The New York Law Blog: October 2016
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Monday, October 31, 2016

New York Businesses With Multiple Owners Should Create A Buy-Sell Agreement

NY Business Law, Business in NY
When there is more than one owner of a New York business, creating a buy-sell agreement can save time and money when the eventual change in ownership occurs.

New York business owners know that circumstances can change at a moment's notice. That is why ensuring that your business is prepared for whatever waits around the corner is crucial. Part of being fully prepared is having a buy-sell agreement in place.

New York businesses of all forms and sizes with more than one owner should create a solid buy-sell agreement in anticipation of future changes. A buy-sell agreement, also known as a buyout agreement, is a legally binding agreement between co-owners of a business that governs the situation if a co-owner chooses to leave the business, is forced to leave the business or passes away.

Creating buy-sell agreements come with many advantages. First, the cost of creating a buy-sell agreement is small compared to the potential savings in time and money down the road that would be devoted to settling ownership conflicts. Second, a buy-sell agreement stops all infighting among owners before it begins, which keeps the business afloat and its goodwill and customer base intact. Third, the reciprocal nature of  buy-sell agreements affects all owners equally, which makes it easy for all owners to agree to terms. Finally, in the case of inter-generational businesses where ownership is passed within a family, a buy-sell agreement may be tailored to avoid estate taxes and family squabbles.

There are two types of buy-sell agreements. A redemption agreement states that the shares of a former owner can be purchased by the business itself. A cross-purchase agreement allows another owner to purchase the shares individually. Pricing terms can be pre-determined among the owners of your business, or owners can create a formula for valuation.

If drafted by an experienced business attorney, a buy-sell agreement can be surprisingly simple and low-cost when compared to the potential costly problems not having an agreement can cause in the future.
*Sean Hayes may be contacted at: Sean Hayes is co-chair of the Korea Practice Team and Chair of International Practice Group at IPG Legal.  He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.  Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  He has, also, received the highest rating by AVVO and other legal rating services.

*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 28, 2016

Recommended Steps For Acquiring Small Businesses in New York

NY Business Law, Acquiring Small Businesses
When acquiring a small business, we recommend a more nuanced approach that contemplates matters beyond cost analysis and dollars and sense.

Small businesses are the engine of American enterprise and continue to play a vital role in the economy of the United States. According to a 2012 Small Business Administration report, small businesses "produced 46 percent of the private non-farm GDP in 2008 (the most recent year for which the source data are available), compared with 48 percent in 2002."

Small businesses are also unique in that they engender loyalty from employees who take greater pride in building a business and who are personally invested in the business's success than if they worked for a larger company. Customers can also be more loyal to smaller businesses for reasons beyond price.

Given the above, here are a few of the important steps involved in purchasing a small business.
  1. What's The Plan? When buying a small company, understand the goal of the purchase before initiating any process. Are you buying the business because of its name?  Are you interested in its intellectual property?  Are you buying the business as a whole? Are you only purchasing the talent? Each scenario comes with its own challenges and steps forward that should be fleshed out with the assistance of an attorney. 

  2. Respect What The Target Company Has Built. Regardless of your target, part of your plan must be to respect what the target company has built in terms of customer base and product. Buyers should honor the existing products or services as well as the customer base. You are, in most cases, acquiring a business because of the good will developed by that business through product development and customer service. If you are to disregard those customers, you may lose them.

  3. Respect Who Built The Target Company. New team members that remain from the target company will most likely look at the company they’ve created with pride. Failing to respect their achievements will most likely lead to employees feeling undervalued and looking to leave for other opportunities in the job market. Disregarding a target company's progress will be disheartening for the team that built it - a team you may want to make your team. Get to know your new employees and integrate them accordingly into your business. 

