New York State’s Expanded Whistleblower Statute

It took 37 years, but the New York Legislature amended the New York State Whistleblower Law, Labor Law 740, effective January 26, 2022. A flawed law that once offered little protection from retaliation for employees complaining about unlawful and unsafe conduct[1] is now one of the most robust in the country.

The former version of Labor Law 740 protected employees from retaliation for reporting an employer’s activity, policy or practice that is 1) “a violation of law, rule, and regulation”; and 2) creates and presents a “substantial and specific danger to the public health or safety.” The limitations of the old law were evident: it was not enough for an employee to report an employer’s violation of law to be protected from retaliation. The violation must have been of a kind that created a substantial public health or safety danger. See, e.g., Remba v. Federation Employment & Guidance Serv., 545 N.Y.S.2d 140 (dismissing whistleblower action where employee’s complaint about employer’s fraudulent billing practices did not concern a substantial and specific danger to public health and safety). In addition, for a claim to survive under the earlier version of Labor Law 740, there had to be an actual violation of law; an employee’s good faith belief of unlawful conduct was insufficient. See, e.g., Kern v. DePaul Mental Health Serv., 529 N.Y.S.2d 265, 268 (Sup. Ct. 1988), aff’d, 152 A.D.2d 957 (4^th Dept. 1989), appeal denied, 74 N.Y.2d 615 (1989) (action dismissed where aide at a residence for individuals with mental disabilities reported a male resident engaging in rape-like nonconsensual intercourse because the mere “belief on the part of the employee that a violation has occurred is not sufficient to invoke the statute’s protection”).

The Legislature recognized these and other deficiencies in the original Labor Law 740 and greatly expanded the statute’s reach. The following are the most important changes made in the newly amended Whistleblower Act:

• “Reasonably believes”: An employee is now protected from retaliation for reporting what he or she “reasonably believes” is a violation of law; an actual violation is no longer required. NYLL 740(2).
• Reporting conduct which the employee reasonably believes is a “substantial and specific danger to the public health and safety” triggers protection from retaliation, regardless of whether the conduct is illegal. Thus, under the amended Labor Law 740, Ms. Remba’s report of the employer’s fraudulent and illegal billing practices would be protected activity even though they did not implicate a danger to public health and safety. NYLL 740(2).
• “Independent contractors,” and not just “employees,” are covered by the amended Whistleblower Act. NYLL 740(1).
• Labor Law 740’s definition of “law, rule or regulation” has been expanded to include “executive orders and judicial or administrative decisions, rulings, and orders.” NYLL 740(1)(c).
• Employees are protected under the amended statute whether or not their whistleblowing activity was within the scope of their job duties. NYLL 740(2).
• The definition of employer retaliation is expanded: In addition to discharge, suspension, demotion, or other adverse employment in terms and conditions of employment, “retaliatory action” includes any form of discrimination, threats, threatening to contact immigration authorities, and actions against former employees. NYLL 740(1)(E).
• Statute of limitations: The statute of limitations has been extended from one to two years. NYLL 740(4)(a).
• Jury trial: The amended Labor Law 740 provides the right to trial by jury.
• The amended statute requires the employer to conspicuously post in the workplace the rights of employees under Labor Law 740.
• Reporting to supervisors: The prior version of Labor Law 740 only protected an employee who disclosed the employer’s “activity, policy or practice to a ‘public body’ if the employee had first brought the suspected practice to the attention of a supervisor, and given the employer ‘a reasonable opportunity to correct such activity, policy or practice.’” Notifying a supervisor before reporting to a public body is no longer an absolute requirement under the amended Labor Law 740; a “good faith effort” to do so is now sufficient. However, the law still requires an employee to afford the employer “a reasonable opportunity to correct such activity, policy or practice” before disclosing the practice to a public body. NYLL 740(3).
  • However, the amendment establishes five exceptions to the requirement of first giving the employer an opportunity to correct the allegedly unlawful conduct:

• • • There is an imminent and serious danger to the public health or safety;
    • The whistleblower reasonably believes reporting the issue to a supervisor would result in the destruction of evidence or concealment;
    • The conduct reasonably could be expected to endanger the welfare of a minor;
    • The whistleblower reasonably believes reporting the issue to a supervisor would result in physical harm to the whistleblower or others; or
    • The whistleblower reasonably believes a supervisor is already aware of the issue and will not correct it.
• Definition of “public body” is expanded: As noted, an employee is protected when making a disclosure to a “public body,” defined under the original law as federal, state, or local legislatures, courts, agencies, or law enforcement/prosecutors. The amended Labor Law 740 expands the definition of “public body” to include: “any federal, state or local department of an executive branch of government;” and “any division, board, bureau, office, committee or commission” of federal state, or local legislatures, courts, agencies, or law enforcement/prosecutors.”
• Expansion of remedies: Whereas previously the Whistleblower Law entitled a prevailing employee to reinstatement, the new law adds remedies of a civil penalty up to $10,000 and/or punitive damages if the violation was “willful, malicious, or wanton.” NYLL 750(5)(f) and (g).

With these amendments, New York’s Whistleblower Act, a once moribund statute offering little protection for employees, promises to lead to the discovery of unlawful and unsafe conduct within the workplace and protect whistleblowers willing to disclose such conduct to their employers and public authorities.

This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Attorney John A. Beranbaum who counsels clients on employment law, litigation, arbitration, negotiation, and trial advocacy. Mr. Beranbaum is admitted to practice law in New York and New Jersey and before the U.S. Supreme Court, U.S. Court of Appeals from the Second and Third Circuits, U.S. District Court for Southern and Eastern Districts of New York, District of New Jersey, Eastern District of Pennsylvania and the Northern District of Florida.

[1] As far back as 1987, the New York State Commission on Government Integrity found New York’s Whistleblower Law inadequate for offering protection to employees reporting dishonest and dangerous conduct . See Feerick, J., “Toward a Model Whistleblowing Law,” 19 Fordham Urb. L. J. 585 (1992).