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Tuesday, August 23, 2016

What NYC Businesses Can Learn From The Blue Man Group Royalties Dispute

NY Business Law, NY Contract Law
There are lessons to be learned by fledging NYC businesses from the recent legal battle over royalties between Blue Man Group and a collaborator.

If you are a New Yorker, or a tourist visiting New York City, then you probably know of Blue Man Group, a troupe of street artists that have grown into a global brand that has entertain millions annually. Recently, a collaborator and songwriter has sued them for breach of a royalty agreement.  

Ian Pai's lawsuit contends that the parties agreed he was entitled to a fixed percentage of box office revenue from performances allocated into a "pool" for composer royalties for 20 songs used in the original Blue Man Group show. Pai alleges that, over time, he noticed a significant decrease in the percentage allocated to the royalty pool and that he is entitled to more money for his songs.

Royalties are paid to legal owners of intellectual property, such as music used in musical compositions and performances.  Often, the amount of payment is based on sales. For instance, when a record label distributes a song either by CD or online, a royalty payment is due as compensation to the owner of the property, patent, copyrighted work or franchise by those who wish to use  it to generate revenue. In most cases, royalties are legally binding.

Mr. Pai also alleged that there exists an "industry standard", or a criteria generally accepted within field of song writing followed by the members therein, for royalties not lower than 6 percent.  We believe Mr. Pai is referencing commonly-accepted arrangements for Broadway shows.

Essentially, a royalty agreement is much like other business agreements bound by the fundamental principles of contract law.  However, its applications have a wide range and are an often overlooked tool that small businesses can use to leverage intellectual property. From the situation in the news with Blue Man Group over rights to a song, to multi-million dollar franchise agreements for use of a brand's intellectual property, NYC small business owners should become familiar with licensing and leverage property for profit.

But, there's another lesson to learn from this situation.  It appears, given the statement regarding "industry standards", that there may not be a written agreement between the parties in place in this case.  This is a common mistake when friends enter into a business arrangement - always reduce your agreements into a written document to protect everyone involved.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Monday, August 22, 2016

Proposed Change to NYC Hiring Practices Intended To Tackle Wage Inequity

NY Employment Law, NYC Gender Wage Gap
Courtesy:  New York Times
A proposed change to local law seeks to make certain customary hiring practices illegal for employers in New York City.

This week, the NYC Office of Public Advocate introduced proposed legislation that would make it illegal for for employers to inquire into a job applicant's wage history during the hiring process.  The bill would prohibit New York City employers or employment agencies from asking about an applicant's salary history or searching publicly available records or reports for the same. New York City employers would also be prohibited from relying on any such information in determining the compensation package at any stage in the employment process unless the applicant disclosed information willingly and without prompting.  The proposed new law would not apply to any actions taken by an employer in following any federal, state or local law.

Similar legislation recently passed in Massachusetts.  Indeed, the issue has become a hot political topic, with groups advocating that New York state take up federal and state measures to bridge the wage gap.

The proposed law is based on policy recommendations from a wage equity report from NYC Public Advocate Letitia James that found women in New York City face a "significant wage gap" across industrial sectors that is worse than the national average.

What does this mean for businesses employing workers in New York City?  Nothing, at the moment because this bill is winding its way through the New York City Council and will not take effect until 120 days after the law would be adopted.  But, we would recommend that business in New York City change their evaluation of prospective hires to conform with this new proposed law and to focus on references and verifiable information (like experience, certifications, etc.) in assessing the value of a future hire.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Friday, August 19, 2016

COBRA: Basic Definitions And Applicability For Small Businesses

NY Employment Law, NY Health benefits
To conclude our series of federal laws that every small business owner must know, we discuss an employer's obligation to provide health insurance under the law.

(For other stories in this series, you can read our posts about best practices to avoid age discrimination New York's new laws involving family and medical leave and federal and state protection of employees with disabilities.)

