Updates Required for Nonprofit Whistleblower Policies New Year | Bond Schoeneck & King PLLC


With recent changes to Section 740 of New York State Labor Law (effective January 26, 2022), which significantly expand the scope of protections provided to employees under this law, organizations aiming to New York nonprofits will be required to start the New Year in high gear. when it comes to compliance. If you haven’t read Bond’s lawyer Jane Sovern’s recent overview of the law, you can find it here. Here are the links to the old and New laws, as well as a underlined version.

While the law applies to all employers, it has an immediate impact on nonprofits that have been required to have whistleblower policies under section 715-b of the Companies Act. nonprofit (that is, all nonprofit organizations with 20 or more employees and more than $ 1 million in income). Specifically, the standards and requirements of the changes to section 740 of the labor law do not fully match those of section 715-b of the Non-Profit Corporations Act, which was usually the main focus. compliance in drafting policies in the past. You can find this status here.

The following are examples of updates that will be required for policies to comply with both section 715-b of the non-profit company law and section 740 of the labor law:

  1. Increased need for policies. As noted above, the Nonprofit Corporations Act (NPCL) requires whistleblower policies only for organizations meeting specific employment and income thresholds. Section 740 of the labor law, on the other hand, applies to all employers with at least one employee. As a result, all New York nonprofits with at least one employee should now consider adopting a policy.
  2. Coverage extended to former employees. Section 740 of the labor law not only protects current employees against retaliation, but also old employees, as well as independent contractors, who are generally not covered by current whistleblower policies. Policies should therefore be broadened to include former employees and independent contractors and otherwise amended to ensure that all those covered by the Labor Act 740 are included.
  3. Extensive report protection. Section 740 of the old Labor Law protected whistleblowing only in relation to certain specified laws, while the new law was expanded to cover all laws, regulations, local ordinances, decrees and decisions, decisions and court orders. and administrative. Typically, whistleblower policies were much broader than the old labor law (for example, section 715-b of the NPCL requires policies to include violations of “adopted policies”, which were / are not covered by section 740 of the labor law, and many policies have expressly included regulations, executive decrees and even breaches of ethics), but they may not have expressly included orders, executive decrees or judicial or administrative decisions , and should therefore be expanded as needed.
  4. The reprisals have spread. Section 740 of the labor law expanded the prohibited reprisals to include certain types of adverse action that were generally not contemplated by existing policies, such as contacting U.S. immigration authorities regarding the immigration status of ‘an employee.
  5. Good faith vs reasonable belief. Section 740 of the labor law now protects employees who report whenever they “reasonably believe” that there is a violation, while section 715-b of the NPCL requires protection where there is a “good faith” report of a violation. There is an inherent tension between these standards: the NPCL standard is subjective – apparently only taking into account the belief and intention of the employee, which is therefore arguably easier to meet – while the law standard of the work is objective, examining the nature of the belief itself and whether it is “reasonable” to hold it back. Policies should be carefully updated to include both terms so as not to violate either requirement.
  6. Employee notification form. Section 740 of the labor law requires notification of the protections offered by this law by posting prominent information in an easily accessible and well-lit place usually frequented by employees and job applicants. The NPCL, on the other hand, allows a whistleblower policy to simply be posted on the employer’s website. We updated the policies with a conservative approach of including all of section 740 of the labor law as one piece, rather than summarizing its provisions.

In light of the above, state nonprofits will need to put these policy updates high on the New Year’s agenda.

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