New York Strengthens Whistleblower Protections

Among other things, the definition of “employee” in Labor Law 740 now includes former employees and independent contractors. Thus, giving a poor reference to an ex-employee could support a charge of retaliation. The statute of limitations has also been extended from one to two years. In addition to injunctive relief, reinstatement, back pay and attorney’s fees, the law now entitles plaintiffs to jury trials and recovery of front pay and punitive damages.

Under the revised law, a retaliatory action is no longer limited to actual adverse employment actions (for example, discharges, suspensions or demotions), but also any “actions or threats to take such action that would adversely impact a former employee’s current or future employment.”

The biggest change to New York’s whistleblower protections is expansion of the definition of what constitutes protected activity. Previously, an employee engaged in protected activity when he disclosed or threatened to disclose to a supervisor or a public body an activity, policy or practice of the employer that was in violation of law, rule or regulation which violation created and presented a substantial danger to the public health or safety, or which constituted health care fraud. Under the revised law, the employee is engaging in protected activity if he “reasonably believes” that the employer is violating a law, rule or regulation.

Additionally, the law previously required an employee to first bring the violation to the attention of his supervisor and afford the employer a reasonable opportunity to correct such activity, policy or practice. The statute now carves out numerous exceptions to this requirement, including the case where the employee “reasonably believes that the supervisor is already aware of the activity, policy or practice and will not correct such activity, policy or practice.” Finally, if they have not already done so, New York employers are required to post a notice informing employees of their protections, rights and obligations under the new law.

In addition to posting the required notice, there are a number of things that employers can do to protect themselves from whistleblower claims. First and foremost, every employer (even those outside New York) should have strong reporting and anti-retaliation policies in place that give employees multiple avenues for reporting concerns that they might have. Whenever concerns or complaints are received they should be investigated promptly. Managers and supervisors should also be trained on how to respond to complaints from employees and contractors, and how to reduce the risk that their response to complaints will be viewed as retaliatory. Managers and supervisors should also be urged to let human resources know when they receive complaints, even complaints that they believe may be frivolous or without merit.