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Apr 19 2018

Should my New York based business be a Delaware LLC?

Published by under Uncategorized

 

The answer is very a simple and unequivocal, “NO.”  I decided to write this post because I get asked that question at least once a month and there is a lot of misinformation on the subject.

Despite the correct answer being NO, many lawyers and accountants still advise otherwise based on their lack of understanding about how the NY tax code and jurisdiction laws works. While it is true that Delaware taxes and laws are more beneficial to employers than New York taxes and laws, NY based businesses however don’t get any of that benefit.  In fact, if you form a Delaware LLC for your New York business, you will be required to file tax returns in both states and make additional filings in NY such as an application for authority for a foreign business. You will also be required to maintain a registered agent in DE which will come at an additional cost to you.

If your business is in NY, you will be required to pay NY taxes regardless of where you choose to form your LLC.  Further, if you do form your LLC in Delaware but operate in NY, you will subject to NY jurisdiction and law for any legal claim that arises in NY (absent a contract claim where the contract contains a DE jurisdiction and choice of law provision).

Thus, there is no tax benefit and (in almost every conceivable scenario) there is no legal benefit for forming your New York based business as a Delaware LLC.

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Apr 16 2018

Stop Sexual Harassment in NYC Act Enacted

 

 

On April 11, 2018, the New York City Council enacted a package of legislation referred to as the “Stop Sexual Harassment in NYC Act,” described by the City Council as critical to creating safe workplaces in New York City.

The Stop Sexual Harassment in NYC Act passed one day after New York Gov. Andrew Cuomo signed the Budget Bill, which contains a new state law requiring employers to conduct annual anti-sexual harassment training. New York City employers must comply with both state and city training requirements.

Whereas the NYCHRL generally covers employers with four (4) or more employees, all New York City employers, regardless of the number of individuals they employ, will be subject to the NYCHRL with respect to only sexual harassment. Thus, for sexual harassment claims only, the law expands the definition of “employer” to include all New York City businesses and entities that employ at least one individual within New York City.

The Stop Sexual Harassment in NYC Act also expands the statute of limitations period for sexual harassment claims. Under the NYCHRL, aggrieved individuals have one year from the alleged discriminatory practice to file a complaint with the New York City Commission on Human Rights and three (3) years from the alleged incident to file a claim in court. Effective immediately, the new law allows individuals up to three (3) years to file sexual harassment claims with either the City Commission or in court; the statute of limitations period for all other discrimination or harassment claims remains unchanged.

In addition, within 120-days after the Mayor signs the Stop Sexual Harassment in NYC Act into law, the City Commission must create anti-sexual harassment posters in both English and Spanish. New York City employers will be required to post both the English and Spanish versions of the posters with other workplace postings.

Finally, as of April 1, 2019, all private employers with fifteen (15) or more employees in New York City will be required to conduct annual anti-sexual harassment interactive training. The City Commission is charged with creating interactive training programs. Employers can use the model training programs created by the City Commission to satisfy the training requirements set forth in the Stop Sexual Harassment in NYC Act, or they can implement their own policies and training programs provided that such policies and programs equal or exceed the minimum standards set by City Commission.

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Nov 03 2017

NYC Cabaret Law Will Be Repealed!

yellow-chicken-happy-dance-clipart

The New York City Council overwhelmingly voted on October 31, 2017, to pass legislation (Int. 1652) that repeals the City’s longstanding Cabaret Law. At the same time, Int. 1652 retains certain security requirements of the old law for large establishments. The legislation has the support of Mayor Bill de Blasio, who is expected to sign Int. 1652 into law shortly.

The existing Cabaret Law, established nearly a century ago during Prohibition, requires any business venue where dancing occurs to obtain a Cabaret license from the New York City Department of Consumer Affairs before operating. The law also prohibits musical entertainment, singing, or other forms of amusement without a Cabaret license at establishments in New York City. Currently, premises required to hold a Cabaret license also must provide a copy of it to the New York State Liquor Authority in order to be licensed to sell or serve alcohol at the premises.

While active enforcement of the Cabaret Law has been on the decline in the past several years, this legislative effort marks the end of decades of strong opposition by venue operators and performers to the law as written.