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employees and their families are protected should they lose employer-sponsored health benefits. In general, most employers with 20 or more "employees" sponsoring health plans on more than 50 percent of its typical business days in the previous calendar year must offer each "qualified beneficiary" who would otherwise lose coverage under the plan because of a "qualifying event" an opportunity to elect continuation of the coverage received immediately before the qualifying event.

The definition written above can seem complicated at first because it contains terms, phrases and exceptions (like those above written in bold) that determine whether the law is applicable, what plans may be available. Employers should familiarize themselves with the basic  meanings within the law:

  • Most "employers" are subject to the law.  COBRA broadly defines an "employer" as a “person for whom services are performed” and include those with common ownership or part of a controlled group as defined further in the law. 

  • All common law "employees" of the employer counted when determining if an employer is subject to COBRA. Part-time employees may counts as a fraction of a full-time employee. Self-employed individuals, independent contractors and their employees and directors of corporations are not counted towards this legal threshold, which is 20 employees

  • Generally, a "qualified beneficiary" is any individual who, on the day before a "qualifying event", was covered under a group health plan maintained by the employer either as the covered employee, the spouse of the covered employee, or  the dependent child of the covered employee. As with any law, exceptions may apply. 

  • A "qualifying event" is any one of the following events which would result in  loss of health insurance coverage: 
  1. the death of the covered employee;
  2. the termination of a covered employee's employment for reasons other than gross misconduct; 
  3. a reduction in a covered employee's hours; 
  4. the divorce or legal separation of a covered employee and spouse; 
  5. a covered employee becoming entitled to benefits under Medicare; 
  6. a dependent child ceasing to be a dependent child of the covered employee under the terms of the group health plan; and
  7. with respect to certain retirees and their dependents, chapter 11 bankruptcy proceedings of an employer.

The general rule is that group health plans are subject to COBRA, but there is a two-prong test to determine if the law applies. First, the arrangement must provide medical care. The second prong is that the arrangement must be maintained or established by an employer. Examples of group health plans subject to COBRA include HMOs, self-insured medical reimbursement plans, employee assistance programs, and others.

There are several group health plan exceptions to COBRA, which do not apply to:

  • Health plans sponsored by the federal government, as there are other laws that require similar continuation of coverage;
  • Certain plans sponsored by churches, or church-related organizations;
  • Small-employer plans maintained by an employer that normally employed fewer than 20 employees on at least 50 percent of its typical business days during the preceding calendar year.

 Small businesses should understand the penalties should it fail to provide insurance coverage - or even notice of benefits under COBRA -  include fines, penalties and exposure to liability in court for statutory penalties.  To minimize your business's exposure to these penalties, it is important that you understand the basic obligations your business has under this legislative scheme and that you consult with the right legal and insurance professionals will help your business determine your compliance with COBRA.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Thursday, August 18, 2016

Legal Protection For Employees With Disabilities In New York

As part of our ongoing series of postings bringing awareness to certain law every New York business owner must know, we bring your attention to laws that protect employees with disabilities.

(For other stories in this series, you can read our posts about best practices to avoid age discrimination and New York's new laws involving family and medical leave.)

While many employers are not familiar with the Americans with Disabilities Act as providing accommodation for third parties with disabilities, many fail to recognize that the law also provides employee protection.  The law, as amended by the ADA Amendments Act, protects employees from job discrimination based on (1) physical or mental disability, (2) recorded history of disability or impairment or (3) a substantial impairment that limits a major life activity (defined in the law as hearing, seeing, speaking, walking, breathing and many other manual tasks), which is meant to be defined broadly.

Having a disability covers only half of the standard.  Employees making a discrimination claim based upon ADA must also be qualified to perform the essential functions or duties of the job up to the employer's requirements for the job, and be able to perform the essential functions of the job with or without reasonable accommodation.

"Reasonable accommodation" means actions taken which permit an employee, prospective employee or member with a disability to perform in a reasonable manner the activities involved in the job or occupation sought or held. Examples of reasonable accommodations include:

  • modified equipment or devices;
  • adjusted work schedules;
  • re-assignment;
  • modified training and policies; 
  • support services for people with impaired vision or hearing; and
  • making the workplace readily accessible to and usable.


