What is a whistleblower policy?

A whistleblower policy is an organizational policy that encourages workers to report suspected illegal or improper activity within the organization while protecting workers from retaliation for making such reports.

Is our nonprofit required to have a whistleblower policy?

New York nonprofits that have at least twenty employees and annual revenues of $1 million or more are required to have a whistleblower policy under Section 715-b of the New York Not-for-Profit Corporation Law.

Keep in mind that whistleblowers have significant protections under other federal, state, and local laws, even if those laws do not explicitly require adoption of a whistleblower policy. For example, Section 1107 of the American Competitiveness and Corporate Accountability Act of 2002 (more commonly known as the Sarbanes-Oxley Act) makes it a crime to intentionally retaliate against any individual, “including interference with the[ir] lawful employment or livelihood,”  for providing law enforcement with truthful information relating to the commission or possible commission of any federal offense. Many states and municipalities have other laws that protect whistleblowers from retaliation.

A whistleblower policy helps to educate management and workers about these legal protections. It is a helpful tool in promoting a culture of lawfulness and integrity. By explicitly stating management’s commitment to protect whistleblowers from retaliation and laying out a process for reporting illegal or improper activity, a whistleblower policy encourages workers to communicate their concerns to the employer in good faith without fear of reprisal. Adopting a whistleblower policy is a recommended best practice for nonprofit employers.

What are the key changes to New York’s whistleblower protections?

Effective January 26, 2022, New York amended Section 740 of the New York Labor Law, which protects workers who engage in whistleblowing activity from retaliation by their employers.¹ The amendments expanded the classes of protected workers, the types of protected whistleblower actions, the types of employment-related actions that are considered illegal retaliation, the time frame for individuals to file a retaliation claim, and the potential penalties for employers who do retaliate against whistleblowers. Below is a summary of some of the key changes.

1. Protected Individuals. The prior law appeared to protect current employees only. The amended law protects current employees, former employees, and independent contractors from retaliation for whistleblowing activity.

2. Protected Actions. Under the prior law, whistleblower protections only applied to disclosures or threats of disclosure that involved an actual violation of a law, rule, or regulation and presented a substantial danger to the public health or safety or constituted health care fraud. There were many types of illegal activities that did not fit within this standard, leaving employees who reported such activities at risk of retaliation. The prior law also stipulated that whistleblower protections did not apply if an employee disclosed an illegal activity, policy, or practice to a public body without first notifying the employer and giving the employer a reasonable opportunity to correct the problem.

The amended law changes these standards. An employer may not retaliate against a protected individual for doing any of the following:

• Disclosing or threatening to disclose to a supervisor or public body an activity, policy, or practice of the employer that the individual “reasonably believes” violates a law, rule, or regulation or poses a substantial and specific danger to the public health or safety;
• Providing information to, or testifying before, any public body conducting an investigation into any such activity, policy, or practice by the employer; or
• Objecting to, or refusing to participate in any such activity, policy, or practice.
• Protected individuals also need only make a “good faith effort” to report the activity, policy, or practice to the employer prior to notifying a public body. No employer notification is required at all when:
  • There is an imminent and serious danger to the public health or safety;
  • The whistleblower reasonably believes that reporting to the supervisor would result in a destruction of evidence or other concealment of the activity, policy, or practice;
  • The activity, policy, or practice could reasonably be expected to lead to endangering the welfare of a minor;
  • The whistleblower reasonably believes that reporting to the supervisor would result in physical harm to the whistleblower or any other person; or
  • The whistleblower reasonably believes that the supervisor is already aware of the activity, policy, or practice and will not correct it. 

3. Prohibited Retaliation. The amended law expands the definition of unlawful retaliation to mean any adverse action taken by an employer or the employer’s agent “to discharge, threaten, penalize, or in any other manner discriminate against” a protected individual who engages in protected whistleblowing activity. This includes:

• Actual or threatened adverse employment actions against a protected individual in the terms and conditions of employment, including but not limited to discharge, suspension, or demotion;
• Actions or threats to take actions that would adversely impact a former employee’s current or future employment; or
• Contacting or threatening to contact United States immigration authorities or otherwise reporting or threatening to report a protected individual’s suspected citizenship or immigration status or the suspected citizenship or immigration status of a protected individual’s family or household member. 

