New York Labor Law 740: NY Whistleblower Law Claim

The New York Whistleblower Law, N.Y. Labor Law §§ 740 – 741, prohibits all employers from discharging, suspending, demoting, or otherwise retaliating against an employee because the employee, among other independent actions, discloses to a supervisor or to a public body an unlawful activity, policy or practice of the employer that creates and presents a substantial and specific danger to the public health or safety, or which constitutes health care fraud.

More specifically, the New York Whistleblower Law bars all employers from retaliating against an employee because the employee does any of the following:

• discloses, or threatens to disclose to, a supervisor or to a public body (such as a legislative body, a judicial officer, an administrative agency, or a law enforcement agency) an activity, policy or practice of the employer that violates a 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. N.Y. Lab. Law § 740(2)(a). In order to receive the protections afforded by the New York Whistleblower Law, an employee who discloses an employer’s unlawful activity, policy or practice to a public body must first bring the employer’s unlawful activity, policy or practice to the attention of a supervisor and must afford the employer a reasonable opportunity to correct the unlawful activity, policy or practice. § 740(3).
• provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into the employer’s violation of a 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, N.Y. Lab. Law § 740(2)(b);
• objects to, or refuses to participate in an activity, policy or practice by the employer that violates a 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, N.Y. Lab. Law § 740(2)(c);
• discloses or threatens to disclose, to a supervisor or to a public body, an activity, policy or practice of the employer or the employer’s agent that the employee, in good faith, reasonably believes constitutes improper quality of patient care, N.Y. Lab. Law § 741(2)(a); or
• objects to, or refuses to participate in any activity, policy or practice of the employer or the employer’s agent that the employee, in good faith, reasonably believes constitutes improper quality of patient care, N.Y. Lab. Law § 741(2)(b).

In order to receive the protections bestowed by the New York Whistleblower Law, an employee who discloses or threatens to disclose to a supervisor or to a public body, or who objects to or refuses to participate in, an activity, policy or practice of the employer or the employer’s agent that the employee reasonably believes constitutes improper quality of patient care must first bring the improper quality of patient care to the attention of a supervisor and must afford the employer a reasonable opportunity to correct the activity, policy or practice constituting improper quality of patient care. N.Y. Lab. Law § 741(3).

This ‘notice and opportunity to correct’ requirement does not apply to an employee’s disclosure or threatened disclosure to a supervisor or to a public body where the improper quality of patient care presents an imminent threat to public health or safety or to the health of a specific patient and the employee reasonably believes in good faith that reporting to a supervisor would not result in corrective action. Id. § 741(3).

“To prove [a] claim under [N.Y. Labor Law § 740], Plaintiff must establish that the retaliatory action was [suffered] because he (a) disclosed to a supervisor or a public body (b) an activity, policy or practice of the employer that is in violation of law, rule or regulation (c) which violation creates and presents a substantial and specific danger to the public health or safety.” Calabro v. Nassau Univ. Med. Ctr., 424 F. Supp.2d 465, 475 (E.D.N.Y. 2006).

N.Y. Labor Law § 740 “require[s] proof of an actual violation of law to sustain a cause of action.” Bordell v. General Elec. Co., 88 N.Y.2d 869, 871, 644 N.Y.S.2d 912, 913 (N.Y. 1996). “A good faith, reasonable belief that a violation occurred is insufficient.” Deshpande v. TJH Med. Servs., P.C., 52 A.D.3d 648, 650, 861 N.Y.S.2d 697 (2d Dep’t 2008); see Bordell, 88 N.Y.2d at 871.

“A cause of action alleging a violation of Labor Law § 741 . . . differs from a cause of action alleging a violation of Labor Law § 740 . . . in that such a complaint is required to allege only a good faith, reasonable belief that there has been a violation of the applicable standards, rather than an actual violation.” Deshpande, 52 A.D.3d at 650 (citation omitted). “A plaintiff claiming a violation of Labor Law § 741(2)(a) must nonetheless allege conduct which constitutes ‘improper quality of patient care,’ which is defined as ‘any practice, procedure, action or failure to act of an employer which violates any law, rule, regulation or declaratory ruling adopted pursuant to law, where such violation relates to matters which may present a substantial and specific danger to public health or safety or a significant threat to the health of a specific patient.’ ” Deshpande, 52 A.D.3d at 650 (quoting N.Y. Lab. Law § 741(1)(d)) (further citation omitted).

An employee who has been the subject of a retaliatory personnel action in violation of the New York Whistleblower Law may maintain a civil action in any court of competent jurisdiction. N.Y. Lab. Law §§ 740(4), 741(4).

The remedies that are available to an employee in a New York Whistleblower Law action include injunctive relief, reinstatement of a former employee to the same position or to an equivalent position, reinstatement of full fringe benefits and seniority rights, back pay, compensation for lost benefits, and recoupment of reasonable costs, disbursements, and attorney’s fees. N.Y. Lab. Law §§ 740(5). However, neither front pay nor punitive damages are recoverable in a New York Whistleblower Law action. See Clarke v. TRW, Inc., 921 F.Supp. 927, 936 (N.D.N.Y. 1996); Kraus v. New Rochelle Hosp. Med. Ctr., 216 A.D.2d 360, 628 N.Y.S.2d 360 (2d Dep’t 1995).

If your company needs assistance or guidance on a labor and employment issue and your company is located in the Manhattan, NYC area, call Attorney David S. Rich at (347) 472-1026.