What businesses need to know about changes to NY whistleblower law

New York has greatly expanded whistleblower protections for employees who report alleged wrongdoings by employers in the new year.

The amended law, effective Jan. 26, expands not only the type of claims that may be lodged against an employer, but also expands the statute of limitations to file a claim. Protections will be expanded beyond employees to include former employees and independent contractors.

"This is a significant change in the law that opens employers up to more claims," says Domenique Camacho Moran, a partner at Farrell Fritz in Uniondale.

Currently, to file a whistleblower claim, an employee must know there was a violation of the law, she says. As of Jan. 26, employees are protected if they "reasonably believe" an employer’s activity/policy is in violation of a law, rule or regulation, or poses a substantial and specific danger to public health or safety, she says.

It’s not clear what constitutes reasonable belief, Moran said, adding that it will "be a matter of court interpretation" down the line.

A lower bar

Also notable is that, currently, the alleged violation being reported must pose "a substantial and specific danger" to public health or safety, she says. That bar has been lowered, greatly expanding the nature and type of claims an employee can bring against an employer, Moran said. For more on the amended law, see tinyurl.com/mr3xt4jy.

"There’s really no pro for the employer," said Yale Pollack, a partner at Ronkonkoma-based Campolo, Middleton & McCormick LLP. "But for the employee, it gives them more protection and expands the statute of limitations to bring forth the claim from one to two years."

He said the old law "was a very restricted statute," meaning you basically were asking a layperson (the plaintiff) to research that there was a law, rule or regulation that was actually violated. Now it comes down to "reasonably believe."

Higher stakes for employer

Also, the stakes are higher for the employer. Under the current law, a successful plaintiff can be awarded re-instatement to their job, back wages and attorney fees, Pollack said. Once the new law goes into effect, employees could also be entitled to punitive damages, civil penalties not to exceed $10,000, and "front" pay.

Front pay could come into play if the whistleblower is at a new job making less than at the old job, and it could make up that salary differential, Pollack says. Plaintiffs also will have the right to a jury trial instead of a bench trial before a judge, he says.

"Juries may be more liberal in granting punitive damages," Pollack said.

But while that may seem daunting to employers, it is likely to increase company accountability, experts said.

"It might encourage more people to feel confident and to make more disclosures if they suspect wrongdoing," says Edgar Ndjatou, executive director of Washington-based Workplace Fairness, an advocacy organization for employee rights.

He noted that the requirement that the plaintiff know for certain that a law was violated discouraged people from coming forward.

Fear of abuse

Still, some experts say the changes could open up firms to abuse from disgruntled employees.

"Concern for abuse is real," says Keith Gutstein, co-managing partner of the Woodbury office of Kaufman Dolowich & Voluck LLP. That's why employers need to take precautions and know their responsibilities, he said.

Companies are required to let employees know about the changes by posting a notice about the amended law in an easily accessible and well-lit location, he said.

He also advises updating whistleblower/anti-retaliation policies in employee handbooks, reiterating that an employer won’t retaliate against an employee for pointing out alleged wrongdoing.

Another important step is training managers how to handle complaints (i.e. not to ignore them or write them off as disruptive), Gutstein said.

For firms with a poor-performing employee, the new law "emphasizes how critically important it is to document bad performance," he said.

Employees who have made complaints aren’t insulated from disciplinary action for legitimate non-retaliatory reasons, but employers need to be cautious, says Melissa Camire, partner in Fisher Phillips’ Manhattan office. Before taking any action against an employee, employers should consult with HR/employment counsel, she said.

"Employers will want to ensure that there are well-documented, objective, non-retaliatory reasons for any such adverse employment action," she says.

It’s also important to maintain a culture of compliance, where employees raising concerns are encouraged and employers don’t fear retribution, Camire said.