News and Articles

Attracting Investment for the Amateur Entrepreneur Part I

Yogi Patel - Thursday, June 04, 2015


With access to information and the ability to share resources at an all time high, it seems easier than ever for anyone with an idea and a plan to create her own business. Amateur entrepreneurs across the country are finding new ways to attract capital and technology for developing their ideas in ways that are evolving the modern economy and changing how business is conducted. Still, for many of these new business owners, their first “seed” money comes from friends, family, and other casual investors, and they may not be aware of the state and federal laws and regulations that apply to such seemingly informal transactions. 

For any transaction in which a business is accepting money as an investment, there are registration requirements and other restrictions imposed by both the Securities Exchange Commission (SEC) and state law. There are even actions that a business owner must take before even offering securities or other equity in exchange for capital, and a failure to comply with federal and state requirements could leave the uninformed entrepreneur inadvertently facing charges as serious as security fraud. 

Of course, with the right planning and guidance, there should be nothing for the entrepreneur to fear, and she should be able to attract the investments she needs to start and grow her business. 

This article is the first in a series intended to provide the amateur entrepreneur with a general idea of how to form a business, accept investment capital at various stages of growth, and ultimately sell the company and distribute the profits if that should be the desired outcome. The articles will focus primarily on business owners whose initial investments will come from friends in family and who are operating in New York, but the general principals covered will be useful to anyone looking to start a business in most states. While each article should give the amateur entrepreneur a solid understanding what steps she will need to take, it is not intended to provide legal advice and anyone seeking investment in her business is strongly encouraged to speak to an attorney before taking any action.

So, let’s start from the beginning. You have an idea you want to turn into a business, you are confidant you can get friends and family to invest, and you are wondering what you should do. Here is what we suggest, using New York State as an example:  

Step 1: Incorporate Your Business

Before you can do anything, you need to officially create your business. Pick a name (make sure it is available), the entity type, and the state in which you are incorporating. While the scope of this article is not intended to cover step-by-step how to incorporate, for its purposes, New York entrepreneurs seeking to sell shares in exchange for investment funds should file as a corporation. This can be done online by filing with the New York Department of State.  

Step 2: Initial Corporate Formalities

After your corporation is established, there are formalities you must follow in order to operate the business and have shares of stock to sell to investors. These include, but are not limited to, appointing at least one director of the corporation, creating the corporation’s bylaws, opening a bank account in the corporation’s name, holding an organizational meeting, and issuing stock certificates to the initial owners of the corporation. While there is no legal requirement that you have a lawyer prepare any of the documents necessary for carrying out any of these steps, because they create enforceable rights and responsibilities, it is always encouraged that you consult with an attorney prior to executing any legal documents. 

Step 3: Applying for Securities Registration Exemption

Once your business is operational and you have shares of stock to sell to investors, which are classified as corporate securities, you need to register your securities with the SEC or file for an exemption. Small business owners seeking investment from friends and family should consider filing for exemption from the registration requirements of federal law (Securities Act of 1933) under Regulation D, rule 504 and under their local state law.

Regulation D, rule 504 allows a corporation to receive up to $1 million from investors over a 12-month period. The advantage of applying under Rule 504 is that the investors are not required to be accredited. An accredited investor, as the term applies to individuals, is defined as someone (a) whose individual net worth, or joint net worth with his or her spouse, is over $1 million; or (b) who had an income of over $200,000 or a joint income over $300,000 in the two most recent years and who has a reasonable expectation of reaching the same level in the current year. Many amateur entrepreneurs are not fortunate enough to have such wealthy friends and family, Rule 504 provides a welcome exemption.

One limitation of Rule 504 as compared to some other exemptions is that it requires that all such non-accredited investors be preexisting contacts of the business owner issuing the stock and that no general solicitation is therefore permitted. This is likely not an obstacle for amateur entrepreneurs in that they typically are seeking investment from friends and family, but it is important to note that they should not also seek to advertise or solicit generally and to people they do not already know.

Additionally, under Rule 504, issuers of stock are still subject to their state registration requirements. It is essential that when applying for a federal exemption under Rule 504 that business owners check and comply with their state laws. In New York, issuers of stock can apply for an exemption to registration with the Attorney General if the securities are to be sold in a limited offering to no more than forty people. Note carefully: the language of the New York Statute limits the number of offerings, so it is not enough that you issue stock to fewer than forty people; you can only offer the shares to that many. 

Finally, while awaiting approval from Attorney General, making offers is prohibited. New York entrepreneurs should abstain from making any offer, even to friends and family, until they have received official approval of the exemption from the Attorney General.

Step 4: Issuing the Securities (Stock)

Now that your corporation has been formed and formalized, and your securities exemption has been approved both federally and on a state level, your corporation is now free to sell the shares of stock to investors. Naturally, your internal, corporate documents must have been duly executed in a manner authorizing the type and quantity of stock you wish to sell, particularly your bylaws and your articles of incorporation. 

The two main types of stock are common and preferred. Common stock is what most people think of when they imagine stock: it is a security that represents ownership in a corporation that comes with certain rights, powers, and duties, including certain voting rights. Preferred stock gives the owner a priority when it comes to being paid and can also come with a higher dividend, but it does not typically come with voting rights and the return on investment is fixed, so there is no share in the overall sale price of the business. 

Typically for this first “seed” round, amateur entrepreneur wish to issue preferred, non-participating stock to their friends and family, with the option to convert them to common, participating shares. This offers the amateur investor a more secure investment in the short-term, and offers the entrepreneur’s friends and family a greater reward should the venture turn lucrative. In exchange, the entrepreneur is getting investment money she might not otherwise have received, particularly with low to no interest, and she can retain control over the operations of the business. The overall goal at this stage is to give friends and family back the percentage they put in, hopefully when the business has grown and everyone makes a profit.

The next article in this series will discussed more nuanced forms of investment that may take place at subsequent stages, when the business is up and running, proven to be a viable concept, and is seeking an additional capital injection. 


The time is truly ripe for amateur entrepreneurs to take advantage of the current climate and start their own businesses, but they must take steps to ensure that they are in compliance with all applicable federal and state laws, particularly those that govern the sale of securities. In particular, those looking to start and grow a business should not ask for seed investment money until they are properly setup and have received registration exemption approval from the federal and state governments. 

There are many, detailed steps to follow along the way, and while retaining an attorney is not a requirement, it is highly recommended that you have a legal expert guide you along the way. The information contained in this article is not intended to be legal advice and there are certain parts of the overall process discussed above that were not included, so this should not be used as a step-by-step guide either. Overall, Working with an attorney who not only knows what she is doing not only will make the process go faster, but it will give you the peace of mind that you are doing everything you are supposed to be doing.


Yogi Patel - Friday, May 01, 2015

Dear valued clients and supporters: This month's newsletter will focus on (1) recent developments in the law with regards to the use of LinkedIn by ex-employees and violations of a pre-existing non-compete or non-solicitation agreements and (2) legal considerations for start-up ventures that are raising money.

LinkedIn and Violation of Separation Agreements

It is not uncommon for employers to require an employee to enter into a separation agreement upon termination or resignation of their employment in exchange for a severance payout. The benefit to the employer in entering such an agreement often includes clauses restricting who that employee works for (competitor, etc) and who they can take with them to the new employer (co-workers, clients, etc.), among other benefits. And the reality now is that many employees maintain social media accounts such as LinkedIn that includes professional connections made through their employment, whether it is co-workers or clients/vendors of the employer. The question that has arisen in several jurisdictions is whether an employee who signs such an agreement and then announces that they are leaving the employer on LinkedIn has breached the non-solicitation and non-competition clauses. Courts have found both ways on this issue in different jurisdictions. And the analysis Courts appear to be engaging in when presented with this question is focused on a few factors. First, what was the exact content of the message by the employer on the social media site. Did it encourage defection or competition? Second, what policies did the employer maintain regarding the use or restriction of social media during the course of employment and did the separation agreement specifically make reference to the use of social media with regards to non-solicition and non-compete clauses? Ex-employees subject to such clauses are advised to tailor the message about their departure or future plans on social media sites with this in mind. Employers that have concerns about how their businesses might be impacted as a result of the use of social media by an ex-employee are advised to implement policies restriction the use of social media, while keeping in mind federal labor law protections protecting employees' ability to engage in concerted activity, should they impose such restrictions.

Start-up ventures, raising money and legal obligations

The current state of the capital markets appears to have set the stage for entrepreneurs to start their own businesses. But entrepreneurs are cautioned to take steps to ensure that they are in compliance with all applicable federal and state laws, particularly those that govern the sale of securities. For any transaction in which a business is accepting money as an investment, there are registration requirements and other restrictions imposed by both the Securities Exchange Commission (SEC) and state law. There are even actions that a business owner must take before even offering securities or other equity in exchange for capital, and a failure to comply with federal and state requirements could leave the uninformed entrepreneur inadvertently facing charges as serious as security fraud. Over the course of the next several months, we intend to post a series of articles on our website intended to provide the start-up entrepreneur with some general guidance on issues related to business formation, accepting investment capital at various stages of growth, and ultimately selling the company and distributing the profits, if that should be the desired outcome of the venture. Please see our series of articles here: I, II, and III .