  4. Who Will Stay And Who Will Go? When acquiring a business, having a plan in place regarding which employees and consultants will be retained after a purchase is vital. Establish this plan early on with the seller so the process is as quick and painless as possible for all parties concerned.
The goal of every start-up is to, one day, become one of those big success stories that experience record growth and profits. Having the right planning and preparation is essential to ensure the greatest possible chance of reaching that goal.
*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, October 27, 2016

Benefits And Drawbacks Of A Reverse Merger For New York Businesses

NY M&A Law, Reverse Merger
If you are looking to take your New York private business public, consider the benefits and drawbacks of a reverse merger.

Often, executives and owners of successful New York businesses may wish to capitalize on that success by making shares of the business’s stock available to the public. Having a public company provides additional benefits to businesses, including expansion of  business dealings and attracting highly talented hires with offers of stock options.

In a reverse merger, investors of a privately-held company acquire a majority of the shares of a publicly-held "shell company," which is then merged with the privately-held company. To consummate the deal, the private company trades shares with the public shell in exchange for the shell company's stock, transforming the acquiring private company into a public company.

An advantage of undertaking a reverse merger is the comparative ease of transitioning into a public company. Typically, shell companies are used by investment banks and financial institutions as vehicles to complete these types of deals because the shell companies are simply structured and can be registered with the SEC easily and inexpensively prior to the reverse merger. Also, acquiring a shell company is a way to work around the more conventional route of initial public offerings (IPOs), which may take several months to over a year to complete.

Another advantage of a reverse merger is that, generally, it gives the newly-merged public company greater liquidity and access to valued capital markets. This simplified process is favored because it allows New York business owners and executives to create a publicly-held company without having to raise capital.

A potential disadvantage to reverse mergers is that managers are often inexperienced in the additional regulatory and compliance requirements that comes with being a publicly-traded company. This can be significant because the initial effort to comply with the additional regulations and responsibilities may result in the company under-performing while managers devote time to administration over business operations. To alleviate this risk, newly-public companies sometimes turn to experienced investors familiar with the role of officers and directors of a public company. Another solution is to hire employees and consultants, such as attorneys and financial professionals with relevant experience, to bridge the compliance gap.

When considering a reverse merger, as with any merger and major acquisition, retaining the right attorney is key to ensuring that your company’s best interests are represented.
*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, October 26, 2016

What To Consider Before Starting A Home-Based Food Business in New York

NY Business Law, Business in NY, Home-Based Food Businesses
If you are looking to create a home-based food business in New York, then you should become familiar with what you can and cannot make, as well as the rules and regulations that exist.

Before you even think about launching your home-based food business, check with your city or town to see if you will be able to comply with local zoning laws that govern where you can run a business from your home. In many cases, there are limitations onthe percentage of your square footage within your home that you may dedicate for a home business. There may even be a complete restriction on running certain businesses in your neighborhood. Obviously, this can only be addressed on a case-by-case basis, so consult with an attorney before taking any further steps.

Also, before you can operate a home-based food business in New York, you must follow the rules of safe food handling and processing. For instance, New York City requires commercial food preparers to have a Food Handler License. Home processors can apply for a “home processing exemption” to the food handling license.

Also known as a “20-C exemption," home processors must first have this exemption approved before starting to operate a home-based food business. The application can be found on the website of the New York Department of Agriculture and Markets. Also note that, if your home is on a private water system, such as use of well water, home processors must arrange for a potability test of their water source, the results of which must be included with your application. Also be aware that your kitchen will also be subject to inspection by the NYS Department of Agriculture.

Once your application is processed and approved, the exemption allows home processors to make the following food products only in your home kitchen:
  • baked goods that don’t require refrigeration, including breads, rolls, cookies, double crust fruit pies, brownies, and cakes 
  • traditional fruit preserves, such as jams, jellies, and marmalades 
  • candy, except for chocolate candy 
  • repackaged commercially dried spices and herbs 
  • snack items, such as popcorn, caramel corn, and peanut brittle 
You can find more information about the foods you can and cannot prepare in a home kitchen by visiting this section of the New York Department of Agriculture and Markets's website.

