News and Articles

Apple vs. FBI – Technology and the New Legal Frontier

Yogi Patel - Wednesday, March 09, 2016

Mobile devices in general have arguably taken over as the main portal through which significant portions of people in our society communicate. And with the advancement of technology, the mobile device is now and will continue to become, the main portal through which we engage in every day transactions. We can now use our phones to engage in banking, ordering groceries, booking vacations, researching novel questions, storing our personal information and to do just about anything else we want. The amount of data that can be derived from our mobile devices can reveal just about every aspect of our day-to-day lives. From the websites we visit, to the phrases we search. Our phones, for better or worse, can probably reveal more about us than we could if we tried to provide our own narrative. Think about how naked and vulnerable you felt the last time you left home without your phone. For most of us, it has become a necessity. We truly cannot imagine life without our mobile devices – and this is not going to change anytime soon. We will undoubtedly continue to use our mobile devices to share even more personal information about ourselves. And with this in mind, consider the dispute between Apple and the FBI –which is ultimately between privacy and safety.

The iPhone is known for its nearly impenetrable security features and thus, is one of the many reasons that Apple’s products are considered superior to others in the market place. The latest challenge to privacy comes in the form of the unlocking the iPhone of one of the San Bernardino shooters. The FBI has been unable to unlock and access the device and is now relying on the courts to compel Apple to do so. Apple is not complying because it fears future implications of the government’s ability to access their devices.

While the FBI has only requested that Apple help the government access the gunmen’s iPhone, the broader implications of the request are the true cause of conflict and concern here. The government is essentially asking for Apple to create an encryption system that would provide them access to any Apple device after securing a warrant. The Government’s position appears to be carefully considered and narrowly tailored. Many experts consider this case as the “perfect case” for litigating the issue of privacy concerns against the governments need to access incriminating information in the evolving world where technology controls access. Since the case involves terrorism, the government’s interest in encroaching on privacy concerns is less likely to cause a public outcry and provides sufficient justification for the court’s to reach a decision allowing it to gain access to an encrypted system.

Besides the privacy vs. security considerations implicated here, this case also raises the issue of how far the government can go in requiring a business to perform functions that have no financial value to the Company. In this case, the FBI wants Apple to develop a new version of the iPhone operating system, whereby the new versions would allow the government to bypass the security features on its product. The sole purpose of this software would be to allow the government to have access to the data on such phones when appropriate. Apple’s shareholders do not stand to gain financially by cooperating with the government. In fact, developing this software would arguably weaken Apple’s overall security system and potentially have a negative impact on its market-share and subsequently the value of the Company to its shareholders.

The implication of this dispute also extends to how other privileges could be potentially compromised. Given that smartphones such as the iPhone store so much personal data, it is important to note that if the government were given such access, they would ultimately be able to access emails, photos, and text messages. This access would present challenges to right of privacy amongst privileged relationships. For example, confidential communications between attorney and client, marital communications amongst spouses and patient-psychotherapist relationship may be easily penetrable.

Other technology companies such as Microsoft, Google, Facebook, Twitter and Dell understand the implications of this dispute as well. Most have pledged support for Apple and are expected to submit Amicus positions in the pending litigation. These companies also fear that the government will make similar requests thus compromising their security and intellectual property.

 

This Article was co-authored by Asima Chaudhary, an intern at Lloyd Patel LLP and a second year law student at the City University of New York Law School.

 

New York City Commission on Human Rights Announces Huge Increase in Discrimination Awards in 2015

Erin Lloyd - Wednesday, March 09, 2016

The New York City Human Rights Law applies to most employees working in the five boroughs, and it expands the anti-discrimination protections found in New York State and Federal law. Under Mayor Bill de Blasio, newly appointed Chair Carmelyn P. Malalis, and the current City Council, the New York City Commission on Human Rights—the agency responsible for enforcement and implementation of that law—has stepped up its efforts, and the results are beginning to become clear.