Yogi Patel - Wednesday, April 01, 2015

Dear valued clients and supporters.  This month's newsletter will focus on: (1) recent changes to the law in New York State that impacts every employer and all newly hired employees as of January 1, 2015; (2) recent U.S. Supreme Court ruling impacting an employers obligation to provide workplace accommodations to pregnant employees and (3) legal considerations when using the internet to engage in commerce.

Wage Theft Protection Act of 2010  ("WTPA")

Effective January 1, 2015, the WTPA requires all employers in New York State to provide all newly hired employees with a wage notice in English and, if applicable, the primary language of the employee as identified by the employee, within ten (10) day of hiring.  A civil lawsuit against an employer for failure to provide these wage notices may be brought by either the employee or the commissioner of the Department of Labor (on behalf of the employee), and could result in a judgment against the employer for up to $250 per workday (per employee) in which the violation occurs or continues, up to $5,000 (in addition to costs and reasonable attorney fees).  More information about the amended law, including what information needs to be included in the wage notice is available here.  

Workplace Accommodations for Pregnant Employees

The U.S. Supreme Court, in the case Young vs. United States Parcel Service was expected to determine whether and to what extent an employer is required to provide work place accommodations to pregnant employees. Both Federal, State and City law currently make it unlawful for an employer to terminate or treat an employee unequally simple because of the pregnancy.  But what the laws did not make clear is what type of accommodations must employers make for pregnant workers. The decision, which was issued on March 25, 2015, held that a plaintiff may be able to prove unlawful failure to accommodate a pregnancy-related condition through evidence that other non-pregnant employees were provided with the requested accommodation.  The decision lowers the burden for plaintiffs and raises the burden for employers to overcome. And employer policies that tend to negatively impact pregnant employees – particularly where there is evidence that the requested accommodations have been provided to non-pregnant employees – are likely to be scrutinized and may well be deemed to be unlawful.  We recommend employers to review their policies and practices with this ruling in mind, and to make whatever changes necessary to ensure appropriate accommodation of, and no adverse effect with respect to, pregnant employees.   Internet and Commerce There is no denying the impact of the Internet on commerce. Many businesses utilize websites, social media, and other web-based platforms to promote their products and services. In fact, an entire industry has emerged comprised of what are now commonly known as “e-commerce” based business – entities that rely solely on the Internet as their means of engaging in commerce. Various Federal and State laws govern businesses’ ability to advertise on the web. These restrictions depend in large part on the company’s location, where their customers live, and the industry in which they operate. Special consideration should be taken by businesses that actually engage in e-commerce (selling goods or services over the Internet), since their activities may involve more legal issues than a website that merely uses the web for advertising purposes. However, even websites that are only created for advertising purposes should be mindful of best business practices to protect themselves from liability.  An in-depth article exploring these issues is now available here

Internet and Commerce

There is no denying the impact of the Internet on commerce. Many businesses utilize websites, social media, and other web-based platforms to promote their products and services. In fact, an entire industry has emerged comprised of what are now commonly known as “e-commerce” based business – entities that rely solely on the Internet as their means of engaging in commerce. Various Federal and State laws govern businesses’ ability to advertise on the web. These restrictions depend in large part on the company’s location, where their customers live, and the industry in which they operate. Special consideration should be taken by businesses that actually engage in e-commerce (selling goods or services over the Internet), since their activities may involve more legal issues than a website that merely uses the web for advertising purposes. However, even websites that are only created for advertising purposes should be mindful of best business practices to protect themselves from liability.  An in-depth article exploring these issues is now available here.   

New York’s Wage Theft Protection Act Hurriedly Amended at the End of 2014

Erin Lloyd - Thursday, February 12, 2015

The New York State Legislature recently amended the Wage Theft Protection Act (WTPA) of 2010 in several important ways that will affect both employers and employees. For one, these changes affect the employer's obligations and how and when they must notify employees of their wages. Likewise, the amended version of the WTPA also affects an employee's legal rights when an employer fails to comply with the WTPA.

Annual Wage Notice Requirement is Eliminated Starting this Year

While employers were originally required under the law to provide their employees with an annual wage notice no later than February 1

st of each year, the new amendments to the WTPA do away with that requirement. In fact, this change has already taken effect and employers need not provide current employees with annual wage notices for 2015. However, employers still must provide all newly hired employees with a wage notice in English and, if applicable, the primary language of the employee as identified by the employee, within ten (10) days of hiring.

This wage notice for newly hired employees must include all of the following:

· the employee's rate of pay;

· the basis of the employee's pay (i.e. hour, shift, day, week, salary, commission, etc.);

· any allowances claimed as part of minimum wage (i.e. tip, meal, lodging allowances, etc.);

· the employer's regular payday;

· the name of the employer; any other "doing business as" names of the employer;

· the physical address of the employer's business;

· a mailing address (if different from the business' physical address); and

· the employer's telephone number.

Newly hired employees must also be asked to sign and date a written acknowledgment that they received a wage notice from the employer, which the employer must keep in its records for six years, just as originally required in the WTPA of 2010.

Form notices and acknowledgements are available from the New York State Department of Labor in English and several other languages.

Penalties Against Employers for Failure to Provide Proper Wage Notices and Statements Have Been Increased to Encourage Compliance

The new WTPA amendment also increases the amount that an employer may be required to pay newly hired employees (or the commissioner of the Department of Labor, on behalf of the employee) if it fails to provide the wage notice to new employees within ten days of the his or her first day of employment. Previously, employees not provided with such notice within ten days of their first day of employment could bring a civil lawsuit against the employer, but could only expect to receive $50 per work week in which the violation occurred or continued, and a maximum of $2,500 (in addition to costs and reasonable attorney fees). The recent amendment, however, allows employees to recover $50 per day, or up to $5,000 (in addition to costs and reasonable attorney fees).

In addition, the amendment increases the penalties faced by employers for failing to provide current employees with wage statements to accompany each paycheck. A civil lawsuit against an employer for failure to provide these wage notices may be brought by either the employee or the commissioner of the Department of Labor (on behalf of the employee), and could result in a judgment against the employer for up to $250 per workday (per employee) in which the violation occurs or continues, up to $5,000 (in addition to costs and reasonable attorney fees). This is up from $100 per workday and up to $2,500 in the original WTPA.

Employer Defenses Against the Penalties are Preserved

It is important that both employers and employees understand that the amendment to the WTPA still allows employers to defend allegations of failing to provide either a proper wage notice to newly hired employees, or wage statements to employees with their paychecks. Under both of these sections, an employer may still shield themselves from liability if it made complete and timely payments of all wages due to the employee, making those employers who fail to make proper wage payments the primary target of these portions of the statute. The WTPA also allows an employer to avoid liability if it can show that it reasonably believed in good faith that it was not required to provide the employee with the a wage notice or statement discussed in the law.

The Powers and Responsibilities of the Commissioner of the Department of Labor Are Altered in Several Important Ways

The new WTPA amendment strengthens the powers of the New York State Department of Labor Commission. The Commissioner is now empowered to issue WTPA compliance orders to companies that have violated the requirements of certain labor laws: employee wage payments; the minimum wage act; minimum wage standards and protective labor practices for farm workers; day of rest laws; or meal periods. Employers that receive a compliance order under this provision will be monitored and subject to onerous reporting mandates by the Department of Labor.

Also, now when the Commissioner investigates WTPA complaints, the investigation must now cover the entire six-year statute of limitations period or notify all affected employees otherwise. The Commissioner may no longer limit its investigation to the most recent years, then, without notifying all employees that could potentially have the right to pursue action against the employer in court for any years excluded from the investigation. Civil penalties to be assessed by the Commissioner have also increased under the amendment, although the Commissioner still yields great discretion in this regard, including the ability to award an additional 15% of damages on top of any monies actually owed to an employee.

Further, the New York Legislature also alters the Commissioner's discretion when filing a civil penalty against an employer after the statute of limitations on an employee's claim has expired in the amended WTPA. In this situation, the amendment has removed the Commissioner's discretion in choosing whether to give a portion of the penalty against the employer to the employee. The amendment now requires the Commissioner to assign a portion (the amount of the employee's wage/salary claim) of the penalty to the employee if they request for those monies due.

The Definition of "Same Employer" Has Been Expanded

The definition of "same employer" is expanded in the amended WTPA, allowing the court or the Commissioner to treat an employer similar in operation and ownership to another employer that has previously found in violation of wage payment regulations, the minimum wage act, or minimum wage standards and protective labor practices for farm workers, as the "same employer" for purposes of enforcement of the Act. This expanded definition of a "same employer" only applies if the new employer meets all of the following criteria: 1) it engaged in substantially the same work as the other employer; 2) the working conditions are substantially the same; and 3) the supervisors are substantially the same or, if the new employer uses substantially the same production process, it produces substantially the same products, and has substantially the same customers. This change makes it easier for employees and the Commissioner to enforce the law against employers that attempt to evade past labor law obligations.

