BILL NUMBER:  S3862

 TITLE OF BILL :  An act to amend the labor law, in relation to
retaliatory action by employers

 PURPOSE OR GENERAL IDEA OF BILL :

To prohibit employer retaliation against employees in the financial
services industry who report violations of laws, rules or regulations
to a supervisor or to a public body.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 amends section 740(1) of the labor law by adding a new para-
graph (h) to define "Financial institution" to mean:

(1) an insured bank; (2) a commercial bank or trust company; (3) a
private banker; (A) an agency or branch of a foreign bank in the
United States; (5) any credit union; a thrift institution; (6) a
broker or dealer registered with the Securities and Exchange
Commission; (7) a broker or dealer in securities or commodities; (8)
an investment banker or investment company; (9) a currency exchange;
(10) an issuer, redeemer, or cashier of traveler's checks, checks,
money orders, or similar instrument's; (11) an operator of a credit
card system; (12) an insurance company; (13) a dealer in precious
metals, stones, or jewels; (14) a pawnbroker; (15) a loan or finance
              

company; (16) a travel agency; (17) a licensed sender of money or any
other person who engages as a business in the transmission of funds;
(19) a telegraph company; (19) a business engaged in vehicle sales;
(20) persons involved in real estate closings and settlements; (21)
the Unites States Postal Service; (22) an agency of the United States
government or of a state or local government carrying out a duty or
Power of a business described in this paragraph; (23) an Indian
casino, or other gaming operation; (24)any business or agency which
engages in any activity which the super intendent of the department of
financial services determines to be an activity which is similar to,
related to, or a substitute for any activity in which any business
described in this paragraph is authorized to engage; (25) or any other
business designated by the superintendent whose cash transactions have
a high degree of usefulness in criminal, tax, or regulatory matters.

Section 2 amends section 740(2)(a) of the labor law, as amended by
chapter 442 of the laws of 2006, to prohibit an employer from taking
any retaliatory personnel action against an employee who discloses, or
threatens to disclose to a supervisor or to a public body an activity,
policy or practice of the employer that is in violation of law, rule
or regulation which constitutes a violation of the federal or state
securities laws, financial or accounting fraud, or misappropriation or
misuse of funds of a financial institution, a hedge fund or private
equity firm, or of the clients or customers of such organizations.

Section 3 is the effective date.

 JUSTIFICATION :

In the wake of the financial crisis caused by fraudulent financial
schemes, it is in the interest of the state to encourage employees of
financial institutions to report illegal and unethical behavior to a
supervisor or to a public body. Current law only protects employees
who report illegal behavior that creates and presents a substantial
and specific danger to the public health or safety. This law will
protect employees who report or threaten to report illegal behavior in
financial institutions and actions that constitute bribery of a public
official.


The need for this legislation is highlighted by the May 2012 New York
Court of Appeals decision in Sullivan v Harnisch. The majority of the
Court rejected a wrongful discharge case brought by a compliance
officer claiming that he was terminated for questioning the personal
stock trades of the company's president and ruled that current law did
not prohibit such discharge. In his dissenting opinion, the Court's
Chief Judge said that the majority's decision created, "A great
Potential for abuse in the financial services industry," which would
need to be solved by legislation.

This law addresses that need by protecting employees in the financial
services industry who report illegal behavior from retaliation,
including retaliatory termination. Without the efforts of employees
willing to report and prevent illegal and unethical behavior, such
behavior can continue until discovered and acted upon by a third party
outside the company. According to a United States Senate report,
whistleblower tips identified 54.1% of uncovered fraud schemes in
public companies, while external auditors, including the Security and
Exchange Commission, detected only 4.1% of uncovered fraud schemes. As
further stated in the Chief Judge's dissenting opinion, "These
protections must exist not only to decrease the likelihood that the
employees will succumb to pressures to ignore or violate their
obligations for fear of termination, but also to protect the public."

 LEGISLATIVE HISTORY :

2013-14 Session - new bill S.4453 - was reported from Labor Committee.

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
The act shall take effect immediately.