The Potential for Viable Whistleblowing Claims Is About To Become Larger and Louder In New York

Written by Christie Del Rey-Cone

Historically, New York Labor Law Section 740 provided rather narrow protections for employees of private employers who engaged in potential whistleblower activities. However, at the end of 2021, Governor Kathy Hochul signed legislation that significantly broadened the scope of individuals and activities covered by Section 740 and those changes become effective on January 26, 2022. Employers must now take even greater care to avoid retaliation against these covered individuals.

            Who is Covered? Historically, Section 740 only applied to current employees of a private employer.  With the newest amendment, former employees, as well as independent contractors of the private employer will also have the benefit of the provision’s protections.

            What Type of Activity is Covered? The narrow nature of Section 740 was strongly grounded in the fact that, in order to be found to have engaged in a “protected activity,” an employee had to be complaining about an actual violation of the law or public policy.  The newest amendments broadens that requirement by now simply requiring that the employee have a good faith belief there has been a violation, not that there has been an actual violation.  In other words, even if the employee is wrong about the nature of the employer’s actions, he/she/they could still be protected from retaliation if there is a demonstration of good faith in the belief that he action was unlawful or against public policy.

            What Constitutes “Whistleblowing?” Section 740 previously provided that an employee must disclose the objected to activity to the employer before the issue could be brought to a public body.  This requirement, of course, allowed an employer an opportunity to remedy the issue without concern of broader implications.  As of January 26, however, an employee need not go to the employer first.  Instead, the “good faith” standard is again inserted requiring that the employee demonstrate that a good faith effort was made to notify the employer in advance of going to a public body with the concern.  Moreover, under certain circumstances where the matter is severe, could cause harm to certain individuals, the employee believes the employer already knows of the concern or the employee reasonably believes that reporting to the employer first will cause certain harm to the discovery of the activity, he/she/they need not go to the employer first at all.

            Is it Retaliation? Prior to the most recent amendment, an action taken against an employee had to be some “adverse action” impacting the terms and conditions of an employee’s employment.  The easiest examples of such an adverse action are akin to termination, suspension or demotion. With the amendment taking effect on January 26, however, it will now be a lot easier for an employee to argue that he/she/they were retaliated against. The examples the new legislation provides as what qualifies as an adverse action (e.g., an action that would adversely impact a current or former employees current or future employment) demonstrate that the standard here as loosened as well.

            What Affirmative Obligations Exist for Employers? With the new amendments, employers can no longer get away with waiting to see if their employees know of their rights under Section 740.  Now, employers must conspicuously post a notice informing employees of their protections under Section 740.

            What Now? Other than being mindful of the new posting requirement, employers must continue to do their best to follow the law, avoid reacting negatively to an employee with concerns and recognizing that truly any legal violation or perception of a legal violation on the part of the employer could make it vulnerable to a claim of retaliation from a concerned employee.

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