Individual LLC Members Who Fail to Pay Debts, Wages, and Salaries to Their Employees Are No Longer Shielded

The top ten members of a Limited Liability Company (LLC) can now be liable for all unpaid debts, wages, or salaries due to employees. There are substantial procedural requirements for seeking recovery from LLC members, but this provides employees with another layer of protection against employers who fail to pay proper wages.

Contractors and Sub-Contractors Must Now Notify Employees When Found to Have Violated Minimum Wage Laws

Finally, the new amendment to the WTPA imposes a new notice requirement on Contractors and Sub-Contractors that have been found to have failed to pay all employee wages or to comply with the minimum wage standards. In that case, the Contractors and/or Sub-Contractors must notify all their employees of the violations. This notification must be provided to employees by an attachment to their paycheck and in accordance with any compliance order from the Commissioner. This amendment increases the transparency of employers who are Contractors or Sub-Contractors and who have violated labor law, and ensures that their employees are made aware of any such violations.


Both employers and employees will be affected by these new amendments in potentially substantial ways. Employers should ensure that they are in full compliance with wage laws and regulations. For help reviewing current practices or to respond to an inquiry by the Commissioner on any of these issues, our attorneys are available to work with employers. Employees who believe they are not being properly paid by their employers can contact one of our attorneys to discuss what options they may have under this and other laws and regulations.

Erin Lloyd, Esq. is an employment and business lawyer and partner at Lloyd Patel LLP, a general practice law firm. Ms. Lloyd works closely with each client to develop a personalized strategy based on his or her individual needs and concerns. She can be reached at or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at

Samuel Gaultier is a second year law student at City University of New York School of Law focusing on criminal and administrative law, and an intern at Lloyd Patel LLP. Mr. Gaultier expects to graduate with his J.D. in May 2016.

Potential New York State and City Legal Violations Arising From Hosting Guests Using Airbnb

Erin Lloyd - Thursday, January 29, 2015

    Users of the online service Airbnb beware: there have been a flurry of lawsuits against New York hosts using the popular Internet service to accommodate guests, and careful consideration of all relevant legal regulations and laws is important to understand your risks and liabilities. The New York State Attorney General has taken the position that hosts using Airbnb’s website—or others like it—to accommodate guests are responsible for understanding the laws of their own locales and complying with them.[1] For this reason, it is important that New Yorkers using or intending to use Airbnb are aware of the potential legal repercussions and seek legal advice before agreeing to host guests. 

    First and foremost, this article provides a basic introduction to some of the New York laws that Airbnb hosting can conflict with and some of the risks posed by hosting guests in exchange for money in New York, and is not a substitute for individual legal advice. Due to the variety of housing situations throughout the City, any New Yorker considering hosting Airbnb travelers for any period of time should always consult legal counsel to ensure that their particular housing situation is or will be or is in compliance with all applicable laws. This article may not be relied on as legal advice. 

Airbnb Hosts May Not Violate the NYC Building Code if They Have a Permanent Resident Co-Occupy the Residence During the Traveler’s Stay

    In some scenarios, New Yorkers may legally host guests using Airbnb’s services—at least under the New York City’s Building Code. The NYC Building Code permits Airbnb hosts to accommodate long-term residents, assuming there are no other legal restrictions on the rental, such as the apartment being rent controlled/stabilized or Mitchell-Lama housing which will be discussed more below. New York law defines a “long-term” resident as a person who lives in a residence for more than thirty days. Hosts should be aware that any guest or roommate that occupies the apartment or house for thirty days or more will be classified as a “permanent” resident or occupant, which can entitle the traveler to occupancy rights just as much as if the host met a longer-term roommate on Craigslist or some other source. For this reason, hosts should always seek legal counsel to understand the full extent of their own and their renter’s or roommate’s legal rights, obligations, and liabilities in this scenario. 

    Generally, hosts that rent a room to a traveler for less than thirty days will not be fined under the New York City Building Code if a “permanent resident” (someone who is living in the space for at least thirty days) is also present while the home is occupied by the traveler. This was the Environmental Control Board’s finding in New York City v. Abe Carrey.[2] If no permanent resident occupies the home with the traveler, New York State Law prohibits short-term rental of apartment space (less than 30 days) unless the property is a licensed hotel or bed-and-breakfast. 

    Again, it is extremely important to note that although a host may not be fined for violations of the Building Code, they could still face other fines—or even eviction—if the host-tenant is found to have violated rent-regulations laws, tax laws, or terms of their residential operating agreement (e.g. leases, condominium contracts, and cooperative shareholder contracts). Due to the complexity of the law and the variety of circumstances, it is recommended that any host using or seeking to use Airbnb, review—with the assistance of an attorney—all applicable State and City laws as well as the terms of the document(s) governing their housing situation.

Airbnb Hosts That Live in Rent Controlled, Rent Stabilized, or Mitchell-Lama Housing Should Think Twice Before Accommodating Travelers

    Hosts living in rent controlled, rent stabilized or Mitchell-Lama housing must also be aware of other laws (independent of the NYC Building Code) that affect the rental of their apartment to travelers. In a recent case, a tenant paying $4,193 per month for a rent controlled four-bedroom apartment in Manhattan was found to be in violation of City and State laws because she rented the unused rooms each month and made about $6,500 per month. In addition to taking the tenant to court to halt her rental of rooms in the apartment, the building owner also sought to evict her based on her violation of the rent control law, which prohibits tenants in rent controlled apartments from earning more money than they legally pay for rent. These types of housing accommodations are traditionally intended to provide low-cost housing, and tenants who exploit low-cost housing to “profiteer” can be found in violation of the law.

    If a host rents out a rent-regulated apartment while they are not occupying it as his or her primary residence, they have engaged in an unauthorized sublet. In this situation, it is illegal for the primary tenant of the residence to rent the space—or in some instances even a portion of it—for a price over the legal rental value.[3] Under these circumstances, the primary tenant of a rent-regulated apartment may be evicted.[4] On the other hand, some courts have determined that a landlord cannot evict a tenant for charging his or her roommate(s) a disproportionate amount of the legal rent as long as the tenant cures the overpayment (in that case by refunding the excess charged rent to the roommate).[5] Residents of Mitchell-Lama housing are generally prohibited from renting their apartment to travelers.[6] Although the result is not always the same, courts that have addressed these cases have tended to evict the host-tenant for profiteering.

    As stated before, though a host in these situations may be in compliance with the NYC Building Code, violations of a residence’s rent-regulated status is an independent violations of the law that can potentially result in the tenant’s eviction. For this reason, hosts residing in rent-regulated apartments or Mitchell-Lama housing should think twice before deciding to rent space in their apartment and, again, should always seek advice from an attorney before proceeding.

Airbnb Hosts in Non-Regulated Apartments Should Consult the Terms of Their Lease, Cooperative, or Condominium Agreement Before Accommodating Travelers

    Airbnb hosts in private, non-regulated apartments may also risk violating the terms of their lease, cooperative, or condominium agreement when they rent their space to travelers. For instance, most leases require tenants to receive written consent from their landlord before renting all or part of their apartment to a non-tenant. A tenant can be faced with an eviction for violating the terms of their lease. Because of the landlord’s discretion in deciding whether to initiate such a proceeding, tenants should carefully read the terms of their lease with an attorney and seek written permission from their landlords—where required—before hosting Airbnb travelers to ensure compliance with the terms of their lease.

    Similarly, occupants of cooperatives and condominiums risk violating the terms of their respective residential operating agreements by hosting travelers without reviewing these documents. The directors of residential housing cooperatives always have the right to approve or deny the transfer of shares and the assignment of proprietary leases (assuming they do so in a non-discriminatory fashion).[7] Likewise, many condominium agreements have a right of first refusal provision that a host’s rental of their condominium can potentially violate. For these reasons, hosts should take care to check over their applicable residential operating agreement to ensure that their rental of the space to travelers is permissible.

All Airbnb Hosts Must Abide by New York State and Local Tax Laws

    Finally, Airbnb hosts must be aware of any applicable New York tax laws. The New York Attorney General’s report on the use of Airbnb in New York notes that hosts who rent out a unit or portion of it short-term must pay applicable hotel taxes.[8] These New York City tax laws are notoriously complex and difficult to understand. According to the Attorney General’s report, the Airbnb host is liable for a portion of the hotel tax and must collect and pay it unless the rental is of one room in an owner-occupied home, the rental is less than fourteen days or for fewer than three occasions per year, or involves a rental for a continuous period of 180 consecutive days. The report also indicates that sales taxes and New York City Unincorporated Business Taxes may also apply to these short-term Airbnb rentals. In order to ensure compliance with these various tax laws, make sure to discuss your housing situation with your attorney.

