section 740 of the Labor Law

Although New York has had an employment-related whistleblower statute for decades, many employers may not have been aware of it. That is because the statute itself – N.Y. Labor Law section 740 – has been fairly limited in its scope and application. Indeed, it has only protected employees who disclose employer activity that violates laws relating to public health and safety or to health care fraud. Disclosures of other unlawful activities have not been protected by section 740.

That will no longer be the case, however, starting next year. Late last month, New York Governor Kathy Hochul signed a bill that will amend and effectively overhaul section 740. The amended law, which is scheduled to take effect on January 26, 2022, drastically expands the breadth and scope of section 740 by making it significantly easier for New York workers to bring a claim, lengthening the statute of limitations, and imposing a notice requirement on employers.

Overview of key updates to section 740

  • Independent contractors can bring claims too: As a starting point, under the amended law, not only will current and former employees be able to assert legal claims against the employer, but so too will independent contractors.
  • Broad expansion of protected activity: Perhaps the most noteworthy aspect of the amendment is how it expands the types of employee activities that are protected under section 740 of the Labor Law.

Previously, section 740 was a narrow statute that primarily barred employers from taking retaliatory action against employees only where the employee had disclosed or threatened to disclose to a supervisor or public body, or had objected to or refused to participate in “an activity, policy or practice of the employer that is in violation of law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety, or which constitutes health care fraud.” The prior version of the law thus required that an actual legal violation have occurred – i.e., an employee’s reasonable belief that a violation had occurred was insufficient – and was intended to curb only activities that posed a substantial and specific danger to public health or safety or that constituted health care fraud.

The amended statute, however, broadly expands this scope of protected activity. Specifically, the law now bars employers from taking retaliatory action where the employee discloses or threatens to disclose to a supervisor or public body, or objects to or refuses to participate in “an activity that the employee reasonably believes is in violation of law, rule or regulation or that the employee reasonably believes poses a substantial and specific danger to the public health or safety.” The new definition, therefore, essentially protects, and bars employers from retaliating against, workers who report any actual, or reasonably perceived by the employee, violation of any law, rule, regulation, executive order, or judicial or administrative decision, ruling, or order at all, regarding of its subject matter. To say that this is a dramatic expansion of Section 740 would be an understatement.

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