New York labor law changes expand whistleblower protections

New York Governor Kathy Hochul recently signed legislation which expands one of the state’s whistleblower laws with significant revisions (“amendments”) to New York Labor Law § 740 (“Section 740”). The amendments increase coverage for workers who allege they have been retaliated against for reporting alleged employer wrongdoing. Coming into force on January 26, 2022, the amendments expand the scope of protections for private sector whistleblowers[1] expanding whistleblower protections beyond the scope of health care fraud and health and safety reporting. The amendments also expand the pool of people protected by Section 740, among other changes.

Who can claim protection under the amended law?

The amendments make it easier for individuals to file a reprisal complaint under section 740.

Current job no longer required

Section 740 prohibits retaliatory action by employers against an employee who engages in any activity related to the reporting of the employer’s violation(s) of law or regulation. The amendments expand the definition of “employee” under section 740 to include old employees as well as independent contractors who “perform work in the commercial enterprise of an employer and who are not themselves employers”. Previously, the definition was limited to persons who perform services “on behalf of and under the control and direction of an employer for salary or other remuneration”, which meant that only current employees could sue under of Section 740. In addition, the statute expressly provided in Section 4(c) that if a plaintiff was an independent contractor, this would be a defense to an action brought under Section 740. The Amendments delete this sentence from the provision.

Whether former employees can sue for whistleblower retaliation is a national hot topic. Last year, the United States Court of Appeals for the Sixth Circuit ruled that former employees could pursue such claims, creating a spit in the circuits, as the United States Court of Appeals for the Tenth Circuit had previously ruled that former employees can not pursue claims of retaliation. The U.S. Supreme Court could take up the matter, pending its decision on a motion challenging the Sixth Circuit’s ruling.

No health and safety or healthcare fraud restrictions

The law previously limited protection to claims where the employer was “in violation of any law, rule or regulation, the violation of which creates and presents a substantial and specific danger to public health or safety or which constitutes health care fraud”. First, the amendments remove the reference to health care fraud. Second, and more importantly, the amendments remove the requirement that protected whistleblowing activity must relate to public health or public safety. Instead, the amendments create two separate whistleblower protections – for a reasonable belief that (i) a violation of law, rule or regulation has occurred, Where (ii) there is a substantial and specific danger to public health or safety. In other words, whistleblowing no longer needs to relate to public health and safety or health care fraud, but broadly applies to any potential violation of law, rule, or regulations. This could give rise to claims previously unavailable under this law, including claims of fraud and other financial irregularities.

No law is broken? Information may be based on a “reasonable belief”

In addition, to be protected by law, an applicant will no longer need to disclose or threaten to disclose a real violation of any law, rule or regulation. This wording was removed, instead allowing a claimant to invoke “whistleblower” status by showing that the basis of the allegations was a reasonable belief that the employer had committed an offence. Thus, the ability of an employer to prove that in fact no violation or offense occurred will no longer serve as an effective affirmative defense to a retaliation action under Section 740.

No adverse employment event? Other actions may qualify as retaliation

The amendments also change the wording of the law to significantly broaden its definition of unlawful “retaliatory action” by an employer. The meaning of retaliation will no longer be limited to actions of personnel in the context of employment by the employer. While adverse employment actions against a whistleblower remain illegal, the amendments expand the meaning of illegal retaliatory action. The expanded definition includes allegations of discrimination for exercising rights under the Amendments, actions or threats to take actions affecting current or future employment, and contacting or threatening to contact U.S. law enforcement officials. immigration or reporting or threatening to report the suspected immigration or citizenship status of a whistleblower or a member of a whistleblower’s family or household. So while termination, suspension, demotion, and other such actions remain actionable, other actions by the employer, including threats, can be considered retaliatory.

Extended whistleblower protections

Protected activity developed

Qualifying protected activity now includes alleged violations of executive orders and any judicial or administrative decision, decision or order, in the new definition of “law, rule or regulation”.

Modified notification rules: fewer obligations for whistleblowers, more for employers

The additions to article 740, as well as Labor law § 741, which applies to whistleblowing in the context of health care employment, includes new notice posting requirements. The amendments require employers to inform workers (including independent contractors) of their protections, rights and obligations under employment law by prominently posting a notice in an easily accessible and well-lit location usually frequented by employees. and job applicants.

Although the amendments create more tasks for employers, they ease the obligations of those who would make a claim under Section 740. Previously, whistleblowers had to give employers notice and redress. Employees were required to bring the activity, policy or practice that was the subject of the disclosure to the attention of a supervisor of the employer and to give the employer a reasonable opportunity to correct such activity, policy or practice before disclosing it to the public. body. Thus, employers had a defense against allegations of retaliation from whistleblowers who reported suspected wrongdoing to a public body, but not to their employer.

Under the amendments, while whistleblowers generally must always make a “good faith effort” regarding such employer notification, employer notification is not required where:

  • there is an imminent and serious danger to public health or safety;

  • the whistleblower has reasonable grounds to believe that reporting to the supervisor would result in the destruction of evidence or other concealment of the activity, policy or practice;

  • such activity, policy or practice could reasonably be expected to endanger the welfare of a minor;

  • the employee has reasonable grounds to believe that reporting to the supervisor would result in physical injury to the employee or any other person; 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.

Increased risk of litigation

Longer statute of limitations

The amendments extend the statute of limitations for civil actions under Section 740 to two years from one year. Parties also now have an express right to a jury trial in a civil action alleging violations of Section 740.

Extended Remedies

The amendments state that additional penalties are now available to plaintiffs who successfully prove a violation of Section 740. In addition to the compensatory damages and attorneys’ fees already available, the new remedies include prepayment instead reinstatement, a civil penalty of up to $10,000, and punitive damages where the violation was willful, malicious, or gratuitous.

What New York Employers Should Do Now

  • Review any applicable whistleblower or “speak up” policies to verify compliance with the changes.

  • Seriously consider training frontline managers on the ever-evolving questions of what constitutes “protected activity” and “undesirable action.” We have found that front line managers often receive the majority of complaints from whistleblowers, so it is essential that they understand and are trained on the important role they must play in properly addressing these issues (including not not allow ostracism within their department by co-workers).

  • Review any notification or complaint procedures to ensure an effective response in the event that individuals disclose an activity, policy or practice reasonably suspected of violating any law, rule or regulation.

  • Document compliance efforts, including communications with employees and independent contractors. Although compliance is no longer a defense to an allegation of retaliation, evidence of compliance and its disclosure may prove useful in disproving that a complainant’s belief that a violation occurred was “reasonable “. This may be particularly important after the effective date of the amendments (January 26, 2022), when individuals will no longer have to notify the employer if they meet the exceptions described above.

  • Note that health and safety complaints related to COVID-19 may qualify for the exception regarding imminent and serious danger to public health or safety.

  • Prepare to comply with notice posting requirements under Sections 740 (applicable to private employers generally) and 741 (specific to healthcare workplaces).


[1] In general, whistleblowing in the context of New York State public sector employment is covered by New York Public Service Law § 75-b, which is not affected by this legislation.

©2022 Epstein Becker & Green, PC All rights reserved.National Law Review, Volume XI, Number 323