    Currently, Airbnb is pushing for legislation that will allow at least some tenants to host temporary travelers in their homes without running afoul of New York State or City laws that tenants are currently at risk of violating. As of this writing, however, no such legislation has been enacted.


    Because of the interaction of numerous New York City and State laws that apply to Airbnb rentals, hosts should proceed cautiously and seek an attorney’s help before renting space in their home. Tenants who fail to ensure compliance face a variety of potential penalties, from fines to eviction. Discussing these various laws with an attorney will ensure that you comply with them and are able to keep your home.


Erin Lloyd, Esq. is an employment and business lawyer and partner at Lloyd Patel LLP, a general practice law firm. Ms. Lloyd works closely with each client to develop a personalized strategy based on his or her individual needs and concerns.  She can be reached at or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at


Samuel Gaulthier is a second year law student at City University of New York School of Law focusing on criminal and administrative law, and an intern at Lloyd Patel LLP. Mr. Gaultier expects to graduate with his J.D. in May 2016.

[1] Airbnb even acknowledges this risk on its own website:

[3] See Brookford, LLC v. Penraat, 2014 WL 7201736 (NY County Sup. Ct. 2014) (rent controlled apartment); See also 220 West 93rd St., LLC. v. Stavrolakes, 2006 WL 4758817 (NY County Sup. Ct. 2006) (holding that a rent controlled tenant who profiteers can be evicted).

[4] Continental Towers Limited Partnership v. Freuman, 128 Misc.2d 680, ___ (App. Term. 1st Dep’t 1985) (holding that a primary tenant can be evicted for subleasing the whole or part of their rent-stabilized apartment for an amount in excess of the legal rental value of the residence).

[5] See 520 East 81st Street Associates v. Roughton-Hester, 157 A.D.2d 199, ___ (1st Dep’t 1990) (holding that a landlord cannot evict a primary tenant for overcharging a roommate in a rent stabilized apartment if the violation is remedied); See also 270 Riverside Drive, Inc. v. Braun, 4 Misc.3d 77 (App. Term 1st Dep’t 2004) (holding that a primary tenant in a rent controlled apartment cannot be evicted for collecting rent from two roommates in excess of the rent controlled cost of the residence if the violation is remedied); See also Giachino Enterprises LP. v. Inokuchi, 7 Misc.3d 738, ___ (Civ. Ct. 2005) (holding that a tenant cannot be evicted for overcharging their roommate in a property subject to the NYC Loft law if the violation is remedied).

[6] See Padilla v. Levy, 300 A.D.2d 62, 62-63 (1st Dep’t 2002)

[7] See Bachman v. State Div. of Human Rights, 104 A.D.2d 111, 114 (1st Dep’t 1984)

[8] Research Department and Internet Bureau, Office of the Attorney General of the State of N.Y., Airbnb in the City, 18-20 (2014),

End Of Year Conversation with Erica Loren

Erin Lloyd - Monday, December 15, 2014

Conversation with Erica Loren, Erin Lloyd and Yogi Patel

Last month, we began an Interview Series with Certified Career and Leadership Coach Erica Loren from Coaching2Greatness. As the year comes to a close, we thought this would be a perfect time to have a conversation about what this time of year means for our clients and how everyone can end the year strong—and begin next year even stronger.

Erica Loren: The holidays and the end of a year are often a time of great stress, but also of great reflection. Erin, what kinds of issues do your individual clients come to you with around this time of year?

Erin Lloyd: Many of our individual clients are taking personal stock of how well the year treated them as it comes to a close. Often our clients have been considering making a professional move, and as the year ends perhaps they did not get the bonus they expected or they realize the toll a stressful, hostile or unhappy work environment has taken over the preceding year.

Erica: How do you help clients like that turn their disappointment into action?

Erin: Of course, it depends on each client’s individual circumstances, as you know. But by the time these clients come to us, they are usually ready to make a change and want to make sure that the steps they take are effective in creating leverage for a severance package or other benefits as they transition out of their former employment. Occasionally, these employees have already left their job and believe they were treated unfairly in violation of the law. For those clients it’s important to help them understand their options and also plan for the future. You encounter many of these types of clients yourself; what are some of the common issues your clients deal with around this time of the year?

Erica: Most clients seek coaching to start off the new year right either in a new position lateral or vertical in nature, a new job, or even a new industry. Many clients do have a desire to finish the year strong to be set up in a greater way in the new year. Some clients seeking a new industry or leadership position will work on strengthening these areas and exploring appropriate resources to support their new vision for going forward. Many don’t want to repeat the mistakes or experiences of the year, so we will work on what has worked, what hasn’t and what they would envision being different and ideal going forward.
So very similar in context to what you refer to, Erin and Yogi. Though not a check list, we perform an individualized assessment to demonstrate strengths, gaps, and combine that with a clear vision for the coming year.

Yogi, you serve as general counsel to many small and medium-sized businesses. They probably have unique considerations at the end of one year and the beginning of others. Do you have a sort of “check list” for businesses to consider at the end of every year?

Yogi Patel: I recommend that all my business clients take stock of their personnel and human resources materials at the end of every year. Businesses should be considering whether there have been any legal or regulatory changes over the year, if new training material is necessary for employees, or if there are any new government filings they need to complete.

In addition, every business should review their employment manual each year. And specifically, if there is a mechanism for conducting annual reviews in the employer’s manual, then I discuss with my clients whether that has happened and how it has been documented. What is important to remember is that if an employer does not follow his or her own policies, then having an employment manual is meaningless, and in fact, perhaps even a liability. This is also a good time to look ahead and see what changes the employer anticipates for the coming year and to consider if the appropriate legal framework to support those changes is in place.

Erica: A lot of small business owners are probably reading that and wondering why, after investing in an employment manual in the first place, they have to redo it every year! Why should they do this every year?

Yogi: The idea certainly is not to rewrite the company’s policies and procedures each year. But small businesses, especially, experience a lot of change each year. Job descriptions could change, new employees could have been added or entire departments could be restructured. Employment manuals are the guidelines that employees have to live by so if they are outdated and there’s an employment-related issue that is not covered in that document, an employer could find themselves with their hands tied. For example, if a business owner began 2014 with 2 employees, a detailed Equal Employment Opportunity (EEO) structure probably was not necessary. But if that same employer promoted one of those employees to middle management and added 5 more employees during the year, it would be essential for all employees to know how to make complaints of unlawful discrimination or harassment and how the company would handle those complaints. Or, in another industry, perhaps there are dangerous and highly regulated chemicals used on the premises. If the employment manual does not discuss the company’s policies with regard to who has access to them, what training is required prior to using them, and how to deal with accidents and spills, the company could really be opening itself up to serious liability in the case of an accidental exposure.

Erin: Erica, I’m curious about your corporate clients. I know that some of our corporate clients do “house cleaning” at the end of a year, evaluating which employees have been the greatest assets and which might be seen as a drain on the company. Do your corporate clients reach out to you for similar reasons at the end of a year?

Erica: Yes they do and if they are wise they will reach out in early fall to really be best prepared for new year. Most times corporate/small business clients reach out to decide what the new year will look like and how to cultivate the vision. Though typically we are discussing this around September so we can properly evaluate the current situation, thus plan, and then prepare for launching new year vision. Whether it’s hiring ,evaluating policy and procedures, or employee appreciation programs, this must begin early to be prepared and have others on board before they take action. Private clients on the other hand are usually driven in and around their performance review. Sometimes they are also driven by salary, benefits, burnout and/or relocation. And in all these cases it is usually urgency that is driving the motivation and they are eager to begin coaching.

Yogi: I think the beginning of a new year can feel like a bit of a fresh start for many people. Do you find that this perspective can help create momentum for your clients to start something new or make significant changes for the coming year?

Erica: To answer your great question Yogi, providing the vision is powerful enough, that when they feel like giving up they will remain faithful to fulfilling it, then yes, the new year can allow for this momentous action to take place and provide a fun kick off time. However many people waste time throughout the year, procrastinate, hide, delay, and make excuses when life shows up as to why they could not fulfill the resolution, which truly began as a really lofty goal to help them feel better and trick themselves into believing this year will be better just because. New Year’s resolutions can be a bit seductive to some who want to wipe the slate clean and start over, even though they know they are probably going to do an almost identical repeat of last year, unless they get true support and accountability.

Erin: I agree, Erica, that too many people wait until this time then set unrealistic goals without really getting the support they need to accomplish them. I do think employees should do a sort of self-audit, though: ask yourself what changed in your life over the course of the year and whether your current situation is better than it was one year ago. If an individual was unhappy in his or her job this time last year, and nothing has changed—whether because he or she is simply undervalued or because he or she is the victim of unlawful discrimination or because he or she is not being paid according to the law—it’s time to re-evaluate that situation. If an individual set a financial goal this year that was not met at his or her current job, it may be time to explore other options including trying to obtain a severance package and move on to a position that is more in line with their vision. This kind of end-of-the-year review should be done by everyone, in my opinion!

