With so much happening during the holidays, who wants to think about preventive steps and corporate compliance? Unfortunately, expansion of New York’s “whistleblower protection” laws coupled with the ongoing pandemic-related return to work issues make it increasingly critical for employers to ring in the New Year with an understanding of these new developments. High on the list of to do’s should be creating an effective “whistleblower” program, that includes an internal reporting process for employees as well as, in some instances, for independent contractors.

Recently, for example, New York Governor Hochul signed legislation expanding coverage of Labor Law 740, a whistleblower law, by including employees as well as former employees and independent contractors. This law goes into effect on January 26, 2022. The “old” law provides protection from retaliation to employees who: 1) disclose or threaten to disclose to a supervisor or a public body an activity, policy or practice of the employer that violates a law, rule or regulation or creates a danger to public health and safety; 2) provide information to or testify before any public body conducting an investigation, inquiry into the employer’s violation; or 3) object to or refuse to participate in the activity or policy that violate the law. The new legislation expands protection to individuals “who report or threaten to report any activity that they reasonably believe is in violation of law, rule or regulation.” The amendments further clarify the definition of “law, rule or regulation” includes any state, local, and federal law, rule, and regulation, as well as any judicial and administrative decisions.

If a person intends on providing information to a public body, the amendments only require that the individual “in good faith reasonably believes” the activity has or will occur, and that the person “in good faith reasonably believes” the activity is an illegal business activity. Notably, there is no requirement that the person provide notice to the employer. This is a different standard of what may constitute protected activity under the current statute.

The changes to the law provide broader protections, including an expanded definition of retaliatory action, a longer statute of limitations, entitlement to jury trials and additional remedies. In addition, the law requires employers to inform employees of these rights and protections by way of a so-called “Section 740 Notice,” that is placed in a “well-lighted” and easily accessible area frequently populated by employees. https://www.litigatorsatwork.com/2021/12/employee-whistleblower-protections-expanded-under-new-york-labor-law-section-740/. Given these developments, employers should consider what strategies need to be implemented in 2022 to minimize risk and litigation.

To begin preparing for the expanded remedies available under whistleblower protection laws that are comparable to New York’s, we recommend that employers review and consider updating the company’s “internal reporting” policy. Beyond that, we recommend employers review, bolster, and/or develop the key elements of their effective “whistleblower” program which are:

  • Top Leadership Commitment and Support
  • Management Responsiveness
  • Internal Reporting System, With Alternative Systems
  • If appropriate, External Reporting System
  • Training on the Process
  • Assurance of No Retaliation to persons who make reports
  • Regular Audit or Review of Process To Determine Effectiveness
  • Continuous improvement and development of a Culture of Trust and Compliance

As you can see, even with the pandemic on everyone’s mind — updating or creating an effective “whistleblower” program is an important New Year resolution. On that note, best wishes for a happy and healthy New Year!

Please contact a Jackson Lewis attorney, including attorneys in our Corporate Governance and Internal Investigations practice group, with questions regarding legal developments and best practices in this expanding area.