Home processors should also know that your home-based food business will be subject to a number of restrictions on where and how you sell your products. Home-based food businesses are:
  1. limited to selling only within the state of New York;
  2. restricted to local venues such as farmers markets, farm stands, or by direct delivery for selling products; and
  3. prohibited from selling directly from your home or through the Internet.
Home processors must also follow rules and regulations requiring them to keep food packaged cleanly and properly. 

Clearly, starting a home-based food business may seem like an appetizing option at first, but like most prized recipes, it is important that you measure the risks, expenses and rewards before getting started.
*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 25, 2016

Five Situations Where A New York Landlord Should Hire An Attorney

NY Landlord-Tenant Law
If you are a New York landlord that owns or manages one or a few rental properties, then you are unlikely to have a lawyer on retainer. To save costs and avoid frustration, landlords should recognize that when these five situations arise, it is time to hire an attorney:
  1. Evicting a Tenant: In New York, an eviction lawsuit is a summary proceeding that takes much less time than other civil matters. But, in exchange for the expedited treatment of cases, landlords must follow detailed court rules to the letter. These rules range from serving proper and timely notice on the tenant to filing the right papers in court with the appropriate legal arguments. Additionally, landlords should know at the outset that judges, who recognize that the subject matter of the litigation is the tenant's home, set a very high burden of proof for landlords to meet. Thus, your case must be properly organized and argued by a skilled attorney. Novice landlords in New York should especially consider hiring a lawyer if (a) you are undertaking your first eviction, (b) the tenant has already obtained legal representation, (c) the tenant is filing for bankruptcy, or (d) you must comply with state and/or municipal rent control or housing program rules.

  2. Sued for Injury or Illness: As a civil litigator represented injured third-parties, I always made a point of suing both the landlord and the tenant regardless of what a lease stated because the landlord, as property owner, always has a non-delegable duty to maintain its property. Thus, if a tenant, guest or third party sues and alleges that s/he got hurt or sick because of your carelessness, then you will almost certainly want to hire a lawyer to defend you. Typically, if you have liability insurance and pay your premiums, your insurer will provide you with a lawyer to defend you against personal injury claims. But remember: you have the right to hire and consult with the counsel of your choice.  

  3. Any Other Time You Are Going To Court: A former or current tenant - or even a contractor you hired - may take you to housing court or small claims court for any number of reasons. Claims range from disputes over security deposits, to allegations of incomplete or negligent repairs within the leased premises to claims for personal property damage. On the other hand, you may find yourself in court as a plaintiff - perhaps a contractor tool your money and did not complete its work. Regardless of the reason you find yourself in court, consider consulting a lawyer. Deciding whether to hire a lawyer should depends on (a) the complexity of the situation, (b) how much is at stake, (c) your budget, (d) your confidence in handling the matter yourself, and (e) your own experience.

  4. Audited By The IRS Or The State: When you learn that the IRS or the NY State Department of Taxation will be auditing your tax return, it's time to hire a lawyer - especially if there is a substantial amount of money at stake. Hiring an attorney can also stop a problem before it starts. For example, hiring a lawyer before auditors find a mistake can help you avoid a potentially damaging and embarrassing situation. Tax issues are usually beyond the grasp of the average New York landlord, so it is smart business to hire the appropriate professional to work for you. 

  5. Managing Your Business & Properties: Depending on your choice of business structure, you may need to file certain documents within New York on a regular basis. An attorney can walk you through creating the proper business structure that will serve your needs, apprise you of the legal and tax ramifications of each form, and lead you to the best business form. Also, an attorney should be consulted when considering taking on partners or re-structuring your business form. Additionally, there are certain matters of business operations that may call for an attorney. For example, buying or selling property as a business comes with legal risks and complex obstacles.  If you, as a landlord, are not familiar with the intricacies of an inspection report, or do not know what it means to obtain a "clear title" - then you need a lawyer that can walk you through the process and avoid common pitfalls. 
When you own property, you are constantly making legal agreements with tenants and third parties. It is best to hire an attorney whenever you are not comfortable with moving forward with any business decision or are unsure of the legal consequences of your actions.  
*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 24, 2016

No, You Cannot Take a "Ballot Selfie" in New York

NY Election Law, NY Legal News, Ballot Selfie
Graphic by:
With the Presidential election looming in a few weeks, here is a reminder that taking a "ballot selfie" to show your social media circles how you voted in New York is actually illegal.