The Commission recently announced that it doubled the average amount collected in damages and civil penalties assessed in employment discrimination claims filed with it, collecting nearly $1.4 million in 2015 alone.

The work of the agency has also increased, with 755 investigations opened in 2015, a 20 percent increase from the prior year. Of those investigations, disability-related complaints comprised the highest proportion of complaints filed, at 31 percent, followed by race-related complaints at 20 percent, and gender-related complaints at 18 percent. National origin discrimination complaints accounted for 15 percent of the complaints filed in 2015.

The New York City Human Rights Law also prohibits discrimination in housing against individuals receiving government assistance with their rent, and complaints of this nature made up 11 percent of the Commission’s cases last year. According to the Commission, their investigations of these types of complaints quadrupled in 2015, from 23 investigations in 2014 to 86 in 2015.

The Commission was able to resolve more than 100 of their cases by settlement or agreement, rather than trial, including both employment and housing complaints, but that leaves a substantial number of investigations that resulted in or are still waiting for trial with the Commission.

Claims that fall under the New York City Human Rights Law can be either filed in court or filed with the Commission, but once a claim is filed in either venue, a plaintiff cannot change his or her mind and file it in the other venue. For that reasons, and many other reasons, consulting with an attorney prior to filing any claims is important. Our attorneys represent employees in a wide variety of employment matters and would be happy to schedule a consultation to discuss your particular situation.

For more information, contact us here

 

Legal Update - February 2016 Newsletter

Yogi Patel - Monday, February 08, 2016

 

Dear valued clients and supporters: This month's newsletter will focus on: (1) Updates and developments under New York State Human Rights Law and guidelines issued by the New York City Commission on Human Rights and (2) recent developments at Lloyd Patel LLP.


New York State Human Rights Law Developments
Employers and employees are advised that several new protections for employees under New York State Human Rights Law passed by the State Assembly last year went into effect on January 19, 2016.

One amendment expands on existing prohibitions against paying women less than their male colleagues for performing similar work and clarified what criteria would be appropriate for differential in pay not based on gender/sex. The same amendment also made it easier for women to find out of they are being paid equally and protects them from retaliation for sharing wage information with other employees. Additionally, New York State Human Rights Law now requires that employers provide reasonable accommodations to pregnant employees in the form of schedule adjustments or alterations in job duties. Other amendments prohibit discrimination against employees based on their familial status (specifically against single mothers); allow victims of employment and/or credit discrimination based on sex/gender to recover attorney's fees when they file claims; and expand protections to all employees, including those previously exempt, against sexual harassment.

The Assembly also made two amendments to New York State Human Rights Law unrelated to employment. One such amendment protects individuals against discrimination and eviction based on their status as domestic violence victims. Another amendment augmented the state's human trafficking laws by increasing the penalties for traffickers, providing training to law enforcement officers, and allowing trafficking victims to sue for damages, including attorney's fees. Individuals and employees should familiarize themselves with these new developments to ensure that they know their rights and that all parties are in compliance with New York State Human Rights Law.

New York City Commission on Human Rights
Employers and Employees are advised that the New York City Commission on Human Rights issued legal enforcement guidelines on the protections against discrimination, harassment, and retaliation based on gender identity and expression under New York City Human Rights Law. The guidelines rebuke acts and omissions that intentionally refuse to use an individual's preferred pronoun or title; require that individuals be allowed to use whatever bathroom is consistent with their expressed gender; and prohibit the imposition of uniforms or grooming standards based on sex or gender. The Commission's mandate includes other protections, including health care-related protections for transgendered people, it makes clear that the guidelines are a floor, not a ceiling, and that there is an overall intent to prohibit any form of gender identity-based discrimination.

Employers are advised to analyze and implement their policies and procedures accordingly.

Development at Lloyd Patel LLP
We are pleased to announce the re-location of our main office to 65 Broadway, 7th Floor. New York, NY 10006.
And we are also excited to announce expansion plans and the opening of a satellite office in Long Island City, which we anticipate to be operational by March 1, 2016. Additional details will be forthcoming on Facebook, here on our website and next months's newsletter.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.