4. Increased Filing Time, Right to Jury Trial, and Penalties for Retaliation Claims. The statute of limitations for filing a retaliation claim under Section 740 is increased from one year to two years. Parties are entitled to a jury trial. A successful retaliation claim against an employer may result in any of the following penalties:

• An injunction against the employer;
• Reinstatement of the whistleblower to their same position or an equivalent position, or front pay in lieu of reinstatement;
• Reinstatement of full fringe benefits and seniority rights;
• Compensation for lost wages, benefits, and other remuneration;
• Payment by the employer of reasonable costs, disbursements, and attorneys’ fees;
• A civil penalty for the employer of up to $10,000; and/or
• Payment of punitive damages by the employer, if the violation was willful, malicious, or wanton. 

5. Employer Notice Requirement. Employers are required to inform protected individuals of their protections, rights, and obligations under the law by posting a notice “conspicuously in easily accessible and well-lighted places customarily frequented by employees and applicants for employment.” The New York State Department of Labor has issued a model notice that employers can post. Employers must also provide an electronic copy of the whistleblower notice to protected individuals via email and/or posting on their website.

1 In 2022, New York also amended Section 741 of the Labor Law, which applies to whistleblower complaints against health care employers.

The post Updated Whistleblower Protections in New York – Is Your Nonprofit Compliant? first appeared on Perlman Sandbox.

The bill follows New York’s passage in 2019 of another diversity related law which calls for a study of the number of women serving on certain corporate boards.

The bill’s sponsors say ethnic diversity is critical to a nonprofit board’s ability to understand its community’s needs.  They say when the ethnic makeup of a nonprofit board mirrors that of the community it serves, the board is more able to relate to the shared experiences of its community, and is therefore better equipped to identify problems and feasible solutions.   The bill makes an analogy to ethnically diverse police departments, stating that as data bears out that diverse police forces provide better service to diverse communities, the same may be true for nonprofit boards.

On January 5, 2022, the bill was referred to the Senate’s Corporations, Authorities and Commissions Committee.  It’s unclear whether this bill will gain traction during this legislative session.  Nevertheless, the call for more diversity on boards is trending not only in New York, but in California, Maryland, Illinois and other states where board diversity requirements have either been enacted or proposed.  Given the growing expectation for greater inclusion of underrepresented minorities on boards, nonprofits should consider familiarizing themselves with best practices for board diversity.

The post New York State Legislature Considers Bills Requiring Diversity for Nonprofit Boards first appeared on Perlman Sandbox.

Effective April 3, 2020, New York amended its paid election leave law, again, to require an employer to provide an employee with up to two hours—not three hours—of paid voting leave if the employee does not have sufficient time to vote. The State has issued an FAQ, explaining the amendment.  An employee is deemed to have “sufficient time to vote” if he/she has four consecutive hours to vote either from the time the polls open to the beginning of their work shift, or four consecutive hours between the end of a working shift and the time the polls close.   An example is provided of an employee who is scheduled to work from 9 am to 6 pm.  In that instance, where the polls open at 6 a.m. and close at 9 p.m., the employee is eligible for paid time off to vote, because the employee only has three consecutive hours off at the beginning of their shift and end of their shift.

Employees must provide their employers with at least two working days’ notice of an intent to take voting leave before an election, but not more than 10 working days.

The amendment explains that employers may not require employees to use their “personal” time off to vote.

Employers should update their voting leave policies and notices to comply with this change in the law.

As you may know, due to COVID-19, Governor Cuomo cancelled the June 23, 2020 Presidential primary in New York though other Congressional and local primaries in New York are scheduled to occur on that date.

The post New York State Amends Paid Election Leave Law, Again, to Provide Up to 2 Hours’ Paid Voting Leave first appeared on Perlman Sandbox.

The Empire State Development (ESD) guidance on which organizations are deemed “essential” in New York State was updated on April 9, 2020, and can be found here.  Businesses and organizations deemed “essential” by ESD must continue to comply with the New York State Department of Health’s guidance and directives for maintaining a clean and safe work environment.

