Updates: New York Whistleblower Law Expansions During COVID-19

On January 26, 2022, New York’s new legislation expanding protection for whistleblowers went into effect.  As we discussed in January, these expansions, as well as those enacted in 2020 affecting health care whistleblowers, have significant implications for both employees and employers.  The combined 2020 and 2021 amendments to New York whistleblower laws improve protections for whistleblowers in a number of ways, including by: protecting a wider array of workers, broadening the scope of “protected activity,” expanding the definition of a prohibited retaliatory action, lengthening the statute of limitations, and requiring employers to notify employees of their whistleblower protections. 

Because these amendments have expanded employee rights, employers should be prepared to see an uptick in employee reporting of wrongful activity and courts and agencies should expect an increase in filings from whistleblowers.  Employees, potential whistleblowers, should familiarize themselves with the expansion of what qualifies as “protected activity.”  Employees may be surprised to learn that, under the recent amendments, an employee must only demonstrate that she disclosed or threatened to disclose an employer activity that the employee reasonably believes is in violation of law, rule or regulation, whereas previously the employee was required to demonstrate an actual violation of the law.  Employees who think they may have engaged in “protected activity” and who think their employer may have participated in unlawful retaliation as a result should reach out to a lawyer to determine whether they may have a legal claim.

The amendments to the New York whistleblower laws are still new, and therefore cases hinging on the new provisions are only beginning to move through the courts.  However, there have been a few interesting developments already.

First, Caselaw Updates Affecting Health Care Whistleblowers.

Even though the New York legislature expanded protections for health care whistleblowers nearly two years ago in June 2020, few cases have dealt directly with the law’s expansions. 

One case serves as a reminder to plaintiffs of the importance of adequately identifying what “law, rule, regulation, or declaratory ruling” the defendant is alleged to have violated.  In Mirza v. Garnet Health, No. 20-cv-00556 (PMH), 2022 WL 826410 (S.D.N.Y. Mar. 17, 2022) (appeal filed Apr. 15, 2022), the court acknowledged that the “health care whistleblower law,” New York Labor Law Section 741, is “intended to protect health care workers who complain about unsafe medical practices.”  The court then emphasized the importance of the plaintiff identifying, at the summary judgment stage, the “law, rule, regulation, or declaratory ruling” defendant allegedly violated.  Because the plaintiff did not identify the alleged violation, the court granted summary judgment to the defendant employer.  Importantly, the court did not address or otherwise require that a plaintiff identify the “law, rule, regulation, or declaratory ruling” defendant allegedly violated when a plaintiff makes her initial complaint.  While this case demonstrates that a plaintiff opposing summary judgment must be able to identify what “law, rule, regulation, or declaratory ruling” defendant is alleged to have violated, it does not place a similar additional burden on prospective plaintiffs who have complained to their employer without identifying the employer’s specific legal violation.

In another case before a New York federal court, Conte v. Kingston NH Operations LLC, No. 1:20-CV-0647 (GTS/CFH), 2022 WL 356753 (N.D.N.Y. Feb. 7, 2022), a former health care facility employee, as relator, brought a qui tam action against her employer alleging claims for violations of the federal and New York False Claims Acts, and retaliation under both federal and New York law.  The relator alleged that the employer mishandled health and safety measures during the COVID-19 pandemic and retaliated against her for raising concerns.  The court ultimately did not reach any of the substantive arguments based on New York Labor Law Section 741.  Instead, it granted the defendant employer’s motion to dismiss the federal and New York False Claims Acts claims for failing to allege facts plausibly suggesting the defendant retaliated against her for engaging in protected activity under either statute.  The court then declined to exercise its supplemental jurisdiction over the remaining state law claim under New York Labor Law Section 741 and held that the claim should be dismissed without prejudice to refiling in state court. 

Who Is A Covered Employee Under New York Labor Law Section 741

With respect to the Section 741 claim, the Conte defendant employer argued that the plaintiff-relator was not a covered employee because she never provided patient care and merely coordinated distribution of N95 masks to employees.  The defendant argued that even if the plaintiff-relator was an employee, she had failed to allege facts plausibly suggesting improper quality of patient care or improper quality of workplace safety.  Again, the court did not reach those substantive Section 741 arguments in Conte, and we do not anticipate that courts will change who qualifies as a “covered employee” given that the 2020 amendments to Section 741 did not adjust the definition of “employee.”  However, it may be helpful to review who qualifies as a “covered employee” under New York Labor Law Section 741.

New York Labor Law Section 741 defines “employee” as “any person who performs health care services for and under the control and direction of any public or private employer which provides health care services for wages or other remuneration.”  New York Labor Law Section 741(1)(a).   New York courts have emphasized that it is important that the plaintiff be involved in performing health care services directly, or in supervising those who directly perform health care services.  For example, in Trivelli v. Putnam Hosp. Ctr., No. 19-CV-09898 (PMH), 2020 WL 7246904 (S.D.N.Y. Dec. 9, 2020), the court held that the plaintiff was a covered employee under Section 741 where plaintiff’s responsibilities as a Nuclear Medical Technologist included supervising outpatient radiology, dealing with patient complaints, and using a camera to view areas of the body that nuclear isotopes had traveled through.  The court held that “[p]laintiff’s allegations, specifically that he administered nuclear isotopes into patients, establish that he performed health care services and meets § 741’s definition of an employee.”