 

When a Trademark Licensor Goes Bankrupt

Yogi Patel - Tuesday, January 05, 2016

Businesses often enter into licensing agreements to use a trademark belonging to someone else. One of the most essential circumstances to consider before expending any resources on a trademark license is what happens in the event that the owner of the trademark declares bankruptcy. Businesses who develop products, perform research, and make sales revolving around a trademark license, savvy planning in advance is essential for protecting their interests. Poor planning or a failure to do so can result in the license being revoked, even if paid for in advance, resulting in the licensee's business potential failure. A more in-depth article on this issue is now available on our website.

In general, courts have found trademark licensing agreements to be executory, meaning the parties to the agreement still have duties remaining to be performed. When a licensor declares bankruptcy, it has the option of assuming or rejecting the agreement. If the agreement is accepted and certain conditions are met, everything continues as normal. However, if the agreement is rejected, there is the very real risk that the licensee will lose all rights to use the trademark, leaving the owner free to re-license the trademark to someone else. While Bankruptcy laws offer some protections for intellectual property, such as patents, copyrights, and trade secrets, courts have split on whether trademarks are included. Because Bankruptcy Courts have the authority to resolve trademark issues, licensees must take steps to minimize the risk of an unfavorable decision.

One possibility is to structure the licensing agreement as a sale or assignment of the trademark. This minimizes or reduces the risks to the licensee as it transfers ownership in the trademark and creates a non-executory contract. However, when this is not possible, another option is to require that the trademark be owned by a limited liability company with the single purpose of holding the trademark. The LLC can also be prevented from incurring debt, which greatly reduces the risk of a bankruptcy filing. One last alternative is for the licensee to take a security interest in the trademark, but this is not commonly used as it creates disincentives for both parties. While there are additional drafting techniques one should adopt, such as explicitly referencing Bankruptcy Law protections, combining trademarks in the same agreement as other protected intellectual property, and paying royalties over time, anyone considering entering into a trademark licensing agreement should enlist the services of an attorney to make sure their rights are protected.

Legal Update - January 2016 Newsletter

David Lloyd - Tuesday, January 05, 2016

Dear valued clients and supporters: Happy New Year. This month's newsletter will focus on: (1) The effect bankruptcy of a trademark licensor has on a licensee; (2) The limits on non-compete clauses; and (3) The emergence of "The Internet of Things" and its legal impact.

When a Trademark Licensor Goes Bankrupt
Businesses sometimes enter into licensing agreements to use a trademark belonging to someone else. One of the most essential circumstances to consider before expending any resources on a trademark license is what happens in the event that the owner of the trademark declares bankruptcy. For businesses that develop products, perform research, and make sales revolving around a trademark license, savvy planning in advance is essential for protecting their interests. Poor planning or a failure to do so can result in the license being revoked, even if paid for in advance, resulting in the potential failure of licensee's business. A more in-depth article on this issue is now available here on our website.

 

Grounds for Refusing to Enforce a Non-Compete
In New York, non-compete clauses must be necessary to protect a legitimate interest of an employer, and must be reasonable in scope, duration, and location. Non-compete clauses are generally disfavored as restraints on trade and will only be enforced if signed for adequate consideration - i.e. in exchange for something. In a recent commercial court case involving three former executives of a Suffolk County-based vitamin distributor, NBTY, the judge addressed the validity of a non-compete clause signed after the executives were already employed. Years after being hired, the executives signed a stock option agreement containing a clause prohibiting them from working for any competitor in North America, Europe, or China for one year. The executives all then resigned and began working for a competitor without exercising the stock options.

The court held that the non-compete clause was not supported by new consideration and therefore unenforceable because the executives had chosen resigning over exercising their options. By forfeiting their right to any benefit under the stock option agreement, they rendered the non-compete clause invalid. Additionally, the court found that the geographic scope was unreasonable, noting that such a global restriction was only generally appropriate when a business is sold. Finally, the court rejected the argument that the executives would inevitably misappropriate confidential information, requiring more than hypothetical speculation to form the basis of such a claim.

