When A Whistleblower Can Sue for Wrongful Termination in New York
In "Why Whistleblower Policies May Not Be Grounds to Contest Firing in NY," we explained why internal corporate policies that (seemingly) encourage their employees to report wrongdoing by protecting them against being fired are, as a practical matter, unenforceable in most cases.
But there is a narrow area of the law regarding whistleblowers that does offer a measure of real protection for employees who report wrongdoing, and it has nothing to do with what the employee handbook says: it's when the employee is reporting a violation of the law that poses a significant danger to public safety.
Specifically, New York Labor Law §740 provides, in pertinent part, that "[a]n employer shall not take any retaliatory personnel action against an employee because such employee…objects to, or refuses to participate in any…activity, policy or practice in violation of a law, rule or regulation" (§740[c]).
This provision "is triggered only by a violation of a law, rule or regulation that creates and presents a substantial and specific danger to the public health and safety" (Remba v. Federation Empl. & Guidance Serv., 76 NY2d 801, 802 ). "Retaliatory personnel action" includes the discharge of an employee (Labor Law §740[e]). "An employee who has been the subject of a retaliatory personnel action in violation of this section" has a private right of action (Labor Law §740[a]).
To that end, and importantly, New York's courts have specifically held that this statute does not implicate financial activities, as one of New York's appellate courts recently stated as follows:
"Illegal economic or financial activities that may be inimical to the public welfare are not within the statutory protection absent a showing that the illegal activity concomitantly creates "substantial and specific danger to the public heath and safety" (see e.g., Remba, 76 NY2d at 802 [fraudulent billing does not create a substantial and specific danger to the public health or safety]; McGrane v. Reader's Digest Assn., Inc., 822 F Supp 1044, 1051 [SDNY 1993] ["Financial improprieties within a corporation do not constitute threats to public health or safety"])."