In contrast, New York courts have found plaintiffs not to be covered employees under Section 741 where their work responsibilities are primarily administrative or logistical and where they do not render medical treatment.  For example, courts held that the following plaintiffs were not “covered employees” under Section 741:

  • Plaintiff, as Director – International Patient Program, coordinated arrival, transportation, and lodging of international patients and provision of translation services; developed the calendar for international patients’ visits; and distributed patient satisfaction questionnaires.  Reddington v. Staten Island Univ. Hosp., 893 N.E.2d 120, 121–­22 (N.Y. 2008);
  • Plaintiff’s job responsibilities included reviewing documentation of human-subject research projects and plaintiff did not allege she provided treatment or care to patients or supervise those who did.  Moynihan v. New York City Health & Hosps. Corp., 993 N.Y.S.2d 260, 261 (N.Y. App. Div. 2014).

Even employees who are not covered under Section 741, may still have a claim under Section 740 if they otherwise meet the requirements of Section 740, because that section’s definition of “employee” is much broader: an “employee” is “an individual who performs services for and under the control and direction of an employer for wages or other remuneration.”  New York Labor Law Section 740 (1)(a).  Practitioners should carefully consider whether to bring a claim under Section 740 or Section 741 in part based on whether a prospective plaintiff would qualify as a “covered employee” under one section but not the other. That decision might also be affected by other differences between the two sections which define employers who qualify as “covered employers” and describe what activity by an employee constitutes “protected activity”.

Caselaw Updates Affecting Whistleblowers Bringing Claims Under Section 740

New York’s amendments to New York Labor Law Section 740 went into effect on January 26, 2022.  There have been several cases involving Section 740 claims since then, but none turn on the provisions in the new amendments.

In one case, the court held that the Amazon employee-plaintiffs’ retaliation claims under Section 740 (and Section 215) were based, in part, on the employees’ participation in protests against unsafe working conditions and that these were plainly related to their participation in “concerted activities for the purpose of...mutual aid or protection.”  “[C]oncerted activities for the purpose of...mutual aid or protection” are activities protected by the National Labor Relations Act; the court held that therefore, plaintiffs’ claims were preempted because the National Labor Relations Board, not the states, should serve as a forum for disputes arising out of the conflict.  People v. Amazon.com, No. 2021-03904, 2022 WL 1462607 (N.Y. App. Div. May 10, 2022).

Another court analyzed claims brought under Section 740 based on conduct that preceded the 2020 amendments to conclude that the plaintiff in Arazi v. Cohen Brothers Realty Corp., No. 1:20-cv-8837-GHW, 2022 WL 912940, at *11-13 (S.D.N.Y. Mar. 28, 2022) adequately pled that defendant employer had violated the Governor’s Executive Orders regarding COVID-19 protocols and mandatory reduction of in-person non-essential workforce when employer mandated that employees work in-person.  The court specifically noted that plaintiff adequately pled that defendant’s actions were “in violation of law, rule or regulation,” thereby relying on the old language of Section 740.  As of January 26, 2022, Section 740(2)(a) now prohibits employer retaliatory actions because an employee discloses or threatens to disclose “an 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.”  In other words, employees are no longer required to demonstrate an actual violation of law, rule or regulation; it is sufficient to demonstrate that the employee reasonably believes the employer engaged in activity that is in violation of law, rule or regulation.  Of course, given that the acts complained of in Arazi occurred in the spring of 2020 and that the lawsuit was filed in October 2020, many months before the recent amendments went into effect, the Arazi court properly relied on the applicable version of Section 740.  But, going forward, litigators should expect courts to apply the amended law’s more lenient standard.

One final case involved claims brought under Section 740, but again it did not rely on the COVID-19-era amendments.  However, it does demonstrate the ways that plaintiffs may bring whistleblower claims against employers alleging risky behavior relating to the COVID-19 pandemic.  In Jones v. CareandWear II, Inc., No. 656428/2020, 2022 WL 1483791 (Table), at *2 (N.Y. Sup. Ct. May 10, 2022), the court held that the plaintiff adequately alleged a retaliatory personnel action against the defendant employer under Section 740.  Plaintiff had raised concerns about employer conduct that posed a substantial danger to public health and safety during the COVID-19 pandemic, including price-gouging with respect to PPE and selling PPE to health care facilities without any quality control measures, and her employer soon removed her from an email distribution list, barred her from receiving information about the PPE sales, and terminated her.  The court held that plaintiff’s retaliatory discharge claims survived defendant’s motion to dismiss.

Because New York’s amendments to New York Labor Law Section 740 went into effect on January 26, 2022, it is unsurprising that courts have not yet begun to rule on cases turning on the provisions in the new amendments.  We will be watching this area for future developments.

Department of Labor Release of a Model Notice

The amendments to New York Whistleblower Law (New York Labor Law Section 740) added an employer notification requirement pursuant to which employers must notify employees of available whistleblower protections through a “notice.” The notice must be conspicuously posted in an easily accessible and well-lit place customarily frequented by employees and applicants, and must “inform employees of their protections, rights and obligations under this section.”  New York Labor Law Section 740(8).

The New York State Department of Labor has issued a model notice for employers to use to notify their employees of the expanded protections under the New York Whistleblower Law.  The model notice, designated as “LS 740 (2/22),” is available here.  The notice contains the text of the amended law, notes that it became effective on January 26, 2022, and states that the notice should be posted “conspicuously in easily accessible and well-lighted places customarily frequented by employees and applicants for employment.”

We will continue to monitor developments in this area.  Interested practitioners should also review the updated ALM New York Employment Law treatise: Daniel A. Cohen & Joshua Feinstein, New York Employment Law (2023 ed.), to which Michael A. Filoromo, III, a partner at Katz, Marshall & Banks LLP, is a contributor.