This case highlights how employers who wish to hold their employees to non-compete clauses must be careful in tailoring their restrictions not only so that they are reasonable and necessary, but also so that they are in exchange for adequate consideration.

 

The "Internet of Things"
The Internet of Things refers to the everyday objects people use - smart phones, smart watches, smart cars, and even smart homes - that are digitally interconnected and function through a computer network that transmits and analyzes high levels of data. These "things" can be typically controlled and/or accessed remotely, and the new digitized "ecosystem" of which they are a part allows for automation, constant monitoring, and instant access to seemingly endless information. Any single device can be composed of parts made by multiple manufacturers, require a local "gateway" through which it connects to a greater network and other devices, and function through a cloud computing platform. While consumers and businesses alike enjoy the increased functionality the Internet of Things provides, the ever-expanding network of devices, systems, subsystems, clouds, and people has created a whole universe of legal considerations.

 

For one, with such vast access to and exchanges of data, participants in the Internet of Things must take steps to protect the privacy of personally identifiable information. Additionally, other data, such as sensitive or secret information, and control over a computer network, must also be heavily protected, making cybersecurity paramount. Other potential sources of intense litigation will be over the ownership of the various data generated by the Internet of Things, the ownership of the underlying technology/processes on which it all functions, and as well as accusations of anti-trust violations. Finally, when things go wrong and devices malfunction, break, and/or injure a user, with all the potential parties involved, determining whom to hold liable will be a complicated matter. All of this inevitably will result in an increase of rules, laws, and regulations governing the Internet of Things as it develops, and any supplier, manufacturer, or participant should consult with an attorney about potential liabilities before injecting a product into this emerging ecosystem.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on this and other issues throughout the month.

 

Business Owners May Be Liable for Business Debts and Transactions Through the Alter-Ego Doctrine

Erin Lloyd - Thursday, December 03, 2015

The chief purpose of forming a corporate entity is to protect the business owner’s personal assets. Incorporation protects these individuals from being held personally liable for their company’s debts and obligations. However, the use of corporate form is a privilege, and abuse of its protections can have serious consequences.

For example, when a corporate entity is so dominated by an individual that it primarily transacts the individual’s business instead of its own, it will be called the individual’s alter-ego and the corporate form will be disregarded to achieve an equitable result, Rohmer Associates v. Rohmer, 36 A.D.3d 990 (3rd Dept. 2007).

In order to prevail on an alter-ego claim, a plaintiff must establish that there was such a “unity of interest and control” between the individual defendant and the entity, or between two entities, that they cannot really be said to be separate. See Rohmer Assoc. Inc. v. Rohmer, 830 N.Y.S.2d 356, at *1 (App. Div. 2007). An alter-ego determination by a court does not technically make one entity vicariously liable for the debts of another. Rather, it results in disregarding the separateness of the entities as a legal fiction and treats them as one in the same entity for all purposes. This is applied to limited liability companies as well as traditional corporations.

“Alter-Ego” Liability Does Not Require a Showing of Fraud

It is not necessary to allege or prove fraud in order to pierce the corporate veil under the alter-ego theory. What is required is proof that a corporation is being used by an individual to accomplish his own and not the corporation’s business, and that the business owner’s control is being used to perpetrate a wrongful or unjust act. The question is whether the corporation is being used as a “shell” by the individual business owner to advance his own purely personal interests at the expense of another party, typically a judgment creditor, Port Chester Electrical Construction Corp. v. Atlas, 40 N.Y.2d 652 (1976). In making an alter-ego determination, a court is concerned with reality and not form. Wajilam Exports v. ATL Shipping, 475 F.Supp.2d 275 (S.D.N.Y. 2006). The focus is on the actual conduct of the dominating business owner and the impact of that conduct on innocent parties such as judgment creditors.