The legislation will repeal the entire Cabaret Law while retaining certain requirements of the law relating to security measures at large entertainment establishments. Once this legislation becomes law, neither operators nor performers will need to apply for a Cabaret license for any reason. Operators of certain large entertainment establishments (as defined by the New York City zoning laws), however, will need to maintain existing requirements regarding the use of video surveillance cameras and security guards. The requirements will be codified under new section 10-177 in § 2, Title 10 of the Administrative Code of the City of New York.

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Jan 27 2014

NY Restaurants and Bars Must Obtain a License to Play Music.

party-disco-restaurantMusic is protected by copyright law, which provides exclusive rights to copyright owners to perform or play their songs. If a restaurant or bar plays music without permission, they are infringing on the copyright, and copyright law allows the owner to recover damages ranging from $750 per violation, to $150,000 if a court decides the infringement was willful.

In Range Road Music, Inc. v. East Coast Foods, Inc., the Court of Appeals found a restaurant violated copyright laws when it played music without a license. The court awarded the Performing Rights Organization (PRO) nearly $200,000 in damages and attorney’s fees. PROs employ investigators that visit businesses to see whether songs are played without a license.

One exception to the rule allows restaurants or bars under 3,750 square feet to play music from a radio, television, or similar household device without a license, provided there are fewer than six speakers (with limits on the placement of speakers), and customers aren’t charged to listen.

Songwriters, composers and music publishers generally join one of three Performing Rights Organizations that license their work to the public: the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC . The PROs send royalties to the copyright owners.

However, obtaining a license from one PRO doesn’t necessarily mean you’re in the clear — you only have a license for that PRO’s copyright holders. For example, the composer of a song may be represented by ASCAP, while the lyricist may be with SESAC. To avoid this problem, most restaurants and bars choose to purchase a blanket license from each of the PROs, which allows the licensee to play any of the music from each PRO’s library. Blanket licenses can range from the low hundreds to several thousands of dollars per year.  Like any other agreement, these licenses are fully negotiable.   When it comes time to securing one of these PRO licenses, hire an experienced attorney as they will be able to negotiate the best price for your specific establishment.

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Jan 10 2014

Mandatory Tip Policy? Consider Ditching it.

money tips In January of 2014, the IRS will begin cracking down on how restaurant owners pay out mandatory tips (e.g. the typical 18% mandatory tip for parties of 6 or more).  Going forward, these tips must be classified as service charges that are taxable as regular wages and subject to payroll tax withholding (aka more paperwork and accounting), rather than pooled into the tip cash servers divide at the end of their shift (which has been common practice until now).

Though the policy isn’t a new one, having been issued in June 2012, the implementation was delayed until 2014 to give restaurants time to comply.  Some restaurateurs have already chosen to ditch the mandatory tip altogether rather than having to deal with the increased paperwork and fees.

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Jan 01 2014

NYC DEPARTMENT OF HEALTH – LETTER GRADE REQUIREMENTS

The New York City Health Department requires that restaurants publicly post A, B, or C letter grade cards that summarize their sanitary inspection scores.  Not posting a grade card – or posting it incorrectly – is a serious violation that may result in large fines or loss of your permit. To avoid penalties, food service operators and their representatives and attorneys should follow these instructions carefully.

1. Where does the grade card have to be posted?
The grade (or grade pending) card must be posted on a front window, door or outside wall where it is easily seen by people passing by. The card must be within 5 feet of the entrance and from 4 to 6 feet off the ground or floor. If there is no direct entrance to the street, the Health Department sets the place to post the card. The Health Department tracks each grade card by its serial number. It may issue a Notice of Violation to any establishment that fails to post the right card, or posts it in the wrong place.

