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On January 26, 2022, amendments to New York’s whistleblower protection law, codified at section 740 of the New York Labor Law (NYLL), took effect. As we previously reported, these amendments significantly expand the scope of section 740. Although New York employers that also operate in states with expansive private-sector whistleblower protection laws, such as New Jersey, Oregon, or Virginia, may not need to make significant adjustments, other employers may wish to consider updating their policies; implementing or enhancing support structures, including robust and accessible reporting mechanisms and regular training for supervisors, managers, and human resources professionals; and identifying appropriate resources for investigating complaints. Although the action plan will vary depending upon the employer’s industry and size—and the other jurisdictions, if any, in which the employer operates—there are certain elements, action items, and measures that employers may wish to explore, as outlined below.

1. Establishing or Updating Written Codes of Conduct

The amendments require employers to “inform employees of their protections, rights and obligations” under the new law by posting a notice “conspicuously in easily accessible and well-lighted places customarily frequented by employees and applicants for employment.” Beyond satisfying this minimum posting requirement, employers that have not expressly adopted codes of conduct may wish to update their existing policies to clearly outline their compliance expectations and specifically address the ability of employees to report concerns about any “activity, policy or practice of the employer 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.” Employers that already have policies in place may wish to issue periodic reminders about the existence of such policies. Employers also may wish to provide regular training about these policies to all employees at or near the time of hire, and at annual or other intervals.

Taking proactive measures to establish or reinforce existing compliance policies may facilitate an employer’s ability to rebut claims that an employee is excused from the obligation to make a “good faith effort to notify his or her employer by bringing the activity, policy or practice to the attention of a supervisor” because “the employee reasonably believes that reporting to the supervisor would result in a destruction of evidence or other concealment of the activity, policy or practice” or because “the employee reasonably believes that the supervisor is already aware of the activity, policy or practice and will not correct such activity, policy or practice.”

2. Creating Robust and Accessible Reporting Mechanisms

Employers seeking to enhance their compliance-focused cultures and avoid liability for whistleblower claims also might want to ensure that their reporting mechanisms are robust and accessible. The law contemplates that, absent certain enumerated exceptions, an employee must first give notice to “a supervisor” to qualify for statutory protection. It may be appropriate to furnish other centralized channels for making reports. Among possible measures, employers may wish to create accessible systems that prompt reporting individuals to supply specified categories of information to facilitate the employer’s ability to more readily identify and take appropriate responsive action. Because the amendments broadly define a “law, rule or regulation” to include “any duly enacted federal, state or local statute or ordinance or executive order,” a regulation promulgated pursuant thereto, or “any judicial or administrative decision, ruling or order,” designing intake systems that promote a timely determination of the nature of an investigation and that provide data that can be tracked over time to identify patterns or issues warranting additional attention may help to mitigate long-term exposure.

3. Training Supervisors, Managers, and Human Resources Professionals

Because the amendments significantly expand the whistleblower protections under section 740 of the NYLL, employers may also want to consider training supervisors, managers, and human resources professionals about their obligations under the whistleblower law. Among the provisions that could warrant the attention of these groups are the following:

  • The definition of “employee” now includes not only those individuals who receive wages, but also “natural persons employed as independent contractors … who are not themselves employers” and former employees.
  • The definition of “retaliatory action” now includes “actions or threats to take such actions that would adversely impact a former employee’s current or former employment” as well as “threatening to contact or contacting United States immigration authorities or otherwise reporting or threating to report” the actual or suspected immigration status of an employee or an employee’s family or household member.
  • The anti-retaliation prohibitions are applicable whether or not the employee’s conduct is “within the scope of the employee’s job duties.”
  • Notification to a supervisor about the allegedly unlawful activity, policy, or practice constitutes notice for purposes of the law.

4. Reinforcing Adherence to Documentation and Decision-Making Protocols

In effect, the amendments underscore the importance of ensuring that supervisors and managers document performance or conduct issues in a timely manner and in accordance with any applicable progressive discipline or other policies. Absent an adequate record to support a termination of employment or a decision not to promote (or other adverse action), it may be difficult for an employer to demonstrate that any “retaliatory action was predicated upon grounds other than the employee’s exercise of any [protected] rights.” Additionally, employers may wish to emphasize adherence to company protocols requiring human resources personnel or in-house counsel to review contemplated adverse employment actions, particularly employment terminations, for any recent activity that might give rise to whistleblower claims to ensure that documented evidence exists to support the lack of a causal connection between any protected activity and an adverse employment action.

5. Identifying Appropriate Resources for Investigating Complaints

Although the amendments alone may not increase the volume of whistleblower complaints, the expanded scope of the law and its additional remedies increase the potential economic and reputational consequences of ignoring or mishandling employee complaints. As a result, employers may want to consider designating additional internal personnel who can investigate complaints and regularly training personnel with investigatory responsibility to ensure that they will appropriately address assertions that a reporting party or other interviewee previously communicated concerns about potential violations of the law to a supervisor, even if that information is outside the scope of the investigator’s assignment. Employers may also wish to develop a list of external investigators to supplement internal resources so that complaints do not go unaddressed because of workload constraints of internal personnel, who may have a range of other responsibilities, or because an employee raises concerns that fall outside the expertise or experience of internal personnel.

In addition to designating appropriate resources to investigate complaints, employers may also wish to create or refine uniform processes for communicating with reporting parties at appropriate stages following an acknowledgment of receipt of a complaint and notifying such individuals once an investigation concludes. Absent communication that will enable reporting parties to understand whether their concerns are being investigated—and when a particular review process has been completed—employers may increase the likelihood of subsequent legal claims of retaliation or generalized perceptions that their codes of conduct are performative.

The New York office of Ogletree Deakins will continue to monitor developments with respect to the implementation of the new law and its impact on the workplace and will post updates on the New York blog as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.


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Ethics Compliance and Whistleblower Response

Ogletree Deakins provides clients with innovative and business-oriented solutions to compliance issues across every facet of labor and employment law. Our lawyers work with clients to design effective compliance measures, assist in audits and investigations, and defend clients in relation to compliance as well as retaliation claims.

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