New York Courts Evaluate a Number of Different Factors

The factors relied upon by New York’s courts in applying the alter-ego theory include the use of alleged corporate funds for personal purposes, commingling corporate and personal funds, shuttling funds between personal and corporate accounts, the use of common telephone numbers and office space, using the corporation as a “shell” to advance personal rather than corporate interests, and otherwise abusing the corporate form.

When the use of an incorporation entity privilege of is abused, business owners may be held liable through the alter-ego doctrine in the State of New York. As with any legal transaction matter, individuals are encouraged to consult with an attorney before taking any official action, as every situation is unique and should be independently analyzed.

For more information, business owners can contact us here

December 2015 Newsletter

Yogi Patel - Wednesday, December 02, 2015

Dear valued clients and supporters: This month's newsletter will focus on: (1) The nation-wide increase in the usage of arbitration clauses in employment agreements; (2) Negotiating a more favorable employment offer/agreement; (3) The "Alter Ego" doctrine; and (4) New York City's Fair Chance Act.

 

Arbitration Agreements
In recent years, there has been a nation-wide spike in the usage of arbitration clauses by employers in their employment agreements. The motivation for employers to include such clauses is that they typically require employees to settle any grievances through arbitration, effectively preventing them from bringing an action in court. The clauses also usually require that all disputes be brought individually, which can have the effect of prohibiting employees from bringing class action suits. In the wake of United States Supreme Court decisions upholding the validity of arbitration clauses that prevent employees from bringing a collective suit, many employers are now requiring that all employees agree to arbitration as a term of employment. Employers and employees are advised to consider the implication of this trend, as employers may seek to include arbitration clauses while employees may seek to negotiate the removal of this term when possible.


Negotiating A More Favorable Employment Offer/Agreement
Many employees may not be aware that when they are offered a new position, they often have significant leverage at their disposal to negotiate for better terms of employment. Prospective employees who bring years of experience or unique skills and knowledge should not sell themselves short at the bargaining table, especially prior to accepting an offer of employment. From increases in salary, stock options and other benefits, to more favorable terms of severance, grounds for termination, and restrictive covenants, employees should consider what they can gain through such negotiations. An in-depth article addressing terms that an employee should consider negotiating as well as how to negotiate effectively so that an employer is not "put-off" by your ask is now available here on our website.


"Alter Ego" Liability
The number one reason why business owners form corporate entities is to insulate their personal assets from the liabilities of the company--if the business has an issue that causes it to owe money, the owner's house, bank account, and other personal property cannot be used to pay the company's debt. However, when a business owner abuses this protection and primarily uses the entity for her own personal gain rather than to transact the corporation's business, a court may find that the business is actually the "alter ego" of the owner. Upon such a finding, the owner and the business are treated as one and the owner's personal assets become at risk. To find out more about the factors New York courts look at under an "alter ego" analysis and the consequences of a determination stripping a business owner of the protections of her corporation, please read a more in-depth article posted here on our website.


New York City's Fair Chance Act
On October 27, 2015, the New York City Fair Chance Act went into effect. The law makes it illegal for employers to ask applicants about a criminal record before making a job offer. The Act bans reference to criminal histories or background checks in employment ads, job applications and during interviews. An in-depth article analyzing the Act and an employers obligations under the new law are now available here on our website.


Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on this and other issues throughout the month.

Negotiating a Better Employment Offer/Agreement

Yogi Patel - Tuesday, December 01, 2015

Introduction

Many employees, especially executive level employees, approach an offer of employment as a “take it or leave it” proposition. The reality, however, is that unless you negotiate, you will end up with terms that are generally skewed and favorable to the employer. As with executives negotiating more favorable severance packages, executives negotiating employment agreements should consult with an attorney prior to negotiating or signing any such document. Once you sign on the dotted line, the executive has effectively given up any leverage in negotiating terms that will directly impact his or her role, compensation, future obligations to the employer, including who and where else they can work next. This article will address some of the terms that we recommend an employee should consider negotiating as well as how to negotiate effectively so that an employer is not “put-off” by your ask.

