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Wednesday, October 19, 2016

Tips, Gratuities And Mandatory Service Charges: Rules for New York Businesses and Employees

NY Employment Law, NY Business Law, Tips, Gratuities
New York businesses and its employees alike can both benefit from learning the rules for tips, gratuities and mandatory service charges.

Many New Yorkers are tipped employees. Jobs where workers earn tips range from waiters and servers, to hotel employees and those who provide other services like delivery workers. In fact, part of the incentive for New Yorkers to take these kinds of jobs is the possibility that you may be able to earn more in tips than in straight wages. However, very few tipped employees and their employers understand all the applicable wage laws regarding tips, which can get complicated.

First, let's establish what is considered a "tip" or "gratuity" in New York. In its usual everyday meaning, a tip or gratuity is a voluntary payment over and above the charge for products or services (plus tax.) Employers do not need to withhold additional funds for Social Security and Medicare (FICA) tax and can claim a credit against its own tax obligations for these amounts. The basic rule of tips is that they belong to the employee, not the employer.

Tips and gratuities differ slightly from a "mandatory service charge" which some restaurants add on to bills for large tables, private parties, catered parties or special events. While some states consider this to be money owed to the employer, New York law establishes a rebuttable presumption that any charge in addition to charges for food, beverages, lodging, and so on, is a gratuity which must be distributed to employees. However, the tax treatment of those distributed as tips can be a burden on both employer and employee. Any portion of such a charge which the employer pays to employees must be treated as wages. This means the employer must withhold additional funds for FICA and may not claim any credit as it can for tips. Also, employers must include them as part of the employee’s hourly wage when determining overtime payments.

So when is a tip really a tip and not a service charge for tax purposes? For the amount to count as a tip rather than a service charge, all of the following must be true:
  • The payment must be entirely voluntary;
  • The customer must have the unrestricted right to determine the amount of the tip;
  • The amount cannot be set by any employer policy or be subject to negotiation with the employer; and
  • The customer must have the right to determine who receives the payment.
In other words, tips are payments outside of the control of the employer.  However, there are instances where employers may require employees to hand over their tips:
  • The employer takes a tip credit. New York law allows employers to count all or part of an employee’s tips towards its minimum wage obligations. The credit is the amount the employer doesn't have to pay towards the applicable minimum wage (which is the higher NY minimum wage.) If an employee doesn’t make enough in tips during a given shift to earn at least the applicable minimum wage, the employer has to pay the difference. The amount of an applicable tip credit depends on the employer’s industry and the employee’s job duties, and employees must be informed of the tip credit in writing.
  • The employee is part of a valid tip pool. Under both federal law and New York state law, employees can be required by their employer to pay part of their tips into a shared pool with other employees. Only employees who perform personal service to patrons as a principal part of their job may participate in the pool. All employees in the pool must contribute a portion of their tips that then gets divided among the employee pool. However, if the employer takes a tip credit, the employer counts only the tips the employee gets to take home up to the minimum wage limit as the credit. The employer may not keep any part of the pool or tip sharing arrangement -  it all must be distributed to employees. Employees who have limited supervisory duties may participate in the pool if providing personal service to patrons is a regular or principal part of their duties. However, an employee who has meaningful authority or control over other employees may not take part in the pool.
For more information on tips and how they should be treat, we recommend consulting with the NYS Department of Taxation and Finance
*Gene Berardelli may be contacted at:

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, October 18, 2016

Some Uber Drivers May Be Entitled To Unemployment Benefits

NY Legal News, NY Business Law.
An administrative ruling out of New York state found that, under certain conditions, Uber drivers may be entitled to state unemployment benefits.

The NYS Department of Labor (DOL) ruled that two Uber drivers were eligible for weekly jobless benefits. This represents the first time that a state government have determined that drivers for a ride-sharing company are employees. To date, states have found - and companies like Uber have argued - that drivers for ride-sharing companies were independent contractors who are ineligible for jobless benefits.

