New York State Labor Law Section 740 prohibits an employer from taking any retaliatory action against an employee who discloses or threatens to disclose a practice of the employer which poses a substantial and specific danger to public health or safety, or which constitutes health care fraud. Retaliatory action includes, but is not limited to, termination or demotion.
To recover under a Section 740 claim, the employee must show that he or she first reported or threatened to report the alleged illicit policy or practice to their employer or a supervisor before then making such disclosure to a public body. This reporting mechanism allows the employer to be given reasonable opportunity to correct the activity or practice. Further, while the employee need not identify the specific law or regulation which the practice or activity violated, the employee does have the burden of identifying the specific practices or activities which the employer allegedly engaged in, and the burden of proving that an actual violation occurred. An employee looking to file suit against their employer for a retaliatory action must do so in a timely manner, within one year of the date of the retaliatory action.
While these rules may seem relatively straightforward, the most common issue in successfully asserting a claim under Section 740 is whether the practice or activity is a substantial and specific danger to public health or safety. In response, New York courts have developed several tests.
As to the “public” aspect of public health and safety, the practice or activity needs to affect or have the risk of affecting numerous people. Generally, an isolated activity that negatively impacts one specific employee or patient/person has been found to be insufficient. Yet, one way an isolated incident can be deemed sufficient as a threat to public health is when the seriousness of the incident is coupled with a chance it can reoccur in the future.
For example, in Rodgers v. Lenox Hill Hospital, a sufficient claim under Section 740 was stated by a plaintiff who was terminated for investigating a group of paramedics who pronounced a live woman dead without examining the woman or attempting to perform resuscitation, and then tried to cover up their error. The court held that the seriousness of the danger coupled with the possibility of the recurrence of this type of neglect was sufficient to satisfy a Section 740 claim.
Regarding the “health and safety” prong, the activity or policy generally needs to fall within the realm of causing physical harm to the general public. Furthermore, economic harm, such as fraudulent billing, usually does not fulfil this requirement. While many Section 740 claims involve the medical field, other industries impacted include a hotel employee being terminated for threatening to report violations of fire and building occupancy codes, and employees of an automobile manufacturer being terminated for reporting that company practices regarding manufacturing of certain parts would lead to gasoline fires and brake failures.
Congress also has provided protection for federal employees who report illegal misconduct by their employers by passing the Whistleblower Protection Act of 1989. It further established whistleblower protections for individuals who work in the private sector through at least 18 federal statutes. To name several, the Fair Labor Standards Act which governs proper wage and hour rates for employees, and the Sarbanes-Oxley Act, which protects any employee of a publicly traded company when reporting what they believe to be any conduct relating to fraud against shareholders of that company. However, employees often have an even shorter window to report misconduct under the federal statutes, with many only providing a 180 day window in which to file a complaint. In summation, while there are ample protections in place to prevent retaliation for whistleblowing, employees must not delay in pursuing their claims against their former employer.