Will My Future Employer Negotiate?

An executive with an employment agreement in hand is in a strong position to negotiate with the employer for better terms of employment. The employment agreement is the last step of an employer’s long recruitment process, which plays largely into the employer’s willingness to negotiate at this point. On the surface it seems the negotiating dynamic is skewed much in favor of the employer, who holds the desired position. However, the employer does not want to lose the person they want most and then have to repeat the arduous recruitment process if all it takes is revising the existing agreement to provide the executive with better terms. Executives who come to their employers with reasonable requests might be surprised by the employer’s willingness to negotiate. This is especially so when the employer has actively recruited the executive from her current employment at another company. This is the first moment where the executive and employer’s interests may clash; and the employer, having pursued the executive, will want to show that it is responsive to the executive’s needs and willing to give them serious thought.

How Does Negotiation Work?

The first step is to understand the terms that are being offered and the future implications of those terms. By reviewing the agreement with the help of employment counsel, the executive will get a full understanding of the agreement’s terms and the risks associated with signing off on those terms—especially restrictive covenants that might inhibit the executive’s growth in the profession should he or she leave the company for a position elsewhere. The goal is to isolate the terms that are important to the executive and that need to be refined with a plan for how the executive will negotiate those terms when he or she next meets with the employer or its representative. For example, an executive who wants to protect themselves from subjective termination would prioritize negotiating a pro-employee “cause” termination clause and a severance package that stipulates the executive will receive earned, unvested compensation if terminated. For an executive whose compensation is primarily based on bonus, equity pay or stock options, the priority will lie with negotiating better vesting options and non-dilution terms.

Once counsel and the executive have worked through the priority of the terms that need to be revised, it is often advisable to have the executive provide an annotated agreement with the revisions built-in to the employer for consideration. The executive must assert their position boldly while being careful not to alienate the future employer with coaching from counsel on presentation of issues. If the executive and the employer fail to compromise, the executive should then consider having his or her attorney engage in direct negotiations with the employer’s General Counsel on behalf of the executive.


So What Exactly Will I Be Negotiating?

Depending on the industry and the executive’s priorities, an employer may seek revisions on any of the following terms of employment.

  • Remunerative terms, such as:
  • • Salary
  • • Bonus
  • • Commission
  • • Stock options
  • • Medical benefits
  • • Retirement benefits
  • • Deferred compensation
  • • Vacation and leave

  • Restrictive covenants, such as:
  • • Non-compete
  • • Non-solicitation
  • • Confidentiality
  • • Preserving trade secrets
  • • Dispute resolution

  • Terms of severance, such as:
  • • Grounds for termination, i.e., for cause, not for cause, mutual agreement, notice requirement, opportunity to cure
  • • Severance pay
  • • Continued medical coverage
  • • Buy-back of equity
  • • Bonus payouts and vesting periods
  • • Dispute resolution (arbitration vs. litigation).

Conclusion

The bottom line is that an executive with an offer of employment and an unsigned employment agreement should always consider negotiating for better terms. If you do not ask, you will never get – but you have to do it with tact and strategy. This article is not intended to be nor should it be construed as providing legal advice. As with any matter, the particular details of each executive’s situation require careful consideration and should be reviewed individually with an attorney.


Yogi Patel, Esq. is an employment and business lawyer and partner at Lloyd Patel LLP, a general practice law firm. He can be reached directly at yp@lloydpatel.com.

Whitney McCann is a second year law student at City University of New York School of Law, interning at Lloyd Patel LLP, and expects to graduate in May 2017.