Yogi, do you have any New Year’s resolutions?

Yogi: I think finding a way to be more efficient with my time is going to be at the top of my list in 2015. What about you? Anything you’ve been putting off in 2014 that you’re committed to for 2015?

Erin: Well I’m making the ultimate commitment in 2015: I’m getting married! But on a professional level, my goal is to continue developing creative solutions for my clients’ legal issues even when traditional legal approaches may not make sense.

Erica, what are your resolutions and goals for 2015?

Erica: Congrats Erin! I am getting married too, in September 2015. Yogi, good luck with the time piece. I actually have changed up the traditional resolution thing ( this is what coaches do people lol) and have a word that ties all my goals together. So I can focus on that word and review if what I am doing is achieving the outcome of what I want to see happen in my business and life. So with that being said, I chose the word IMPACT. You too can try it and see when you put down your goals what is the result you would like to see achieved and voila you will have your word.

Erin: Thank you so much, Erica, for taking the time to talk with us and share your insights with our clients as they consider what kind of year they want 2015 to be. I look forward to sharing wedding stories with you next year! Happy holidays everyone!

Erin Lloyd, Esq. is an employment lawyer and partner at Lloyd Patel LLP, a general practice law firm. She represents individuals who have been subjected to unlawful discrimination, harassment and pay practices and helps them recover the damages they are entitled to. Ms. Lloyd works with clients to develop a personalized strategy based on each client’s needs and concerns. She can be reached at or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at

Yogi Patel, Esq. is a business and commercial lawyer and partner at Lloyd Patel LLP, a general practice law firm. Mr. Patel counsels small and medium sized businesses and other institutions on all aspects of their business, helping business owners navigate regulatory and governmental issues specific to their respective industry, to defend or prosecute commercial and other litigation, to develop personnel and human resources policies and procedures, to protect their unique brands and products, and otherwise guide them through any legal issues that may arise. Mr. Patel can be reached directly at or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at

Erica Loren, ACC, CPC CEO of Coaching2Greatness is an ICF Certified Career Coach who partners with professionals seeking happiness and fulfillment in their careers, by honing in on the belief that we all have the potential to discover our personal gifts through professional pursuits. She guides clients down a clear and focused path, toward a powerful vision of what they want to achieve in helping them discover their dream jobs. When Erica is not working with private clients she is out traveling the world as a public motivational speaker and partnering with corporations who want to cultivate a healthier happier work environment.
You can learn more about Erica by visiting: www.coaching2greatness.orgLinkedinFacebookor by calling: (732) 757-1880.


Interview of Erin Lloyd, Attorney and Partner at Lloyd Patel LLP - by Erica Loren

Erin Lloyd - Friday, December 05, 2014

In this installment of our interview series, Erin Lloyd, a litigation partner from the law firm of Lloyd Patel LLP who practices in the area of labor and employment law, is talking with Erica Loren, an ICF Certified Career Coach at Coaching2Greatness.  Last month Erin interviewed Erica about her approach to a client who came to her with a difficult work situation, unsure of how to proceed. Today, the tables have been turned and Erica has asked Erin to share some insight on the possible legal issues and implications surrounding difficult work situations facing both employees and employers.

Erica Loren:  Last month we discussed a client that came to me after attaining extraordinary success in her department within a short period of time, which created resentment from other members on her team. Leadership in the company stopped supporting her, despite her successful record.  The client was wrongly accused of bullying a fellow co-worker and management pressured her to do nothing in her own defense out of fear of a lawsuit.  Due to the work environment, this client went out on a temporary disability leave to address her mental health and while she was out, she received notice that she was terminated.  When she filed for unemployment benefits, the employer opposed them.  My role was to help this client get back on her feet after experiencing what was a very challenging situation. In your practice, do your attorneys represent individuals only after they’ve been terminated, or can you help employees even while they’re still working?

Erin Lloyd: The circumstances of our clients vary tremendously, but certainly many of our clients are still working for their employer and simply need advice and guidance in either protecting themselves within that relationship or navigating their way out of the employment relationship with the greatest benefit to the them.  When clients come after they have quit or been terminated, we are obviously more limited in how we can help them.

Let’s take the client we discussed last month, for example. This client probably saw the writing on the wall well before she took leave from her job, but if she came to us after she was terminated, we would immediately need to focus on whether or not her employer had the right to fire her under the law. And generally, regardless of the answer to that question, getting the job back is usually not an option for either the employee or the employer.

Erica:  Had the client reached out to you before she was terminated, what would you have advised her to do?

Erin:    It depends.  Whenever a client comes to see us, we always ask them what her ideal outcome would be.  We always ask the client what they want and often find that clients actually do not know the answer to this question.  Clients are, understandably, usually focused on what is happening to them and not so much on the possible solutions.  So part of our job is to help the client figure out what her options are and what her ideal outcome is.

In a situation like this, if the client is still employed, the biggest question is: do you want to still be employed at this job or are you looking for a way out? The answer to that will dictate our next steps. If the client wants to stay in her job, we can help evaluate the communications she has had with her employer and advise her on next steps or even ghost-write communications to the employer to try to improve her situation at work and create a record that positively reflects her work there. 

On the other hand, if the client expressed an interest in leaving and hopes for a severance package, we could discuss what kind of offer she might be able to expect and help her create leverage for later negotiations by documenting her position and creating a record of the situation at her workplace. We would also counsel her on the common provisions that employers demand in severance agreements and how they could impact her future endeavors.

Erica:  What is the purpose of creating a record and how would that help later?

Erin:  From our perspective, documentation is critical to having a strong claim, should the need arise to bring one, and for creating leverage in any severance negotiation.  Proper documentation, depending on the situation and timing, can sometimes help to prevent unlawful retaliation from an employer as well.   

Erica: Employment litigation seems like it would be a very challenging and emotional proposition for any client.

Erin:  Yes, it is an emotional and personally taxing experience.  It is akin to divorce in my opinion.  I think everyone can appreciate the varying emotions one experiences in any given work environment.  We as a society often spend more time at work than we do at home with our own families.  And if your work environment is toxic, the relationships and personalities are usually complex.  So the litigation can be charged, expensive and very adversarial as there are many things on the line once an action is commenced.   It is not for everyone and we always talk to our clients about weighing the full implications of litigation before proceeding, and counsel trying to reaching a resolution when that is possible and appropriate. 

Erica:  I think we can both agree that employees and employers are often in need of help.  Sometimes, employers are so good at their business – which is whatever they do to keep their lights on – that they don’t realize the impact of their unintended behavior on their employees.  And sometimes employees need a little help in advocating for themselves and finding the confidence they need to advance in the workplace despite considerable odds.

Erin:  Absolutely.  Both can benefit from counsel from and consultation with outside professionals who can make objective and unbiased observations about difficult situations.  We should also note that employers sometimes just need to adopt good structure and clear policies to avoid liability.  We often advise employers on best practices in their employment and personnel matters. For example, clean and clear offer letters and employment manuals are a great start.  Depending on the kind of employees and the industry an employer is engaged in, there are complicated rules regarding the way an employee must be paid, what kinds of records must be kept, and other regulatory requirements which requires employers to have a protocol in place to minimize liability in the event 

of an action or audit.  These protocols are a must in my opinion, even when a company does not have a dedicated Human Resources Department. 

Erica:  On a lighter note, if you were not an employment lawyer, what would you do?

Erin:  That’s easy: I would be a law professor.

Erin Lloyd, Esq. is an employment lawyer and partner at Lloyd Patel LLP, a general practice law firm.  She represents individuals who have been subjected to unlawful discrimination, harassment and pay practices and helps them recover the damages they are entitled to. Ms. Lloyd works with clients to develop a personalized strategy based on each client’s needs and concerns.  She can be reached at or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at

Erica Loren, ACC, CPC is an ICF Certified Career Coach who partners with professionals seeking happiness and fulfillment in their careers, by honing in on the belief that we all have the potential to discover our personal gifts through professional pursuits. She guides clients down a clear and focused path, toward a powerful vision of what they want to achieve in helping them discover their dream jobs. She not only works with individuals but she also partners with corporations who want to cultivate a healthier happier work environment. 

You can learn more about Erica by visiting: www.coaching2greatness.orgLinkedinFacebookor by calling: (732) 757-1880.


Interview of Erica Loren, Certified Career and Leadership Coach - by Erin Lloyd

Erin Lloyd - Tuesday, November 18, 2014

We are talking with Certified Career and Leadership Coach Erica Loren from Coaching2Greatness today about her expertise on how one can utilize personal career coaching to get out of a sticky work situation with ease, clarity and happiness.

Erin Lloyd: Erica, can you describe a situation that could help our audience understand how someone like you would be able to help a person who is feeling very trapped and unhappy in a current job situation see that there are options on how to handle this situation that will leave them feeling empowered and not trapped – putting them at even greater risk?

