January 25, 2022

New Whistleblower Policy: A New York State Labor Law Update

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Key Takeaways

  • Whether you are a small or large employer, you now have to have a Whistleblower Policy. Under Section 715-b of New York’s Not-for-Profit Corporation Law (“N-PCL”), only organizations with 20 or more employees and over $1 million in revenue needed to have a whistleblower policy. That is no longer the case.

Whether you are a small or large employer, you now have to have a Whistleblower Policy. Under Section 715-b of New York's Not-for-Profit Corporation Law ("N-PCL"), only organizations with 20 or more employees and over $1 million in revenue needed to have a whistleblower policy. That is no longer the case. Recent amendments to Section 740 of New State Labor Law (the "New Law") which are effective January 26, 2022, require that all employers having at least one employee must have a whistleblower policy.

There are also significant differences between N-PCL 715-b and the New Law and, therefore, you will need to revise your existing policy (if you have one) to be compliant with both laws. Briefly, these are:

  • The New Law applies to not just current employees, but also former employees as well as independent contractors.
  • Under the N-PCL, compliance allowed you to post your whistleblower policy on the website. The New Law requires you to post information conspicuously in an easily accessible and well-lighted place customarily frequented by employees and applicants for employment.
  • The New Law has expanded prohibited retaliation to encompass certain types of adverse actions that were not commonly envisioned by existing policies, such as contacting U.S. immigration authorities regarding an employee's immigration status. It appears that the legislature was sensitive to complaints from workers, unions, and advocates that during COVID, individuals feared or experienced retaliation for speaking up about unsafe working conditions, especially in the beginning of the pandemic.
  • The New Law now protects employees who make reports whenever they "reasonably believe" there is a violation, whereas N-PCL Section 715-b requires protection where there is a "good faith" report of a violation. Policies should be updated carefully to include both terms in ways that do not result in a violation of either requirement.
  • One of the most important employer defenses to these claims that have been used in the past is that the employee did not make the required disclosure to the employer of the allegedly unlawful or dangerous activities to allow the employer to correct the issue (or that the employee did disclose, and the employer did correct it), has been hollowed out. The amendments provide that the employee will not have an obligation to disclose and allow the employer to address the issue when (1) there is an imminent and serious danger to public health and safety; (2) the employee reasonably believes that the result of disclosure would be destruction of evidence or concealment of activity; (3) there is a reasonable expectation of activity that could lead to endangering the welfare of a minor; (4) the employee reasonably believes disclosing would result in physical harm to the employee or another person; or (5) the employee reasonably believes a supervisor is already aware and will not correct the problem.
  • The New Law has been broadened to cover all laws, regulations, local ordinances, executive orders, and judicial and administrative decisions, rulings, and orders. Policies should therefore be expanded as needed.
  • The New Law is also procedurally more favorable to plaintiffs. The time limit to bring claims is extended from one year to two years and plaintiffs will now be entitled to a jury trial. In addition to remedies including injunctive relief, reinstatement to the same or equivalent position, reinstatement of full fringe benefits and seniority rights, back pay and other compensatory damages, and attorney's fees and costs, a plaintiff may also be awarded front pay in lieu of reinstatement, a civil penalty of up to $10,000, and/or punitive damages for a "willful, malicious or wanton" violation.

In short, if you don't have a whistleblower policy, you now need one. And, if you do have one, you will need to revise it to comply with the New Law.

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