NYC Fair Chance Act Limits If and How Employers Can Consider Criminal Histories in the Hiring Process

Erin Lloyd - Tuesday, December 01, 2015

On October 27, 2015, the New York City Fair Chance Act went into effect. The law makes it illegal for employers to ask applicants about a criminal record before making a job offer. The Act bans reference to criminal histories or background checks in employment ads, job applications, and during interviews. Only once the employer has made a conditional offer of employment is the employer allowed to inquire into an applicant’s criminal record and determine whether there are grounds to revoke the offer consistent with New York Correction Law Article 23–A (“Article 23–A”). The Fair Chance Act applies to all employment decisions—including hiring, firing, and promoting individuals with criminal histories. This article focuses on the hiring of applicants with criminal records and outlines what employers must do to comply with the new law when they offer a position to someone they discover has a criminal record.

How Do I Comply with the Fair Chance Act?

Prior to Making a Conditional Offer

The first step is to eliminate any reference to criminal histories or background checks in an employer’s employment ads, job applications, and interview practices. Advertisements with phrases such as “no felonies,” “must pass background check,” or “must have clean record” are illegal. As for print and online job applications, employers must rid them of any language inquiring into an applicant’s criminal history or asking an applicant to authorize a background check. This practice is the same during the interview, where the interviewer is prohibited from asking about an applicant’s criminal history.

If during the interview, an employer or hiring manager accidentally discovers the applicant has a criminal record, the interviewer should give the applicant a basic overview of the NYC Fair Chance Act. Explain that employers are only allowed to consider the applicant’s criminal record after making a conditional offer and that it would be inappropriate to discuss the record until that point, if at all. Interviewers may want to make a note in the applicant’s file should disclosure later become an issue.

After Making a Conditional Offer

Only after an employer extends a conditional offer of employment may it ask the applicant, either in writing or orally, whether he/she has a criminal history or pending criminal case. The New York City Commission of Human Rights recommends employers style their written inquiry as follows:

Have you ever been convicted of a misdemeanor or felony? (Answer “NO” if your conviction: (a) was sealed, expunged, or reversed on appeal; (b) was for a violation, infraction, or other petty offense such as “disorderly conduct;” (c) resulted in a youthful offender or juvenile delinquency finding; or (d) if you withdrew your plea after completing a court program and were not convicted of a misdemeanor or felony.)

If an employer runs a background check to determine or confirm the applicant’s criminal history, it is legally obligated to give the applicant the exact information used to inquire into his/her background. For example, if the employer hired a third party to conduct the check, it must turn over a copy of its report; if it found the information online, it should print a copy of the page; if it accessed the information by public record, it must print that page; or if it relied on the applicant’s oral testimony about the record, best practice would be to present a written summary of that information back to the applicant.

Once the employer has the applicant’s criminal record, if it decides the information discovered in the applicant’s criminal history is irrelevant and makes a final offer of employment without regard to the criminal history, and the employer complied with the above requirements, no other steps are required to be in compliance with the law.

Revoking a Conditional Offer

An employer that is unsure whether to hire the applicant based in any part on the information you discovered in this criminal history must carefully and deliberately evaluate whether that criminal record outweighs the reasons the applicant was selected for the position.

For forty years, New York State Article 23–A, has prohibited employers from denying applicants work based solely on a criminal record, and has governed how employers make this determination. Article 23–A requires employers evaluate job seekers and current employees with conviction histories fairly and on a case-by-case basis. It lists eight factors employers must use to determine whether there is a direct relationship between the criminal record and the prospective position or whether, based on the conviction, the employer can show the applicant poses an unreasonable risk to the company’s safety:

  • 1. New York State’s public policy of encouraging the employment of persons with prior convictions;
    • 2. The specific duties and responsibilities necessarily related to the . . . employment sought;
    • 3. The bearing, if any, the criminal offense or offenses for which the person was previously convicted will have on his ability to perform one or more such duties or responsibilities;
    • 4. The time which has elapsed since the occurrence of the criminal offense or offenses;
    • 5. The age of the person at the time of the occurrence of the criminal offense or offenses;
    • 6. The seriousness of the offense or offenses;
    • 7. Any information produced by the person, or produced on his behalf, in regard to his rehabilitation and good conduct; and
  • 8. The legitimate interest of the . . . private employer in protecting property, and the safety and welfare of specific individuals or the general public.
  •  

If after weighing these factors, an employer still wishes to hire the applicant, again, there is nothing more to do.