Reasonable accommodations do not impose an undue hardship on the business from which action is requested.

Depending upon the industry your business is engaged, ADA issues may arise.  For example, the food services industry requires high standards of cleanliness and prohibits some workers with communicable diseases that can be transmitted through food.  While ADA prohibits businesses from asking applicants about medical issues and requiring a medical examination, after a business makes a conditional job offer, businesses may then ask about an applicant's health and require a medical exam, so long as the business treats all applicants in the same job category the same.  But keep in mind that this example highlights the fact that employers can only inquire about a worker's health if the inquiry is related to your job and necessary for the conduct of the business.

Every business should establish an ADA policy that is known to all employees and job applicants. This policy can be adopted with guidance from the Equal Employment Opportunity Commission, which provides a great guide for small businesses, by looking at sample policies or by consulting an attorney that can create policies tailor made for your business.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Wednesday, August 17, 2016

Business Compliance Basics: Age Discrimination Protection In New York

ADEA Age Discrimination, New YorkAs part of our ongoing series of posts intended to familiarize you with laws you must follow if you are running a business in New York, it is important to understand the way the law protects employees form age discrimination.  

Age discrimination is when an employer makes employment or management decisions based on an employee's age and not on his or her job performance, skills or qualifications. There are multiple layers of protect from the federal state and local level in New York. 

Age discrimination is not limited to hiring, firing.  Claims for age discrimination can be based on age bias within the workplace, like passing over employees for promotion, failure to provide necessary training programs, distribution of "valuable" work to younger employees and other decisions within the operations of the business that are discriminatory. Age discrimination can take many forms - a resistance to new processes, a lack of aptitude for new technology are typically "code" for such behavior.

At the federal level, the law protects workers age 40 or older from age discrimination. If you work or apply for work at a company with 20 or more employees, the Age Discrimination in Employment Act (ADEA) generally prohibit employers from basing decisions on hiring and firing on age.  Companies should note that employees can bring claims under ADEA not only for glaring obvious terminations and decisions based upon age, but also neutral factors that resulted in disproportionately high impact of older workers. 

At the state and local levels, both the State of New York and New York City have passed human rights laws that take ADEA a step further. In New York, if you work or apply for work at a company that employs only 4 or more employees, employers are prohibited from basing employment decisions on age unless age is truly necessary for the specific position.  

So what is an employer to do?  Especially in tough economic times, it is important to have an efficient and effective workforce. Employers considering workforce restructuring should weigh the risks of incurring employee claims and other potential liability from incorporating neutral means of determining workplace performance.  Evaluation must include whether the selection of these individuals can be justified by business necessity, or in the case of older workers, by reasonable factors other than age.  

So long as your business bases employment decisions upon objective measures and methods, you should stay relatively clear of the pitfalls of age discrimination.
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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Tuesday, August 16, 2016

NY's Family Leave Law: What It Means For NY Small Businesses

NY Small Business, NY Family Leave Act, NY employment law, NY small business
NY became the 5th state to mandate family leave in April, 2016
Earlier this year, New York enacted the NY Family Leave Law, which mandates NY businesses, including small businesses, to provide family leave for most employees.

This article is part of our ongoing series of reviewing laws that NY small business owners must follow. 

Under the new law, your NY business must offer both full-time and part-time employees who have been employed for a minimum of 6 months up to 12 weeks paid time off if they are (a) new parents (including adoptive parents), (b) individuals who need to take care of a family member with a serious medical condition or to (c) individuals with a need to relieve family pressures after a spouse, domestic partner, child or parent has been called to active military service.

The new law applies to every kind of business.  There is no exception for NY small businesses.

Starting on January 1, 2018, eligible employees can get up to eight weeks at 50 percent of their weekly pay, as computed by the NYS Department of Labor.  Annual increases occur until 2021, where eligible employees can get up to 12 weeks at 67 percent of their weekly pay.