Every business is being strongly urged by New York State to continue to maintain social distancing measures to the extent possible.  Governor Phil Murphy of New Jersey has recently issued a similar executive order for essential businesses in New Jersey.

Governor Andrew Cuomo also directed that, effective at 8 p.m. on Friday, April 17, 2020, any individual who is over age two and able to medically tolerate a face-covering, must cover their nose and mouth with a mask or cloth face-covering when in public and unable to maintain, or when not maintaining, social distance.  This includes but is not limited to, when walking on the sidewalk or in a park, traveling on public transit or in an Uber, Lyft, Via, etc. 

On April 16th, 2020, Governor Andrew Cuomo also ordered “New York on PAUSE” extended to May 15, 2020.  The Executive Order requires all workers at non-essential businesses, including nonprofit organizations, to work from home, schools to remain closed, and individuals to maintain a 6-foot distance from others in public, as per an Executive Order.

If you have any questions, please contact Lisa M. Brauner, Esq., Head of Employment Law Practice, Perlman & Perlman LLP, lisa@perlmanandperlman.com, 212-889-0575 ext. 207.

The post Mask Up! New York “Essential” Businesses and Nonprofit Organizations Must Provide Face Masks to Public-Facing Employees first appeared on Perlman Sandbox.

The SHIELD Act creates two primary obligations: 1) the adoption and maintenance of a comprehensive cybersecurity data protection program to safeguard private information; and 2) compliance with specific data breach notification requirements.

The SHIELD Act broadens what is considered to be personally identifiable information (“PII”) which means that most organizations will be deemed to be collecting PII.  Under the Shield Act, any organization that collects PII must “develop, implement and maintain reasonable safeguards to protect the security, confidentiality and integrity” of the PII.   While the extent of the safeguards is expected to be relational to the size and complexity of the organization, it is clear that all organizations will have to meet the minimum requirements as outlined below.

• Develop, implement and maintain “reasonable [administrative, physical and technical] safeguards to protect the security, confidentiality and integrity” of PII.
• When utilizing third-party service providers, include specific contractual provisions that stipulate that maintenance of appropriate cybersecurity practices are necessary for compliance. (This suggests that all current, and certainly future, vendor agreements must be reviewed and appropriately negotiated).
• Adopt a data retention and destruction policy to safely and securely store, and when appropriate, permanently dispose of, PII.

Added to this, the SHIELD Act broadens the definition of data breach, requiring prompt notice to affected individuals and to government authorities.  For those organizations that have yet to adopt a “data breach response plan”, the time to do so is now.   This clause includes penalties for failing to provide timely notice in the event of a data breach as well as for failing to adopt reasonable safeguards.

The organizational costs related to unauthorized access continue to grow.  Therefore, procuring and maintaining a comprehensive and appropriate tailored cyber-security insurance policy has never been more important (also see Cyber Security Insurance – A Must Have).

Although the law took effect on October 23, 2019, it provides organizations a grace period until March 21, 2020 for the establishment of the required data protection policies and practices. I highly suggest organizations use this time wisely!  Businesses that have not previously been subject to cybersecurity regulatory requirements should promptly evaluate the sufficiency of their internal policies and practices – as well as the third-party service providers they use – to ensure compliance with the SHIELD Act requirements.  Those organizations with existing cybersecurity programs should review and update their policies and practices in light of these new requirements.

The post The SHIELD Act – A New York State of Mind … and Privacy first appeared on Perlman Sandbox.

New York is the second State (after California) to adopt this prohibition, and follows behind New York City which has already adopted this prohibition under New York City’s Human Rights Law (NYCHRL) with respect to New York City employers.  In February 2019, New York City’s Commission on Human Rights issued guidance on unlawful workplace race discrimination based on natural hair texture and hairstyles protections and employee rights under the NYCHRL (as well as guidance on other covered entities like public, private and charter schools and places of public accommodation).  The guidance–while directed to NYCHRL’s requirements–may be useful to New York employers outside of New York City as well in view of New York State’s recent amendment to its own Human Rights Law.