Recent published reports that that federal courts recently struck down bans on ballot selfies in New Hampshire and Indiana led us to research what exactly the law is in New York. Election Law 17-130 states, in part:
Any person who ... makes or keeps any memorandum of anything occurring within the booth, or directly or indirectly, reveals to another the name of any candidate voted for by such voter; or shows his ballot after it is prepared for voting, to any person so as to reveal the contents ... is guilty of a misdemeanor. 
While the law does not specifically mention photographs, New York is one of 18 states that prohibits "ballot selfies" which is a photo of a completed ballot.

The intent of the law is to maintain the secrecy of the voting booth. Advocates assert that laws like this prevent "vote-buying" and coercion.

However, critics disagree, and argue that laws like this were written before the advent of social media, where it has become commonplace for just about everyone to over-share their lives. Critics also argue that sharing a personal experience in voting is a useful advocacy tool in promoting voter participation and issue awareness - especially among younger voters who grew up with the internet.

Federal courts in Both New Hampshire and Indiana found that the prohibitions against "ballot selfies" criminalize political expression, and therefore violate the First Amendment in order to solve a problem no one seems to see as a problem.

So when you go to vote in New York for Donald Trump, Hillary Clinton or whoever else you want to write in, keep your smartphone in your pocket.
*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 21, 2016

Cuomo Signs Law That May Cripple Airbnb in NYC

NY Legal News, NY Business Law, NY Property Law, Airbnb
After a summer of discontent, New York Governor Andrew Cuomo signed the toughest restrictions on short-term apartment rentals in the country that are sure to cripple the operations of Airbnb in the state.

As discussed in many previous blogs here, Airbnb is an online marketplace where prospective guests look for a bed to stay in from hosts listing spare rooms and properties for short term rentals. They operate very much like a hotel where guests stay in the host's property for a fee that is likely to be less than a hotel with concierge and other fringe benefits that the traveler may not need or want.

Under the new rules, which we discussed in an earlier posting here, the liability for advertising short-term rentals would shift from building owners to the renters in "Class A" multiple dwellings (buildings designed for three or more families) and those who place the advertisements on sites like Airbnb. Penalties range from $1,000 for a first offense to $7,500 for third and subsequent violations.

The stated intent behind the proposed bill is to protect New York's hotel industry and owners of multiple dwelling properties by preventing illegal and unregistered hotels from popping up in residential apartment buildings. As we noted here, it was already illegal in New York City to rent out an entire apartment for less than 30 days before the state contemplated this legislation.

Airbnb has been very vocal in its opposition to the legislation. The company repeatedly characterized New York’s existing illegal hotel law as behind the times and refused to help regulators police its bookings. We have noted in the past that Airbnb argues that the language of the law does not distinguish between Airbnb and its users, thus violating the Communications Decency Act which prohibits legislators from sanctioning websites for the content of others. This argument worked in Anaheim, CA to successfully modify similar legislation.

Airbnb also argued that the proposed bill violates First Amendment rights and the Fourteenth Amendment due process rights because penalties are triggered automatically without Airbnb knowing of any non-compliant posting.

The issue became so hot at one point that more than three dozen signatories, including PayPal co-founder Peter Thiel, Facebook co-founder Chris Hughes and venture capitalist Marc Andreessen, drafted a letter in support of Airbnb. 

The New York legislation was fought bitterly by Airbnb. The company even threatened to sue the state should Governor Cuomo sign it - a threat that published reports claim it followed through on, as the company filed claims against the City of New York and state Attorney General Eric Schneiderman in Federal court. Airbnb also requested a temporary restraining order against the implementation of the new law. The new law serves as a devastating loss for Airbnb, whose business is the subject of obstructive action across the U.S.
*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, 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 their 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 treated, 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 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 companies 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 law firm 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.