Negotiating from a Distance

Posted: April 2nd, 2020

By: Joe Campolo, Esq. email

Published In: HIA-LI Reporter

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Clammy handshakes, a scratched mahogany table with papers strewn about, laptops fighting for space with half empty cups of coffee, and that awful fluorescent lighting above – sounds pretty great right about now, doesn’t it?

In this unprecedented time of social distancing due to the coronavirus pandemic, negotiations are still happening every day (and they must, for our economy to recover) – they just look different. Critical tools in the negotiator’s toolbox involving nonverbal cues, such as body language and emotional expression, take a back seat during negotiations that take place by phone, videoconference, or even [shudder] email. Research has shown that in-person negotiations yield better results than negotiations that happen via screen, but don’t get discouraged – just reframe your thinking.[1] Here are some tips to make the most of your virtual negotiations until we’re back in the conference room.

  • Go back to basics. You still can’t skimp on the preparation, folks. You still need to do your homework. Gathering as much information as possible is key to identify and make sense of the issues in your negotiation. Spending the time on preparation will open more doors for you to create value.
  • Be an active listener. While leaning in or using other body language may be off the table, you can still show your interest in your adversary’s point of view by paraphrasing their phrases back to them and peppering the conversation with simple phrases such as “yes,” “I see,” and “I understand.” Actively listening encourages your opponent to continue talking – and the more that happens, the more control you have over the negotiation.
  • Build affiliation. You may be separated by screens, but if there were ever a time to bond with someone you may otherwise have nothing in common with, it’s now. In normal circumstances, I find mindless banter about the weather and traffic to be a waste of time you could instead be building a connection that can help you negotiate. But now… the rules have changed. People are hurting, anxious, and overwhelmed. Ask your adversary how he or she is holding up, and take the opportunity to share what’s going on in your world. Don’t cut right to the chase. By creating rapport, you create value.
  • Mix it up. Modern technology enables us to be connected 24/7/365, and the COVID-19 crisis has proven it. While you may not be meeting face to face, you still have a wealth of options to get in touch. If you’re negotiating with someone you don’t know well or if the negotiation has just begun, consider a videoconference as the next closest thing to an in-person meeting. As the negotiation progresses, the timing may be right to negotiate by phone. I really believe that email, which is about as impersonal as things can get, is a last resort when negotiating – but it’s still an appropriate choice, of course, to settle simple issues and share documents.

To lift ourselves out of the economic fallout of COVID-19, continuing to make deals and negotiate is critical. In that way, the negotiations that take place during this period are among the most important of our lives. Keep focused and keep moving forward so we can get back to those fluorescent lights and clammy handshakes as soon as possible.


[1] Read more on Harvard Program on Negotiation Blog.

The CARES Act Paycheck Protection Program

Posted: March 31st, 2020

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Guest Post by Alan R. Sasserath, CPA, MS, Sasserath & Zoraian, LLP

On Friday, March 27, the President signed the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) into law. There are a myriad of tax changes and economic stimulus provisions in addition to unemployment, health care, health system as well as other stimulus and stabilization provisions.

Cash flow is critical right now for all businesses, especially small businesses. We are still at the point where it is the most critical issue and will continue to be the most critical issue for at least the short term. In our estimation, the most significant business provision in the CARES Act is the Paycheck Protection Program (“PPP”) which falls under the U.S. Small Business Administration’s (“SBA”) 7(a) loan program.

Because it is so significant from the cash flow perspective, we have spent the better part of the last few days analyzing the PPP. The tax and other cash flow provisions in the CARES Act are important and we expect to take a deeper dive into those this week; however, they don’t come close to comparing to the cash flow significance of the PPP.

The most significant provision of the PPP is the provision that it is a loan that can be forgiven under certain circumstances.