Erica Loren: Sure. One situation that comes to mind was with a client who had a lot of leadership influence and early success within a year of being hired with a company that over a short period of time began to resent her for it. Which then unfolded into underground gossip, backstabbing, and efforts to sabotage her future success by the leadership team and the Boss.  So much that any new hires would be brainwashed to think she was bad before this person even got a chance to know her.  Then the final blow came when her boss accused her of bullying an employee to which he told her to keep her mouth shut because he didn’t want a discrimination lawsuit (the woman who accused her was Asian). The boss refused to hear her argument and took her leadership responsibilities away.

Erin: Wow, that sounds like a lot of stress and pressure for a person to be under and while having to perform their job. What are some of the ways you could help a person in this situation to reduce the stress and come to a healthy resolution?

Erica: Great question. Often times when we are in these types of scenarios we can often feel like a victim, which at first is understandable. So what I might work on with the client to see is what could an  ideal situation look like, so they can step out of victim mode and see possibilities. What this does is activates  a part of the brain known as the the prefrontal cortex  that  can allow for true  creative processing thus allowing for  healthier solutions. At the same time this also deactivates to the limbic part of brain that is feeling threatened and under attack thus creating flight or fight responses which never lead to good decision making.  As humans we can not be in both these areas of the brain at the same time, the dominant thought and emotion will prevail.

Erin: Very interesting, and what would be a process in which you would help them see a long term view of what could happen?

Erica: Most clients need a program that will begin with their current challenge, while then addressing ideal outcomes, with a 6 month and 1 year view, along with identifying current obstacles and roadblocks that could pose a problem along the way.We also would work with assessments to gauge behavior styles and tendencies to advance the client toward their goals while helping them understand who they are and how they are showing  in the world.

Erin: Seems like a comprehensive way to tackle this complex situation that sounds like would leave them feeling much better in some many ways then just say leaving or waiting to get fired. Now to switch gears a little bit here, can you tell us how did you become interested in the field of coaching?

Erica: I love this question because no two people ever have the same answer and it really is a unique decision one makes when considering this field. Coaching is so different because it does not track like many other professions like nursing, doctors etc. Over the course of my career  I was always championing, inspiring, and coaching others toward their career paths and with my past career in medicine and dentistry, I knew I was maxing out on options to advanced myself. I knew I didn’t want to be a doctor or director and started to seek out what my next career move would be.  I also realized being in many different workplaces allowed me opportunities to excel but with limits, due to the toxicity in these environments. It left me feeling very frustrated and sad which is why I  made it my mission to help professionals discover their personal gifts for their professional pursuits.

In my search for the next step, I came across an ad in the paper for coaching and thought, “Hey I can do this, this sounds like me!” and I went for it and never turned back. I went on to become an ICF certified coach from the Institute for Professional and Excellence in Coaching 2009, and opened my coaching practice, Coaching2Greatness, in 2010. I also sit on the International Coaching Federation Board and actively volunteer on Educational and Professional Development Committee.

Erin: If a kid walked up to you asking for your advice and you only had a few minutes to give ‘em your best tip, what would it be?

Erica: Your career is what you’re paid for and your calling is what you’re made for. Invest in services that will help you discover your calling, be in service to help others, and make time for what really brings you joy and happiness.

It’s not your employer’s job to determine your career path, and its certainly not your mother’s responsibility or your spouse’s responsibility to make this happen for you either. It’s your responsibility to discover, create, and respond to what you’re meant here to do on this earth.

Erica Loren, ACC, CPC is an ICF Certified Career Coach who partners with professionals seeking happiness and fulfillment in their careers, by honing in on the belief that we all have the potential to discover our personal gifts through professional pursuits. She guides clients down a clear and focused path, toward a powerful vision of what they want to achieve in helping them discover their dream jobs. She not only works with individuals but she also partners with corporations who want to cultivate a healthier happier work environment. 

You can learn more about Erica by visiting:; Linkedin:; Facebook:, or by calling: (732) 757-1880.

Erin Lloyd, Esq. is an employment lawyer and partner at Lloyd Patel LLP, a general practice law firm.  She represents individuals who have been subjected to unlawful discrimination, harassment and pay practices and helps them recover the damages they are entitled to. Ms. Lloyd works with clients to develop a personalized strategy based on each client’s needs and concerns.  She can be reached at or (212) 729-4266. For more information on Lloyd Patel LLP, visit their website at

Internet Law, Commerce and Liability

Erin Lloyd - Saturday, October 18, 2014

There is no denying the impact of the Internet on commerce. Many businesses utilize websites, social media, and other web-based platforms to promote their products and services. In fact, an entire industry has emerged comprised of what are now commonly known as “e-commerce” based business – entities that rely solely on the Internet as their means of engaging in commerce. Similarly, consumers are using the Internet as a primary source of information to make decisions on what they will purchase or from whom they will retain services – whether it is a simple “Google” search or an analysis of consumer reviews. Besides consumers, both employers and employees are increasingly making it a point to search the Internet before making a decision to hire an individual or to apply for a job. In this regard, websites provide an opportunity for businesses to connect to their customers/clients and future employees by instantaneously sending a message about their brand to the world.

Soliciting such a large audience requires businesses to be thoughtful of the obligations and responsibilities that go along with having a presence on the Internet. While creating a website for advertising businesses has become increasingly popular, entrepreneurs should be mindful of the potential for exposure to legal liability. Various federal and state laws govern businesses’ ability to advertise on the web. These restrictions depend in large part on the company’s location, where their customers live, and the industry in which they operate.Special consideration should be taken by businesses that actually engage in e-commerce (selling goods or services over the Internet), since their activities may involve more legal issues than a website that merely uses the web for advertising purposes. However, even websites that are only created for advertising purposes should be mindful of best business practices to protect themselves from liability.

Since these considerations are more general, this article will explore the general business and legal issues for non-e-commerce websites first, followed by a separate analysis specific to e-commerce websites, and finally some general considerations for both.Finally, each business is unique and the information provided in this article should not be relied on as legal advice, so an individualized and customized legal review of your website and business is recommended. 

Non-E-Commerce Websites

To begin with, just about anyone in the world can visit a website.Since a website is the face of your business, and is created for a particular purpose, a business should actively control and limit the activity that can take place on its website and be thoughtful of the legal implications triggered by the mere use of a website site.For the purposes of this article, a non-e-commerce site is referred to as a “banner site.”Some businesses that initially start off using a website simply as a “banner” page sometimes decide to use the data from their site in a more sophisticated manner.For example, some businesses analyze the traffic on their site, including the search terms that get consumers to their page to make marketing and other strategic growth decisions.Some businesses focus on search engine optimization (“SEO”) – meaning having a business or name appear at the top of the list of any search done on common Internet search engines such as Google or Yahoo.Some businesses use customer data, such as email addresses submitted on their site, to send specific marketing and promotional materials.Some companies are in the business of buying and selling those customer lists. The point is that you never know how you will end up using your site in the future, so we recommend having a thoughtful infrastructure (terms of use, privacy and security policies, etc.) in place even for simple banner sites.Many of the considerations below are applicable to e-commerce based businesses as well, however, some distinctions applicable to e-commerce businesses are discussed in more detail below.Notwithstanding this, the following “infrastructure” ought to be considered by any business with a website.

Terms of Use

One of the most basic legal protections a business can include on its website is a “Terms of Use” agreement – also known as “terms and conditions.” This creates a contractual agreement between the website host and the user and ensures that both parties understand the circumstances under which the website and its information may be accessed and used. [1] Generally speaking, the Terms of Use should clearly state the policies of the site, the contractual rights and obligations of the site host and users, any legal notices or disclaimers required by state and federal law, and assert ownership of intellectual property.When visiting a website, the Terms of Use are typically displayed through a link at the bottom of a website.However, the more visible the Terms of Use are and the more interactive the host makes them (e.g., requiring a user to click “I agree” before proceeding), the more likely the terms of use will be enforced as a legal contract.Additionally, it is useful to state the Terms of Use in plain English and to keep the notices short and simple – this increases the chances that the average user will actually read through and understand them and thereby enhances the likelihood of the contract being enforced.

The point of creating an enforceable contract through the Terms of Use is twofold: to prevent the need for litigation down the road, and to protect your rights in the event that litigation becomes necessary.Any disclaimers that may be required of your industry by state or federal law should also be included here, unless they are required to be conspicuously posted on the home page. [2]

Security and Privacy Policies

A Privacy Policy serves to explain security practices to consumers and puts them on notice as to whether and how their information will be collected and used while visiting a website (such as whether cookies are used to track a user’s browsing history).Consumers have become increasingly aware of the use of their private information and actively look to these policies when determining whether to do business with a particular company.In this vein, a Privacy Policy can serve to assure consumers that their information will not be sold to a third party or used for any purpose other than providing the company with information on their customer base.Alternatively, companies that may want to reserve the right to collect and sell consumer information should be sure to do so within the Privacy Policy in order to prevent potential claims of privacy violation.