We here at The New York Law Blog have discussed the differences between an employee and an independent contractor in the context of continuing federal litigation involving Uber.  
Uber and other ride-sharing company are part of a larger development in business termed the "gig economy," which is an environment where independent workers contract for temporary positions for short-term engagements.

Uber's critics have argued for some time that it should be accountable to employees for unemployment benefits because it controls where drivers pick up and drop off riders and its profits are tied to the work of those drivers. Uber has countered by arguing that drivers use the app on their own terms, and have ultimate control of their schedules, including where and when they drive.

Uber plans to appeal the DOL's ruling. At stake for Uber is a windfall of profits that keeps the ride-sharing company at a competitive advantage against local taxi companies. In New York, appeals are heard by DOL administrative law judges. If employment status is still at issue, appeals are also heard by the DOL's Unemployment Insurance Appeal Board. Disputes beyond this level of review go to the Appellate Division, Third Department, in Albany.

The employment status of drivers participating with ride-sharing companies - and indeed in other gig economy businesses - remain in flux. This may be intentional, as the DOL's decision stated that determining unemployment is made on a case-by-case basis and depend on the facts of a given case.
*Gene Berardelli may be contacted at:

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, October 17, 2016

What I Learned About International Business Law By Visiting Seoul

International Business Law, IPG Legal
I took this one morning in Seoul to see if I could capture a
normal weekday morning near IPG's law office. 
I took away a few lessons in law that businesses looking to expand internationally must consider after recently visiting my partner Sean Hayes in his adopted home of Seoul.

First, show some respect to your target market. Just like when you chose your domestic business target market, observing your desired international target market is right at the top of your list of things to do before expanding. But, there are extra added wrinkles.

Understand that, in some places, you will be considered "outside" the culture, and may face a cultural bias as an obstacle to penetrating your international target market. Places that have a long history and tradition that are different than western culture should be respected and understood, not discounted. So learn the culture. Visit often. Sample the cuisine. Go to festivals. And stay away from the tourist traps so you see the everyday life and routine of your desired international target market. This will inform you of not only your customer base, but also inform your marketing strategies and help you gauge your employment pool.

The best thing to do is, at the very least, to appoint a registered agent in your international target market. Retaining a registered agent in the country you plan to do business with, such as a local law firm, will be your official “contact point” for accepting legal documents, and will give you a local presence that may offset any institutional bias your business may experience. Retaining a local law firm can also help you navigate the applicable treaties and/or business regulations that would otherwise trip up your progress.

Second, consider currency exchange rates as you choose your international target market. This will allow you to maximize your potential for buying and selling inventory. This will also help you assess your risk factors is setting up shop overseas. Also, keep in mind that you may need to retain outside help, especially if collections will become an issue.

Third, just like in the U.S., consider the tax system. This is a no-brainer because, as you know already, the key to doing business anywhere is to maximize your revenue and bottom line.

Finally, always remember that foreign legal systems may not have the same legal values as the American legal system. Some may be impartial and consider protecting native customers and businesses a considerable factor to weigh. Some may be politically motivated when considering business or commercial disputes. Whatever the case may be, ask your lawyer for counsel about the integrity of the court system before opening up shop overseas.

Failing to do your international homework can be disastrous to your business. Selecting the wrong location will damage your revenue, operations, and bottom line.
*Gene Berardelli may be contacted at:

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, October 14, 2016

Federal Court Dismisses Claim That Disney Violated H1-B Visa Law

Employment Law, Legal News, Disney
A federal judge dismissed lawsuits brought by two former Walt Disney Parks and Resorts workers claiming that it conspired with outsourcing companies to violate visa laws.

According to published reports, the lawsuit claimed that two American IT workers were laid off and forced to train foreign replacements with H1-B temporary visas after Disney and two contractors, Cognizant Technology Solutions and HCL America, allegedly colluded to make false statements when they applied for the temporary visas. However, a federal judge rejected this assertion, finding that none of the statements put at issue in the complaint were adequate to sustain the former workers’ cause of action.