Here is a high-level overview of the PPP:
• It generally applies to businesses with fewer than 500 employees.
• The amount of the loan is the lesser of (1) the average monthly payroll (salary, wage, commission, tips, vacation, group health benefits, certain other payments, etc.) up to $100,000 on an annualized basis per employee/payee for the 12 months preceding the date of the loan multiplied by 2.5 plus the balance of any pre-existing emergency loan, or (2) $10,000,000.
• The loan proceeds may only be used for payroll as defined above, interest on any mortgage obligation, rent, utilities and interest on any other debt obligations that were in place before February 15, 2020 (“Covered”).
• In evaluating the eligibility of a borrower, the lender shall consider whether the borrower was in operation on February 15, 2020; had employees; or paid independent contractors as reported on Form 1099-MISC.
• No personal guarantee requirement.
• No collateral requirement.
• Forgiveness: The amount that can be forgiven include the amounts paid by the borrower during the 8-week period following the loan origination date for:

• Covered payroll costs – Generally including payroll as defined above up to $100,000 per employee/payee on an annualized basis. In other words, the amount of loan forgiveness available is limited to $1,923.07 per week or $15,384.56 over an 8-week period per employee.
• Interest on a “Covered” mortgage obligation.
• “Covered” rent obligation.
• “Covered” utility obligation.
• Any amount not forgiven will become a term loan for up to 10 years with a maximum interest rate of 4%.

The loan forgiveness can be reduced either based on a reduction in employees or a reduction in salaries of certain employees if their salaries are less than $100,000 on an annualized basis.

Even if you have laid people off, you are still entitled to the loan based on prior year payroll. If you lay people off during the period February 15, 2020 – April 26, 2020 and hire them back by June 30, 2020, then you will not be penalized as discussed in the paragraph above. Remember, even if you are penalized, the penalty is that the term loan remains in effect and is not forgiven. Please note that the penalties related to the forgiveness of the loan is a complicated area of this program and beyond the scope of this writing.

We are suggesting that everyone should analyze this loan as it pertains to their circumstance. If you aren’t sure, take it. There is no penalty to prepay it.

It is going to take a little while for the banks to gear up to be able to make these loans. We don’t know how long. As of Friday, one banker mentioned that they were waiting from the SBA for guidelines. Treasury Secretary Mnuchin said that he wants loans to start by Friday. We’ll see.

With the program’s dependence on banking relationships, those businesses who lacked strong relationships prior to the coronavirus pandemic may get left behind if they don’t act quickly. We can help you with this. In the meantime, if you do have a banking relationship, call your bank and make sure they know you are on top of this and want it as soon as it is available.

Here is a workbook to assist in the calculation of the amount of the loan. Please call us if you need assistance and we will walk you through it.

It’s the start of a new week, and we are now one week closer to getting through this ordeal. Keep moving forward. Look at the shovel, don’t look at the mountain.

Thank you for your time.

Note: This workbook is provided by Sasserath & Zoraian, LLP and is intended solely for general informational and educational purposes. It is not intended in any way as financial, securities, insurance, tax or legal advice or services, or as a solicitation for any financial, securities, insurance, tax or legal product or service. Please consult with your financial, securities, insurance, tax and/or legal advisors for advice regarding your specific circumstances. The calculations herein are estimates based on our interpretation of the bill signed into law on March 27, 2020 under the CARES Act.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Shareholder Liability for Unpaid Wages

Posted: March 29th, 2020

By: Arthur Yermash, Esq. email

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As the coronavirus pandemic continues to spread around the world and particularly in New York, business owners are being challenged like never before to keep their companies, employees, and their own families afloat. As we shared in a recent article, litigants must reach an extraordinarily high bar to be able to “pierce the corporate veil” of a business and shift a company’s liabilities to the owner personally. One notable exception to be aware of, however, concerns unpaid wages for New York employees.  This issue is of particular concern as business owners grapple with challenging decisions in light of business shutdowns and other challenges brought on by the deadly COVID-19 virus.

Pursuant to changes to the Limited Liability Company (LLC) Law and Business Corporation Law (BCL) enacted about five years ago, the 10 LLC members with the largest membership interest, as well as the 10 largest shareholders of a foreign (non-New York) corporation with New York employees, may be held jointly and severally liable for “all debts, wages, or salaries” due to “any of its laborers, servants or employees… for services performed by them for [the entity].” (The 10 largest shareholders of New York corporations were already on the hook for such wages under the BCL prior to the other law changes five years ago.)

