department of Labor website for the official employee notice poster when it is released;
• review the business’s policies to ensure clarity and inclusion of specific procedures and contact information for internal reporting;
• thoroughly document all complaints received and responsive action taken ;
• prepare and train management and human resources personnel regarding updates and changes to the law, including how to respond appropriately and quickly to complaints and when to escalate them;
• assess whether claims asserted under the new Section 740 are covered by their existing Employment Practices Liability Insurance policy.
The attorneys in Kane Kessler’s Labor & Employment Practice Group are available to help companies address compliance issues and navigate the amendments to Section 740. If you have any questions, please contact the Co-Chairs of Kane Kessler’s Labor & Employment Practice Group, Valerie K. Ferrier at 212 519-5107, firstname.lastname@example.org, or Jeffrey G. Douglas at 212 519-5183, email@example.com.