On October 28, 2021, New York Governor Kathy Hochul signed into law New York Senate Bill S43494A (the “Act”), which amends New York’s whistleblower statute to greatly expand the protections for individuals who report alleged employer wrongdoing. Notably, the whistleblower statute will now protect employees, former employees, and independent contractors from retaliation if they disclose (or threaten to disclose) to a supervisor or a public body, or object or refuse to participate in, any employer conduct that the individual reasonably believes violates any federal, state, and local law, rule or regulation, or judicial or administrative decision, ruling or order. Prior to the amendment, the whistleblower statute only protected employees who reported violations of law that created a danger to public health and safety or constituted health care fraud.
The Act is scheduled to take effect on January 26, 2022. The key aspects of the Act are as follows:
- The Act covers employees, former employees and independent contractors.
- An individual is protected from retaliation if they (1) disclose or threaten to disclose to a supervisor or public body their reasonable belief that the employer is violating any “law, rule, or regulation” — including federal, state, or local statutes or ordinances or executive orders, rules or regulations, and any judicial or administrative decision, ruling or order; (2) provide information to or testify before a public body conducting an investigation, hearing or inquiry into such alleged violation; or (3) object to or refuse to participate in such alleged violation.
- The complainant needs to make a “good faith effort” to bring the activity to the attention of a supervisor and afford the employer a reasonable opportunity to cure the violation, except if (1) there is an imminent danger to public health or safety, (2) the complainant reasonably believes that reporting would result in destruction of evidence or other concealment of the activity, (3) the activity, policy or practice could reasonably be expected to lead to endangering the welfare of a minor, (4) the complainant reasonably believes that reporting would result in physical harm to a person; or (5) the complainant reasonably believes the supervisor is already aware of the activity, policy or practice and will not correct such activity, policy or practice.
- The Act defines a retaliatory action to include not only the discharge, suspension, demotion or other adverse employment action with respect to a protected individual, but any other adverse action to threaten, penalize or in any other manner discriminate against any employee, former employee or independent contractor, including actions or threats to take actions that would adversely impact a former employee’s current or future employment or threatening to contact or report or contacting or reporting the covered individual, or their family or household members, to U.S. immigration authorities.
- The Act requires every employer to inform covered individuals of their whistleblower rights by posting a notice in “easily accessible and well-lighted places that are customarily frequented by employees and applicants for employment.”
- The statute of limitations is two years from the date the alleged retaliatory action was taken. Complainants are also entitled to a jury trial.
- A court may order injunctive relief, reinstatement of the employee, including fringe benefits and seniority rights, compensation for lost wages, and reasonable costs and attorneys’ fees. The Act allows for: (i) front pay in lieu of reinstatement; (ii) a civil penalty of $10,000 or less; and/or (iii) punitive damages.
Financial services companies doing business in New York should take particular note of the Act because it expands anti-retaliation protections to those who report suspected violations of the securities laws internally. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, only employees who report suspected securities law violations to the Securities and Exchange Commission receive anti-retaliation protection.
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If you have any questions regarding this Act, or any other employment issues, please contact Anne C. Patin at (212) 574-1516, Julia C. Spivack at (212) 574-1373 or your relationship partner at the Firm.