Such imposition of liability on the 10 largest shareholders/members creates an exception to the general shielding of a shareholders/members for claims made against the corporate entity. The definition of “wages or salaries” includes all compensation and benefits payable by an employer to an employee, such as overtime, vacation, holiday and severance pay, employer contributions to pension funds, and insurance payments. 

A New York employee seeking payment for unpaid wages must first seek payment from the business itself. If payment is not made, the top 10 shareholders/members may be held liable for any unsatisfied judgments. Note, the employee must provide notice to the shareholders/members within 180 days after his or her employment terminates.

As many business owners are facing harsh realities and extremely difficult business decisions in light of the deadly COVID-19 virus, it is important to keep some of these issues in mind.  Asking employees to work without pay, or even where employees volunteer to work without pay still creates potential financial exposure (including penalties) to the employer and its principals in these trying times.  Any decision regarding reduced or no pay should be carefully evaluated in light of applicable law.

With today’s economic uncertainty, business owners should be aware of any potential liability they may face so they can plan accordingly and take steps to mitigate. Please call us for guidance on your specific situation. We are here to help your business get through these challenges.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Complying with the Governor’s Executive Order Regarding E-Notarization

Posted: March 25th, 2020

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In response to the COVID-19 pandemic, Governor Cuomo has issued Executive Order No. 202.7 authorizing notary services via audio-visual technology. Even during these trying times, business must continue. Here are the steps for valid e-notarization (courtesy of NYS Academy of Trial Lawyers):

  1. Set up a video conference allowing for direct, live interaction between the signatory and the notary.
  2. The signatory must present a valid photo ID.
  3. The signatory must affirmatively state that he or she is present in the State of New York.
  4. The signature must then sign, and on the same date, email or fax the document to the Notary.
  5. The Notary may then notarize the emailed or faxed copy and send it back to the signatory.

If a fully executed original is needed, the original and e-notarized documents must be sent to the Notary within 30 days. The Notary may then notarize the original using the e-notarization date.

Contact us with any questions.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Making Sense of the Executive Order Regarding “Essential” Businesses

Posted: March 25th, 2020

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Governor Cuomo’s Executive Order 202.8 requires that, starting March 22 at 8 p.m., all workers stay home, unless they work for essential businesses.

  • Defining essential businesses: In a companion document, the Governor identified 12 categories of essential businesses. Some are obvious, such as healthcare operations (including hospitals, labs, and nursing homes); essential retail (including grocery stores and pharmacies); and financial institutions (including banks). Others leave more room for interpretation, such as “essential services necessary to maintain the safety, sanitation and essential operations of residences or other essential businesses” and “vendors that provide essential services or products, including logistics.”
  • How much of a business’s functions are essential. Some businesses might serve both essential and non-essential functions. Only essential functions are exempt from the in-person restrictions.
  • Whether a business needs to apply for designation as essential. Businesses that fall under the 12 categories identified by the Governor do not need apply to be designated essential. Other businesses may submit a request to Empire State Development. Businesses with only one on-site employee are automatically exempt and also do not need to submit a request.
  • Penalties: Any business that violates the in-person restrictions is subject to the same penalties imposed by Section 12 of the Public Health Law, which provides for a fine of between $2,000 and $10,000 per violation.

Please contact us for guidance on your particular situation.

Links courtesy of the New York State Bar Association

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Information about NYS Executive Order Addressing Financial Institutions and Financial Hardship

Posted: March 22nd, 2020

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On March 21, Governor Cuomo issued an Executive Order stating that banks (those subject to the jurisdiction of the NYS Department of Financial Services) must grant a forbearance to any person or business facing financial hardship as a result of the COVID-19 pandemic for 90 days. If they do not, it would be deemed “an unsafe and unsound business practice.”

The Department of Financial Services has been ordered to “ensure under reasonable and prudent circumstances that any licensed or regulated entities provide to any consumer in the State of New York an opportunity for a forbearance of payments for a mortgage for any person or entity facing a financial hardship due to the COVID-19 pandemic.”

An application will be created to be made available to consumers, and applications “shall be granted in all reasonable and prudent circumstances solely for the period of such emergency.” The Superintendent may issue rules regarding ATM fees, overdraft fees, and credit card late fees to be restricted or modified in light of the pandemic as well.

