The overall goal of preventing illegal or unsafe conduct is laudable, but the scope of the expanded New York Labor law § 740 creates significant risks for employers. It also imposes notice and posting requirements, which can be met through a model notice to be promulgated by the New York Department of Labor.
In short, the new law is extremely broad. It applies to employees or contractors that disclose, threaten to disclose, object to, or refuse to participate in, violations of any law, rule or regulation, whether arising from federal, state, local, administrative or judicial sources. Whistleblowers are similarly protected when opposing dangers to public health and safety, provided the danger is both specific and substantial. Moreover, the whistleblower is protected even if they are mistaken; only a reasonable belief that a violation or danger exists is required.
Notably, an employee is protected whether disclosing to a supervisor or a public body. Although the law nominally requires a whistleblower to advise their employer before going public, the limitation may have little practical effect because there are numerous exceptions. One exception is particularly important: if the employee reasonably believes the employer is aware of the issue and will not correct it, then they may immediately go public. As a result, it will be difficult for employers to rely on a lack of advance notice when taking employment actions.
Employees and contractors that meet the foregoing criteria cannot be retaliated against for their conduct, including: (1) adverse employment actions such as terminations, demotions, reduced compensation, or failures to promote or increase compensation; (2) actions that jeopardize their current or future employment; and (3) contacting or threatening to contact immigration authorities.
We expect this law will give rise to a significant volume of litigation. There is a particular risk where an employee reports, or threatens to make public, legal activity that the employee believes is unlawful. Additionally, because the law extends to contractors, employers will need to be careful when choosing not to renew an agreement or failing to provide a contractor with new assignments. Employers will also need to be cognizant of the increased litigation risk when considering whether to terminate employees that complained and formulating associated severance offers.
Author Matthew McDonald is a partner in the Litigation Department at Klehr Harrison and available to assist with navigating these matters.