NYCHRL prohibits employers and other covered entities from having policies prohibiting hairstyles associated with a particular racial, ethnic, or cultural group.  Black hairstyles are protected racial characteristics under the NYCHRL because they are an inherent part of Black identity.   The guidance explains that “there is a strong, commonly-known racial association between Black people and hair styled into twists, braids, cornrows, Afros, Bantu knots, fades, and/or locs.”  The legal enforcement guidance–while focused on Black communities– extends protections to other impacted groups including but not limited to those who identify as Latin-x/a/o, Indo-Caribbean, or Native American.   The NYC guidance notes that unlawful discrimination based on race may occur where employers ban or require the alteration of natural hair or hairstyles associated with Black people, harass a Black employee because of their hair, or target natural hair or hairstyles associated with Black people. For example, a grooming policy to maintain a “neat and orderly” appearance that prohibits locs or cornrows is discriminatory against Black people. Where an employer has a legitimate health or safety concern, it must consider alternative ways to meet that concern before imposing a ban or restriction on employees’ hairstyles.

Employers throughout New York State should review and update their appearance and grooming policies and train managers to ensure they comply with this legal development.

If you have questions about the law’s requirements, please contact Lisa Brauner, Esq., Head of Perlman & Perlman LLP’s Employment Law Department at lisa@perlmanandperlman.com or 212-889-0575.

The post New York State Prohibits Race Discrimination Based on Natural Hair Texture or Hairstyles first appeared on Perlman Sandbox.

Employers hiring in New York State should review all of their hiring practices and employment applications to ensure they comply with this new law, and train all HR staff and hiring managers on the law’s legal requirements.

The post New York State Ban Employers from Inquiring about Salary History first appeared on Perlman Sandbox.

1. Schedule Mandated Annual Trainings; Keep Postings Current

Effective April 1, 2019, NYC employers with 15 or more employees (including independent contractors) have until December 31, 2019 to implement sexual harassment prevention training for all employees and then must conduct such training annually.  NYC Commission on Human Rights has recently updated its FAQ, clarifying the deadline and other guidance on the law as well as training materials. Training should be provided to employees in their primary language (though not legally required).

For New York employers outside NYC or those with fewer than 15 employees in NYC, the deadline to complete sexual harassment prevention training for all employees that meets New York State’s standards is October 9, 2019.  Schedule your training now!

As of January 2019, employers that are State contractors must now submit an affirmation to New York State in connection with bids for such contracts that they have a sexual harassment policy and provide annual sexual harassment prevention training .

Both the State and the City have enacted new laws last year that require posting in a visible location in the workplace, including sexual harassment prevention postings.  Make sure your postings are current. 

2. Update Employee Handbooks

There have been a spate of recent federal, State and New York City legal developments and so it’s a good idea to review your employee handbook and make necessary updates. Here are a few:

Employee Legal Protections under NYC and NYS Human Rights Laws

On January 20, 2019, the NYC Council passed a bill amending the NYC Human Rights Law to prohibit workplace discrimination by a covered employer against an employee for “sexual and reproductive health decisions.”   These are defined as “any decision by an individual to receive services, which are arranged for or offered or provided to individuals relating to sexual and reproductive health, including the reproductive system and its functions. Such services include, but are not limited to, fertility-related medical procedures, sexually transmitted disease prevention, testing, and treatment, and family planning services and counseling, such as birth control drugs and supplies, emergency contraception, sterilization procedures, pregnancy testing, and abortion.”  The law takes effect on May 20, 2019.

In January, New York State enacted Gender Expression Non-Discrimination Act (GENDA), amending New York State’s Human Rights Law to explicitly prohibit workplace discrimination based on gender identity and expression.

Lactation Accommodation (eff. March 18, 2019)

NYC employers with 4 or more employees must provide a “lactation room” unless doing so would pose an undue hardship to the employer and must implement a written lactation accommodation policy meeting certain requirements and provided to employees upon hire.  The lactation “room” must be a clean space, other than a bathroom, to express breast milk; it must be shielded from view and free from intrusion and have an electrical outlet, a chair, and a surface for a breast pump and personal items. The space must have access to running water and be in “reasonable proximity to” the employee’s work area.  There also must be a refrigerator suitable for breast milk storage “in reasonable proximity to” the employee’s work area.