As discussed in a previous blog outlining the different temporary visas that the United States makes available to non-immigrant workers, a H1-B visa allows domestic companies to employ foreign workers in specialty occupations that require technical expertise in specialized fields such as in architecture, engineering, mathematics, other sciences, and medicine. It is highly-sought by businesses, with limited visas available and many applications filed annually. 

The plaintiffs pinned their case on the argument that the companies had violated clauses of the visa law requiring employers to show that hiring H1-B workers “will not adversely affect the working conditions” of other workers in similar jobs. The law requires large outsourcing companies that employ many H1-B workers to certify that incoming workers will not displace any similarly employed U.S. worker within six months of the visa application.

The outsourcing companies successfully argued that the law did not apply to them because the plaintiffs who were displaced were not originally their employees. While the Court accepted the defendants' argument, it granted the plaintiffs an opportunity to re-plead an amended lawsuit. However, whether plaintiffs have an alternative legal theory to base their claims remains in doubt.

The effects of the decision may have a negative effect on the American workforce, particularly in the IT field, where H1-B workers are highly sought. It is now theoretically confirmed that an outsourcing company can effectively supplant American workers of a company it services without concern for H1-B visa laws protecting those native workers.
*Gene Berardelli may be contacted at:

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, October 11, 2016

Reform Group Files Suit Claiming NY's Daily Fantasy Sports Law Is Gambling, Not Skill

NY Legal News, NY Litigation
An anti-gambling reform group filed a lawsuit last week claiming that New York's "Daily Fantasy Sports" law violates the state constitution by characterizing daily fantasy sports contests as games of skill, rather than games of chance.

The suit was filed in New York Supreme Court in Albany County by an organization called Stop Predatory Gambling on behalf of 4 New York resident plaintiffs who claim to have been negatively impacted by gambling. According to published reports, the suit "seek(s) to protect the public from predatory gambling consistent with the constitution."

Article 1, Section 9 of the state constitution, states, in part that "[n]o law shall be passed… except as hereinafter provided, no lottery or the sale of lottery tickets, pool-selling, bookmaking, or any other kind of gambling, except lotteries operated by the state… except pari-mutuel betting on horse races…  and except casino gambling at no more than seven facilities as authorized and prescribed by the legislature shall hereafter be authorized or allowed within this state." The lawsuit argues that “interactive fantasy sports” as defined in the law is "gambling that falls within the express prohibition” discussed in the state constitution.

The suit points to New York Attorney General Eric Schneiderman's legal opinion from last November that declared daily fantasy sports companies like FanDuel and DraftKings were operating in violation of New York state gambling laws. However, that opinion was issued before New York passed legislation exempting fantasy sports from state gambling law. Schneiderman's office has since stated it will defend the new DFS law.

This blog has been carefully tracking the news surrounding New York's adoption of "daily fantasy sports" laws, including the process of developing the legislation that eventually passed this summer, as well as discussed possible flaws in the new law's application. However, nothing in our analysis indicates that the new DFS law violates the state constitution.

Opposition to the lawsuit argues that New York's state constitution specifically gives the legislature the power to define what gambling is and is not - a power which it exercised by passing the DFS law this summer.
*Gene Berardelli may be contacted at:

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, September 28, 2016

Filing For Divorce In New York: Residency Requirements and Permissible Grounds

NY Divorce, NY Domestic Relations
Before filing for a divorce in New York, you must meet the residency requirement as outlined in New York's Domestic Relations Law, and you must have a legally acceptable reason, or "ground," for the divorce.