2. When am I required to post the grade or grade pending card?
The restaurant must post the grade or grade pending card as soon as the inspector provides it. If the restaurant receives both a grade card and a grade pending card, the operator has the choice of posting one of these two cards immediately, until it has had the chance for a hearing at the Administrative Tribunal.
3. Are there penalties for failing to post the grade card, or posting it incorrectly?
Yes. Not posting a grade card can result in fines of up to $1000. Posting the grade card incorrectly can result in a $200 fine. Repeated violations may result in loss of your permit.
4. How do I get a hearing at the Administrative Tribunal?
Everyone who receives a Notice of Violation has the right to a hearing at the Administrative Tribunal. Your scheduled hearing date is printed on the front of the Notice. Directions for how to respond to the Notice are on the back.
5. I had my hearing, and I was given a new grade card. What should I do with it?
When a restaurant receives a grade card at the Administrative Tribunal, it means that the Hearing Examiner’s decision changed the restaurant’s inspection score enough to change its grade.
You must immediately:
• Post the grade card issued by the Tribunal, and
• DESTROY the letter grade card and grade pending card that the inspector gave you
at the inspection.
6. I had my hearing, but I was not given a new grade card. Which card do I post now?
If you did not receive a new grade card at the Administrative Tribunal, it means that the Hearing Examiner’s decision did not change the restaurant’s inspection score enough to change its grade.
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
7. My restaurant accepted a settlement offer. Which card do I post now?
If you accepted a settlement, your inspection score and grade did not change.
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
8. What if I miss my hearing date at the Administrative Tribunal?
If you do not respond to your Notice of Violation by 1) accepting a settlement offer;
2) appearing at the Tribunal on your hearing date; 3) writing to the Tribunal for a hearing by mail; or 4) asking on or before your hearing date for an adjournment:
You must immediately:
• Post the grade card that the inspector gave you at the inspection, and
• DESTROY the grade pending card.
9. I asked for a new hearing date (“adjournment”). What card do I post in the meantime?
If this is the first adjournment you requested, you can continue to post your grade card, or grade pending card. If you ask for another adjournment or miss your second hearing date, you must post the letter grade card the inspector gave you at the inspection.
10. What if I receive a default decision?
If you received a default decision, it means that you did not respond to your Notice of Violation. You were required to post your grade card on the day you missed the hearing. If your grade card is not posted when you receive a default decision:
You must immediately:
• Post the grade card the inspector gave you at the inspection, and
• DESTROY the grade pending card.
11. Do I have to post the actual grade card? Can I post a photocopy or fax instead?
You must always post the actual letter grade card as required (see Question 1). You cannot substitute a photocopy or fax for the real grade card.
12. How do I replace a lost or damaged card?
You can get a new card at the Health Department’s Bureau of Food Safety and Community Sanitation, 253 Broadway (between Murray and Warren), 12th Floor, in Manhattan.

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May 15 2013

NYC Mobile Food Vendors v. NYC Restaurants

food cartSeems the ongoing battles between brick and mortar restaurants and mobile food vendors may soon be calming down.  Most of the tension between these parties is caused by proximity (i.e. how close the mobile cart is located to the restaurant).

The New York City Council just enacted legislation which will (commencing June 2013) prevent mobile food vendors from setting up shop within 20 feet of any entrance or exit, including service entrances and exits, of any restaurant.  The soon to be prior law just prevented mobile food vendors from setting up within 20 feet of the establishment’s main entrance/exit.

This new law should go a long way towards easing some of the existing tension between the mobile vendors and brick and mortar restaurants.

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Apr 18 2013

PRESENTING AT THE COMMUNITY BOARD – LIQUOR LICENSE APPLICATION

You are required to provide the local Community Board (“CB”) with notice at least 30 days prior to filing an on-premise liquor license application the New York State Liquor Authority (“NYSLA”). The CB may then put you on their hearing agenda to find out more about your project. At the CB hearing they may ask you about everything from the type of cuisine that you plan on selling to your affiliations with any other NYSLA licensed premises. Nothing is off limits.

I am always asked, “Do I need to have a lawyer with me at this hearing?” My response, which is not going to please my fellow attorneys, is absolutely not. In fact, I typically recommend that you don’t bring an attorney there and that you should never have an attorney go in place of you. The reason is simple. If you were a CB member, would you want to hear the details about the restaurant / bar project from an attorney or directly from the owner/operator of the project? The CB does not want to hear an attorney describe the type of cuisine that you are offering, or what you will do to prevent people from lining up outside, or that you will not have dancing in your premises. They want to hear these assurances from you . . .the operator; the person responsible for ensuring that all of these assurances are going to be kept. I typically recommend that you retain an attorney to be present at the CB hearing only in the event that (i) you anticipate strong opposition to your project, or (ii) are uncomfortable with public speaking. Otherwise, save yourself money and have the person who is best able to present the details of your project present them. . .you.