NY Paid Family Leave (PFL)

New York Paid Family Leave may be used to bond with a new child, care for a family member with a serious health condition, or assist loved ones when a family member is deployed abroad on active military service.  In 2019, eligible employees are entitled to 10 weeks’ PFL at 55% of their average weekly wage, up to a cap of 55% of the current Statewide Average Weekly Wage of $1,357.11. The maximum weekly benefit for 2019 is $746.41.  Also, effective February 3, 2019, PFL may be used to care for a family member who is preparing for and recovering from surgery related to organ or tissue donation.

  Amended Rules for NYC Earned Safe/Sick Time Act (ESSTA)

In 2018, the NYC Department of Consumer Affairs Office of Labor Policy and Standards issued amended rules regarding ESSTA and updated its FAQ.

The updates include, but are not limited to, that covered NYC employers must distribute a written policy (“in a single writing”) addressing paid sick leave to all new hires, within 14 days of the effective date of any changes to the policy, and/or upon employee request and that the policy must also include a description of the confidentiality requirements of Section 20-921 of New York City’s Administrative Code. https://www1.nyc.gov/assets/dca/downloads/pdf/about/Paid-Sick-Leave-Law-Rules.pdf . It also updates and expands upon certain definitions.  Read more about the law in my earlier blog post. https://www.perlmanandperlman.com/nycs-earned-safe-and-sick-time-effective-may-5/

Temporary Schedule Changes

NYC’s Administrative Code was amended last year to required covered NYC employers to provide eligible employees with the opportunity to make temporary schedule changes for specified “personal events,” under certain conditions. Read more.   

3. Ensure Workers are Properly Paid

Eff. 12/31/18:  NY State Minimum Wage increased to $15/hour for New York City employers with 11 or more employees; $13.50/hour for NYC employers with 10 or fewer employees; $12/hr. for Long Island and Westchester employers; and $11.10/hr. for employers in other parts of New York State.  Effective 12/31/19, minimum wage increases to $15/hr. for all NYC employers.   Salary thresholds for executive and administrative exemptions to overtime pay requirements also increased to $1,125/week ($58,500 annually) for NYC employers with 11 or more employees, and to $1,012.50/week ($52,650 annually) for NYC employers with fewer than 11 employees.

Review Worker Classifications and Job Descriptions.

Job responsibilities change over time and the job descriptions should keep up with those changes to ensure workers are properly classified as exempt or nonexempt from overtime pay laws, to clarify the essential functions of the job (in the event you need to provide that job description to the health care provider of an employee seeking reasonable accommodation for a disability), and to ensure performance evaluations are aligned with expectations set out in the job description.  Review those worker classifications as well to make sure they are still accurate based on salary threshold (where applicable) and the job duties.

4. Know Your Obligations for Employees On Leave Or Out Sick And Know How To Handle Requests for Reasonable Accommodation

Whether your employee is out on disability, FMLA, NY Paid Family Leave, paid safe/sick (in NYC), short-term disability, worker’s compensation, or military leave, refresh your understanding of your legal obligations.

Refresh training of supervisors on legal obligations where an employee asks for a reasonable accommodation for a disability, pregnancy, childbirth or related medical condition, domestic violence victim status, lactation, sincerely held religious belief, or other legally protected category. Train your managers how to handle employee requests for reasonable accommodation, and how to engage in a “cooperative dialogue” now required under NYC’s Human Rights Law.  Read more.

5. Review Personnel Files

New York has so many notice and record-keeping requirements that it’s sometimes hard to keep up.  It’s a good idea to review your personnel files annually to ensure you have all current notices and records, particularly those that you’re required to provide upon hire.

Last but not least, consult with your labor and employment counsel to head off any potential legal problems and ensure it is smooth sailing for 2019!