Domestic Relations Law § 230 outlines the residency requirement that parties seeking a divorce must meet to legally pursue a divorce in New York. There are a few ways parties can meet the residency requirement:
  • Either you or your spouse have been living in New York State continuously for at least two years before the divorce case is started;

  • Either you or your spouse have been living in New York State continuously for at least one year before the divorce case is started and 
    • you got married in New York State, or 
    • you lived in New York State as a married couple, or 
    • the grounds for your divorce happened in New York State; 

  • Both you and your spouse are residents of New York State on the day the divorce is started and the grounds for your divorce happened in New York State.
Once the residency requirement is met, parties seeking a divorce musthave a "ground" for divorce found in Domestic Relations Law § 170. There are seven grounds for a divorce accepted by the courts in New York State:
  1. Irretrievable breakdown in relationship for a period of at least 6 months: Commonly referred to as "no-fault divorce," New York recently amended the law to include this ground. To use this ground, the marriage must be over for at least 6 months, and the parties have settled all economic issues, including debt accumulated during the marriage, division of marital property, and custody and support of the children.

  2. Cruel and inhuman treatment: To use this ground, a party must prove to a judge that specific acts of cruelty occurred in the last five years. Arguments or simply not getting along does not meet the burden of proof necessary because the cruelty must rise to the level of physical or mental danger and continuing to live with the offending spouse would be unsafe or improper.

  3. Abandonment: To use this ground, the spouse must have "abandoned" the party seeking a divorce for at least one year. Abandonment is legally defined as actual, such as where the spouse physically leaves the home without any intention of returning, or constructive, where the spouse refuses to have sex for an extended period of time.

  4. Imprisonment: To use this ground, the spouse must have been in prison for 3 or more years in a row after the marriage began. This ground is available while the spouse is in prison or up to 5 years after the spouse was released from prison.

  5. Adultery: To use this ground, a spouse seeking a divorce must prove that his/her spouse committed adultery during the marriage by producing evidence from someone besides the two spouses. For obvious reasons, this ground is hard to prove.

  6. Divorce after a legal separation agreement: To use this ground, the spouses must have signed and filed a valid separation agreement and live apart for one year. A judge must determine that the separation agreement meets specific requirements in order to be judged valid.

  7. Divorce after a judgment of separation: To use this ground, the N.Y. Supreme Court would draw up a judgment of separation and the married couple live apart for one year. This ground is not used very often, as many couples agree to a legal separation agreement and do not rely on a judicial decree of separation.  
*Gene Berardelli may be contacted at:

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, September 27, 2016

New York City Considering Subsidizing Legal Counsel For Low-Income Persons In Housing Court

NY Landlord-Tenant Court, NY Legal News
The line for the Housing Court Clerk in Brooklyn
Courtesy:  New York Law Journal
The New York City Council is considering legislation that would make New York City the first jurisdiction in the nation that would confer the right to counsel in housing court for low-income persons.

The bill would guarantee civil legal counsel for low-income tenants in an eviction or foreclosure proceeding, so long as they meet the eligibility cut-off on gross income set at 200% of the federal poverty line (or about $48,600 for a family of four). A lawyer would be appointed by a “civil justice coordinator” from a list of pre-approved legal organizations. The City of New York would then foot the bill for the legal work.

New York City is considering the measure in response to a report published in June by the newly created Office of Civil Justice that found that more than 70 percent of low-income tenants in New York City go without legal representation in Housing Court, while landlords almost always appear with counsel. Last year, New York City had over 22,000 evictions ordered. Many see an inequity in bargaining power, relying on anecdotal accounts of tenants facing an uphill court battle. 

The bill is supported by the New York City Bar Association and traditional tenant rights advocates, as well as many high ranking city officials. There is even a website dedicated to the initiative.

Taxpayers may not be too thrilled with the potential cost to taxpayers, which are estimated by the Wall Street Journal reports to be about about $200 million a year, but will be more than offset by decreases in costs to operating homeless shelters and affordable housing costs savings.

