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New York Substantially Expands Whistleblower Protections

New York Substantially Expands Whistleblower Protections

New York Governor Kathy Hochul has signed into law expanded protections for private sector whistleblowers, among the broadest in the U.S.

The new amendments, signed on Oct. 28, 2021 and set to take effect on January 26, 2022, mark a substantial expansion of Section 740 of the New York Labor Law, which protects whistleblowing employees against retaliation.

This primarily includes:

EXPANDED DEFINITION OF “EMPLOYEE”

Under the new legislation, protected whistleblowers include former employees as well as independent contractors.

EXPANDED DEFINITION OF “LAWS”

Whistleblower protections currently only cover reporting of illegal activity that “presents a substantial and specific danger to the public health or safety.”

The new law will also protect whistleblowers if they report a violation which they “reasonably believe” violates any law, rule, or regulation, as well as lawful activity that presents a danger to public safety.

Also expanded is the definition of “law, rule, or regulation” to include executive orders, judicial rulings, and or administrative decisions.

REDUCED WHISTLEBLOWING REQUIREMENTS AND EXPANDED STATUTE OF LIMITATIONS

Currently, an employee must first report any perceived violation to the employer and provide the employer with reasonable time to take appropriate action before reporting to authorities. The exception is if a violation poses an imminent danger to public safety.

Under the new legislation, an employee need only “make a good faith effort” to inform the employer of the violation before reporting it. This effort is waived in the case of imminent public danger and if the employee believes the employer either already knows about the violation and won’t correct it, will destroy evidence, or will retaliate physically.

The statute of limitations for filing a whistleblower lawsuit is increased from one year to two, with an added right to a jury trial by either party.

EXPANDED DEFINITION OF “RETALIATION”

In addition to the “discharge, suspension or demotion of an employee, or other adverse employment action…in the terms and conditions of employment,” retaliation will now also include threats to do any of the above; any threat or action to “adversely impact a former employee’s current or future employment”; and any threat or action to report an employee or their family to immigration authorities.

EXPANDED REMEDIES

Under the existing law, an employee suing their employer for whistleblowing retaliation may be entitled to reinstatement, compensation for lost wages and/or benefits, and other forms of injunctive relief and recovery, including attorney fees and costs.

The new law allows successful plaintiffs to receive front pay instead of reinstatement, as well as punitive damages if the violation was “willful, malicious, or wanton.” It likewise allows courts to fine employers with civil penalties up to $10,000.

Conversely, employees found to have sued “without basis in law or in fact” may be liable for the employer’s attorney fees and court costs.

WHAT EMPLOYERS SHOULD DO

Given that other states with similarly expanded protections have seen a sharp rise in whistleblower litigation, New York employers should take preventive action, including:

  • Ensure up-to-date compliance with federal, state, and local laws, rules and regulations, particularly those concerning COVID-19.
  • Ensure a clear and effective internal reporting process for employee complaints, including review and remedial action.
  • Provide managerial training and materials regarding the new legal protections.
  • Post an up-to-date notice of employee rights in “conspicuously in easily accessible and well-lighted places customarily frequented by employees and applicants.” (The NYS Department of Labor is expected to issue an updated notice by Jan. 26.)

     

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