We will continue to report on this Executive Order as more information becomes available.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

New York State on PAUSE: What You Need to Know

Posted: March 21st, 2020

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The following information is from the New York State Department of Health as of March 21, 2020. Learn more here.

  • New York State on PAUSE: In New York we know that Policies Assure Uniform Safety for Everyone.
  • 100% of the workforce must stay home beginning Sunday, March 22 at 8PM, excluding essential services. 
  • All non-essential gatherings of individuals of any size for any reason are temporarily banned.
  • New York State has has identified two million N95 masks for purchase and will send one million to New York City and 500,000 to Long Island.
  • Department of Motor Vehicles offices are temporarily closed for in-office visits. Online transactions, including for license renewals, are still be available. License and permit expirations will be extended.
  • Governor Cuomo is visiting four sites that have been identified by the Army Corps of Engineers for temporary hospitals.
  • Enacting Matilda’s Law to protect New Yorkers age 70+ and those with compromised immune systems 
    • Remain indoors
    • Can go outside for solitary exercise
    • Pre-screen all visitors by taking their temperature
    • Wear a mask in the company of others
    • Stay at least 6 feet from others
    • Do not take public transportation unless urgent and absolutely necessary
  • All barbershops, hair salons, tattoo or piercing salons, nail salons, hair removal services and related personal care services will be closed to the public effective Saturday, March 21 at 8:00PM.
  • Casinos, gyms, theaters, retail shopping malls, amusement parks and bowling alleys are closed until further notice. Bars and restaurants are closed, but takeout can be ordered during the period of closure.
  • Testing is free for all eligible New Yorkers as ordered by a health care provider.
  • Your local health department is your community contact for COVID-19 concerns.  

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

Coronavirus-Related Suspension of NYS Laws – March 21, 2020

Posted: March 21st, 2020

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NOTE: Please see our updated post dated April 7, 2020.

Under Executive Order 202.8, Governor Cuomo has suspended and tolled through April 19, 2020 any specific time limit for the commencement, filing of or service of any legal action, including time limits in the Criminal Procedure Law, Family Court Act, Civil Practice Law, Court of Claims Act, Surrogates Court Procedure Act and Uniform Courts Act.

The Governor also suspended sections of the vehicle and traffic law related to the expiration of driver’s licenses, non-driver IDs and vehicle registrations that expired on or after March 1, 2020.

A provision requiring shareholder meetings to be noticed and held in person has been suspended.

Finally, the Governor expanded the authority of the Commissioner of Taxation and Finance to abate interest for a period of 60 days for taxpayers required to file returns for sales and use taxes for the period that ended February 29, 2020.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

COBRA Considerations for M&A Transactions

Posted: March 18th, 2020

By: Christine Malafi, Esq. email

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Business owners: are you aware that during a business reorganization, merger or acquisition, stock transfer, and/or asset sale, you may be required to offer continuous COBRA (Consolidated Omnibus Budget Reconciliation Act) medical coverage to qualified employees?

Recent IRS regulations provide that employees who are let go from a position or whose employment status changes as a result of a business reorganization may qualify for continued COBRA coverage under the law. M&A transactions, stock transfers, or asset sales could create an overlap in job tasks where not every employee is guaranteed a continued position after the dust settles from a reorganization, and, therefore, such business reorganizations are “qualifying events” under COBRA.

Under federal and state laws, a qualifying event legally obligates the reorganizing entity to provide COBRA coverage and all appropriate notifications to the affected employees who paid into a healthcare plan through their workplace during the qualifying period. If the reorganized group no longer maintains a healthcare plan after the sale, the “new” entity (“purchasing entity”) is legally required to provide COBRA coverage with all notice requirements if: 1) the purchasing entity maintains a group health plan, and 2) in the case of an asset sale, the purchasing entity is a successor employer, meaning they hired most of the same employees to work the same jobs when continuing business operations.

Businesses should also be aware that although the parties involved in an M&A transaction may assign responsibility for COBRA coverage among themselves within the contract, if the designated entity defaults on its obligation, the party legally required to provide continued insurance coverage under the COBRA statute will not be absolved of the contracted-away obligation.

The requirements on both the selling and purchasing side vary based on the type of business transaction occurring, as well as on its outcome. Please contact our office to discuss your particular situation.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.