Businesses should also establish security measures to prevent against hacking and the theft of sensitive consumer information.In the event of a security breach, New York State law requires that businesses follow certain procedures to notify consumers whose private information may have been accessed by unauthorized parties. [3] Including a notice to consumers about what steps will be taken by the company in the event of a security breach is a good idea because it forces companies to flesh out what those procedures are and it assures consumers that the company takes security seriously. Consumers should also be advised that the website host makes no representations as to the security or validity of information that may be obtained through links that lead to other websites.

Moderation policy

If there is a blog related to the website that allows users to post comments, or any other forum for visitors to leave comments or reviews, there should be a clear policy of how contributions by visitors will be reviewed and approved.This helps to protect both the website host and the consumer from Internet “trolls” who post comments solely to harass and annoy others or comments that are misleading or violate the law.Additionally, posting clear guidelines on what sort of posts will be approved allows consumers to contribute valuable feedback to the benefit of the business and their client base.

Intellectual property 

Businesses seeking to protect their intellectual property rights should include notices that unequivocally claim ownership over all the language and material on the site, including the brand name. Providing these notices in a clear and understandable manner helps avoid customer confusion as to what rights and obligations are triggered when accessing a business’ website.

Protection your website’s intellectual property is one of the most important functions of the Terms of Use.This is relevant to all websites, no matter how big or small, because protecting your brand is the online equivalent of protecting your reputation.A few considerations to keep in mind when drafting your intellectual property notice: 

  • Content development: Be sure to execute written agreements with those that are contracted to provide or develop material for the website to ensure that the content remains the property of the website host.
  • Licensing: If stock photos are used, be aware of what type of license applies to that copyrighted material.Just as you do not want others infringing on your intellectual property, you should do everything in your power to avoid infringing on the property rights of another.
  • Copyrights: These protect works of authorship. 
    • Putting a copyright “©” notice at the bottom of your home page may deter others from using the language that is on your site, but actually filing for copyright protection of that material is the only way to secure your rights under Federal law in the event that someone copies your material and you decide to sue them for copyright infringement.Keep in mind, however, that copyrighting the material on your website does nothing to protect the brand name of your business.
  • Trademarks: These protect brand names and logos.
  • Prior to acquiring a trademark for your business, you should perform a trademark search to be sure you are not infringing on an existing trademark.
  • Using “™” next to your company name gives you minimal trademark protection and puts others on notice that you have already claimed the brand for use in commerce.
    For the highest protection available, your brand name should be registered with the USPTO, but keep in mind there are various additional considerations to take into account with that process (such as the application being rejected), which are outside the scope of this article.

    E-Commerce Websites

    For the purposes of this article, e-commerce businesses are generally entities that sell products or services exclusively through their websites, or who in large measure rely on the Internet to execute major portions of their operations.Many e-commerce based businesses are structured so that most of the interaction with the consumer takes place online.Typically, customers select the products or services they desire and complete their purchase all on a company’s website, which often includes selecting a method of delivery of the product. For issues or questions, customers can sometimes even communicate live electronically with customer service representatives through a chat system on the company’s site. Naturally, e-commerce businesses are subject to a higher potential of liability through their websites than a business utilizing only a Banner Site.At a minimum, the amount of customer data that is collected by such a business creates legal obligations for these businesses regarding the manner in which their customer data is handled and protected.

    While the general points discussed above are all applicable to e-commerce businesses, e-commerce websites also need to outline clear sales and return policies, be more stringent about their advertising practices, and comply with myriad federal and state tax laws.Due to these added considerations, businesses should strive to structure notices under the terms of use to resemble a binding contract as much as possible with the following considerations:

    Terms of Service

    In addition to the Terms of Use, e-commerce based websites should include a Terms of Service agreement.While the Terms of Use dictate the limits on the use of a website, the Terms of service govern transactions between the website host and the user.In other words, terms of Service define in more specificity the exact activity that is engaged in by the parties. Some important provisions to consider in the Terms of Service agreement also include choice of law and forum clauses, which allow the business to designate how and where disputes will be handled and are especially important for businesses that have customers based in other states or countries. By including these provisions, a company predetermines whether disputes will be handled through arbitration or litigated in court, and chooses a jurisdiction convenient to the company. In this way, businesses can often avoid spending precious time and money litigating customer grievances in a foreign state or country.

    Similar to the Terms of Use, the Terms of Service should be structured so that it stands the test of a challenge.Businesses should consider requiring consumers to affirmatively check a box manifesting their agreement with the Terms prior to placing an order or paying.These Terms should also ensure that consumers are of legal age to make online purchases and should be presented in a format that allows customers to save and print them to increase the chances that they are read and understood.

    Sales and Return Policy

    Customers placing an order through a website should be able to easily access the company’s Sales and Return Policy prior to completing a purchase.The terms of the policy should be clear and unambiguous and allow for customers to print and save them.Employing these safeguards will help avert customer confusion and the need to deal with complaints down the road.

    In New York, a company may not advertise or accept orders over the Internet for merchandise that cannot reasonably be shipped within thirty days, unless they conspicuously disclose in the online advertisement the potential for delay. [4]


    In addition to Federal tax, businesses venturing into e-commerce must be sure to comply with all local and State sales tax laws for the localities in which they engage in business or customers reside.

    Miscellaneous Considerations


    All websites are a form of advertising, generally speaking, and all business advertising in New York – on the Internet or another medium – is governed by General Business Law §§349 & 350.These statutes in sum and substance prohibit deceptive and fraudulent advertising.

    These statutes allow any individual deceived by advertising to sue businesses for deceptive advertising or to file a complaint directly with the Attorney General, who may choose to investigate and prosecute violators of the GBL. [5] These statutes, and others like them, bar many types of deceptive/fraudulent practices that businesses should be aware of.Some examples include:

      • Spamming – sending unsolicited emails in bulk.
      • Spoofing – falsely soliciting business through another person’s email account is considered fraud.
      • Astro-turfing – posting fake positive reviews for your own business.One company paid a $300,000.00 settlement with the NYSAG for astro-turfing. [6]
      • Adware & Pop-ups – Adware is the software that generates pop-ups, which are unsolicited advertisements.Those advertising through adware must provide users with full identification and descriptions of any adware downloaded on to their computers, and obtain their consent before downloading and running the software.
      • Burying notices – Notices to consumers that they have a right to know about cannot be buried in lengthy, fine-print web pages, such as automatic renewal charges.
      • Unsupported claims – Businesses cannot make unsupported claims and assume that they will be regarded as ‘mere puffery” rather than fraud, e.g., claiming to be the number one law firm listed on Google, but only showing up in searches 50% of the time.
      • Shill bidding – bidding on items you have put up for online auction in order to inflate the price.
      • Games of Chance – Statements must be filed with the AG for any games of chance that are used for advertising or promoting where the value of the prize exceeds $5,000.
      • Domain Names – cannot be registered if they use the name of another living person without their consent for profit.
      • Advertising to Children - In the case of businesses that are actively marketing to children, their websites must comply with the federal Children’s Online Privacy Protection Act (COPPA), which imposes certain restrictions on advertising directed to children under 13 years of age.

    Industry-specific legal notices and disclaimers

    Depending on the industry your business is engaged in, there are specific disclaimers required by law.Below is a list of some of the professions/industries and the corresponding statutes imposing such requirements. It is important for the implicated business to be in compliance with the requirements of these statute as it relates to their website.

    • -Doctors 
    • -Attorneys 
    • -Auctioneers
    • -Tax Preparer
    • -Consumer Credit Report
    • -Free Trial Offers
    • -Internet Dating Sites
    • -Peer to Peer Applications

    While this article attempts to provide a general analysis of the Internet, online commerce, and ensuing liability today, the fact is that technology is advancing at such a rapid pace that many of the points in this article will be become obsolete or irrelevant in short order. In fact, many of the laws that we now have on the books are already starting to come into conflict in some instances with the realities of e-commerce and are creating ambiguities with regards to the legal liability and exposure businesses face in this ever-changing environment. At the same time, the law is managing to adapt in certain areas of this new reality (albeit slowly), as highlighted in this article, and while this area continues to grow and develop, the obligation of businesses to remain compliant must also grow and develop.

    This article was prepared by Yogi Patel, partner Lloyd Patel LLP with the assistance of Susan Reyes (Summer Associate), August 20, 2014, for educational purposes only. The article is intended to provide general information on a wide range of issues, including but not limited to legal issues. It is not intended to provide specific legal advice and no legal advice is given. This blog does not create an attorney-client relationship and should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

    [1]The enforceability of terms of use agreement as a contract depends on several factors, such as how visible the notice is on the site, how interactive it is (whether a user has to affirmative click to demonstrate their assent), how easy it is to understand, and whether the actual terms conform to the requirements of a contract (e.g., the terms are not unconscionable or illegal, etc.).