This effort is the latest in advocates fighting to extend the right to counsel. A federal appeals court shot down a class action over whether poor children in immigration proceedings have a right to government-appointed counsel.
*Gene Berardelli may be contacted at:

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, September 26, 2016

Pokémon Go Lawsuit Claims Game Creators Entice Users To Trespass

NY Legal News, NY Litigation, Pokemon Go
Creators of the popular Pokémon Go augmented reality game are litigants in a lawsuit claim that the game entices users to trespass on other's properties.

Nintendo, the Pokemon Company and Niantic Labs are named in a lawsuit filed in New Jersey on behalf of Jeffrey Marder, a homeowner who claims to have had a number of unwanted encounters with Pokémon Go Players on his property.

As dicussed in a previous blog posting, augmented reality games involve live direct or indirect views of a physical, real-world environment whose elements are augmented (or supplemented) by computer-generated sensory input such as sound, video, graphics or GPS data. When playing the game players use their smartphone's camera feature  to "see" Pokémon's fictional creatures. In the case of Pokémon Go, fictional creatures are projected onto a mobile device's camera through the game's app and overlays project Pokémon over the physical world, as well as other items called "Pokéstops" and "Pokémon gyms" that attract players seeking to catch new Pokémon or battle previously caught monsters to go to those locations.

The suit claims that, on at least 5 occasions, strangers have knocked on the door of his home requesting access to the property to "catch" Pokemon that the game creators had placed there in the game. Marder seeks personal compensation and an order that the game makers update and adjust the game to prevent future trespasses. The lawsuit also claims that the creators of the game "placed" some of these virtual "Pokéstops"on overlays of private property without permission, creating unwanted attention and disturbance. The plaintiff in this particular lawsuit is seeking class action status for his case, claiming that his privacy issue are not unique, and that many other property owners have suffered trespassers playing the game resulting from overlaid objects virtually placed onto private property.

This situation as described in the lawsuit was, at least to us here at IPG, a foreseeable concern, as we anticipated "over-zealous gamers trespassing" onto properties.

Since service of the lawsuit, Niantic Labs has updated the game with a warning to players to use common sense and obey all laws, including a warning to players not to trespass.  Upon the game's release, it also included a set of disclaimers for liability resulting in property damage, personal injury or death committed while playing the game. It also disclaims liability based on violations of any other applicable law.

The disclaimer also generally requires arbitration of disputes that may arise from the game. While there may be an argument that this lawsuit should be dismissed in favor of arbitration, it remains to be seen how the court would respond to such an argument because the lawsuit is not based on the litigant's actions in utilizing the game, but in the game creator's placement of virtual objects causing others to violate the law.

We here are IPG will continue to monitor the legal evolution of claims involving augmented reality games.
*Gene Berardelli may be contacted at:

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, September 23, 2016

New York Extends Time For WTC Disability Claims By 9/11 First Responders

NY Administrative Law, NY Health Law, WTC Disability Law
This week, New York Gov. Andrew Cuomo signed a law that extended the submission deadline for disability claims by first responders who worked at the World Trade Center (WTC) and related rescue operations after the September 11, 2001 attacks.

The submission deadline under the WTC Disability Law has been extended to September 11, 2018 for first responders affected by the terror attacks. This applies to claims for lost wages and medical benefits for illnesses (including workers' compensation, disability claims and accidental death benefits) resulting from participating in activities at or near the WTC recovery site in lower Manhattan. Medical claims covered include respiratory, psychological and skin diseases, as well as other serious illnesses like cancer, pulmonary disease, asbestos-related ailments and heavy metal poisoning.

The WTC Disability Law establishes a presumption that certain disabilities for certain New York City employees were caused by rescue, recovery or clean-up operations at the World Trade Center during the September 11 attacks. According to the City of New York, the law entitles qualified uniformed members of NYPD, FDNY, DSNY, DOC and other civilian employees to accidental disability retirement benefits if the person:
  • Worked at a WTC site at least 40 hours during the period beginning on September 11, 2001 and ending on September 12, 2002 (or was unable to work 40 hours due to a physical injury incurred during WTC-related work on September 11 or September 12, 2001), or
  • Worked at Ground Zero during the first 48 hours after the terrorist attacks on September 11, 2001, and
  • Has developed, or develops in the future, certain physical and mental conditions.
Lawmakers determined that this extension is necessary to cover qualified employees with related medical conditions that remain latent for many years following exposure to the WTC recovery site.

