New York Governor Kathy Hochul recently signed S.B. 4394, an amendment of Section 740 of the New York Labor Law that amounts to a significant expansion of safeguards for whistleblowers. Effective January 26, 2022, the new law broadens the definition of retaliation, creates new notice and reporting requirements, extends certain protections to former employees and independent contractors, and increases potential damages, among other things discussed in greater detail below.

Who is an “Employee” Under the New Law?

Formerly, whistleblower protections were only extended to those “who perform[ ] services for and under the control and direction of an employer for wages or other remuneration,” as that was the definition of “employee.” However, under the amended law, the range of people protected from retaliation includes current and former employees as well as independent contractors.

What Kind of Activity is Protected Under the New Law?

Under the old law, employees were only protected when reporting a violation that created a substantial and specific danger to public health or safety. By contrast, the amended law protects those who disclose or threaten to disclose anything relating to practices and activities that the employee “reasonably believes” (1) violate a law rule, or regulation, or (2) pose a substantial and specific danger to public health or safety. The employee is also protected if he provides information to or testified before a public body, or objects or refuses to participate in the subject policy or practice.

What Constitutes Retaliation Under the New Law?

Under the old law, the definition of retaliatory conduct was limited to the discharge, suspension or demotion of an employee, or other adverse employment action. Now, the law also protects against actual or threatened adverse employment actions, including (1) the above-described conduct, (2)  conduct that would adversely impact a former employee’s current or future employment; and (3) the contacting of immigration authorities or reporting the immigration status of employees or their family members.

How Have the Reporting Requirements Changed?

Under the old law, employees had to report any violations to their employer first, before disclosing it to a public body. This was intended to give the employer a reasonable opportunity to correct the alleged violation. The amended law, however, requires only that employees make a “good faith” effort to notify their employer first. Further, the employee can entirely bypass that step, and go straight to public disclosure if the employee reasonably believes: (1) that there is imminent and serious danger to public health or safety; (2) that reporting the alleged wrongdoing to their employer will result in the destruction of evidence, concealment, or harm to the employee; or (3) that his supervisor already knows of the violation and will not correct it.

What Else Has Changed?

Under the old law, a plaintiff could seek (1) injunctive relief; (2) reinstatement; (3) compensation for lost wages, benefits, and other remuneration; and (4) reasonable costs, disbursements, and attorneys’ fees. The law now allows for a jury trial and permits, in addition to existing remedies, front pay in lieu of reinstatement, the recovery of up to $10,000 and punitive damages. If the plaintiff prevails, he may be entitled to injunctive relief, reinstatement, compensation for lost wages, benefits, and other remuneration, and reasonable costs, disbursements, and attorneys’ fees. Importantly, the amended law also expands the statute of limitations from one to two years. However, it is also of note that, if the court finds that a retaliation claim was brought without basis in law or fact, the employer may now be awarded reasonable costs and attorney fees.

Recommendations for Employers Going Forward

Employers are required to post notice of the employees’ protections, rights and obligations under the new law. The notice should be conspicuous, meaning in an accessible and well-lighted place. A model posting will likely be available at the Department of Labor website in advance of the law’s effective date. Additionally, it may be appropriate to provide additional training for managers responsible for receiving and escalating whistleblower complaints. Further, it may be advisable to contact counsel when presented with reported violations by employees.

For further information on New York’s whistleblower laws or how to revise your company’s policies, contact David Paseltiner at 516-746-8000.