It’s 5:00 on Friday and your boss calls you into her office.  You probably noticed that business has not been going well.  A long time customer has left and there is simply not enough work to go around.  Your boss, tearing a bit, breaks the news and offers you a severance package. Should you take it?

Believe it our not, you can negotiate a severance agreement.

1. Understand that your emotions while be on high after you are initially handed the agreement.  The worst thing that you can do is let your boss “have it.” Be cordial and ask for time to review the agreement.  You have the legal right to do so.
2. Don’t sign anything immediately. Your boss may ask you sign a waiver, which could release any future rights that you may have in the event of a potential lawsuit. So if you a fired while you are pregnant, waive your discrimination case goodbye.
3. Be aware that your employer cannot withhold your wages if you fail to sign the agreement.
4. Have you been paid all over your benefits? Review your employee handbook or employment contract to see if you are owed any vacation time.
5. How is the severance payment being disbursed? In a lump sum or over a period of time.  There could be tax benefits for choosing one form of payment over another.
6. What health insurance is being offered?  Look into possible of extension of your Cobra benefits.
7. Your employer may want you to sign a non-compete agreement or non-disclosure agreement.  If you sign a non-compete agreement, you may have trouble seeking new employment if the terms are not analyzed.  A non-disclosure agreement may prohibit you from disclosing trade secrets to a potential new employer.
8. Do you have any stock options?
9. In some cases, your employee handbook or agreement may provide that your employer will pay your legal expenses for an attorney review your severance package.
10. You can negotiate with your employer and agree to the language of your recommendation.

Don’t negotiate your severance agreement alone. The Law Office of Frederic R. Abramson reviews, drafts and negotiates severance agreements.  Call me at 212-233-0666 for a free consultation.

Zoe Baird watch out.  If you employ a Nanny, even one who is here illegally, a new proposed New York Law is in the works that will place new burdens on their employers. The State Senate passed a bill last week that would protect Nannies. According the New York Times, this law is likely to be passed into law.

The new law will require the following:

1. Paid holidays, sick days and vacation days for domestic workers, along with overtime wages.
2. It would require 14 days’ notice, or termination pay, before firing a domestic worker.

The law would cover citizens, legal immigrants and those here illegally as well.  It seems highly unlikely that those who are here illegally would make complaints to the Department of Labor for workplace violations.

This bill is a bad idea.  The reality is that many working parents cannot afford a Nanny and pay her(always a women) taxes, workers compensation and overtime wages.  My estimate is that the cost of  Nanny would skyrocket to the $35,000.00 a  year. Many families may decide to lay off their Nannies and let the parent who makes less money stay at home.  Other families may decide to let their homes go into foreclosure.

There is a whole underground economy when it comes to domestic workers that benefits the workers as well. A brief sample of acquaintances who currently employee  Nannies in the New York metropolitan area revealed that the average wage for a Nanny who is in the United States illegally is about $500.00 a week. Since they don’t pay taxes their earning power is up to a third more.  Nannies are not regulated. There is no certification process and a criminal check is often impossible.

For this bill to work, the legislature should increase the child care tax credit to $10,000.00 a year per child.  In addition, Nannies who have been here for 2 years should be given a path to citizenship. What do you think?

FYI, my kids are in daycare.

If you have a question about labor and employment law, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

You probably spend much of your time at work in front of a computer. When you are on the run, you use your Blackberry or iPhone for both work and pleasure. But who owns the data that is created, viewed and stored while working?

If you work in New York for a private company, you have a reasonable expectation of privacy for your electronic devices, work computers and cellphones. This is especially the case when the company that you work for does not have a policy regarding internet usage. As a result, I have been advising companies to cover their bases by clearly and specifically drafting internet usage policies that explains their employees expectation of privacy.

Restrictive internet usage policies usually include the following:

1. All the data that is stored on work computers is company property;
2. Employee’s have no expectation of privacy;
3. The Employer may monitor its employees computer usage without their knowledge.

The law regarding restrictive internet usage policies have been looked at with increasing scrutiny by the courts.  For example, a recent court ruling did not allow an employer to access the Hotmail account of its employee.

Despite a written internet usage policy, employers are not immune from potential lawsuits from employees. Listed below are restrictions that employers should be aware of:

• PRIVILEGED DISCUSSIONS. Discussions regarding attorney-client communications may continue to be privileged.  If an employee is using the internet for legally permitted employee, like union organizing her communications may be privileged.
• DISCRIMINATION. Be aware that you cannot treat your employees differently while monitoring their computer usage.
• ACCESSING PRIVATE ACCOUNTS. You cannot access your employee’s Twitter account simply because they accessed their account at work.
• NEW YORK STATE LAW. Believe it or not, New York State does not have an invasion of privacy law.  Be aware that you cannot fire an employee simply because she tweets.

Be aware that case law is changing on this subject.  As a word of caution, use your common sense and think about the golden rule.

For more reading:  Who Owns all the data in the Workplace

If you have any questions about who owns your data at work, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

I have written extensively about the potential problems employers can have by misclassifying their workers as employees.  The IRS has been cracking down on companies that try to pass off regular employees as independent contractors. It now may become a crime.