If, on the other hand, the employer decides to revoke the offer based on the applicant’s criminal history, it must: (1) explain to the applicant why, using the City’s Fair Chance Notice; (2) provide the applicant with a copy of the background check or criminal history information you obtained; (3) and give the applicant three business days to respond to the notice. The Fair Chance Notice acts as the employer’s application of Article 23–A to the applicant’s criminal history; it gives the applicant the employer’s reasoning for wanting to rescind the offer. The applicant has three days to respond to the Notice and should include information about errors in his/her record and any additional information the employer should consider before making the final determination to retract the offer.

The New York City Commission offers free trainings on the Fair Chance Act. Given how dramatically this law changes former employment practices in hiring people with criminal histories, it is important all employers and employees are aware of all its requirements to avoid unlawful discrimination against job seekers with criminal histories. If you are unsure how to apply the new law in your business, or if you feel you have been a victim of unlawful discrimination in the hiring process, our attorneys can help. Contact us today.

Erin Lloyd, Esq. is an employment and business lawyer and partner at Lloyd Patel LLP, a general practice law firm. She can be reached directly at el@lloydpatel.com.

Whitney McCann is a second year law student at City University of New York School of Law, interning at Lloyd Patel LLP, and expects to graduate in May 2017.

November 2015 NEWSLETTER

David Lloyd - Tuesday, November 03, 2015

Dear valued clients and supporters: This month's newsletter will focus on: (1) New York City legislation, effective January 2016, expanding the right to pre-tax transit benefits for certain employees; (2) Governor Cuomo’s recently introduced statewide regulations prohibiting harassment and discrimination against transgender people; and (3) The first article in a two-part series focusing on executive severance packages and negotiations.

Pre-Tax Benefits a Boost for Commuters
Beginning January 1, 2016, New York City companies with 20 or more full-time employees will be required to offer their employees pre-tax transit benefits. This legislation encourages employers to take advantage of an existing federal tax benefit that allows companies to offer workers $130 as pre-tax income for transportation costs. As a result of this law, the City anticipates employees will save $400 per year on MetroCard expenses and employers will annually save $100 per employee in tax liability. The Department of Consumer Affairs will enforce the law, which imposes fines on covered business who do not offer the required benefits. However, companies that fail to comply will be given a 90-day grace period to fix their violation before being subject to civil penalty. To allow businesses adequate time to adjust their practices, employers will not be subject to penalty before July 1, 2016.


Expanded Protections for Transgender New Yorkers
Governor Cuomo recently introduced regulations by Executive Order that provide broad protections for transgender New Yorkers from unlawful discrimination. The statewide regulations prohibit harassment and discrimination against transgender people by all public and private employers, housing providers, businesses, creditors, and others. Cuomo’s order, to be enforced by the New York State Division of Human Rights, will be subject to a 45-day notice and comment period before being fully implemented. The regulations will provide the full force and protections of the existing New York Human Rights Law, which includes extensive compensation and other legal remedies for victims of discrimination and harassment, as well as stiff penalties for those who violate the law.


Executive Severance Negotiation
Executives who have been recently terminated and more importantly those that are considering leaving their current positions, including those that believe they are about to be terminated are urged to think more pro-actively about their severance packages. Rather than settle for what an employer may initially offer, if anything at all, executives should consider the benefits of developing a negotiation strategy that results in a package that makes their transition to the next phase of their lives and careers more manageable and equitable. The legal issues that generally determine what leverage, if any, an employee may have depends in large part on the rights under their specific executive employment agreements, any legal claims they may have against their employer, and other non-legal factors. To find out more about how to negotiate a better severance package from your employer, please read a more in-depth article posted here on our website.

 

Next month's newsletter will focus on the flip-side of the issues - Executive Compensation strategy.


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