Hunton Employment & Labor Perspectives

New York Governor Kathy Hochul has signed S.B. 4394, an amendment of Section 740 to the New York Labor Law that dramatically expands safeguards against employer whistleblower retaliation. The new law expands protected activity that entitles an employee to whistleblower protection, the categories of covered workers protected by the statute, and the definition of prohibited retaliatory actions, among other changes.  The new law takes effect on January 26, 2022. Some of the key provisions that New York employers should carefully review are listed below.

Scope of Protected Activity

Whereas Section 740 presently only protects those employees who report violations of law that create and present a substantial and specific danger to the public health or safety, the new law provides that protected activity can relate to any practices or activities that the employee “reasonably believes” (i) violate any law, rule, or regulation; or (ii) pose a substantial and specific danger to public health or safety.

Covered Retaliatory Conduct

Under the current statute, retaliatory conduct is limited to “discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment.” The new law expands retaliatory conduct to include: (i) actual or threatened adverse employment actions, including discharge, suspension, or demotion, related to the terms and conditions of employment; (ii) actions or threats that would “adversely impact a former employee’s current or future employment;” and (iii) the actual or threatened contacting of immigration authorities or reporting the immigration status of employees or their family members.

Covered Employees

Whereas, under the current statute, an “employee” is defined as “an individual who performs services for and under the control and direction of an employer for wages or other remuneration,” the new law explicitly includes former employees and independent contractors.

Notice Requirement

The current statute requires that employees bring the alleged violation to the attention of the employer and afford the employer a reasonable opportunity to correct such violation before disclosing to a public body. The new law only requires employees to make a “good faith” effort to notify their employer before disclosing to a public body. In addition, employer notification will not be required if (i) there is imminent and serious danger to public health or safety; (ii) the employee reasonably believes that reporting to the employer would result in a destruction of evidence or other concealment of the violation; (iii) the alleged violation could reasonably be expected to lead to endangering the welfare of a minor; (iv) the employee reasonably believes that reporting would result in physical harm to the employee or any other person; or (v) the employee reasonably believes the employer is already aware of the violative activity and will not correct it.

Expanded Statute of Limitations

The statute of limitations for filing a claim under the statute is extended from one year to two years.

Remedies

Under the current statute, remedies are limited to (i) injunctive relief; (ii) reinstatement; (iii) compensation for lost wages, benefits, and other remuneration; and (iv) reasonable costs, disbursements, and attorneys’ fees. The new law adds additional remedies consisting of front pay in lieu of reinstatement, a civil penalty of up to $10,000, and punitive damages.

Actions for Employers

Given the expanded scope of whistleblower protections in New York, employers should (i) review/update management training to be sure it includes how to respond to reported violations of law; (ii) post conspicuous notices of employees’ rights under the new law (which is also required by the new law in addition to the aforementioned amendments); and (iii) contact counsel when presented with reported violations of law by employees.