Congress is about to act on a bill entitled the Employee Misclassification Prevention Act that would impose criminal penalties on companies that misclassify workers. It appears that both the House and Senate is behind the bill, so it is likely to become law.

If this new law is passed, it would impose finds of $5,000.00 for each worker that is misclassified as an independent contractor. According to the American Bar Association Journal, the new law would also require employers to provide new hires with notice concerning their rights

There is an excellent and lengthy article on the subject by the large law firm Pepper Hamilton, LLP.

The new law is a natural progression of the Obama administration focus on cracking down on employers who improperly classify employees as independent contractors.

I would suggest that companies review all of their employment classifications to avoid potential criminal liability. You may be able to minimize the risk to your company by:

• Wholesale review of all of your workers.
• Restructuring the relationship that you have with your independent contractors that fall within a gray area of the law by re-classifying them as employees. I would suggest that you should err on the side of caution and classify your workers as employees if you are not sure.
• Draft written agreements with all of your workers stating their employment status.
• If you want to limit the workers that you classify as employees, you may have a third-party such as a staffing agency performing the hiring.

If you have any questions regarding independent contractor agreements or classification of employees, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

I have a technology company as a client who recently retained my office to advise them on a relatively common employment law. The company signed a contract with financial institution to perform help desk related work.  They hired ten people to perform the work and had each of them sign an independent contractor agreement.  All of the workers performed the work on the job site only. The all worked solely for the technology company for 40 hours a week. The company just received an evil notice from the IRS. The IRS believes that the workers are misclassified as independent contractors and should be employees.

The technology company now wonders if there are penalties for misclassifying the workers as an independent contractor.  The IRS looks in part at the intent of the employer.  If the IRS reclassifies a worker from independent contractor to employee, the employer may be liable for a penalty based on the amount of the tax that was not withheld because of the original misclassification. If the IRS finds that the misclassification was an honest mistake on the part of the employer, and the employer filed proper returns, the penalty against the employer is:

• 1.5% of the wages paid to the employee; and

• 20% of the amount that should have been withheld from the employee’s wages for FICA, but was not due to the misclassification.

If the IRS finds that the employer failed to file the proper returns, then, except where the failure is due to reasonable cause and not willful neglect, the penalties double. Then, the penalties are:

• 3% of the wages paid to the employees; and

• 40% of the amount that should have been withheld from the employee’s wages for FICA, but was not.

If the misclassification on the part of the employer is intentional and therefore the employer intentionally neglected to withhold the necessary employment taxes, the limits discussed above do not apply in assessing the employer’s liability. The penalties for intentional misclassification are more severe. Moreover, the limits are not applicable to the employee’s share of the FICA taxes if the worker is a “statutory employee,” nor where the employer withholds federal income tax from the worker’s wages, but does not withhold FICA.

Lastly, if the required to pay an “employee reclassification” tax liability, the employer may not recover the tax assessed from the employee. In addtion, the employer may not deduct the amount of tax assessed from the employee’s wages. The Internal Revenue Code provides further that the employee’s liability for his or her share of the tax is not affected by the assessment or payment of the penalty tax by the employer.

If you have a legal question regarding independent contractors in New York, contact the Law Office of Frederic R. Abramson at 212-233-0666

Fraud is not limited to the Bernie Madoff’s of the world.  Because of the recession, it should come to no surprise to learn that financial problems are more likely to lead to more fraud.

Fraud is a huge problem.  According to the Association of Fraud Examiners 2008 report on occupational fraud and abuse, companies lose 7 percent of annual revenue due to this problem. The report also indicates that small businesses are more likely to be victimsthan large companies.

Small businesses are having more difficulty with fraud not only because employees have an increased workload, but also because they have less resources to stop it.

Generally fraud occurs in four primary areas.  I will provide a brief overview and let you know of ways that you can help limit your company from being a victim.

Checks

Altered checks is a major problem for businesses. What out for mistakes from payroll companies and bookkeepers.

Owners should:

• limit the use of rubber stamps
• have an outside accountant check your books monthly

Fraud to order

Employees can make fake orders. Check inventory to see if anything is missing.

Owners should:

• Conduct surprise audits
• limit access to cash
• install security cameras

Encourage employees to report Fraud

According the ACFE study, most fraud was uncovered by co-workers.

• Encourage tips and make sure they reach you.
• Make it easy for an employee to report the problem anonymously.

Fake employees

This fraud is especially prevelent in the construction industry.  A foreman on a construction site mays say has ten employees and he really has 9.  He collects the 10th  paycheck for himself.  You can avoid this by:

• handing paycheck personally
• create a computer program to detect missing hours.

If you or your company is a victim of fraud, contact me at the Law Office of Frederic R. Abramson at  212-233-0666.

Wage and Hour lawsuits are rising according to Kiplinger.com. Due to the faltering economy, workers who have been let go are looking to the courts to seek monetary damages.  Usually the lawsuits are based upon allegations that hourly workers are not paid overtime. This is a violation of the Federal Labor Standards Act.