Our employment law department conducts workplace trainings, audits of your employment/personnel practices, and updates policies and employee handbooks. Please contact Lisa Brauner, Head of Perlman & Perlman LLP’s Employment Law Practice, at: lisa@perlmanandperlman.com or 212-889-0575 if you have any questions.

The post Resolutions for 2019?  Here are a Few Small, Measurable Goals for New York Employers first appeared on Perlman Sandbox.

This new law reflects a trend in New York State for enacting highly prescriptive nonprofit governance requirements and restrictions in an effort to curb abuse of nonprofit organizations’ assets.  It is worth noting, however, that a sole membership structure is not uncommon and is often used by organizations for legitimate reasons, such as to ensure that the organization continues to adhere to its original charitable mission and vision. The IRS, which enforces laws prohibiting private benefit, has approved tax-exempt status for organizations that utilize a sole member structure.  This sole membership structure is allowed under other states’ laws.

The new law becomes effective on July 1, 2019.  Not-for-profit corporations incorporated in New York should review their governance structures to determine whether any changes are required to maintain compliance, including the addition of new members. Nonprofits incorporated in other states which are doing business in New York should not be affected by this change.

For information on why Delaware is such a popular state for incorporating not only businesses but also nonprofits, you can read the blog post written by my colleague, Jeremy Coffey.

The post New York Outlaws Sole Member Not-for-Profit Corporations first appeared on Perlman Sandbox.

Office holiday parties are a time for employees to relax, let loose, knock back a few cold ones, and connect with colleagues on an informal, more personal level, right?   Well, yes and no.

You may have heard stories of sexually inappropriate behavior at annual office holiday gatherings at other organizations.  Why?  Because some people mistakenly believe that when they shed their business suit for the office holiday party, they also shed their obligation to abide by the organization’s professional rules.   But workplace policies, particularly those prohibiting sexual and other forms of unlawful harassment, apply to organization-sponsored events including the annual holiday office party.

Managers and staff must remain professional in attitude, personal appearance and behavior and show the same respect and professionalism to colleagues at events outside of the physical workplace as they do within it.   Managers should be particularly mindful about not commenting on a subordinate’s body or physical attractiveness, or making comments or jokes of a sexual nature (as should co-workers).  In addition, being inebriated does not ever excuse a supervisor, co-worker, or non-employee such as a Board member or donor, from engaging in conduct that might be perceived as unwelcome sexually inappropriate behavior.

An employer’s legal obligation to protect its employees from unlawful conduct continues during these events.  What is intended to be a fun time can easily derail into a lawsuit for an organization that has not laid clear ground rules, and can result in the firing of an employee who does not abide by workplace rules prohibiting sexual harassment.

Aside from the legal risks, organizations that fail to prevent sexual harassment may face damage to their reputation, mission, employee morale, and worker productivity.

The following actions may help your organization minimize the risk of this kind of trouble:

• Set rules around office events, including expectations for supervisors in interacting with subordinates and co-worker interactions generally.

• Decide whether alcohol will be served and if so, provide reminders that employees should drink responsibly. Determine how much alcohol will be served and whether a ticket maximum should be used, how long the party will last, whether the party should be held at the office during office hours, and whether employee family members should be invited to minimize inappropriate behavior.
• Re-circulate the sexual harassment and retaliation prevention policies shortly before the annual holiday party and have employees sign an annual acknowledgement of receipt of the policies.
• Conduct annual sexual harassment and retaliation-prevention training shortly before the office holiday event.

A number of jurisdictions like New York require employers to issue sexual harassment policies and complaint forms, and to conduct annual sexual harassment prevention training.

For additional measures to prevent workplace sexual harassment, listen to my interview on Tony Martignetti Nonprofit Radio Sexual Harassment in Nonprofits 

Enjoy the holidays!

Lisa M. Brauner is the head of the Employment Law Practice at Perlman & Perlman.  She advises employers on how to reduce litigation risk and resolve employee issues. She offers training in preventing workplace discrimination, harassment, retaliation and on other workplace law-related topics. Contact her at  lisa@perlmanandperlman.com; 212-889-0575.

The post Annual Holiday Party? Tra-La-La-La-Lawsuit! first appeared on Perlman Sandbox.