    [2]Where appropriate (depending on the content of a website), businesses should make sure that children under 18 years of age cannot access explicit material on their websites by including a notice that requires users to affirm they are over 18. For businesses actively advertising to children under 18, please refer to the advertising section below for a summary of applicable federal law.

    [3]N.Y. Gen. Bus. Law § 899-aa.

    [4]N.Y. Gen. Bus. Law § 396-m




    New York City Strengthens and Makes Significant Amendments to the Earned Sick Time Act

    Erin Lloyd - Wednesday, July 02, 2014

    New York City Strengthens and Makes Significant Amendments to the Earned Sick Time Act


    The New York City Council voted 46-5 this February to expand the scope of the New York City Earned Sick Time Act (“ESTA”) to require business with five or more employees to provide up to five paid sick days per year. When the law was passed last year, it originally imposed paid sick leave requirements only on businesses with fifteen or more employees.

    The new amendments, signed into law by Mayor DiBlasio and effective April 1, 2014, extended application of the law to all businesses with five or more employees. Further, even businesses that are not required to provide paid sick leave are now required to offer their employees unpaid sick leave according to the same schedule.

    In addition to expanding the category of covered employers, the ESTA increases the statute of limitations for filing a complaint from nine months to two years. The law also institutes a six-month grace period for businesses with 5-19 employees and those in manufacturing before they will be fined for non-compliance. Finally, the new amendments make significant changes in filing requirements, notice obligations, and enforcement powers.  

    What Employers are Required to Provide Paid Sick Leave?


    The ESTA requires all employers with five or more employees to provide paid sick leave. Employers with four or less employees must provide unpaid sick leave. The Act does not pertain employees who are covered by a collective bargaining agreement that waives the provisions of the ESTA and provides comparable benefits, work study programs, employees for the hours worked and compensated by or through qualified scholarships as defined in 26 U.S.C.117, independent contractors, and hourly professional employees.[1]

    How Much Sick Leave are Employers Required to Provide?


     All employers, except with regards to domestic workers, [2] must provide a minimum of one hour of sick time for every thirty hours an employee works. The amount of sick time employers are required to provide is capped at forty hours in a calendar year. If the employer has five or more employees, the sick time is to be paid; if there are four or fewer employees, the sick time may be unpaid. The ESTA does not limit the amount of paid or unpaid sick leave employers are allowed to give; rather, it encourages employers to be more generous than the act requires.

    I Already Give My Employees Paid/Unpaid Sick Leave; Do I Have to Give Them More?

     Generally, if an employer provides paid leave already in the form of sick days, personal days, vacation, or other paid time off, the act does not require additional leave if the amount currently provided is equal to or greater than what the ESTA mandates. Likewise, if an employer that is required to provide unpaid sick leave by the ESTA is already providing unpaid leave to his or her employees that meets the act’s requirements, he or she is not required to give additional unpaid leave.


    Under What Circumstances May Employees Use their Sick Time?


    Employees may use their sick time to be absent from work due to: 1) The employee’s own physical or mental illness; 2) the employee’s need to care for a family member’s physical or mental illness; [3] or 3) the closure of the employee’s place of business by order of a public official due to a public health emergency or the employee’s need to care for a child whose school or childcare provider has been closed by a public official due to a public health emergency.

    Caring for an employee’s own illness, condition, or injury or that of a family member includes treatment, preventative treatment, care, obtaining a diagnosis, or simply being too ill to work. Employers may not require the disclosure of an employee’s or his or her family member’s medical condition as a condition of providing sick time.

    Employers may require reasonable notice of the need to use sick time. When the need to use sick time is foreseeable, an employer may require up to seven days’ notice; when the need is not foreseeable, the employer may require notice as soon as is practicable. If an employee is absent for more than three days, an employer may require reasonable documentation that the use of sick time was authorized under the ESTA. For example, an employer may require a doctor’s note if an employee is out due to his or her own illness for more than three days. If an employee has inappropriately used sick days, the employer may take disciplinary action, including termination.


    Are Employers Required to Provide Notice to Employees About the New Law?

     In short, yes. Employers must provide notice to all current employees via conspicuously placed posters. The notice must be in English and the primary language of the employee if the Department of Consumer Affairs has made the translation available.  Posters are available for download and printing on the DCA website in English and various translations:  The specific posting requirements are also listed on the DCA’s website:


    What Happens if an Employer Fails to Provide Notice?

    Employers who willfully violate the notice requirements of the ESTA will be subjected to a fine not exceeding fifty dollars for each employee to whom proper notice was not given.

    Are Employers Required to Keep any Records by the ESTA?

    Yes. Employers must retain documents that show the employer has complied with the ESTA’s requirements for three years and must make the records available upon request by the Department of Consumer Affairs.

    Who has the Power to Enforce the ESTA?

    The Commissioner of the Department of Consumer affairs has the authority to receive, inspect, and resolve complaints filed under the ESTA and may also conduct investigations on his or her own initiative. Additionally, the mayor may designate any other agency or department to enforce the ESTA, which will then have all the powers of the Commissioner.  

    What Should an Employee Do if He or She Believes an Employer is Violating the ESTA?

    Employees may file complaints with the Department of Consumer Affairs within two years from when he or she knew or should have known of the alleged violation. The Department will conduct an investigation and attempt to resolve the complaint through mediation. The identity of the complainant will be kept confidential unless it is necessary to resolve the issue or is required by law. To the extent that it is possible, the Department of Consumer Affairs will notify the complainant that it intends to disclose his or her identity prior to doing so.

    What can the Department do when an Employer Violates the ESTA? 

    If the Department of Consumer Affairs finds that an employer has violated the ESTA, the department may impose penalties and provide other relief to the aggrieved employee, such as:

    1. For each instance of sick time taken by an employee but unlawfully not compensated by the employer: three times the wages that should have been paid or two-hundred and fifty dollars, whichever is greater;
    1. For each instance of sick time requested by an employee but unlawfully denied by the employer and not taken by the employee or unlawfully conditioned upon searching for or finding a replacement worker, or for each instance an employer requires an employee to work additional hours without the mutual consent of such employer and employee to make up for the original hours during which such employee is absent pursuant to this chapter: five hundred dollars;
    1. For each instance of unlawful retaliation, not including discharge from employment: full compensation, including wages and benefits lost, five hundred dollars and equitable relief as appropriate; and
    1. For each instance of unlawful discharge from employment: full compensation, including wages and benefits lost, two thousand five hundred dollars, and equitable relief, including reinstatement, as appropriate.

    Additionally, any entity or person found to be in violation of the provisions the ESTA will be forced to pay a civil penalty to the City of up to five hundred dollars for the first violation. For subsequent violations that occur within two years of any previous violation, the fine can be as high as seven hundred and fifty dollars for the second violation and one thousand dollars for each succeeding violation.

    However, for businesses with fewer than 20 employees or businesses that are in the manufacturing sector, the department will not impose civil penalties for any violations that occur before October 1, 2014, though it may impose equitable relief. For businesses with more than 20 employees, the department will impose penalties, however the first violation will not serve as a predicate for imposing fines for subsequent violations if the first violation occurs prior to October 1, 2014. A second violation that occurs before October 1, 2014 will serve as a predicate for imposing fines for subsequent violations.

    What Should Businesses Do to Comply with the ESTA?

    All employers should:


    • •   Review any sick time policies that are in place;
    • •   Create procedures to document compliance with the ESTA;
    • •   Create procedures for implementing sick time policies, if necessary;
    • •   Contact the Department of Consumer Affairs with regards to official notice signs to post;
    • •   Train administrators, managers and supervisors on compliance with the ESTA and ensure that all employees are receiving their mandated sick time.
    • •   Create procedures for informing all employees, present and future, of their rights under the ESTA, including reviewing and updating Employee Manuals and other materials provided to new-hires.
    • Conclusion
    • Overall, the purpose of the ESTA is to create a right to sick leave for all employees and to encourage employers to provide sick leave that is more generous than the act requires. While the goals and purposes of the act are relatively straightforward, the details as they apply to a specific business can be tricky, and an employer should consult with his or her attorney to make sure he or she is in compliance with the ESTA.


    For more information, employees and employers can contact us here. (include a link to “Contact Us” page).



    [1] The act defines hourly professional employees as one “(i) who is professionally licensed by the New York State Education Department, Office of Professions, under the direction of the New York state board of regents under Education Law sections 6732, 7902 or 8202, (ii) who calls in for work assignments at will determining his or her own work schedule with the ability to reject or accept any assignment referred to them and (iii) who is paid an average hourly wage which is at least four times the federal minimum wage for hours worked during the calendar year.

    [2] For more information regarding how ESTA applies to domestic workers, see the Department of Consumer Affairs’ website:

    [3] Family member is defined as the employee’s child, spouse, domestic partner, parent, sibling, grandchild, grandparent, or the child or parent of the employee’s spouse or domestic partner.

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