According to the article, New York was one of the states that has seen the most significant growth in Wage and Hour lawsuits.   Among the reasons why there have been an increase in litigation is because these cases are relatively easy to win.  The proof is in the numbers.  If you are a worker, you simply have to prove that you worked overtime.  This is usually evidenced by a time sheet.  Large employers also keep records of employees hours.  If the workers paycheck doesn’t match the hours worked, the worker wins.  Awards can include two to three years of back pay plus benefits.

The Obama administration is also placing a greater emphasis on regulation and enforcement.  As a result, more workers are being notified of Wage and Hour violations.

Here are a few ways that a business can protect itself from Wage and Hour lawsuits:

• All worker classifications should be reviewed. Make sure that you are properly classifying any independent contractors.
• Review all worker wages.  Sit down with an attorney to see if you workers are being properly paid. This could save your company millions of dollars.  Wal-Mart settled a $65 million dollar claim last year.
• Speak to and train all of your supervisors.  Managers often demand workera to work overtime without knowing its implications.
• If there is a problem don’t ignore it.  If an employee complains that she has not been paid overtime, take it seriously. Wage lawsuits can be just as costly as sexual harassment litigation.
• Make sure your employee handbook is up to date and addressses wage and hour issues.
• Be aware of the difference between employees who are paid salaries and hourly workers.

Another tip, as Rush Nugut points out is that a business should consider hiring a lawyer during the auditing process as to keep the attorney-client privledge.

I would also like to thank Craig Roberts for his insights regarding this issue while watching our children slide on giant inflatables at a Pump it Up party in Plaiview, Long Island.

If you have any question regarding Wage and Hour Lawsuits, whether you are an employer or employee, contact the Law Office of Frederic R. Abramson at 212-233-0666.

In early October, the FTC published its guidelines governing testimonials. The main purpose of these new guidelines is to protect the public from hidden endorsements.

Many bloggers are paid by advertisers to write about a product.  If you are a tech blogger and you were handed a shiny Droid phone by Verizon to blog about its new camera, you are now required to disclose that relationship.  The new guidelines  have  teeth, with fines of up to $11,000 for not disclosing payments. How are bloggers and advertisers able to protect themselves from an unwanted legal action?

ADVERTISERS AND BLOGGERS NEED A WRITTEN AGREEMENT

If you are an advertiser and you pay bloggers to review and report on your product and services, you must develop an agreement with the blogger that mirrors the guidelines of the FTC rules.  The agreement should:

• Prohibit them from  against making baseless claims about the service or product;
• Require the blogger to disclose the connection between the advertiser and the blog owner. A tech blogger must disclose in its review of the Droid smartphone that it received the Droid for free.

THE ADVERTISER MUST MONITOR THE WORK OF THE BLOGGER

• The advertiser should also set up a Google Alert,  follow the blogger on all social media and constantly review the blog posts to make sure that the blogger complies with the FTC rules.

MONITOR YOUR EMPLOYEES

• A company is also responsible for what their employees disseminate on social media.   Companies must have their employees disclose that they work for them in any reviews.  You can also prohibit your employees from reviewing any of your products.

BE TRUTHFUL

This may appear obvious, but both bloggers and advertisers now have an affirmative duty not to mislead or make a statement about the product that his untrue. Bloggers now have to perform due diligence about the product before posting.  Bloggers now must review the product in an unbiased manner.

What do you think of the new FTC rules?  Are they necessary?  How do you think they will be enforced?

The Law Office of Frederic R. Abramson drafts agreements between bloggers and advertisers.  For more information, contact me at 212-233-0666

Related articles by Zemanta

• The FTC Rules for Bloggers (bloggingot.com)

There is no question that the Internet has changed the way companies hire people.  Currently 45 percent of employers use social networking sites and conduct online searches to screen applicants.  If you are a job applicant, that means that your potential employer is reading you Twitter feed and analyzing your blog posts. 

While it is not illegal for an employer to to search a candidate’s social networking profiles, there are risks. In an article written by Jeffrey S. Kein and Nicholas J. Pappas for the New York Law Journal, they highlight a number of legal issues arising out of employees’ use of social networks. They list Anti-Discrimination Laws, Legal Activities Laws, National Labor Relations Act, Terms of Service Violations, Privacy Implications and Business Considerations. I will briefly discuss the the legal implications of Anti-Discrimination Laws.

ANTI-DISCRIMINATION LAWS

By simply viewing a candidates social networking profile, certain information can be gleaned that can be a basis for a claim under discrimination laws. For example,  if an employer views the LinkedIn profile of a candidate and the employer decides not to hire the candidate or take action within a short time because the candidate lists that she is handicapped, the employer could be held liable.  The mere fact that the employer viewed her social networking site can be used as circumstantial evidence of discrimination.

Under New York Law, an employer must use the same standards when deciding who to fire.  The authors cite an Simonetti v. Delta Airlines, where Delta decided to fire a female employee because she posted revealing photographs online. She argued that she was being discriminated against because other male flight attendants also posted similar content and were not fired.