Sexual Harassment and Negligence Claims Not Waived by Waiver Provision of New York’s Whistleblower Statute

In Lee v. Woori Bank, decided by the Appellate Division, First Department on July 28, 2015, the  court held that plaintiff’s sexual harassment and negligence claims were not barred by the “waiver” provision of New York’s whistleblower statute, Labor Law § 740.

Labor Law § 740(7) provides, in part, that “the institution of an action in accordance with this section 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.”

In affirming the Supreme Court’s denial of defendant’s motion to dismiss plaintiff’s sexual harassment and negligence claims, the court held:

Here, the claims for sexual harassment and negligence in the training and supervision of the managers who engaged in such misconduct by Woori Bank are “legitimately independent claims” from those that are deemed to be waived because they “duplicate or overlap the statutory remedies for retaliation on account of whistleblowing activity alone”. Plaintiffs’ sexual harassment claim is based on a senior executive’s alleged physical and verbal sexual harassment of subordinate staff, the other managers’ alleged encouragement of that conduct, and the creation of a hostile work environment. Meanwhile, their negligence claim alleges that Woori Bank negligently hired and trained defendant senior executive Yoo and continued to retain him, even after learning of his alleged sexual harassment of subordinate employees. These claims concern injury sustained as a result of the reported misconduct, not simply the statutorily protected loss of employment as a consequence of complaining to management about such misconduct. We further agree with plaintiffs that the mere incorporation by reference of various allegations in the complaint alleging retaliation in the sexual harassment and negligence causes of action does not warrant a contrary conclusion.

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