First responders can also enroll in the WTC Health Program administered by the National Institute for Occupational Safety and Health. This program provides medical services available through clinics in New York City that were set up under the James Zadroga 9/11 Health and Compensation Act passed by the federal government. In October 2015, the federal government extended Zadroga Act coverage for 75 years.

Registration is still open to make a claim under the Zadroga Act through 2018, but only for new onset Chronic Obstruction Pulmonary Disease diagnoses on or before August 4, 2016 for persons who can verify their presence at or near the WTC recovery site. Anyone who was diagnosed after August 5, 2016 has two years to put in a Zadroga Act claim, but the claim must be filed no later than August of 2020.
*Gene Berardelli may be contacted at:

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, September 22, 2016

What Can and Cannot Be Included In A New York Prenuptial Agreement

NY Family Law, NY Divorce Law
In light of the impending divorce of superstar couple Brad Pitt and Angelina Jolie, now is a good time to become re-acquainted with what a prenuptial agreement is and what can and cannot be included in such agreements in the State of New York.

A prenuptial agreement is a contract between future spouses that they agree to prior to getting married where they each disclose to each other all the money, property and assets each own and determine their respective rights. The agreement sets in writing a future spouse's rights and responsibilities that s/he will have during the marriage, as well as how all money, property and assets will be divided in the event of divorce or the death of a spouse. While New York law already covers how money, property and assets would divided in the event a marriage ends in divorce or death, courts recognize valid prenuptial agreements that create division of property that differs from the statutory scheme and order that they control.

In New York, a prenuptial agreement is valid and enforceable so long as it protects both spouses and it was entered into with full and fair disclosure of all assets. New York also requires that a prenuptial agreement be executed much in the same way a deed is signed and recorded, with the parties being required to have separate attorneys to avoid any appearance of fraud.

A prenuptial agreement can address:
  • Defining property: Property and assets brought into a marriage is called separate property. So long as separate property specifically referenced in the agreement remains separate in ownership from property you and your spouse obtained together (or, marital property), then that separate property continues to belong to that spouse alone during and after the marriage. However, if a spouse does not keep his/her separate property in their own name only (for example, adding a spouse to a home you owned prior to marriage) then such separate property may become marital property and divided equally in a divorce under New York law. Future spouses can also establish who is responsible for pre-martial debt.

  • Maintenance and Child Support: A prenuptial agreement can establish maintenance, or a regular payment of money as support. This may become necessary if, for example, a spouse gives up a career to remain at home to raise children. Maintenance can also be established in the event of a divorce. If the spouses bring minor children to a marriage, a prenuptial agreement can help make sure the children are provided for if the spouses divorce.  
However, there is one aspect of family life that a prenuptial agreement does not generally cover:
  • Child Custody / Visitation: A prenuptial agreement cannot definitively address child support issues or custody issues for unborn children because a New York court is bound by law to determine whether child support and custody arrangements are in the best interests of a child.
A spouse may challenge the validity of a prenuptial agreement for certain reasons, including fraud (intentional failure to disclose assets), coercion (agreement signed under threat or duress) and unfairness (agreement was tailored inequitably in favor of one spouse to the detriment of another).

Prenuptial agreements are not simple instruments. They are, in fact, complicated and complex not only because of the legalities of the agreement, but the high emotions that can result from drafting, executing and, unfortunately, disputing the agreements in the event of divorce. That is why we recommend that you discuss these issues completely with your soon-to-be spouse before even considering hiring an attorney experienced in handling these delicate issues.
*Gene Berardelli may be contacted at:

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.