An eligible employee may take the paid family leave to care for a new child anytime within the first 12 months after the child's birth or placement for adoption or foster care.  For care of a seriously ill relative will be able to take their paid leave time intermittently in increments of one full day or one fifth of the weekly benefit.  The law also guarantees job protection and continuation of health care benefits.

If you are an employer, especially a small business in New York, you need to prepare for the commercial and financial impacts of this law sooner rather than later.   Your business is about to absorb additional employment costs, decreased productivity and increased administrative costs.  You will need to amend internal policies and handbooks to reflect these changes.  And, you have less than a year to begin preparations.

Now is the time to consult with an attorney to start preparing for the additional burdens imposed by NY's Family Leave Law.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com
Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Monday, August 15, 2016

Basic Business Compliance: Federal Laws That NY Businesses Must Follow

Federal Compliance, Employment Law
Don't roll the dice with your business!
Depending upon certain factors, every New York business must comply with federal laws governing employment and liability to third parties.  This week, we are going to look at three federal laws that you need to know and ensure that your business follows.

We have already discussed the recent changes to New York law as it pertains to Pregnancy Discrimination Act (PDA) / Family Medical Leave Act (FMLA).  PDA prohibits discrimination on the basis of pregnancy, childbirth and other related medical issues by businesses with 15 or more employees. This does not just include the legally mandated time-off for family and medical leave, which we will address shortly. On a larger scope, FMLA grants job-protections  and unpaid leave to certain workers in companies with at least 50 employees working within 75 miles of the work site. We encourage you to check out how the law has changed in New York

ADA / ADA Amendments Act:  The ADA Amendments Act (ADAAA) provides certain protections for workers with disabilities, but only apply unless your company has fifteen or more employees. That being said, your business must be ADA-compliant regardless of how many people you employ because it applies to accommodations for customers. If your New York small business services customers on-site, then you must provide ramps and other accommodations for customers using wheel chairs or other devices when they are entering or exiting your place of business.

Age Discrimination in Employment Act: The Age Discrimination in Employment Act prohibits employers from discriminating against people age 40 or older in hiring, firing, layoffs, wages and benefits.

Consolidated Omnibus Budget Reconciliation Act:  COBRA gives workers and their families who lose their health insurance benefits the right to choose to continue with those benefits provided by their group health plan under certain limited circumstances such as job loss, reduction in hours worked, job transitioning, death, and other life events.

Now that you have had a taste of what is to come, check back daily for in-depth analysis of these laws that business owners in New York must understand and follow.
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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Friday, August 12, 2016

Business Management Basics: Understanding The Business Judgment Rule

NY Business Law
If you are starting a business, you shouldn't worry that you will be subject to a lawsuit if things don’t work out. because, in New York, there is a legal concept called the "business judgment rule".

Officers and directors of start-up corporations are responsible for managing and directing the business's affairs. As the business grows, so does the level of responsibility for officers and directors.

Under the "business judgment rule", officers and directors of a corporation are immune from liability to the corporation for losses resulting form corporate decision making within their authority, were made in good faith and decided with reasonable skill and prudence. This is significant because the recovery of any successful claim against the company will be limited to the company's assets only.

In my experience, matters where I would argue that the "business judgment rule" come up in the context of small businesses where there is a dispute between stakeholders and in homeowner's associations and condominium or co-op boards where members dispute a decision.  These kind of cases turn on the facts of a case.  So it is important that you are clear and upfront about your situation with your attorney.

Because of the significance of this responsibility, courts in New York give a lot of deference to the decisions the directors and officers must make to operate a business.  In many cases, the decision-maker will be shielded from personal liability for a business decision reasonably made in good faith because the court does not want to frustrate the entrepreneurial spirit or to discourage people from taking management roles in growing businesses and professional endeavors.

However, the business judgment rule is not a license to act within the business for your own self-interest or to make unreasonable decisions.  Officers and directors will not be shielded from liability for reckless decisions made by officers and directors, including those decisions that take business opportunities from the business for personal gain.

