whistle5As reported by New York Law Journal reporter Ben Bedell, the New York’s Appellate Division, First Department recently held that employees could file suit against their former employer for both sexual harassment and violation of New York’s whistleblower protection law even though the statute bars employees from seeking remedies available under any other law.

The plaintiffs, who are former employees of a Korean bank, alleged that a manager sexually harassed them and that the Bank negligently hired and retained the manager after learning of his alleged sexual harassment.  The plaintiffs also asserted retaliation claims under New York’s whistleblower law (Labor Law §740), which prohibits retaliation against employees who complain about conduct that “creates and presents a substantial and specific danger to the public health or safety, or which constitutes health care fraud,” and the New York City Human Rights Law (“NYCHRL”).

The employer sought to dismiss the plaintiffs’ sexual harassment, negligence and NYCHRL retaliation claims because New York’s whistleblower law expressly states that asserting whistleblower retaliation claims “shall be deemed a waiver of the rights and remedies available under any other contract, collective bargaining agreement, law, rule or regulation or under the common law.”  The lower court dismissed the plaintiffs’ whistleblower retaliation claims, ruling that the plaintiffs’ complaint failed to allege the requisite effect on the health and safety of the public at large.  The lower court also dismissed the plaintiff’s NYCHRL claims as waived by the plaintiffs’ pursuit of their whistleblower claims.  However, the court denied the bank’s motion to dismiss the plaintiffs’ negligence and sexual harassment claims, holding that they are “separate and independent from plaintiffs’ retaliation claim, and the conduct underlying such claims does not arise out of defendant’s alleged retaliatory personnel action.”

The First Department, in affirming the lower court’s decision to deny the bank’s motion to dismiss the negligence and harassment claims, acknowledged that if an employee chooses to institute an action pursuant to Section 740, “any alternative means of redress is thereby waived.” Nevertheless, the court ruled that because New York’s whistleblower law is limited to prohibiting “retaliatory personnel action,” the statute’s waiver provision did not bar the plaintiffs’ sex harassment and negligence claims since “the purpose of [Section 740] and the relief it affords make it clear that claims predicated on the statute are distinct from claims predicated upon the underlying tortious conduct identified by plaintiffs.” Therefore, the court held that the plaintiffs’ assertion of a whistleblower claim does not preclude workplace discrimination claims that are “separate and independent from plaintiffs’ retaliation claim.”

The First Department’s decision reinforces that employees who assert retaliation claims under New York’s Whistleblower Law are barred from seeking relief for retaliation under any other statute or common law.  Still, employers should be aware that claims “separate and independent” from retaliation claims are not barred by the whistleblower law’s exclusivity provision.

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Photo of Lloyd B. Chinn Lloyd B. Chinn

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative…

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd’s practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media, education and technology, he focuses a substantial portion of his practice on the financial services sector. He has tried to final verdict or arbitration award substantial disputes in this area.

Due to Lloyd’s litigation experience, clients regularly turn to him for advice regarding the full range of employment matters, including terminations, whistleblower policy and procedure, reductions in force, employment agreements, and employment policies. For example, in the wake of the financial crisis, he has counseled a number of firms through reductions in force and related bonus and deferred compensation disputes. Lloyd has also been retained to conduct internal investigations of allegations of workplace misconduct, including claims leveled against senior executives.

Lloyd has represented global businesses in matters involving Sarbanes-Oxley and Dodd-Frank whistleblower claims. He has taken an active role in the American Bar Association on these issues, currently serving as Co-Chair of the Whistleblower subcommittee of the ABA Employee Rights and Responsibilities Committee. Lloyd has spoken on whistleblowing topics before a numerous organizations, including the American Bar Association, ALI-ABA, Association of the Bar of the City of New York, and New York University School of Law. He has testified twice before Congressional subcommittees regarding whistleblower legislation and has also published blog postings, articles and client alerts on a variety of topics in this area, including the Dodd-Frank Act’s whistleblower provisions. Lloyd is a co-editor of Proskauer’s Whistleblower Defense Blog, and he has been widely quoted by on whistleblower topics by a number of publications, including the New York Times, the Wall Street Journal, the National Law Journal and Law 360.

Lloyd has also become active in the International Bar Association, presenting on a variety of subjects, including: the #MeToo movement, the COVID-19 pandemic and employment law, and cross-border harmonization of employment provisions in transactions. Lloyd also hosts a quarterly roundtable discussion among financial services industry in-house employment lawyers. He has also published articles and given speeches on a variety of other employment-law topics, including non-solicitation provisions, FINRA arbitration rules, cross-border discovery, e-discovery, and the use of experts.