In a related matter, Community Board 1 in Queens, NY, has just voted against the issuance of a liquor license for a bar where all the female staff would serve wearing only bikinis. The CB cited, amongst the reasons, that this type of establishment would not be appropriate surrounding family oriented community. The proposed name of the bar . . . “Racks.”

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Dec 07 2012

NEW WAGE NOTICE OBLIGATIONS TO EMPLOYEES

Published by under Taxes,Uncategorized,Wages

noticeEmployers with New York employees must ensure that they provide them with an annual wage notice form by February 1, 2013, as required by the New York Wage Theft Prevention Act (the Act). This Act, which became effective in April 2011, significantly increases employers’ wage notice obligations to New York employees.

The Act requires private sector employers to provide each New York employee, upon hire and every year, with a detailed notice form setting forth that employee’s pay rate and the employer’s pay practices. Notice to current employees must be provided between January 1 and February 1 of each year, beginning January 1, 2012. Notice must also be given to employees within seven days following a reduction in their wages (or, if an employee works in the hospitality industry, following any wage change). Notice must be given to both non-exempt and exempt employees, and must contain the following information:
• the employee’s rate of pay and, if non-exempt, overtime rate of pay;
• the basis of the employee’s rate of pay (e.g., salary, commission or hourly);
• the employee’s regular pay day (employees are also advised to state the frequency of pay periods-e.g., weekly, bi-weekly or other);
• the employer’s name and any “doing business as” names;
• the employer’s telephone number and the address of its main office or principal place of business (and, if different, mailing address); and
• any allowances the employer intends to claim as part of the minimum wage (e.g., tip, meal or lodging allowances).

This means that, no later than February 1, 2013, all private sector employers must give ALL of their New York employees a written notice containing the above information.
Employers may provide this notice by hard copy or electronically, provided that employees are able to print out a copy of the notice. Employers must also obtain a signed acknowledgement from employees, acknowledging that they have received the notice. Although an employee’s email response confirming receipt of the notice is sufficient for acknowledgement purposes, an automated “read receipt” would not be sufficient. All notices must be retained by employers for six years.

The New York Department of Labor (the DOL) requires that employers provide the notice in an employee’s primary language for workers whose primary language is English, Spanish, Chinese, Korean, Creole, Polish or Russian. The DOL has notice templates available on its website for each of these languages. However, employers are not required to use the DOL-created templates. They can develop their own notice forms, provided that they contain all of the legally-required information described above.
Employers should be aware that the notice must be a separate form. As such, new hires should receive a separate, stand-alone notice form in addition to (or attached to) any offer letter or employment agreement they may receive. Moreover, if an employee works on a commission basis, the commission agreement should be attached to the notice form.  An employer who fails to provide required notices to its employees may be subject to significant penalties. Individual employees may recover up to $2,500 in a lawsuit, and the DOL may assess a penalty of $50 per week, per worker.

Employers are also advised that, in addition to the new stringent notice requirements, the recently enacted Act also contains provisions regulating recordkeeping, payroll records and paystubs.

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Oct 04 2012

NYSLA Conducts New York City Underage Sweep

The New York State Liquor Authority (SLA) recently concluded an underage sting operation in New York City where SLA investigators sent underage volunteer decoys into 239 licensed premises in all five New York City boroughs. In total, the decoys were able to purchase alcohol at an astounding 124 establishments.  The sting was conducted from March 29 through April 5, 2012.

The outcome of this sting is surprising.  More than half of the premises that were raided had violated the law and served alcohol to minors.  These violations are accompanied by monetary penalties and worse. For a first offense, a Licensee may be able to get away with paying a fine in the amount of $2,500.00 or so to the SLA to settle the charge . . .but if it is not their first violation, they may be looking at having a costly suspension or revocation hearing at the SLA.

However, the good news is that avoiding these violations are very easy.  Licensee’s must (i) train their employees as to what forms of ID are acceptable; (ii) insist that their employees require valid ID from all individuals that appear to be less than the age of 45 (just to safe) and (iii) inform employees that they are subject to job termination should they fail to properly check ID.

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