In the end, the law demands officers and directors of businesses act responsibly and prudently - not perfectly.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Thursday, August 11, 2016

Report: NY's Daily Fantasy Sports Law Contains Major Flaw

NY, DFS, FanDuel, DraftKings
In following up on an earlier story we wrote about the waiting game set up by the New York State government for daily fantasy sports, we are happy to report that DFS businesses like FanDuel and DraftKings are back open for business in New York.

NY Gov. Andrew Cuomo signed a bill into law allowing fantasy sports operators to apply for a license in the state.  The law also makes provisions for operators to serve the market almost immediately via a temporary permit.

And this is where a controversy may still be brewing.

According to DFS advocates, the NY State Gaming Commission erred in implementing the law because DraftKings and FanDuel agreed to cease operating was to ensure that they would be eligible for a license.

According to Legal Sports Report, the application itself states that a DFS operator is eligible if it makes "available an interactive fantasy sports platform offering contests to persons located in New York State who has also offered such a platform prior to November 10, 2015, and requires evidence of the same.

With the new law taking effect, smaller DFS businesses now have a significant barrier to entering the New York market, mainly because this language within the application makes prior operations a necessity to obtain the license. Smaller operators that may have avoided the New York market waiting for the legal dust-up to settle are, as the law is written, excluded from the market.  The application as written also stops new operators not in existence prior to November of 2015 from operating in New York.

Regardless of whether this was an unintentional error in drafting or an intentional exclusion of legitimate businesses that are not being punished for following the existing law, the application language will be an issue that will probably be played out in the court of public opinion and, possibly, in New York courts.

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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

Wednesday, August 10, 2016

Legal Debate: Can A Hashtag Be Registered As A Trademark?

Trademark Law, New York
Talking to a colleague today, we both came upon an interesting legal question:  is a social media hashtag a trademark that one can register?

For those who are not familiar with hashtags, it is a word or phrase preceded by a "#" that accompanies text. Hashtags are used to categorize the content of a social media posting on Facebook, Twitter and other platforms, group content and make social media posting searchable.  Businesses use hashtags allow businesses to promote product and engage audiences throughout social media.  Social media platforms have even developed a stream of revenue by allowing businesses and individual to "promote" hashtags and receive preferential listing on their websites.

The emergence of social media hashtags has had a huge impact in social media marketing. It is a great way to communicate social media messages, build brand loyalty and associate identifying characteristics with a brand and its audience. According to the International Trademark Association, over 600 federal trademark applications have been submitted to the United States Patent and Trademark Office (USPTO) for hashtag marks.

However, the law remains murky on what exactly a hashtag is.  The USPTO's rules recognizes that a term containing a "#" may be a trademark "if it functions as an identifier of the source of the applicant's goods or services".   However, those same USPTO rules will not allow registration of hashtags consisting solely merely descriptive or generic wording for goods or services.

To further complicate matters, a federal district court in California recently found that hashtags are not trademarks.  In the matter of Eksouzian v. Albanese,  The California district court held that hashtags are “merely descriptive devices, not trademarks, unitary or otherwise.” and “merely a functional tool [and] not an actual trademark”

The decision seems to directly conflict with the USPTO rules and pose an interesting, and possibly costly, conundrum for businesses.  This decision seemingly invalidates the USPTO rules on hashtags without even addressing the rules themselves. Those owners that have successfully registered hashtags may be once again in danger of losing the investment in goodwill that the registration provided.  It remains to be seen what other courts will do when faced with the same or similar issue.

For now, the International Trademark association recommends that businesses take steps to protect their brands on social media, including consider registering "only the underlying word or phrase without the hash symbol or the term 'hashtag'" to clarify its functions as a source identifier. Another tip to follow is to not include any trade name or primary brand in a hashtag so you avoid the "trap" used in the Ekouzian case.

We here at IPG will be monitoring developments in this area of the law with great interest.
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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.